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v. Eckert & Ziegler Nuclitec GmbH, Case No. 13-1708 (April 8, 2014), available at: http://www.ca4.uscourts.gov/Opinions/Unpublished/131708.U.pdf
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
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.
 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 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
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
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
Formation of partnership under District of Columbia law is a factual question
In 2008, Queen, an employee with NBC, approached Ed Schultz, who was a radio personality in Fargo, North Dakota, for the purpose of developing a television show that would star Schultz. Prior to this conversation, Queen had approached NBC with the idea for a Schultz led program and was developing a strategy to market the show. In January 2008, Schultz visited the NBC building in Washington, D.C., and Queen and Schultz discussed Queen’s proposal. The parties contested the content of the January conversation, but Queen alleged that, when asked if Schultz was working on a television program with anyone else, Schultz responded, “No. Now you’re it.” Id., at 1. Thereafter, Queen began to develop sales material for the program, and enlisted the assistance of Max Schindler, a former NBC employee. The three engaged in numerous email communications in which the terms of the partnership were discussed, including the percentage salaries that would be given to each after the sale of the program. This was reduced to a partnership agreement, but Schultz never agreed to sign it. Schindler left the partnership soon after, believing Schultz would never honor his verbal agreements. To assuage any concerns that Queen had after Schindler’s departure, Schultz affirmed, in writing, that any television deal that Schultz entered into would include Queen. While Queen and Schultz, through his attorney, continued to negotiate the terms of the financial agreement, Queen arranged for a pilot episode to be filmed at NBC’s studios. The pilot was picked up by WUSA, a CBS affiliate, with the condition that Queen and Schultz had to pay a fee for the first six (6) months and if it was successful WUSA would consider purchasing ownership in the program. A few weeks before the WUSA show was scheduled to begin filming Schultz withdrew, having come to an agreement with MSNBC for “The Ed Show.” Queen contacted Schultz seeking his financial compensation under his agreement with Schultz splitting the compensation for any television show. Schultz sent Queen a check for $12,000 for expenses associated with filming the pilot, but refused to pay any additional amounts.
Queen thereafter filed suit in the District Court for the District of Columbia for breach of contract, fraud in the inducement, tortious interference with business relationships and intentional infliction of emotional distress. Schultz, in response, filed a counterclaim for fraud, slander per se, and libel per se. The parties filed cross-motions for summary judgment, and the District Court granted judgment to Schultz for Queen’s claims and to Queen on Schulz’s counterclaim, finding neither party liable to the other. Queen appealed the ruling on the breach of contract claim and his breach of partnership duties theory.
The Court of Appeals initially reviewed Queen’s claim of ordinary breach of contract, noting that Queen had the burden of showing that there was a “valid and enforceable contract [which] requires both (1) agreement as to all material terms; and (2) intention of the parties to be bound.” Id., at 4. The District Court had held that the parties had never agreed to the terms with reasonable certainty, most notably about the financial terms that were material terms of the agreement. The Court of Appeals agreed with the trial court’s finding that the materials terms were not agreed upon, but proceeded to analyze the facts under the District of Columbia’s partnership law.
While Queen’s complaint failed to allege a breach of partnership duties, the District Court had addressed the issue based on Queen’s reference to partnership throughout his arguments. “A partnership arises under District of Columbia law when ‘two or more persons … intend to associate together to carry on as co-owners for profit.’” Id., at 6. There are customary attributes of a partnership, i.e., profit and loss sharing, joint control, that aid in determining the existence of a partnership, but the existence of a partnership is a factual question. While Schultz claimed that Queen was a mere employee, Queen argued that he was more than an employee, and that Schulz had agreed to the co-ownership and co-development of the television program.
The Court of Appeals found the District Court erred in finding no partnership existed as a matter of law, as there were factual disputes. The Court further noted that, if Queen were able to prove a partnership existed, and that “The Ed Show” was an opportunity for the partnership, Queen may be entitled to a portion of Schulz’s compensation. Despite not being able to show the existence of the contract that would have given him (25) percent of the compensation, under the District of Columbia partnership law there was a presumption that Queen would be entitled to (50) percent of the partnership income. The Court of Appeals then affirmed the trial court’s granting of summary judgment as to all issues, except the determination of whether a partnership was formed, which was reversed. The matter was remanded for proceedings consistent with the ruling.
Submitted by Marisa Trasatti, Semmes, Bowen & Semmes at 410-576-4795
Familiarity and complacency cause lawyers to take on matters they are not competent to handle. Rule 1.1 describes the ethical considerations associated with deciding what matters to undertake, or not.
Lawyers do not like to give their competitors the opportunity to get their foot in the door, and possibly "steal" a client. This is especially true with respect to valued, long-standing clients. So, when a good client calls with a matter that is out of the lawyer's and his firm's typical areas of practice, some lawyers agree to handle the matter when they are really not competent to do so, rather than refer the client to another lawyer.
For their part, clients have a role in this process as well. Clients with long-standing relationships with their lawyers become comfortable with them, their level of service, their billing practices, and their staff. All things being equal, they may (understandably) prefer to have their usual counsel handle an unusual matter, rather than take a chance on an unknown quantity in the form of new counsel. So, they may encourage their long-standing counsel to represent them in a matter that is outside the lawyer's typical areas of practice, and even agree to pay the cost of the lawyer "getting up to speed" in this new area.
Whether the lawyer should agree to handle the unusual matter under these circumstances is a judgment call that depends on a number of factors, discussed below. Ultimately, however, the risk to the attorney is that he or she will make a mistake that an attorney experienced in that area of practice would not: missing an important case, statute, regulation, issue, defense, approach, or strategy.
In the immortal words of a lawyer with whom I once practiced, "The law is some tricky s__t.” In my own, practicing law is hard even when it’s easy. It is hard enough to play error-free ball when you know the rules of the game you are playing. It's much harder in a new and unfamiliar game that you are trying to learn as you go. When considering the following ethical guidelines for deciding whether to take on a matter in an unfamiliar area of practice, a lawyer would be well advised to err on the side of referring the client to a lawyer that is unquestionably competent to handle it.
Next: Being Chatty
Company uses band’s trademark without permission, Court keeps band’s expert from testifying regarding prior settlement in a similar case.
Monster Energy Company created a video using the names and trademarks of the band “Beastie Boys”. Beastie Boys sued, and prior to trial, Monster Energy moved to preclude Beastie Boys’ expert from testifying concerning the fair market value of the copyright license at issue because, among other reasons, the expert’s evaluation improperly relied on a prior settlement between the Beastie Boys and another entity who had previously created a video set to the tune of a Beastie Boys song. The SDNY granted Monster Energy’s motion to exclude testimony by the expert regarding this prior settlement, as such testimony would be unreliable and would be properly excluded under Rule 403, but did not grant Monster Energy’s motion to prevent expert from testifying at all, holding that the expert’s testimony about the fair market value of the copyright license was sufficiently reliable to be presented to the jury.
Submitted by: Megan Fulcher Bosak and Michael Bonasso of Flaherty Sensabaugh Bonasso PLLC
Arbitration Proper for Defendant Condo Association, But Not For Defendant Unit Owner
Plaintiff Kamal Jahanbein, a unit owner and member of the Ndidi Condominium Unit Owners Association, Inc. (the Condo Association), sued the Condo Association for breach of fiduciary duty and sued Jamal Sahri, a fellow unit owner, for negligence, after the water pipes in Mr. Sahri’s unit burst and allegedly damaged Mr. Jahanbein’s unit. Both Defendants moved to compel arbitration pursuant to D.C. Code § 16-4407(a), alleging that the trial court did not have subject matter jurisdiction because the Condo Association’s Bylaws, adopted under D.C. Code § 42-1901.01, et seq., constituted an enforceable agreement that required alternative dispute resolution of Plaintiff’s claims. Plaintiff opposed the motions to compel, arguing (1) that his claims against Defendants were tort claims, not contract claims, and so the Bylaws were inapplicable; and (2) that with respect to the claim against the Defendant unit owner, the Bylaws did not create a contract between unit owners and the unit owner Defendant had no right to compel arbitration of the claim against him. The trial court granted the motions to compel arbitration, and Plaintiff appealed. The appellate court affirmed in part, and reversed in part, and remanded the case for further proceedings. The claim against the Condo Association was subject to arbitration, but the claim against the unit owner Defendant was not.
The appellate court agreed that the Bylaws constituted an enforceable agreement to arbitrate as between Plaintiff and the Condo Association. The Plaintiff’s particular claims against the Condo Association were also subject to arbitration under the terms and conditions of the Bylaws. Therefore, the trial court property granted the Condo Association’s motion to compel arbitration. Whether the Bylaws created an enforceable agreement to arbitrate as between the unit owners was less clear, however, according to the District of Columbia Court of Appeals.
The Bylaws were intended for the benefit of the Condo Association, and not a third-party unit owner, and so the unit owner Defendant could not enforce the arbitration provisions against the unit owner Plaintiff as a third party beneficiary to the Bylaws. The unit owners were also not direct parties to each other’s agreements with the Condo Association. While there was a presumption in favor of arbitration, in light of the ambiguities, that presumption only attached after a trial court determined that a valid agreement to arbitrate existed. No such valid agreement existed in this case as between the unit owner parties, according to the appellate court.
While upholding the trial court’s determination that Plaintiff’s claim against the Condo Association was properly dismissed because it was subject to arbitration, the appellate court held that the Condo Association Bylaws did not constitute an enforceable agreement to arbitrate the inter-unit owner dispute. As such, the appellate court reversed and remanded that aspect of the case for further proceedings.
Recently, Pope Francis tweeted: “Inequality is the root of social evil.” I would like to go a little further and suggest that in the United States, lawyers are the great equalizers. Our Constitution was drafted, in part, by lawyers seeking to avoid the dangers of a monarchy and an overzealous government. Our Bill of Rights makes us unique and gives us not only rights, but responsibilities. In his speech at the Sorbonne on April 23, 1910, then former President Teddy Roosevelt, speaking most eloquently about the duties of citizens in a democracy, said, “To you and your kind much has been given, and from you much should be expected . . . no self-respecting individual, no self-respecting nation, can or ought to submit to wrong.”
Today, in this time of 24 hour news and 24/7 Internet bombardment of opinion and disinformation, there must be guardians of truth. Our Constitution sets forth the framework for finding the truth with rights, including but not limited to, free speech, due process of law, equal protection, counsel in criminal matters, and protection from illegal search and seizure. But this precious framework is worthless unless we have champions willing to stand in the breach and cry foul when these rights are abridged, either individually or against society as a whole. The list of legal championships is long, and in the history of the world unique to the United States of America: Marbury v. Madison, Brown v. Board of Education, and Gideon v. Wainwright are just a few examples. Each case was championed by a lawyer, who was not afraid to seek truth, justice and equality.
Just this week, the owner of the L.A. Clippers was banned from the NBA and fined $2,500,000.00 because of racist statements he made in a private conversation. The NBA may now try to take away his ownership of the team. Notwithstanding the despicable nature of his comments, the issue may come down to whether a citizen may be deprived of property as a result of a surreptitious private recording of his speech. He has the means to hire an army of lawyers to protect his property rights. But what about the aggrieved single mom who can’t support her family because of a deadbeat dad, the falsely accused indigent, or the individual who is the subject of racial, gender, age or religious discrimination? Who will take their cases? Most likely, it will not be an army of lawyers hired by a multimillionaire. No, it will be a solitary lawyer who takes seriously his or her oath “to preserve, protect and defend the Constitution of this State and of the United States . . . and to assist the defenseless or oppressed by ensuring that justice is available to all citizens. . . .” President Abraham Lincoln knew the trials and tribulations of a lawyer seeking justice, truth and equality. These lessons he learned so well were the foundation for his quest for equality for all Americans. Speaking on the issue of equality and the framers of the Constitution, he stated, “They meant to set up a standard maxim for free society which should be familiar to all – constantly looked to, constantly labored for, and, even though never perfectly attained, constantly approximated, and thereby constantly spreading and deepening its influence, and augmenting the happiness and value of life to all people, everywhere.”
I know of no greater honor in civilian society than the privilege of representing a client in pursuit of truth, equality and justice. We lawyers must always be willing to stand in the breach between lies and truth, injustice and justice, and inequality and equality. So, on this Law Day 2014, take stock in the words of Pope Francis, President Lincoln, and President Teddy Roosevelt. In our society, we lawyers are the great equalizers and we must fight social evil by “constantly” laboring for equality. If he were alive on this Law Day 2014, I think that President Roosevelt would be telling us: The credit belongs to the lawyer who is actually in the courtroom… who strives valiantly; who errs… who comes short again and again… who does actually strive to do the deeds…. who knows great enthusiasm… who spends himself or herself in a worthy cause… who at best knows in the end the triumph of high achievement, and who at worst, if he/she fails, at least fails while daring greatly, so that his/her place shall never be with those cold and timid souls who neither know victory nor defeat.
- See more at: http://abnormaluse.com/2014/05/law-day-the-great-equalizers.html#sthash.8f7mOvu0.dpuf