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Managing Ethical Risks Part 11

Finally, familiarity and complacency cause lawyers to mistreat those closest to them. People tend to treat those with whom they are in close relationships worse than they treat others. We see examples of this everyday in our families, in public, and in business settings. A child or spouse may speak to us in a way that they would never speak to one of their friends.  A first date gets dinner and a movie; a fourth anniversary may get a, "oh yeah, happy anniversary." A person that we have hired to perform a service may do so slower than promised, miss appointments, or otherwise behave in unsatisfactory ways that they would never reveal to a person who is considering hiring them, but has not yet done so. At work, people that work together closely may speak to each other in ways that they would never speak to other employees with whom they do not have a close a relationship.


The reasons behind this dynamic are probably as numerous as the experiences themselves. However, a common denominator is that people tend to take close relationships, and the people with whom they have them, for granted. They believe that they can count on such a person to stick around even if they are not giving them their best game.

Lawyers and clients with long-standing relationships are not immune to this dynamic. A lawyer with an urgent message from an existing client and a potential new client may return the latter's call first, taking for granted the existing client will understand. A client with too much to do may defer getting discovery responses back to a long-standing lawyer in favor of other projects, because he or she knows that the lawyer will understand and the client can count on a lawyer to get the work done even if left with little time to do it. Lawyers may find themselves placing a long-standing, “comfortable” client's work in a position of lower priority than that of a new client that the lawyer wants to impress.

In the attorney-client context, one can never tell whether a given manifestation of this dynamic will (i) have no consequence, (ii) sour but not sever a relationship, (iii) result in the loss of that relationship, or (iv) produce an unanticipated harm that may give rise to a malpractice claim.  From every perspective, not just a risk management perspective, it makes sense for a lawyer to be vigilant about treating long-standing clients with as much enthusiasm and with as high a degree of service as the lawyer would treat a new client that the lawyer is still trying to impress.

Real Estate Cooperative Was Not Contractually Required

 Real Estate Cooperative Was Not Contractually Required to Repair Unit Owner’s Pipes

Robinson-Huntley v. George Washington Carver Mutual Homes Association, Inc., Record No. 131065(Court of Appeals of Virginia, April 17, 2014), available at:

In this appeal, the Court considered whether a contract obligated a real estate cooperative to make certain plumbing repairs requested by Plaintiff.

Plaintiff Carol Robinson-Huntley inherited an interest in the George Washington Carver Mutual Homes Association, Inc. (“the Association”), a real estate cooperative created in 1949.  She executed a mutual ownership contract (“the Contract”) with the Association.  A paragraph of the Contract (“the Provide and Pay Provision”) required that “[t]he Association shall . . . provide and pay for property including the [m]ember’s dwelling,  except that the [m]ember shall make minor interior repairs and provide all interior and decorating.”

In 2011, Plaintiff began experiencing significant plumbing problems in her unit.  Deteriorated pipes needed to be replaced which would cost $6,000.  Plaintiff informed the Association but the Association refused to pay for the needed repairs.  Plaintiff filed a Complaint alleging that the Provide and Pay Provision obligated the Association to replace the pipes. 

Following a bench trial, the Court entered judgment for the Association on the Provide and Pay argument, finding that the Provide and Pay Provision did not obligate the Association to replace pipes.  Plaintiff appealed. 

The appellate court concluded that the Contract between Plaintiff and the Association was ambiguous, and so it consulted extrinsic evidence.  An earlier version of the Contract had included an explicit requirement to repair, which had been removed from the contract signed by Plaintiff.  Also, in a practical sense, Plaintiff was unable to prove that the Association had in the past made repairs similar to the kind that she sought.  Therefore, the appellate court affirmed the determination by the trial court that the Association was not obligated to replace the pipes.

Submitted by Marisa A. Trasatti and Colleen K. O’Brien, Semmes, Bowen & Semmes, Baltimore, Maryland

Comply with Federal and State Asbestos Regulations

"What Cleaning and Restoration Professionals Need to Know to Comply with Federal and State Asbestos Regulations"

Even as the use of asbestos in new materials has waned since the 1970s, it remains in countless products, buildings and materials. To protect employees from health hazards and to avoid potential civil liability and criminal penalties, everyone involved in the cleaning and restoration industry should be aware of the prevalence of asbestos at job sites.

The rules related to restoring a building containing asbestos are complicated and differ depending on a jobsite’s location. Contractors should familiarize themselves with the relevant laws and the specific local enforcement policies for a jobsite before engaging in such work.

The Environmental Protection Agency (EPA) and the U.S. Consumer Product Safety Commission have banned several asbestos products, and many manufacturers have since voluntarily limited the use of asbestos. Nevertheless, it remains present throughout the country, particularly in buildings constructed before 1980. It is commonly found in insulation, floor tiles, ceiling tiles, roofing, paints and coating materials, fireproofing, and many other materials.

Products can contain widely varying concentrations of asbestos, ranging from 100 percent to trace amounts. Products with less than one percent of asbestos generally are not treated as asbestos for regulatory purposes.

In the past few decades, federal and state governments have enacted complicated regulatory regimes by which asbestos abatement is governed. Everyone in the cleaning and restoration industry should understand and comply with these rules or be prepared to face significant fines, civil liability and even criminal penalties. Before starting a project that might disturb asbestos, company owners and managers must be familiar with the full range of federal and state (and even local) regulations that govern licensing, certification, notification, worker safety, and disposal.

The federal government regulates asbestos exposure in buildings chiefly through two agencies, the Occupational Safety and Health Administration (OSHA) and the EPA. OSHA sets standards for worker protection involving construction, including the renovation or demolition of buildings, while the EPA sets broader standards to protect workers and the environment from asbestos. Restoration contractors need to comply with regulations promulgated by both agencies when working at a job site where that asbestos-containing material (ACM) may be present.

In addition to federal asbestos requirements under OSHA and the EPA, contractors must consider often-overlapping requirements at the state level. Each state has its own rules, and asbestos-related regulations can differ significantly. Contractors must review the laws of the state where the job site is located and determine what regulations apply.

The legal system is no substitute for the training, diligence and integrity needed to ensure that asbestos health hazards are properly handled. Before engaging in any work that could impact asbestos, it is important to understand the specific scope of the work to be performed, the governmental regulations that apply to your business and the applicable industry standards of care.

Consult with licensed asbestos professionals to ensure compliance with the applicable regulations. Most importantly, take the necessary steps to protect workers, as well as yourself, and be sure to comply with the restoration industry’s code of ethics.

(This post was adapted from a two-part article in Cleaning & Restoration magazine.  Authored by David M. Governo and Colin N. Holmes, Part 1 originally appeared in the March/April 2014 issue and Part 2 appeared in the May 2014 issue.)

Removal of safety guard was not a modification

Removal of safety guard was not a “modification” of product where guard had been previously rendered useless through normal wear and tear.

Plaintiff, a 16-year old girl, was assisting her father in using a tractor-driven digger to drill post holes in her yard. Plaintiff’s step-father, Gary Hoover, had borrowed the digger from a family friend, Smith, but was not aware that Smith had previously removed a safety shield from the gearbox and never replaced it.   While assisting her stepfather, Plaintiff’s jacket was caught by a nut on the rotating drive line which dragged Plaintiff into the gearbox.  Plaintiff suffered severe injuries including severing her arm  above the elbow.   Plaintiff brought suit against the manufacturer of the digger and the manufacturer of the missing safety guard for products liability.  Plaintiff also filed a complaint against Smith for removing and failing to replace the shield, which the court consolidated after the manufacturers filed third-party actions against Smith. 

At the close of discovery, the Defendants moved for summary judgment, claiming that under New York law, they were not liable, because Smith made post-sale modifications.  Defendants argued that the digger was safe when sold, and Smith’s alterations of removing the shield and not replacing it made the product dangerous.  The Defendants further argued that Smith misused and abused the machine letting the shield come into contact with the ground with such force as to cause it to become damaged.

 The Plaintiff responded with an affidavit from her expert in support of her position that the digger contained manufacturing defectives despite Smith’s removal of the shield. The shield protected the user from the gearbox, but had broken on Smith’s machine during “normal” usage when the digger would get stuck and pull the shield into the ground, causing it to break.  All parties agreed the accident would not have occurred if the shield had been in place.  Plaintiff argued that the digger’s shield should have been designed to either last the life of the machine, or prevent usage when it was removed to prevent misuse.  Further, the shield was “inadequately tested” and “not reasonably safe,” according to Plaintiff’s expert, because it failed after two to three years of “normal use,” during which it was foreseeable that the shield would contact the ground and become damaged. Plaintiff also alleged that it was reasonably foreseeable by the manufacturer that the user would remove the shield when it was broken and not replace it.

 The trial court held that the Plaintiff had met its burden to overcome summary judgment and permitted the case to go to trial on the product liability counts.  At the conclusion of the trial, the jury found in Plaintiff’s favor and awarded her $8,811,587.29, and apportioned liability:  35 percent to the digger distributor, 30 percent to manufacturer of the digger, and 30 percent to Smith, 3 percent to the Plaintiff’s stepfather, and 2 percent to the seller of the digger.  The other defendants had settled the claims against them on the third day of trial.  The Defendants moved to have the verdict set aside, which the trial court denied.  The Defendants timely appealed to the Appellate Division, who affirmed the trial court’s holding on the motion for summary judgment.   The Defendants thereafter appealed to the Court of Appeals of New York.

 To begin its analysis, the Court of Appeals reviewed New York’s law regarding products liability claims.   When a plaintiff is injured by a defectively designed product the manufacturer and others in the chain of distribution are held strictly liable.  “[A] defectively designed product is one which, at the time it leaves the seller’s hands, is in a condition not reasonably contemplated by the ultimate consumer and is unreasonably dangerous for its intended use,” and “whose utility does not outweigh the danger inherent in its introduction into the stream of commerce.”  However, a manufacturer’s liability will be severed if the consumer makes substantial materials alterations or modifications to the product, thus making it unsafe.   The manufacturer’s obligation was to put a

 The Court then held that Plaintiff had presented evidence sufficient to defeat summary judgment based on the substantial modification defense, as there was evidence that the damaged shield was removed because it failed to provide protection from the rotating gears.  While the court disagreed with the Plaintiff that “no safety device is reasonably safe unless it is designed to last the lifetime of the product on which it is installed, defendants did not adequately refute Plaintiff’s assertions that the plastic shield failed prematurely under the circumstances presented here.”   The Court further held that Defendants had failed to show that they were entitled to judgment as a matter of law on the basis that Smith’s misuse was unforeseeable or that Smith’s failure to replace the shield was a substantial modification, absolving Defendants of liability. Notably, the court observed that “this may have been a different case if defendants had established as a matter of law that the shield was reasonably designed yet expected to wear and required replacement prior to the accident.”  The Court affirmed the Appellate Divisions holding.

 Judge Smith dissented and argued that the case of Robinson v. Reed-Prentice Division of Package Machinery Company, 49 N.Y.2d 471 (1980), was controlling and directly on point.  Defendant Smith’s act of removing a safety device, in violation of the warnings on the machine and in the manual, was a substantial alteration under Robinson.   The Defendants were only obligated to “use reasonable care to design a product that is safe at the time it leaves the manufacturer’s hands. A manufacturer is not liable for dangers created by substantial alterations to the product thereafter.   That principle should have controlled this case.”

 Submitted by: Marisa A. Trasatti and Gregory S. Emrick, Semmes, Bowen & Semmes, Baltimore, Maryland

Recent Developments in Court Decisions on E-discovery Issues

The duty to preserve and collect data that may be discoverable once litigation is reasonably anticipated is well established.  The following are highlights form recent Court decisions affecting the eDiscovery process. In Riley v. City of Prescott,Arizona, CV-11-08123-PCT-JAT (D. Ariz. Feb 18, 2014), Judge James Teilborg granted Plaintiff’s Motion for Discovery sanctions against the City of Prescott in the form of a spoliation instruction to the jury.  The Court found that the City of Prescott became obligated to preserve emails between city employees and Plaintiff’s employer prior to the date plaintiff first publicized his protest against the City.  From the facts presented, the Court found that multiple emails potentially relevant to the litigation were deleted from the Mayor of Prescott’s city-assigned email account and spoliation of those emails had occurred.  The City argued that there was no evidence emails were deleted, except in the exercise of normal City practice and this did not constitute destruction with any culpable state of mind.  But the Court found that Prescott’s Mayor acted willfully and in bad faith when he continued to refuse production of email accounts and these emails were thereafter deleted.  Plaintiff established, through a subpoena to Google, the existence of nine emails which indicated that Prescott’s Mayor was corresponding with his assistant during a critical period prior to the litigation and that the Defendant produced none of these emails.  The Court found that an adverse inference instruction was warranted to the extent Defendant’s spoliation affected Plaintiff’s ability to prove her claim.

In McCann v. Kennedy Universal Hospital, Inc., 2014WL282693 (D.N.J. January 24, 2014), Judge Joel Schneider was faced with a Motion for Sanctions from Plaintiff because of Defendant’s alleged failure to preserve emergency room lobby surveillance footage.  Plaintiff claimed that he arrived at the Defendant’s hospital in great pain and was left untreated for hours.  He alleged that the hospital staff left him lying on the floor for more than ten minutes after he entered the emergency room.  The following day, Plaintiff emailed the hospital threatening to sue for unfair and inhumane treatment.  Plaintiff filed suit against the hospital and requested production of the emergency room surveillance camera footage.  The hospital had erased the footage claiming that this was the normal course of business.  Plaintiff claimed the hospital spoliated evidence.  Judge Schneider determined that Defendant did not have a duty to preserve the surveillance footage because Plaintiff’s email did not trigger the hospital’s duty to maintain this evidence.  The Court found that Plaintiff’s email only indicated that he “intended to sue.”  Id at 6.  Judge Schneider determined that Defendant did not erase the footage in bad faith or with the intent to destroy relevant evidence.  Id at 7.

In Calderon v. Corporation Puertorrique a De Salud, 2014WL171599 (D.P.R. January 16, 2014), United States District Court Judge Francisco Besosa granted Defendant’s Request for a Spoliation instruction based on Plaintiff’s admission that he deleted text messages and failed to produce approximately thirty eight relevant text messages which Defendant obtained by subpoenaing Plaintiff’s mobile carrier.  The Court determined that Plaintiff intentionally spoliated evidence because he failed to produce and/or deleted text messages amounting to a conscious abandonment of potentially useful evidence which may have been unhelpful to his case.

Finally, District Court Judge David Bury entered summary judgment against Defendant as a spoliation sanction in Slep-Tone Entertainment Corp. v. Granito, 2014WL65297 (D. Ariz., January 8, 2014).  Plaintiff had requested that Defendant produce computer hard drive information containing karaoke tracks which Plaintiff alleged contained approximately 150,000 counterfeit tracks.  Defendant claimed that the hard drives could not be produced because they had been wiped clean one to two months prior to the lawsuit.  Plaintiffs sought, as a sanction, summary judgment against Defendant because of the alleged spoliation.  Defendant filed a counter motion for summary judgment on grounds that Plaintiff could not prove he possessed counterfeit karaoke tracks.  Judge Bury entered summary judgment in favor of Plaintiff stating that Defendant had control over the evidence, had a duty to preserve the hard drives once he was served with the Complaint, and that Defendant had a culpable state of mind when he utilized specialized software to completely wipe the drives clean of information.

By: William G. Caravetta, Partner at Jones, Skelton & Hochuli, PLC
Bill Caravetta handles both national and state-wide bad faith class action litigation, bad faith litigation, insurance coverage disputes, coverage opinions and complex civil litigation. Mr. Caravetta has substantial experience in advising corporate risk managers on insurance coverage issues, indemnity agreements and risk transfer options through commercial contracts. 

Exceptionally Deferential Standard of Reviews

Fourth Circuit Applies “Exceptionally Deferential” Standard of Review to District Court’s Award of Attorneys Fees and Costs to Defendant Under Lodestar Analysis Best Medical International v. Eckert & Ziegler Nuclitec GmbH, Case No. 13-1708 (April 8, 2014), available at

In Best Medical International v. Eckert & Ziegler Nuclitec GmbH,the Fourth Circuit was asked to determine whether the district court properly granted fees and costs to Eckert & Ziegler Nuclitec GmbH (“EZN”), the prevailing party in its litigation against Best Medical International, Inc. and Best Vascular, Inc. (collectively “Best”), by applying the required analysis under Johnson v. Ga. Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974).  Applying an “exceptionally deferential” standard of review to the district court’s decision, and after a thorough review of the record, the Fourth Circuit affirmed the district court’s judgment for Defendant, EZN.

In 1999, AEA Technology-QSQ GmbH (“QSA”) entered into a manufacturing agreement with one of Best’s predecessors. Under that agreement, QSA was to manufacture “sources” or “source trains” of strontium and sell that product to Best’s predecessor. At the end of that contract, Best was obligated to decontaminate and decommission QSA’s manufacturing production lines in Germany used to make these sources.  Best failed to decontaminate the manufacturing line as agreed, so QSA sued to enforce the contractual covenant.  QSA and Best settled QSA’s suit under a 2008 Settlement Agreement that provided Best was to complete its decontamination work by a certain date and post a performance bond.  Best was also required to buy minimum orders of “source trains” that met defined specifications.  Furthermore, the Settlement Agreement provided that “the prevailing party [would] be entitled to recover . . . reasonable attorneys’ fees and costs incurred” in “any litigation” “brought for breach” of the agreement.

The Settlement Agreement soon unraveled. Best did not timely perform the required decontamination work, which caused EZN (having acquired QSA in 2009) to notify Best in 2010 that it planned to do the work at Best’s expense.  Best also did not post the performance bond.  For its part, Best complained that EZN was producing strontium sources that did not meet the specifications found in the parties’ original manufacturing agreement.  Best then initiated a lawsuit raising three (3) principal complaints: (1) that EZN was equitably estopped from conducting the decontamination and decommission task and from disposing of the production line in the course of decontaminating and decommissioning the production line; (2) that EZN breached the Settlement Agreement by not cooperating with Best; and (3) that EZN breached the Settlement Agreement by not providing Best with source trains and sources that met the specifications of the original Manufacturing Agreement.  Best Med. Int’l, Inc. v. Eckert & Ziegler Nuclitec GmbH, 505 F. App’x 281, 283 (4th Cir. 2013).  Best sought certain injunctive relief (including an injunction to stop EZN from breaking the line down), sought “any monetary damages that [Best] sustained as a result of [EZN]’s actions,” and sought a refund of payments that it made for the supposedly “non-compliant” sources.  The parties agreed that Best’s requested relief would have been valued at no less than $8 million.

In response, EZN filed a four-(4) count compulsory counterclaim under Federal Rule of Civil Procedure 13, alleging: (1) that Best breached the Settlement Agreement by failing to post a performance bond; (2) that Best breached the Settlement Agreement by failing to decontaminate and decommission the production line; (3) that Best fraudulently induced EZN to enter into the Settlement Agreement; and (4) that EZN should be awarded declaratory relief stating that Best had defaulted under the Settlement Agreement and that its default relieved EZN from any obligation to dispose of sources. Best Med., 505 F. App’x at 283.

Upon cross motions for summary judgment, the district court ruled largely for EZN.  See Best Med. Int’l., Inc. v. Eckert & Ziegler Nuclitec GmbH, No. 1:10-cv-617, 2011 WL 3951675 (E.D. Va. Sept. 7, 2011).  The district court held that Best had not adequately established any of its claims. Further, the court determined that two (2) of the four (4) EZN counterclaims had not been shown.  As to EZN’s second counterclaim, the court concluded that Best had defaulted on its obligation under the Settlement Agreement to decommission and decontaminate the German production lines, but found that any damages claim should be arbitrated?under an arbitration clause in the Settlement Agreement?once EZN completed its own cleanup efforts.  The district court dismissed the declaratory judgment count as “moot” because the court had “ruled on all points raised” in that count. Id. at *7.

EZN and Best each moved for attorneys’ fees and costs under the Settlement Agreement. After determining that EZN was the prevailing party, the district court proceeded to determine an appropriate amount of attorneys’ fees and costs.  The district court began by detailing the appropriate lodestar analysis—i.e., multiplying the number of reasonable hours by a reasonable fee.  The district court acknowledged that it was to assess reasonableness by looking to the twelve (12) factors in Johnson v. Hugo’s Skateway, 974 F.2d 1408, 1418 (4th Cir. 1992). Second, the district court explained that it was to deduct fees for time spent on unsuccessful claims.  Third, the district court stated that it was to award some percentage of the remaining fees to account for the degree of success enjoyed by the prevailing party.  Applying this analysis, the district court then awarded EZN attorneys’ fees of $584,735.08 and costs of $32,892.61.

In the initial appeal, the Fourth Circuit affirmed all of the district court’s decisions except as to attorneys’ fees and costs.  The appellate court concluded that EZN’s fees and costs request “might be unreasonably excessive in the absence of an analysis of the applicable factors,” which the district court had conducted “only in the most conclusory manner.”  Best Med., 505 F. App’x at 284.  Therefore, the Fourth Circuit vacated the fee and cost award so that the district court could fully consider the Johnson factors on remand.  Thereafter, the district court awarded EZN all of its requested fees and costs after the voluntary reductions, under Johnson, were applied. 

On appeal from the district court for a second time, the Fourth Circuit explained that the standard of review in an appeal from an award of attorneys’ fee is “exceptionally deferential,” as it applies a “sharply circumscribed” version of the Court’s traditional abuse-of-discretion standard.  Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235, 243 (4th Cir. 2009).  Under that standard, “the fee award must not be overturned unless it is clearly wrong.” Id.  In addition, “[the Court] will not ordinarily disturb the award even though [it] might have exercised th[e] discretion [to award fees] quite differently.” Johnson, 974 F.2d at 1418 (quotation marks omitted).  The appellate court noted that under this standard of review, Best had a heavy burden to present a case on appeal that warrants our overturning the district court’s determinations.  Further, the Fourth Circuit stated that not only would another reversal continue this long-running dispute, but it would also invite future litigants to transform their attorneys’ fees disputes into standalone pieces of major appellate litigation.  According to the Court, encouraging this sort of never-ending review would conflict with one (1) of the most often repeated maxims in the attorneys’ fee context: “[a] request for attorney’s fees should not result in a second major litigation.” Hensley v. Eckerhart, 461 U.S. 424, 437 (1983).  Keeping this deferential standard of review in mind, the appellate court turned to the merits of the dispute.

The Court opined that, “The proper calculation of an attorney’s fee award involves a three-step process.”  McAfee v. Boczar, 738 F.3d 81, 88 (4th Cir. 2013).  “First, the court must determine the lodestar figure by multiplying the number of reasonable hours expended times a reasonable rate.”  Id. (quotation marks omitted).  At this step, the court should consider the Johnson factors:

(1) The time and labor expended, (2) the novelty and difficulty of the questions raised, (3) the skill required to properly perform the legal services rendered, (4) the attorney’s opportunity costs in pressing the instant litigation, (5) the customary fee for like work, (6) the attorney’s expectations at the outset of the litigation, (7) the time limitations imposed by the client or circumstances, (8) the amount in controversy and the results obtained, (9) the experience, reputation, and ability of the attorney, (10) the undesirability of the case within the legal community in which the suit arose, (11) the nature and length of the professional relationship between attorney and client, and (12) attorneys’ fees awards in similar cases.

Johnson, 488 F.2d at 88 n.5.  Second, the court “must subtract fees for hours spent on unsuccessful claims unrelated to successful ones.”  McAfee, 738 F.3d at 88 (quotation marks omitted).  Third, and finally, the court “should award some percentage of the remaining amount, depending on the degree of success enjoyed by the [party].”  Id. at 88 (quotation marks omitted).  

After carefully reviewing the record and the parties’ arguments, the appellate court found no basis to reverse the district court’s determination that the attorneys’ fee award was reasonable.  Rather, the Fourth Circuit observed that the district court applied the correct legal and factual criteria.  Best did not raise any objection to half of the lodestar analysis?the reasonableness of the rates of EZN’s counsel?but instead directed many of its objections to the reasonableness of EZN’s claimed hours.  Finding that the district court carefully applied the Johnson factors to measure the reasonableness of those hours and appropriately determined that they reflected an exercise of billing judgment, the Fourth Circuit affirmed the district court’s judgment on attorneys’ fees and costs.

Submitted by Marisa A. Trasatti and Jhanelle A. Graham, Semmes, Bowen & Semmes, Baltimore, Maryland

Managing Ethical Risks Part 10

Familiarity and complacency makes lawyers chatty.

The more you know about something, and the longer you know it, the more a part of you it becomes. The more a part of you something becomes, the more likely it is to find its way into ordinary conversation and other communications. In the legal community, this can happen with respect to information about clients of whom a lawyer is particularly proud, details of particularly interesting matters, or circumstances that produced an exceptional result.


Lawyers generally are "on guard" about protecting the attorney-client and work product privileges, but many do not understand – much less honor – their entirely separate and broader obligation to treat as confidential all information relating to a representation, regardless of whether that information is also "privileged." The nature and scope of this obligation is described in Rule 1.6:


Rule 1.6 Confidentiality Of Information


(a) A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b).


(b) A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary:


(1) to prevent reasonably certain death or substantial bodily harm;


(2) to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer's services;


(3) to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client's commission of a crime or fraud in furtherance of which the client has used the lawyer's services;


(4) to secure legal advice about the lawyer's compliance with these Rules;


(5) to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge or civil claim against the lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer's representation of the client; or


(6) to comply with other law or a court order.




[3] The principle of client-lawyer confidentiality is given effect by related bodies of law: the attorney-client privilege, the work product doctrine and the rule of confidentiality established in professional ethics. The attorney-client privilege and work-product doctrine apply in judicial and other proceedings in which a lawyer may be called as a witness or otherwise required to produce evidence concerning a client. The rule of client-lawyer confidentiality applies in situations other than those where evidence is sought from the lawyer through compulsion of law. The confidentiality rule, for example, applies not only to matters communicated in confidence by the client but also to all information relating to the representation, whatever its source. A lawyer may not disclose such information except as authorized or required by the Rules of Professional Conduct or other law. See also Scope.


A lawyer that obtained a great result for a client in a matter may nonetheless face a malpractice claim if the lawyer improperly divulges information relating to the representation that somehow harms the client. The ways in which this may happen are limited only by the limits of one's imagination.


Next: Mistreating Those Closest

Learned Intermediary Doctrine Bars Plaintiff's Claim

Learned Intermediary Doctrine Bars Plaintiff’s Claims Against Zyprexa Manufacturer

 In Boehm v. Eli Lilly & Co., No. 13-1350 (8th Cir., Mar. 10, 2014), Plaintiff Timothy Boehm’s doctors prescribed him Zyprexa, an antipsychotic drug manufactured and sold by Defendant Eli Lilly & Company (“Eli Lilly”), to treat his bipolar disorder from January 2003 until March 2007, when he developed symptoms later diagnosed as tardive dyskinesia (“TD”)—an involuntary movement disorder long-recognized as a side effect of antipsychotic drugs.  Plaintiff brought an action against Eli Lilly asserting personal injury and product liability claims, and the case was removed by Eli Lilly from state court to federal court.  The district court granted summary judgment dismissing the failure-to-warn claim, applying the Arkansas learned intermediary doctrine, and concluding that Eli Lilly adequately warned Plaintiff’s treating and prescribing physicians of the risk of developing movement disorders like TD.  The learned intermediary doctrine provides that a drug manufacturer may rely on the prescribing physician to warn the ultimate consumer of the risks of a prescription drug so long as the warnings provided by the manufacturer are reasonable.  The physician acts as the ‘learned intermediary’ between the manufacturer and the ultimate consumer.  Plaintiff appealed the summary judgment order, including the district court's decision to exclude expert testimony that fifteen percent of Zyprexa users will develop TD after three years of use.

 With respect to the learned intermediary issue, Eli Lilly presented evidence that its FDA-approved package insert for Zyprexa expressly warned about the risk of developing TD.  Two (2) of Plaintiffs’ treating doctors who prescribed him with Zyprexa had the practice of either reading the product’s package insert or the Physicians’ Desk Reference (which contains package insert information), prior to prescribing any product.  Both doctors also testified in deposition that they learned about Zyprexa's side effects from their own clinical experience and from speaking with their colleagues.  Both doctors testified that an alternative warning about the risk of movement disorders would not have changed their decisions to prescribe Zyprexa to treat Boehm's bipolar disorder.  Based on the express TD warning it gave all physicians, and the testimony of Plaintiff's prescribing physicians that they read the warning and considered it adequate in deciding to prescribe Zyprexa, Lilly moved for partial summary judgment on the failure-to-warn claim, relying on the learned intermediary doctrine.

 Plaintiff opposed on grounds that Eli Lilly failed to adequately warn physicians of the risk of developing TD after long-term use of Zyprexa.  Plaintiff focused on additional deposition testimony by Plaintiff’s doctors.  After the first doctor described certain side effects that can occur with long-term Zyprexa use, he was asked by Plaintiff’s counsel whether he was aware that fifteen percent of those who have taken a drug such as Zyprexa, for three years, developed TD.  The first doctor responded that he was aware of this statistic.  The second doctor stated that he never received this information, and that had he known it, he would not have prescribed Zyprexa for Plaintiff for as long as he did. 

 After initial briefing, the district court concluded that the testimony by the second doctor on the fifteen percent risk figure, if supported, could create a triable issue as to the adequacy of Eli Lilly’s TD warning.  Since the physician did not offer the fifteen percent risk figure on his own and it was part of a leading question, the Court asked for supplemental briefing about whether the alleged fifteen percent risk figure was supported by scientific evidence that would be admissible under Daubert.  Plaintiff offered an affidavit by his expert supported by a blog post and a website advertising, which the trial court determined were a deficient foundation to support the expert’s opinion under Daubert.  Although Plaintiff’s second supplement was a peer-reviewed study from a well-respected journal, the Court reasoned that it was not designed to establish a risk of a particular drug, like Zyprexa, but only the risk of a class of drugs to which Zyprexa belonged.  There was too great an analytical gap to extract from the study the fifteen percent incidence rate the doctor said would have changed his prescribing decisions, so the Court excluded all evidence of that risk percentage under Daubert. The court then granted summary judgment dismissing Plaintiff’s failure-to-warn claims because there was no genuine issue of material fact as to the adequacy of Eli Lilly's TD warnings.

 The appellate court agreed and affirmed.  The district court reasonably concluded that Plaintiff had not provided sufficient scientific support for the fifteen percent-risk opinion and so the fifteen percent-risk opinion was properly excluded under Daubert.  Furthermore, the district court properly applied the learned intermediary doctrine to dismiss the failure to warn claim.  Finally, the appellate court held that even if Arkansas were to recognize the “overpromotion” exception to the learned intermediary doctrine, the Plaintiff failed to prove that Eli Lilly overpromoted Zyprexa, that its promotional efforts negated the written warnings, or that these promotional efforts had any effect on the decisions by Plaintiff’s doctors to prescribe Zyprexa for the continued treatment of Plaintiff’s bipolar disorder. Therefore, the district court properly granted summary judgment in favor of the Defendant, Eli Lilly.

 Boehm v. Eli Lilly & Co.       decided 3/10/14

U.S. Court of Appeals for the Eighth Circuit

 Submitted by Marisa A. Trasatti and Colleen K. O’Brien of Semmes, Bowen & Semmes, Baltimore, Maryland

Amicus Brief--Removal is Important

I'm pleased that the Federation of Defense & Corporate Counsel is weighing in on the importance of out-so-state defendants being allowed to remove cases from state to federal court.    This is an essential right guaranteed in the U.S. Constitution.  However, some courts are attempting to restrict the opportunity to remove cases.  In the case of Dart Cherokee Basin Operating Company v. Owens, the U.S. Court of Appeals for the 10th Circuit affirmed the remand of a removed case citing a so-called "presumption again removal."   The FDCC does not believe there is any such presumption against removal.  Accordingly, the FDCC has joined the Washington Legal Foundation and the International Association of Defense Counsel in urging the U.S. Supreme Court to reverse the 10th Circuit decision, which has the effect of restricting an out-of-state defendant’s ability to remove a case to federal court.   Their amicus brief argued that there is no “presumption against removal,” as stated by the 10th Circuit.   Removal should be permitted and encouraged in appropraite cases, and there should be no restriction on the right to remove based on a claimed "presumption."  

Removal is a right to be preserved.   Congress supported this principle when it adopted the Class Action Fairness Act, which allows for the removal of most large class actions filed in state courts.   The presumption against removal is not supported by Constitutional interpretation, Congressional action or Supreme Court precedent. 

The FDCC’s Amicus and Public Policy Committee, chaired by Stacy Broman, looks for opportunities for the FDCC to participate in matters, like the present case, where the interests of fairness and justice can be advanced.  I am hopeful that the U.S. Supreme Court will grant cert and correct the foundational errors committed by the lower courts. 

Link to Amicus Brief

Sixth Circuit-Good Deeds Should Go Unpunished

Common sense prevailed in Bickley v. Dish Network, LLC, when the Sixth Circuit affirmed a district court's grant of summary judgment to Dish after it was sued under the Fair Credit Reporting Act by a consumer whom it had prevented from becoming a victim of identity theft.  After a prospective Dish customer attempted to use Bickley's identity fraudulently to apply for Dish service through a Dish retailer, the company requested a credit report for the identity thief. When the credit request returned a result of "Declined No Hit," Dish declined service and notified Bickley that someone had attempted to open an account in his name, even going so far as to provide him with a copy of the recorded conversation between the identity thief and a Dish representative.  To show his gratitude for the thwarted identity theft attempt, Bickley sued Dish under the Fair Credit Reporting Act for requesting and using his credit report without a "permissible purpose."  The district court granted summary judgment in favor of Dish and the Sixth Circuit affirmed, finding that Dish used the report for a permissible purpose because it had a legitimate business need to verify the eligibility of applicants for its service.  The court additionally noted that companies should not be punished for preventing identity theft, bringing full circle Judge McKeague's stated opposition to the axiom that "no good deed should go unpunished."  - Submitted by Wesley P. Page and Michael Bonasso of Flaherty Sensabaugh Bonasso PLLC

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