The Preemption Pendulum: The Supreme Court Punts Stengel v. Medtronic
Drug and Medical Device Manufacturers Beware; State-law Parallel Claims Threaten
As failure-to-warn claims, the decades-old staple of medical products liability, are relegated to the trash bin of tort jurisprudence, a new and more potent approach--parallel claims--has emerged. What are parallel claims, where did they come from, why did they emerge, and when will the Supreme Court clear up the issue?
With the advent of mass tort litigation for claims involving Food and Drug Administration (FDA) approved products in the 1980's, the defensive doctrine of federal preemption emerged in fits and starts and, since the mid 1990's, has gradually swung the pendulum toward dismissal of claims, relegating claimants to those few venues where jurists, flummoxed by the lack of a remedy, forged a tenuous path forward. Whether Congress has intentionally refused, or simply neglected to provide a private remedy for tort claimants is unclear. What is increasingly clear is that trial courts are finding room in Supreme Court rulings to permit state-law tort claims to proceed. Claimants are also finding a willing advocate in the FDA itself, which has flip-flopped from its prior view favoring preemption to its position that now assists private litigants in pursuing private tort and Lanham Act "labeling" claims under the Food Drug and Cosmetic Act (FDCA).
Parallel Claims: What Are They And Where Did They Come From?
A triumvirate of Supreme Court cases forms the foundation for federal preemption and parallel claims for medical devices under the FDCA (See Medtronic, Inc. v. Lohr,518 U.S.470 (1996), Buckman v. Plaintiffs' Legal Comm.,531 U.S. 341 (2001)and Reigel v. Medtronic, Inc.,552 U.S. 312 (2008). These opinions gave birth to another trio of Supreme Court cases addressing preemption in the context of approved drugs (See Wyeth v. Levine, 555 U.S. 555 (2009), Pliva v. Mensing, 131 S. Ct. 2567 (2011)and Mut. Pharm. Co. v. Bartlett, 133 S. Ct. 2466 (2013).
In Lohr, the Supreme Court stated that the FDCA does not preempt "a traditional damages remedy for violations of common-law duties when those duties parallel federal requirements." Lohr, 518 U.S. at 495. Buckman purports to allow tort claims where the plaintiff is "relying on traditional state tort law" but not where the FDCA "is a critical element in their case." Buckman, 531 U.S. at 353. In Riegel, the Court established a two-prong test for determining if a state-law tort claim could proceed: 1) has the FDA established applicable "requirements"; and 2) does state law create a requirement related to safety or effectiveness that is "different from or in addition to the federal requirement." Reigel, 552 U.S. at 322. While the precise contour of purported "parallel claims" is uncertain, no court allows claims that seek to impose liability despite compliance with the applicable FDCA.
Something Odd in the (5th, 7th and 9th) Circuits: Out of the shadows of these Supreme Court opinions, a trilogy of Circuit Court opinions have arisen that threaten to up-end medical products liability. See Bausch v. Stryker Corp., 630 F.2d 546 (7th Cir. 2010), Hughes v. Boston Scientific, 631 F.3d 762 (5th Cir. 2011), and Stengel v. Medtronic, Inc., 704 F.3d 1224 (9th Cir. en banc 2013), cert. denied (U.S. June 23, 2014) (No. 12-1351). In Bausch v. Stryker Corp., the Seventh Circuit noted:
The idea that Congress would have granted civil immunity to medical device manufacturers for their violations of federal law that hurt patients is, to say the least, counter-intuitive. That protection does not apply where the patient can prove that she was hurt by the manufacturer's violation of federal law. Bausch, 630 F.2d at 549.
This claim's permissive sentiment is echoed in Hughes v. Boston Scientific Corp., where the Fifth Circuit stated that Riegel and Lohr "make clear" that a manufacturer is not protected from state tort liability when the claim is based on the manufacturer's violation of applicable federal requirements. Hughes, 631 F.3d at 765. The court in Hughes further observed: "[w]e are persuaded that any additional 'formal' finding or enforcement action by the FDA is not an 'implicit precondition' to suit under the facts of this case.") Id. at 762.
With Stengel v. Medtronic, a significant stepchild was poised to join the triumvirate of Supreme Court cases that gave birth to parallel claims. In Stengel, the Ninth Circuit reinstated purported state-law failure-to-warn claims, stating that the "[Medical Device] Amendments do not preempt a state-law claim for violating a state-law duty that parallels a federal-law duty." Citing Lohr the Court stated:
Given the ambiguities in the statute and the scope of the preclusion that would occur otherwise, we cannot accept [the manufacturer's] argument that by using the term 'requirement,' Congress clearly signaled its intent to deprive the States of any role in protecting consumers from the dangers inherent in many medical devices. Lohr, 518 U.S. at 489.
The government filed an amicus brief in the Supreme Court asserting that all the Circuit Courts are wrong concerning parallel claims yet arguing for denial of certiorari. The government's newly minted view is:
Section 360k(a) does not preempt respondents' straightforward claim that petitioner should have brought new safety information to physicians' attention through a CBE revision to the device's labeling, because such a claim implicates no preemptive device-specific federal requirement.
On June 23, 2014 the Supreme Court denied certiorari in Stengel leaving intact the Ninth Circuit's reversal of the District Court decision denying plaintiffs' motion to assert a parallel state-law failure-to-warn claim. With the denial of cert by the Supreme Court, the case is remanded to the district court to determine whether the plaintiffs should be permitted to further amend their complaint in light of the Ninth Circuit's opinion.
Further feeding the fire of private claims under the FDCA, private tort claimants have a peculiar bedfellow in three curious Lanham Act cases brought by manufacturers asserting claims that parallel the FDCA. See Allergan et al. v Athena, No. 2013-1286, 2013 U.S. App. LEXIS 25746 (Fed. Cir. Dec. 30, 2013); POM v. Coca Cola, 2014 U.S. Lexis 4165 (2014), and GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc., 2:13-CV-00726 (ED PA Mar. 2014).
In a curious juxtaposition, the government's newly minted support of private litigation under the FDCA allows ample room for state law to meddle, yet the same government retains a possessive hand on its own power to regulate. With the Supreme Court tied in knots over if, why, when and how to reign in the ever expansive Fourth Branch of government (See generally Chevron v. Natural Resources Defense Council, 467 U.S. 837 (1987), Decker v. Northwest Envtl. Def. Ctr., 2013 LEXIS 2373 (2013), Christopher v. SKB2012 U.S. LEXIS 4657 (2012) and Util. Air Regulatory Group v. EPA, 2014 U.S. LEXIS 4377 (2014), perhaps the only issue more confounding than preemption is the deference to be given governmental agencies in the first instance.
Manufacturers of FDA regulated products have enjoyed a decade of generally favorable rulings on the issue of federal preemption and deference to the primacy of FDA jurisdiction limiting or dismissing claims, but the political climate, the courts' emerging approaches and the government are reshaping the litigation landscape. While it is unclear if or when the Supreme Court will rule on the diverging views in the Circuits on state-law parallel claims, it is evident that tort claimants will look to the Ninth Circuit opinion in Stengel as the talisman for their medical products liability claims.
Interrogatories are a nuisance. Too often they are served with no real purpose. Far too often, they are answered in the most evasive and non-responsive manner possible. Both the propounding party and the responding party devote significant effort to drafting and serving them, often with a result that does not materially affect the status or merits of the lawsuit. How can we as defense lawyers avoid this?
Serve Interrogatories Only When Necessary
Not all information is best sought by way of interrogatories, especially in a jurisdiction such as the federal courts where disclosures of witnesses and documents are mandatory. Before serving an interrogatory, identify what you want to know and consider whether there is a better way of obtaining that information.
The best interrogatories come in two flavors: (1)Those, like good cross-examination, where you don’t care what the actual answer is because any answer will be beneficial to your case; you simply need to force your adversary to take some position; or (2)Where the question is so basic, simple and unambiguous, that your adversary will be forced to answer in a simple declarative sentence if it does not want to appear sanctionably evasive.
Ask Only The Important Questions
Unless you are at the end of discovery and will have no opportunity for follow up questions, leave the follow up questions out of the interrogatories. Ask them once you have responses. You’ll ask fewer questions overall. Now that the federal courts and many states have limitations on the number of interrogatories, an interrogatory is a valuable commodity not to be squandered.
Write Like Hemmingway
Yes, this post fails that test. Writing like Hemmingway is difficult for lawyers. But, you can do it. Ask questions using simple interrogative sentences. Avoid unnecessary adjectives and adverbs. Keep your sentence structure simple. The presence of commas is a cue to reconsider your word choice.
Don’t Answer Like a Weasel
Answer the question. If you don’t know, say so. If you need to make inquiries before answering the question, make them first. Facts, unlike some adult beverages, rarely become better over time.
Whatever you do don’t be evasive or defensive. As all parents know, one of the “tells” regarding a child’s conduct is how evasive or defensive the child is when responding to parental questions. Numerous political scandals teach us the cover-up is almost always worse than the offense. The best way to address bad facts is to be truthful and direct. It’s desirable to explain the bad facts, but do not hide the admission in a long winded imprecise explanation.
Object For A Reason
Objections are appropriate and necessary. Make them count by only making those which will make a difference, either for the particular response or to avoid waiving a privilege. If you can’t explain the basis of the objection to a judge in a concise manner, don’t make it. For example, if the objection is “vague and ambiguous,” know why the question is vague, and be able to identify the multiple inconsistent meanings that render it ambiguous.
Why This Matters
Interrogatory responses can be offered into evidence at trial. Will a jury be impressed with your eight lines and 100-150 word objections, or will they believe you are hiding unfavorable evidence from them? Juries never believe you’re hiding favorable evidence. They rarely consider the possibility the evidence being “hidden” may simply be neutral or inconsequential.
Plain speaking in interrogatories and responses also is beneficial when bringing or opposing motions to compel. As those of us who have had the misfortune to sit through a calendar where the court is considering discovery motions can attest, judges don’t like discovery motions. They really don’t like obfuscation and evasion. And, they dislike bad questions.
Keep it simple, stupid. As simple questions. Give plain answers. Don’t serve interrogatories simply because you don’t know what else to do. If you don’t have a plan of action before drafting interrogatories, stop and develop that plan first. Random acts of kindness are beneficial. Random acts of discovery are unproductive.
Vague Rules Limiting Speech (i.e. Due Process and the First Amendment)
On September 29, 2014, the FDA reopened the comment period for two of its Social Media Guidance documents for FDA-regulated industry. Since the advent of the internet, the FDA has been plagued by its reliance on undefined terms while enforcing vaguely circumscribed regulations that criminalize First Amendment protected speech. During that time, the US has endured (at least) two wars, three two- term presidents and an entire generation has been born and raised, but no clear rules on how FDA regulated industry may use the internet have emerged. There is a now glimmer of hope as the Comment period has been reopened for the follow two draft Guidance documents:
Correcting Third-Party Content: Internet/Social Media Platforms: Correcting Independent Third-Party Misinformation About Prescription Drugs and Medical Devices; Reopening of the Comment Period; and
Twitter Guidance: Draft Guidance for Industry on Internet/Social Media Platforms With Character Space Limitations: Presenting Risk and Benefit Information for Prescription Drugs and Medical Devices.
The Internet/Social Media Scorecard:
There are eight (8) relevant guidance documents that touch on the issues of industry use of the internet:
Correcting Third-Party Content and User Generated Content (see above);
Twitter Guidance (see above);
Interactive Promotional Media (Fulfilling Regulatory Requirements for Post marketing Submissions of Interactive Promotional Media for Prescription Human and Animal Drugs and Biologics) January 2014;
Presenting Risk Information (Draft Guidance: Presenting Risk Information in Prescription Drug and Medical Device Promotion) May 2009;
Advertising and Promotional Labeling Guidance for Industry: Product Name Placement, Size, and Prominence in Advertising and Promotional Labeling. Revised November 2013;
Unsolicited Requests: Draft Guidance for Industry Responding to Unsolicited Requests for Off-Label Information About Prescription Drugs and Medical Devices. December 2011;
Scientific Exchange Notice was published in the Federal Register in December 2011 entitled Communications and Activities: Off-Label Uses of Marketed Products and Use of Products Not Yet Legally Marketed). A draft Guidance was issued on March 3, 2014 revising FDA’s Good Reprint Practice Guidance and that guidance was renamed and issued as a draft Guidance entitled “Distributing Scientific and Medical Publications on Unapproved New Uses – Recommended Practices”; and
.com DisclosuresFederal Trade Commission "Dot Com Disclosures" Guidance Updated to Address Current Online and Mobile Advertising Environment. The 2000 .com Disclosures were updated in March 2013.
In addition, there are two (2) relevant Citizen’s Petitions filed by the Medical Information Working Group that relate to these issues:
1. Request a Review, Response and Modify in a Constitutionally Permissible Manner Statutory Limitations and Specific Requests Set Forth in the July 2011 Citizen Petition (FDA-2013-P-1079). This petition relates to a long pending July 2011 Citizens Petition; and
2. Establish Comprehensive, Clear and Binding Regulations to Guide The Industry Relating to New Uses of Marketed Drugs and Medical Devices (FDA-2011-P-0512).
Third-Party Content and Space Limitations:
On September 16, 2014, a number of stakeholders filed responses to both draft guidance documents (Third-Party Content and Twitter). Permeating the responses to these proposed Draft Guidance documents is the concern that the emerging regime for on-line manufacturer content implicates Fifth Amendment due process concerns and infringes First Amendment speech rights. Despite decades of intransigence, there are encouraging signs as FDA has announced making “some ‘mid-course corrections’ in recognition of emerging case law, in particular the case law involving the First and Fifth Amendments of the United States Constitution.” This is no small concession for an agency that, reminiscent of the Black Knight in Monty Python’s Holy Grail, ignored the Supreme Court’s admonitions in Thompson v. Western States and Sorrell v. IMS, and shrugged off its 2012 First Amendment shellacking in the Second Circuit in US v. Caronia, touting all as a “mere flesh wounds.” In what portends to be the final limb of FDA’s rejection of Due Process and First Amendment challenges to how the FDA limits manufacturer content, the Constitutionality of FDA’s enforcement is once again working its way through the courts in Solis v Millennium, 2:09-cv-3013 (E.D. Cal.).
What “Speech” is at Issue?
There are five forms of manufacturer content for FDA regulated industry: FDA approved labeling; advertisements; “Promotional Labeling”; Scientific Exchange; and none of the above. Despite categories of content entitled to different levels of constitutional protection, the current enforcement regime renders all manufacturer online content as regulated labeling subject to the lowest level of court scrutiny. While there are pseudo safe harbors for certain content (for example, reprints and unsolicited requests), whether manufacturer’s affiliation, collaboration, or by-stander status concerning content is subject to FDA enforcement and the government’s overwhelming police power is largely left to the ipse dixit of the FDA itself.
What is emerging is recognition by the FDA that Due Process demands a clear set of rules and the First Amendment demands more, not less, information be disseminated by manufacturers who possess valuable information concerning their products. As FDA’s decades of analysis of manufacturer and consumer use of the internet has demonstrated, consumers and health care providers overwhelmingly search the internet for information about products. There is a health imperative where consumer education and reliable scientific and medical information are the cornerstone, and manufacturer participation needs to be encouraged not suppressed.
No regulation or guidance will prevent bad actors from circumventing the law for personal gain. While the federal government has proven itself highly successful and profitable in netting bad actors, too often it ensnares questionably culpable manufacturers. Due Process and Free Speech rights remain as vital and misunderstood as they were when ratified in 1791. Despite the controversy, applying the principles that flow from these rights to providing health information on the internet may ultimately prove to be among both the greatest challenges and accomplishments in advancing the public health for this generation.
The United States District Court for the Central District of California granted summary judgment in favor of Plaintiff, Flo & Eddie, Inc., a corporation that owns and controls all of the rights to the master sound recordings of The Turtles, on the basis of public performance conduct. Plaintiff filed a Complaint against Defendant, Sirius XM Radio Inc., for the unauthorized public performance of its sound recordings, all of which were created before 1972.
Under the Federal Copyright Act, 17 U.S.C. § 101, et seq., pre-1972 sound recordings are not subject to copyright protection. The Federal Copyright Act preempts States from regulating copyrights, with the exception of sound recordings fixed before February 15, 1972. 17 U.S.C. § 301(c) expressly allows for state common law or statutes to regulate the rights of owners of sound recordings created before the effective date in 1972.
Here, the Court held that Cal. Civ. Code § 980(a)(2), provides exclusive ownership to an author of an original work of authorship that is a pre-1972 sound recording. This grant of ownership under California law includes the exclusive right to publicly perform that sound recording.
In support of this holding, the Court noted that the Federal Copyright Act does not provide a right of public performance in post-1972 sound recordings, which is expressly stated in 17 U.S.C. §114(a). By contrast, the California legislature only included one limitation to an author’s exclusive ownership of a pre-1972 sound recording copyright under § 980(a)(2), regulating the author’s right to record and duplicate “covers.” In support of granting summary judgment in Plaintiff’s favor, the Court noted that “[t]he legislative history of § 980(a)(2) and its comparison to the Federal Copyright Act actually bolsters the Court’s plain textual reading of the statute that sound recording ownership is inclusive of all ownership rights that can attach to intellectual property, including the right of public performance, excepting only the limited right expressly stated in the law.”
Flo & Eddie Inc. v. Sirius XM Radio Inc., et al., CV 13-5693 (Sept. 22, 2014). http://musictechpolicy.files.wordpress.com/2010/09/flo-eddie-v-sirius-xm-order-on-msj.pdf
Submitted by: Rachel Simes Guttmann, McCranie, Sistrunk, Anzelmo, Hardy, McDaniel & Welch, LLC
From time to time most defense attorneys find themselves in a situation where they are asked to file, usually on extremely short notice, complaints or cross-complaints against multiple parties. Federal Rule 11 and its state counterparts obligate the attorney to make an inquiry reasonable under the circumstances to confirm the claims being asserted are warranted by existing law and the factual contentions have or are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery. In these circumstances, how can the attorney both meet his or her obligation to the client without violating Rule 11 or its state counterpart?
Suing first, and asking questions later is not the solution. No single solution will work in every instance, but there are a number of steps the attorney can take to avoid being put in this awkward position.
1. Anticipate the need.
Many “emergencies” are so only because the attorney has failed to stop and look ahead to identify predictable pending events. If an opponent who has sued in the past appears with a new claim, it’s likely the opponent will sue again this time. If so, by anticipating the need and taking action in a considered and deliberate manner, the defense attorney can reduce the risk of being in a sue first, ask questions later position.
2. Create an institutional memory.
On occasion the party is involved in a series of cases where it is suing a series of other companies in dozens of similar, situations. In the course of that process, the company has presumably gathered extensive documentation regarding the obligations or practices of its opponents. Organizing that information so the correct parties are sued saves both sides considerable time and expense. Organizing information does not mean cutting and pasting from a prior document. It means actually reading and analyzing the applicable documents and then preparing an index, summary or matrix that captures the work product and facilitates future decision making.
3. Fix mistakes; don’t perpetuate them.
Mistakes are inevitable. Without them, we attorneys would be unemployed. When they happen, fix them immediately. Do not put them aside to be dealt with “later.” The cut and paste features of word processing software are wonderful tools to speed document creation, but they also make it very easy to perpetuate a mistake over and over again. If cut and paste is used, print the new document and read it line by line in the context of the current matter to identify and fix inappropriate uses of cut and paste.
4. Identify and gather information promptly.
Rule 11 gives the attorney a “reasonable opportunity” for further investigation and discovery. Take that opportunity. Don’t put it off until later. You don’t want a reputation as a “sue first, ask questions later” lawyer. Prompt investigation and prompt correction of erroneous allegations, or dismissal of erroneously named parties will protect your reputation.
In Peters v. Early Healthcare Giver, Inc., the Maryland Court of Appeals held that Maryland’s Wage Payment and Collection Law (“WPCL”) covered claims for overtime wages, despite any federal authority to the contrary. Writing for the Court, Judge Sally D. Adkins held that there was no bona fide dispute as to whether the plaintiff was entitled to the overtime wages that plaintiff claimed she was owed. As a result, the plaintiff could recover treble damages at the discretion of the trial court. The Court held that if the trial court awarded treble damages on remand, then they these enhanced damages should include plaintiff’s contested wages (rather than being in excess thereto).
This case grew out of a dispute between Muriel Peters (“Plaintiff”) and her former employer, Early Healthcare Giver, Inc. (“Defendant”). When employed by Defendant, Plaintiff provided in-home care for an elderly patient. When Plaintiff left her employment with Defendant, she filed a lawsuit in the Circuit Court for Montgomery County alleging that Defendant had wrongfully withheld her overtime wages. Defendant argued that Plaintiff’s work fell within the Fair Labor Standards Act (“FLSA”) because Defendant operated under a federal Medicaid program. Defendant argued that the FLSA’s “companionship services” exemption applied, and that Plaintiff was, therefore, not entitled to overtime pay. The trial court held that the FLSA preempted state wage laws. Plaintiff appealed, and the Court of Special Appeals held that the trial court erred in finding that federal law preempted state wage laws.
On remand, Plaintiff filed an unopposed memorandum seeking overtime wages under the WPCL and Maryland Wage and Hour Law. Plaintiff requested treble damages under Section 3-507 (b) of the WPCL, which permits the trebling of damages when the alleged withheld wages were not the result of a bona fide dispute. Md. Code Ann., Lab. & Empl. § 3-507.2. Without, apparently, holding a hearing on the matter, the Circuit Court awarded Plaintiff the requested unpaid overtime wages, but denied her request for treble damages. Plaintiff appealed to the Court of Special Appeals and also filed a Petition for Writ of Certiorari to the Court of Appeals. Before the intermediate appellate court could hear the case, the Court of Appeals granted Plaintiff’s petition. In her appeal, Plaintiff argued that she was entitled to treble damages in addition to her overtime wages. Defendant did not participate in the appeal. The Commissioner of Labor and Industry (the “Commissioner”) filed as amicus curiae in support of the application of the WPCL to overtime wages, but in opposition to Plaintiff’s position that enhanced damages should be awarded in addition to unpaid wages.
The Court of Appeals reversed the trial court’s decision. As a threshold matter, the Court held that the WPCL applied to overtime wages, despite certain federal case law to the contrary. The Court stated that the Legislature’s 2010 amendments to the WPCL clarified this matter, and removed any doubt as to whether it covered overtime wages. The Court found that there was no evidence presented as to a bona fide dispute over the contested overtime wages. The burden of production on the issue of a bona fide dispute rested upon the Defendant, as the employer and the party in the best position to bring forward evidence concerning its own subjective belief. Defendant adduced no evidence at trial to support a bona fide dispute, and did not file any opposition to Plaintiff’s memorandum in support of her state law claims.
Despite its holding that there was no bona fide dispute, the Court remanded the case because the trial court failed to make any finding as to whether there was a bona fide dispute as to Plaintiff’s wages. The Court refused to hold that the trial court abused its discretion in failing to award treble damages, but instructed the trial court on remand to keep in mind the WPCL’s remedial purpose in determining whether to apply enhanced damages. On the point of treble damages, the Court sided with the Commissioner, and held that treble damages were not to be awarded in addition to Plaintiff’s overtime wages. An award for treble damages would include Plaintiff’s withheld wages. Hence, the total award available to an employee proceeding under the WPCL is three (3) time the allegedly withheld wages.
Peters v. Early Healthcare Giver, Inc., No. 86 (Md. August 13, 2014), available at http://www.mdcourts.gov/opinions/coa/2014/86a13.pdf
Submitted by: Marisa A. Trasatti and Wayne C. Heavener, Semmes, Bowen & Semmes
New Trial required where asbestos manufacturer’s request for instruction on employer’s duty to employee not given plaintiff’s decedent, Michael Galliher, contracted and died from mesothelioma as a result of exposure to asbestos while employed with Borg Warner (“BW”) at a bathroom fixtures facility. Plaintiff alleged that the materials used at BW were manufactured by the Defendant, R.T. Vanderbilt Co. Inc. (“Vanderbilt”). Vanderbilt denied causation and claimed that BW was solely responsible because it did not operate the facility in a manner that was safe for employees. BW was not a party to the suit.
At the trial, Vanderbilt put on evidence that BW had breached the relevant standard of care as to its employees, including Plaintiff’s decedent. Vanderbilt then requested that the jury be instructed on the duty of care that an employer owes to its employees in accordance with the applicable Ohio law, which the judge refused. Additionally, during testimony Plaintiff’s experts made various highly prejudicial comments including that Vanderbilt liars, alleging that Vanderbilt had paid millions of dollars to affect studies to avoid governmental sanction. After judgment was entered for the Plaintiffs in the amount of $2,864,583.33, Vanderbilt filed a motion for new trial, which was denied. Vanderbilt appealed.
The Delaware Supreme Court first addressed the Court’s failure to give a jury instruction on the employer’s duty to its employee. The court noted that Ohio law governs the substantive issues of the case, and that Ohio had developed pattern jury instructions that applied to the defenses raised by Vanderbilt. The Court held that the trial court’s instruction requiring the jury to determine if BW was “at fault” without further guidance on what established fault failed to properly inform the jury.
Further, the Court acknowledged that the statements made by Plaintiff’s experts were so highly inflammatory that even the trial court had acknowledged the limited value of a curative instruction. The Supreme Court noted that in “gauging the effect of admission of improper evidence, this Court … considers (1) the closeness of the case, (2) the centrality of the issue affected by the error and (3) the steps taken in mitigation.” Id. The issue of Vanderbilt’s liability was heavily contested, as it contested that there was asbestos in its products. Because the inappropriate comments impacted Vanderbilt’s credibility on that issue, and the curative instruction provided by the court was insufficient, the Delaware Supreme Court held the trial court had abused its discretion in denying Vanderbilt a new trial. The verdict was reversed, and remanded for a new trial.
R.T. Vanderbilt Co. Inc. v. Galliher, ___ A.3d___ (July 24, 2014) (not yet published), available at: http://courts.delaware.gov/opinions/download.aspx?ID=209160
Submitted by: Marisa A. Trasatti and Gregory S. Emrick, Semmes, Bowen & Semmes
In Wilcox v. Orellano, the Court of Special Appeals of Maryland held that a joint stipulation of dismissal signed by both parties in a medical malpractice case amounted to “a voluntary dismissal ... by the party who commenced the action or claim” under § 5-119(a) of the Maryland Courts and Judicial Proceedings Article. The Court of Special Appeals affirmed the ruling of the Circuit Court for Prince George's County that the plaintiff, having “voluntarily dismissed” her action, was not entitled to re-file her claim as that claim was now barred by the relevant statute of limitations. Judge Krauser wrote the opinion, in which Judges Wright and White joined.
By way of factual background, after undergoing a lumpectomy performed by Dr. Tristan Orellano, Lydia Wilcox developed an infection at the site of the surgery which eventually required the surgical removal of her right breast. Ms. Wilcox filed a medical malpractice claim with the Health Care Alternative Dispute Resolution Office against Dr. Orellano, together with a certificate of a qualified expert. Unfortunately, Ms. Wilcox failed to attach a report of an attesting expert to the certificate, as required by § 3–2A–04(b) of Maryland’s Health Care Malpractice Claims Statute, and never sought to correct that mistake. Subsequently, Ms. Wilcox waived arbitration of her claim and filed a complaint in the Circuit Court for Howard County, alleging negligence, breach of contract, and loss of consortium. Dr. Orellano moved to strike Ms. Wilcox’s certificate of qualified expert and to dismiss Ms. Wilcox’s complaint. Before a hearing could be held on Dr. Orellano’s motion to dismiss, a stipulation of dismissal was signed by the attorneys for both sides and filed. The stipulation of dismissal simply stated: “The parties, by and through their respective attorneys, pursuant to Md. Rule 2-506(a), hereby stipulate and agree to the dismissal without prejudice of this action in its entirety against [Dr. Orellano].”
Less than two weeks later, Ms. Wilcox filed another claim with the Health Care Alternative Dispute Resolution Office against Dr. Orellano. With that claim Ms. Wilcox filed both a certificate of a qualified expert and the report from that expert, as she was required to do by § 3–2A–04(b). After waiving arbitration again, Ms. Wilcox filed a complaint in the Circuit Court for Prince George’s County, again alleging negligence, breach of contract, and loss of consortium. Dr. Orellano, once again, moved to dismiss, but this time on the grounds that Ms. Wilcox’s claim was now barred by the applicable statute of limitations. After a hearing, the Circuit Court for Prince George’s County granted Dr. Orellano’s motion to dismiss, concluding that Ms. Wilcox, having in effect “voluntarily dismissed” her action, was not entitled to re-file her claim under § 5-119, and that her claim was now barred by the relevant statute of limitations. Ms. Wilcox appealed.
Section 5–119(b) of the Courts and Judicial Proceedings Article permits a party, whose medical malpractice “action or claim” has been “dismissed once ... without prejudice,” because of that party's failure to attach a report of an attesting expert to the certificate of a qualified expert, to re-file that “action or claim,” so long as it is filed within 60 days from the date of dismissal, regardless of whether the statute of limitations has run. This “savings provision,” however, does not apply, under § 5–119(a), the so called “preclusion provision,” when the dismissal of the claim or action is a “voluntary dismissal of a civil action or claim by the party who commenced the action or claim.”
On appeal, Ms. Wilcox argued that the limitation imposed by the preclusion provision (§ 5–119(a)) on the savings provision (§ 5–119(b)), applied only to a unilateral voluntary dismissal, and not a bilateral dismissal, such as a voluntary stipulation. Dr. Orellano responded that the language of the preclusion provision (§ 5–119(a)) clearly covered a voluntary dismissal by stipulation, and that there was no reason to distinguish unilateral and bilateral voluntary dismissals.
The Court of Special Appeals noted that it was not entirely clear from the plain language of the statute alone whether a stipulation of dismissal signed by both parties to the controversy constituted a voluntary dismissal “by the party who commenced the action.” The Court found that any ambiguity disappeared, however, when the preclusion provision (§ 5–119(a)) was read in conjunction with Maryland Rule 2-506. Rule 2-506 states that a party, who has filed a claim, may voluntarily dismiss that claim in one of two ways: “unilaterally” by dismissing her claim before the adverse party files an answer or “bilaterally by filing a stipulation of dismissal signed by all parties to the claim being dismissed. Thus, a voluntary dismissal by stipulation, under Rule 2-506(a), is a voluntary dismissal by a “party who has filed a complaint.” To the Court, when § 5–119 was read in combination with Rule 2-506, it was clear that § 5–119 encompassed both unilateral and bilateral voluntary dismissals. Thus, because nothing in the legislative history of § 5–119 suggested a contrary conclusion, the Circuit Court of Prince George’s County correctly ruled that the voluntary dismissal of Ms. Wilcox's first claim by stipulation precluded a renewal of her claim, as the statute of limitations governing that claim had run. Accordingly, the Court affirmed the ruling of the Prince George’s County Circuit Court.
Wilcox v. Orellano, No. 1420 (Court of Special Appeals of Maryland, June 24, 2014), available at: http://www.mdcourts.gov/opinions/cosa/2014/1420s12.pdf
Submitted by: Marisa A. Trasatti and Richard J. Medoff, Semmes, Bowen & Semmes
Federal Court Permits Expedited Discovery to Identify Defendant in Alleged Copyright Infringement Case
In Malibu Media, LLC v. John Doe (No. 14-1324, U.S. Dist. Ct., Dist. of Columbia), the Court found that there was good cause for Plaintiff to serve a third party subpoena prior to the Fed. R. Civ. P. 26(f) conference in this case alleging copyright infringement. Plaintiff, Malibu Media, had filed an action against Defendant, John Doe, under the Copyright Act of 1976, alleging that Defendant used BitTorrent file sharing to copy and distribute Plaintiff’s copyrighted works. Plaintiff identified Defendant by his IP (“Internet Protocol”) address (a series of numbers assigned to each Internet service subscriber) and IP geolocation technology, and alleged that Defendant was using the BitTorrent file distribution network to access and distribute copyrighted movies owned by Plaintiff. Plaintiff had traced Defendant’s IP address to a physical address located within the District of Columbia, and sought relief against Defendant, but did not know Defendant’s identity. Plaintiff sought leave of the Court to serve a Rule 45 subpoena on John Doe’s Internet Service Provider (“ISP”), Comcast Cable, so that Plaintiff could learn Defendant’s identity so as to serve him with process. The Court determined that good cause existed to permit the expedited discovery and granted Plaintiff leave to serve the third party subpoena on Comcast prior to the Rule 26(f) conference.
The Court noted that a Plaintiff wishing to conduct expedited discovery prior to the Rule 26(f) Conference in order to learn the identity of putative defendants is in essence seeking jurisdictional discovery. Under Fed. R. Civ. P. 26(d), parties may generally seek discovery only after a Rule 26(f) conference, “except . . . when authorized by . . . court order.” Fed. R. Civ. P. 26(d)(1). However, a trial court has broad discretion to tailor discovery and dictate the sequence of discovery. To determine whether to authorize discovery prior to a Rule 26(f) conference in a particular case, the court applies a “good cause” standard.
Here, Plaintiff’s cause of action, tortious copyright infringement, was brought under a federal statute, the Copyright Act, which does not provide for the exercise of personal jurisdiction over alleged infringers. Thus, the Plaintiff must predicate the Court’s jurisdiction over the infringers on the reach of District of Columbia law. Personal jurisdiction might properly be exercised over Defendant John Doe if he or she is a resident of the District of Columbia or at least downloaded the copyrighted work in the District. The Court held that there was good cause to permit the expedited Rule 45 subpoena. First, the suit could not progress unless the Defendant was identified, and second, the Plaintiff had established a good faith basis for believing the putative Defendant may be a District of Columbia resident based on its use of IP address geolocation technology which was alleged to be consistently reliable. In sum, under the broad discretion granted by Fed. R. Civ. P. 26, the Court granted Plaintiff leave to serve a Rule 45 subpoena on the internet service provider, Comcast Cable, for the purpose of identifying the putative Defendant’s true identity, and prior to the Rule 26(f) Conference.
Malibu Media, LLC v. John Doe, No. 14-1324 (CKK) (U.S. District Court for the District of Columbia, August 15, 2014), available at: https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2014cv1324-8
Submitted by: Marisa A. Trasatti and Colleen K. O’Brien, Semmes, Bowen & Semmes
The U.S. District Court for the District of Maryland Denied Motion to Stay Under the Long and Real Truth Tests
In Rose v. Logan, the United States District Court for the District of Maryland denied Appellant’s Motion to Stay under both the Long and Real Trust tests. Appellant, Rainer T. Rose (“Rose”), sought relief from the sale of real property owned by the Debtor, Blackwater Enterprises, Inc. (“Blackwater”). This case arose out of Rose’s opposition to the sale of 9843 Wades Point Road, Claiborne, Maryland (“the Property”), the sole asset of Blackwater. Blackwater filed a voluntary petition for bankruptcy on August 23, 2012 under Chapter 11 of the United States Bankruptcy Code, later converted to a Chapter 7 proceeding with Sean Logan (“Logan”) designated as the Trustee for the estate. Logan filed a Motion to Sell the property in Bankruptcy Court, though Blackwater wanted the property sold at auction. Ultimately, the Bankruptcy Court granted Logan’s Motion to Sell. On August 26, 2013, Rose filed a Motion to Reconsider Sale of the property, arguing that Logan’s marketing efforts had been deficient; however, the Bankruptcy Court rejected the motion, as Rose’s argument had not been raised at the previous hearing.
Rose filed a timely appeal of the Bankruptcy Court’s ruling along with a Motion for Stay Pending Appeal in the Bankruptcy Court, though the latter was denied on December 17, 2013. On March 25, 2015, on appeal, the United States District Court for the District of Maryland found that the Bankruptcy Court did not err when it granted the Motion to Sell or when it denied Rose’s Motion to Reconsider; thus, it denied Rose’s appeal.
Rose appealed the March 25, 2015 order granting Trustee’s Motion to Sell Debtor’s Real Property to the United States Court of Appeals for the Fourth Circuit. In the interim, Rose filed a Motion for Stay Pending Appeal and Waiver of Supersedeas Bond or Alternatively to Establish a Bond (“Motion to Stay”) before this Court.
In its analysis, the court discussed the correct standard for motions to stay pending appeal. It observed that the Fourth Circuit had not recently devoted any attention to the standard, and, thus, the court endeavored to tease out the standard in light of previous decisions. The court looked to the standards set forth in two previous cases as guideposts, yet it noted that even the two “guiding” standards had been applied inconsistently across districts.
First, it took note of the Long standard for considering motions to stay. This standard, rooted in the holding of Long v. Robinson, 432 F.2d 977 (4th Cir. 1970), set forth a four factor sliding-scale test to guide courts considering motions to stay. Courts applying this test have looked to the Blackwelder standard, established in Blackwelder Furniture Co. Statesville, Inc. v. Seilig Manufacturing Co., 550 F.2d 189 (4th Cir. 1997), used for granting preliminary injunctions for instruction guided by the notion that both stays and preliminary injunctions are forms of preliminary equitable relief making similar standards appropriate.
The court then parsed out the four factors of the Long test. The test weighed the following four factors: (1) that the movant will likely prevail on the merits of the appeal, (2) that the movant will suffer irreparable injury if the stay is denied, (3) that other parties will not be substantially harmed by the stay, and (4) that the public interest will be served by granted the stay. Although courts employing the Long test evaluate the same four factors, they have differed in how they apply them. For instance, some courts apply the four factors on a sliding scale where the strength of one factor can compensate for the lack of another. In contrast, this court, and others, has required a showing of all four factors.
Second, the court considered the Real Truth standard primarily used to consider preliminary injunctions for additional guidance. Although established to assist courts considering preliminary injunctions, this court and other courts have looked to the test when considering a stay pending appeal. Under this test, the movant must satisfy each of the following four (4) requirements: (1) that he is likely to succeed on the merits, (2) that he is likely to suffer irreparable harm in the absence of preliminary relief, (3) that the balance of equities tips in his favor, and (4) that an injunction is in the public interest.
The court acknowledged that three (3) of the four (4) factors of the Real Truth standard paralleled those in the Long test. The third factor in each test differs. The Long test requires a party to show that other parties will not be substantially harmed by the stay, whereas the third factor of the Real Truth test calls on the movant to show that the balance of equities will tip in his favor. In assessing the latter, courts must balance the claims of injury while evaluating the impact of granting or withholding the requested relief on each party. The Real Truth also imposes a higher burden than the Long test in that it does not operate as a sliding scale, but requires the movant satisfy each of the four (4) factors in every application.
Given that the two tests are substantially similar, aside from the one factor, the court engaged in its analysis using both, and ultimately concluded that Rose could meet neither so as to merit a stay pending appeal.
First, the court assessed the first factor of both tests— the likelihood of success on merits. The court points to the procedural history of the case as an indication that the appellant’s claim did not appear likely to succeed. It recalled that the Bankruptcy Court made multiple findings of fact in favor of the appellee. It noted that Rose failed to offer little to counter the holdings of the Bankruptcy Court and as such, this court affirmed the Bankruptcy Court’s holdings on March 25, 2014. Additionally, the court observed that Rose lacked standing to bring an appeal to which Rose proffered no argument to the contrary.
Next, the court concluded that Rose also fell short of demonstrating that he would suffer irreparable harm as required by the second element of both tests. While the court conceded that the sale of the property at issue might harm Rose, it failed to accept such harm as an automatic showing of the requisite irreparable harm. The court then dismissed Rose’s contention that he would have no other recourse on appeal if the sale continued because Rose had an opportunity to object to the sale on prior occasions, yet he refrained. The court reasoned that it would not grant a stay where the appellant was the cause of the irreparable injury alleged.
The court then considered the third factors from both tests and concluded that Rose failed to meet either. Merging the factors from both tests, the court considered the injury to other parties (Long test) and the balance of equities (Real Truth test) concurrently. The court considered other parties who may have been vulnerable to an injury should the stay be granted. It reasoned that a stay would substantially injure creditors as it would delay the payments due by Rose and the Debtor. Concerning the balance of equities, the court concluded the balance weighed in favor of Logan as he needed to administer the estate and pay the creditors, rather than Rose who failed to demonstrate a threshold finding of irreparable harm.
Last, the court held that Rose failed to demonstrate that a stay pending appeal would serve the public interest. Rather, Rose based his claim on unsubstantiated accusations against the Trustee’s conduct during the sale. Rose did not offer any further evidence proving the stay of the sale of the property would further any public interest, but instead only focused on his personal stake in the matter.
Upon application of both the Long and Real Truth tests, the court concluded that the appellant failed to meet its burden under either test so as to warrant a stay pending appeal. As such, the court denied Rose’s Motion to Stay.
Rose v. Logan,No. RDB-13-3592 (D. Md., July 21, 2014), available at: http://www.mdd.uscourts.gov/Opinions/Opinions/Rose%20v.%20Logan%207-21-14%20Memo%20&%20order.pdf
Submitted by: Marisa A. Trasatti and Sarah M. Grago, Semmes, Bowen & Semmes