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Owner Has a Right to Royalties

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

Sue First- Ask Questions Later

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.  

Claims for overtime wages

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

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

Joint Dismissal Renders Savings Provision Unavailable

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 athttp://www.mdcourts.gov/opinions/cosa/2014/1420s12.pdf

Submitted by:  Marisa A. Trasatti and Richard J. Medoff, Semmes, Bowen & Semmes

Alleged Copyright Infringement Case

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

Motion to Stay Under Long and Real Truth Tests

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.[1]  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     

Foreign Manufacturer May be Subject to Personal Jurisdiction

A Foreign Manufacturer May be Subject to Personal Jurisdiction in the United States Under the “Stream of Commerce” Theory Where It Is Closely Affiliated with Its Intermediary Distributer

In Valichka v. Kettler Int’l, Inc., et al., the United States District Court for the District of Maryland denied Defendant’s Motion to Dismiss for Lack of Personal Jurisdiction.  Plaintiff William Valichka (“Valichka”) sued Defendants Kettler International, Inc., (D/B/A “Kettler USA”) and Heinz Kettler GmbH & Co. KG (“Heinz”) for negligence and strict product liability, alleging that a defective plastic folding chair manufactured and distributed by the Defendants injured him.  Valichka is a New Jersey resident, but he sustained injuries from the allegedly defective chair while on his yacht docked in St. Michael’s, Maryland.  Neither Defendant is a resident of Maryland.  Kettler USA, the distributor, is a Virginia corporation and Heinz is a German corporation.  Heinz moved to dismiss the claim against it on the basis of lack of personal jurisdiction.  The court denied Defendants’ Motion to Dismiss for it concluded that the Plaintiff had made a prima facie showing that Heinz was subject to personal jurisdiction.  

In reaching its conclusion, the court first considered the fundamental requirements for a finding of personal jurisdiction.  First, it must be authorized by the forum state’s long arm statute.  Next, the court’s exercise of personal jurisdiction must be consistent with due process.  The court noted that the plaintiff need only make a prima facie showing of personal jurisdiction to survive a Motion to Dismiss.  Further, it explained that it must make all reasonable inferences and resolve all factual disputes in favor of the Plaintiff.  

The court found that the Plaintiff adequately identified the Maryland long arm statute, albeit not explicitly, to satisfy the requirements for a finding of personal jurisdiction.  Although the court recognized that it is preferable for plaintiffs to identify the statute authorizing jurisdiction in its complaint or response to a Motion to Dismiss, here, the court found that the plaintiff used language that mirrored that of the Maryland statute.  The Plaintiff alleged that the Defendants “suppl[ied] and/or contract[ed] to supply goods, services and/or manufactured products in Maryland and derive[d] substantial revenue from the sale of goods and/or manufactured products, used, consumed, or purchased in Maryland.”  Similarly, the Maryland long arm statute grants a court personal jurisdiction over a person who “regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from goods, food services, or manufactured products used or consumed in the State.”  Thus, the court concluded that the Plaintiff sufficiently identified the statute, even though he failed to reference it specifically.

Next, the court concluded that a finding of personal jurisdiction over Heinz would not offend due process requirements of the Fourteenth Amendment.  It underscored that due process requires that a nonresident defendant have “certain minimum contacts” with the forum state “such that the maintenance of the suit does not offend ‘traditional notions of fair place and substantial justice.’”  Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotations omitted).  To discern whether the Defendants had sufficient minimum contacts, the court considers the number and relationship of their contacts to the forum state and the nexus between the contacts and the pending cause of action.

Although Defendant Heinz contended that he lacked sufficient minimum contacts, the court found that the Plaintiff made a prima facie showing that Heinz was subject to personal jurisdiction before the court.  Heinz argued that he had no connection to Maryland as he manufactured the products in Germany and then sold the products to a separate corporate entity, Kettler USA and, thus, he did not receive any revenue from product sales in Maryland.  Instead, Kettler USA, controlled which markets the product entered.  In contrast, the Plaintiff argued that Heinz had sufficient minimum contacts.  First Plaintiff posited that Heinz used Kettler USA as an intermediary to market and sell its product in Maryland.  Additionally, Plaintiff offered proof of Defendant’s internet website that indicated at least some of the goods were manufactured in Virginia, not Germany.

Interpreting the facts presented in the light most favorable to the non-moving party, the court concluded that the Plaintiff demonstrated that Heinz subjected himself to jurisdiction in Maryland by way of the “stream of commerce” theory of personal jurisdiction.  Under this theory, a foreign manufacturer may be subject to personal jurisdiction if it “delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum state” even though it may lack direct contact with that state.  World-Wide Volkswagen Corp., 444 U.S. 286 (1980)(emphasis added).  The court echoed the warning of the Supreme Court by noting that the mere foreseeability that a product may appear in the forum state does not trigger personal jurisdiction.  (citing J. McIntyre Mach., Ltd. v. Nicastro, ___ U.S.___, 131 S.Ct. 2780 (2011)). The contact must not be fortuitous, but intended and purposeful.  Copiers Typewriters Calculators, Inc. v. Toshiba Corp., 576 F.Supp. 312, 320 (D. Md. 1983).

In an effort to determine whether Defendant’s contacts with Maryland were sufficiently purposeful, the court considered the facts of a similar case.  It found the facts of Copies Typewriters Calculators, Inc. sufficiently analogous to provide guidance.  In Copies, this court found that a Japanese manufacturer, Toshiba, that distributed products in the United States by way of a wholly-owned subsidiary, intended its products to reach the United States.  While Toshiba did not enter the forum state, this court found that Toshiba intended its products to reach the forum state as its own subsidiary marketed products there.  Here, although Heinz did not own Kettle USA, the Plaintiff offered evidence that the two (2) Defendants maintained a close affiliation.  Additionally, the court noted that use of an intermediary does not insulate a foreign manufacturer from being subject to personal jurisdiction in forum states in which the product is sold.  The court found the facts here sufficiently alike to warrant a similar finding; the court’s exercise of jurisdiction did not offend “traditional notions of fair play and substantial justice.”  Int’l Shoe Co., 326 U.S. at 316.

The court held that Plaintiff presented a prima facie case that Heinz “purposefully directed its products to, and had a reasonable expectation of sales in, the United States as whole, and Maryland specifically.”

Valichka v. Kettler Int’l, Inc., et al., No. RDB-13-0618 (D. Md., June 24, 2014), available at:  http://www.mdd.uscourts.gov/Opinions/Opinions/Valichka%20v.%20Kettler%20MEMO%20AND%20ORDER.pdf

Submitted by:  Marisa A. Trasatti and Sarah M. Grago, Semmes, Bowen & Semmes

Court Finds That a Wrongful Death Action May Arise from Suicide

Court Finds That A Wrongful Death Action May Arise From Suicide And Denies Motion For Summary Judgment On The Grounds That The Jury Is Best Suited To Weigh Expert Testimony In Deciding Whether Defendant’s Negligence Proximately Caused The Suicide

In Young v. Swiney, the United States District Court for the District of Maryland faced the issue of whether suicide may be the basis for a wrongful death action in the context of the impact of expert testimony on deciding a motion for summary judgment.  The court held that Maryland law conforms to the majority position that one may not recover damages in negligence for another’s suicide, in that the suicide serves as an intervening act that precludes a finding of proximate cause.  The court further held that this general rule does allow for an exception for suicide committed during insanity or delirium, if that mental state was caused by the defendant’s negligent conduct.  In addition, the court admitted Plaintiff’s expert’s testimony, despite Defendant’s challenges to its reliability, explaining that Defendant’s challenges went to the expert’s credibility and not admissibility, which is for a jury to weigh.  Judge Hollander authored the opinion of the court.

By way of procedural background, Decedent’s widow brought suit individually, as Personal Representative for the estate of Mr. Young, and as parent of minors Chelsea and Jenna Young against Swiney; Swiney’s employer, Industrial Transport Services, LLC (“Defendant”); and Warehouse Services (“Warehouse”).  Plaintiff voluntarily dismissed Swiney and Warehouse from the case in exchange for Industrial Transport conceding fault of its employee; Defendant also did not dispute the events of the accident or the nature and extent of the resulting injuries.  The complaint contained a survival action and four counts of wrongful death.  Defendant unsuccessfully filed a motion for summary judgment (“Motion”) to, inter alia, dismiss all wrongful death claims.

On June 16, 2010 in Cecil County, Maryland, Decedent Joseph Young was stopped in his pick-up truck when an eighteen-wheel tractor trailer, driven by Donn Swiney, struck him from behind.  The tractor trailer was traveling at a high speed when it hit the rear of Decedent’s truck, creating a chain-reaction collision, and forcing the pick-up truck into the vehicle in front of his.  The tractor trailer continued to strike Decedent’s vehicle on the driver’s side, pushing the vehicle to the right until it stopped, partially resting on the tractor trailer’s saddle tank.  Decedent complained to the rescue crew of neck pain, left forearm pain, and a laceration to the back of his head, before slipping into unconsciousness.  The rescue team removed the roof of the pick-up truck to extract Decedent safely.  At the time of the accident, Decedent was a forty-three-year-old carpenter and millwright, married to Plaintiff for eleven years with whom he fathered of two teenage girls. 

Decedent was unable to return to work due to his injuries, and was terminated in December 2010.  Decedent underwent surgeries on his elbow and spine in 2011.  On March 5, 2012, still unable to work due to his injuries, Decedent lost his health insurance, which impacted his ability to obtain the prescribed physical therapy to rehabilitate his cervical spine.  On May 10, 2012, Decedent met with Dr. Janet Anderson, Ph.D. (later referred to as “Plaintiff’s expert”), a psychologist and certified rehabilitation counselor with prior experience counseling individuals for insanity, delirium, depression, uncontrollable impulses, and suicide.  In her experience, many post-injured patients eventually did commit suicide, typically several years after the accident.  At that meeting, Dr. Anderson interviewed Decedent, who spoke of the “knife-like, dagger-like ripping feeling” in his dominant hand, his incomplete cervical fusion, bulging disks in his lumbar area that may require more surgery, feeling suicidally depressed, not being able to control his angry behavior, and that his whole family had been destroyed because he would never be able to return to work.  After administering various psychological tests, Dr. Anderson concluded that Decedent was totally and completely disabled and would never be able to work any job again, while also very strongly recommending psychotherapy for “very suicidal depression, which [was] suicidal at times.”

Decedent’s family members reported the effects of Decedent’s post-accident injuries, stating that he had experienced “a complete personality change”; unable to control his anger, Decedent frequently fought with his wife about money and yelled at his daughters until his wife and daughters moved to Florida some time before his May 2012 evaluation.  In August 2012, a neurosurgeon recommended surgery for the neck and upper back pain.  Also that month, a vocational assessment revealed that, not only was Decedent unable to return to his occupation, but also that “his significant physical limitations, pain, depression and lack of high school diploma make him a poor prospect for successful return to work.”  Decedent’s family was visiting in September 2012.  On September 6, Decedent had a heated fight with his daughter.  Police were called to the house, and before the family left to stay with a neighbor, Plaintiff requested that police stay with or take Decedent because she was worried about what he might do while upset.  That night, Decedent committed suicide by ingesting alcohol, Flexeril (a muscle relaxant), and Tramadol (a pain medication).  The medications taken were prescribed, but, according to Defendant’s expert, the alcohol likely exacerbated the depressive effects of the medicines; Decedent twice referred to himself in his suicide note as a “loser.”

As is well-settled, a judge makes preliminary determinations concerning the admissibility of evidence and qualifications of experts per Federal Rule of Evidence 104(a).  In this gatekeeper role, a judge ensures that the jury will hear reliable, probative evidence, rather than unsupported assumptions, using the Daubert factors as a guide for evaluating proffered expert testimony.  See Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 593-94 (1993).  These factors “focus on the expert’s principles and methodology, and not on the conclusions that they generate.”  McDowell v. Brown, 392 F.3d 1283, 1298 (11th Cir. 2004).  Importantly, though, this gatekeeper role should not supplant the role of the jury or the adversary system, as cross-examination, contrary evidence, and careful instruction are the appropriate means for combating shaky evidence.  Daubert, 509 U.S. at 596. 

In its Motion, Defendant request dismissal of the wrongful death claims because, as a matter of law, the motor vehicle accident of June 2010 was not the proximate cause of Decedent’s suicide in September 2012.  In Maryland, a successful wrongful death action requires a plaintiff beneficiary to show by a preponderance of the evidence that the defendant’s conduct was negligent and such negligence proximately caused the death of the decedent.  Parties agree that proof of causation standards for suicides as a basis for a wrongful death action are found in the case of first impression, Sindler v. Litman, 166 Md. App. 90 (2005), in which the victim of a car accident committed suicide allegedly due to her injuries.  In that case, the Maryland Court of Special Appeals examined both existing approaches to when a wrongful death claim may arise from suicide.  The minority approach declares suicide a common law crime and maintains that it is a per se bar to a wrongful death action; this approach was not favored because it was based on Virginia sustaining suicide as a common law crime, a stance abandoned long ago in Maryland.  The Sindler court adopted the majority approach that suicide of one may not be grounds for damages based on the negligence of another, subject to this exception: the negligent actor is liable for the suicide when the negligent conduct causes the decedent’s insanity, delirium, or uncontrollable impulse to commit suicide.  Restatement (Second) of Torts § 455.  The court referred to the comments to § 455, stating that this exception neither applies to mere recurring acts of extreme melancholy, nor to a negligent incident simply starting in motion a chain of events that culminated in suicide.  Whether a decedent was insane or delirious at the time of suicide—the suicide being the result of uncontrollable impulse or lack of realization—and whether the mental condition was caused by the defendant’s negligent conduct are questions for a jury that require expert testimony.  Summary judgment on this issue is only appropriate when there is no evidence supporting a finding of liability for the suicide.  In this case, evidence supporting such a finding was proffered by Plaintiff’s expert, a psychologist and certified rehabilitation counselor.

Plaintiff’s expert first submitted her opinion that Decedent, then alive, was incapable of returning to work and that the accident caused his incapacity.  Following the suicide, Plaintiff’s attorney asked whether Decedent was suffering from a psychotic break from reality at the time of his suicide.  The expert concluded that Decedent’s suicide was “directly and proximately caused by the psychosis he sustained as a result of the automobile accident.”  Along with an affidavit, the expert submitted a timeline that detailed the stressful events between the accident and suicide, including the September 6 family argument as just one event of the many contributors to, rather than the direct causes of the suicide.

Defendants challenged the opinions offered by Plaintiff’s expert, deeming the opinions to be unreliable.  Defendants alleged that her opinions were without foundation, were not the product of any reliable methodology, and were not based on sufficient facts or data.  The court rejected Defendant’s classification as “mere conjecture,” reiterating the laundry list of sources that the expert used to arrive at her opinions, including the autopsy, depositions, and police reports on record; her personal meetings with Decedent and his family; and her training, knowledge, and experience in similar matters.  --Moreover, Defendant produced no expert testimony to refute the opinions of Plaintiff’s expert.  Although Defendant’s expert arrived at a different conclusion, Defendant’s expert stated in his deposition that the methodologies employed by Plaintiff’s expert were accepted in their field and that he had no criticisms about how Plaintiff’s expert interviewed or tested Decedent in May 2012.

Defendant further claimed that Plaintiff’s expert’s opinions were inconsistent, in that in May 2012 she found him to be merely suffering from depression, but then post-suicide deemed him the victim of a psychotic break.  Dr. Anderson countered, explaining that she did not find him to be psychotic at the time of the May 2012 testing; however, it is perfectly normal for someone to later have a psychotic episode after overwhelming pressure, as was the case with Decedent.  In addition, Defendants posited that the fact that Decedent left a detailed suicide note could only mean that his act was deliberate and realized, solely caused by depression.  The court responded that no authority supports that conclusion, while a bounty of case law suggests otherwise.  Further, the court noted that several other courts hold that impulses need not be sudden in order to be characterized as irresistible or uncontrollable. 

After declining to accept any of Defendant’s allegations in support of its Motion, the court denied the Motion because Plaintiff produced sufficient evidence to create a jury question.  The court echoed the Daubert and Sindler courts, stating that Maryland law clearly mandates this issue be tried before a jury with expert testimony.  The court found that each of Defendant’s arguments went to the credibility of the expert testimony, not admissibility, explaining that “[d]efendant has pointed to a host of issues that it could raise in the course of ‘vigorous cross-examination of [Plaintiff’s expert] and through the testimony of its own expert witnesses.”

Young v. Swiney, -- F. Supp. 2d --, 2014 WL 2458405 (D. Md., May 30, 2014), available at: http://www.mdd.uscourts.gov/Opinions/Opinions/Young%20v.%20Swiney%20MSJ%20Mem%20Op.pdf

Submitted by Marisa A. Trasatti and Morgan N. Gough, Semmes, Bowen & Semmes

Removal of Personal Injury Case

In In re Norfolk Southern Railway Co., a case involving the removal of a personal injury case to Virginia Federal Court and subsequent remand to Virginia State Court, the Fourth Circuit Court of Appeals held that the order remanding the case according to 28 U.S.C. § 1445(a) was the type of ruling included under 28 U.S.C. § 1447(c), and as such, was not reviewable by appeal or via mandamus, under 28. U.S.C. § 1447(d).  Accordingly, the Court dismissed the appeal and denied the mandamus petition. Judge Traxler wrote the opinion, in which Judges Niemeyer and Duncan joined.

By way of factual background, after applyingfor and being awarded federal workers' compensation benefits under the Longshore and Harbor Workers' Compensation Act (LHWCA), Gilbert Bynum, an injured railroad worker, filed suit in state court against his employer, Norfolk Southern Railway Co., pursuant to the Federal Employers' Liability Act (FELA).  Norfolk Southern removed the case to federal court arguing that the LHWCA covered Bynum’s injury and barred any recovery under FELA, and asserting that whether Bynum's injury was covered by the LHWCA was exclusively a federal question.

After removal, Bynum moved to remand the case to state court, alleging that the district court lacked jurisdiction to determine coverage under the LHWCA34  because Congress had specifically eliminated the jurisdiction of the federal district court concerning the LHWCA, and asserting  that his claim was not removable pursuant to 28 U.S.C. § 1445(a).  That same day, Norfolk Southern filed a motion in the district court to dismiss Bynum's complaint, arguing that, although his claim was filed under FELA, his injury actually fell within the scope of the LHWCA's coverage and the LHWCA therefore provided the exclusive remedy for his injury.

Noting that 28 U.S.C. § 1445(a) prohibits the removal of a civil action arising under FELA which is filed in state court against a railroad, the district court concluded that Bynum's FELA claim must be remanded to state court.  Accordingly, the district court granted Bynum's remand motion and denied as moot Norfolk Southern's motion to dismiss. Norfolk Southern appealed to the Fourth Circuit, and also filed a petition for a writ of mandamus requesting the Court to vacate the district court's order and either dismiss the case or, alternatively, remand the case to the district court to address the merits of its federal defense to the FELA claim.  The Court agreed to consider the mandamus petition together with the related appeal, and thus the two cases were consolidated.  Bynum subsequently moved to dismiss the appeal as barred by 28 U.S.C. § 1447(d) and to have the mandamus petition denied for the same reason.

On appeal, the Court first addressed whether it was authorized to review the merits of the district court’s remand order, concluding that it was not.  The Court noted that the district court's decision was based on the simple fact that a FELA claim brought in state court cannot be removed to a federal court under § 1445(a).  The Court explained that § 1447(c) authorizes remand based on lack of subject matter jurisdiction and remand based on any defect other than lack of subject matter jurisdiction that was raised by a party within 30 days after the filing of the notice of removal.  The Court further explained that § 1447(d) generally bars appellate review of a remand that is ordered on one of those bases.  The Court noted, however, that the § 1445(a) bar does not deprive courts of subject matter jurisdiction over cases to which it applies.  The Court thus faced the question of whether nonremovability based on § 1445(a) is a “defect other than lack of subject matter jurisdiction” within the meaning of § 1447(c).  The Court concluded that it was.  To the Court, it was apparent from the context of § 1447, that “defect” referred to a failure to comply with the statutory requirements for removal provided in 28 U.S.C. §§ 1441–1453.  Because that scope encompassed § 1445(a), the Court concluded that the § 1447(d) bar applied, and thus, the Court lacked jurisdiction to review the remand order on appeal.

Second, the Court addressed whether it was authorized to grant mandamus relief, concluding that it was not.  The Court noted that § 1447(d)’s restriction on review of remand orders applies to review “on appeal or otherwise,” and that the Supreme Court has interpreted that language to forbid the use of mandamus to circumvent the requirements of § 1447(d).  The Court added that granting mandamus relief would also be inappropriate because Norfolk Southern had not made the requisite showing that its “right to the issuance of the writ is clear and indisputable.”  Specifically, the Court found that Norfolk Southern had not shown that it was clearly entitled to have the district court dismiss Bynum's FELA claim rather than remand it to the state court.  Thus, because § 1447(d) barred review of the district court’s order by appeal or via mandamus, the Court dismissed Norfolk Southern’s appeal and denied its mandamus petition.

In re Norfolk Southern Railway Co., Nos. 13–2112 & 13–2127 (United States Court of Appeals for the Fourth Circuit, June 23, 2014), available at:  http://www.ca4.uscourts.gov/Opinions/Published/132112.P.pdf

Submitted by:  Marisa A. Trasatti and Richard J. Medoff, Semmes, Bowen & Semmes

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