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JULY 2017

Message from the Chair


Knowing Your Adversary
As I write this month’s newsletter I’m sitting in my office at the end of the day trying to make sure I haven’t forgotten to include any time entries for the day when I noticed I had not received a phone call from anybody outside the firm today.  Use of the phone today is taken by many as a luxury they don’t have time for.  I still believe that every new case assignment should start with a phone call to opposing counsel.  The purpose of the call is many but in particular it is an attempt to understand and get to know your adversary.  In some communities you already know all of your adversaries but in many large communities there are always lots of new faces.  I still believe it’s important to establish a repoire with opposing counsel from day one.  My initial conversation usually includes an invitation for them to pick up the phone and call me if they ever believe there is a problem with discovery or with any aspect of our ongoing case related dealings.  I also try and get a cell phone number so that I can find them at a moment’s notice and I in turn provide mine.  In discussions with associates I’ve learned how easy it is for them to shoot an email where tone can’t be discerned.  I try to encourage all associates to pick up the phone and call their opposing counsel rather than send an email.  Emails are for follow up in my mind.  I explain that you can’t receive any valuable information from a Plaintiff’s attorney if all you’re going to do is shoot emails back and forth.  Plaintiff’s attorneys like to talk about their cases, like to talk about their witnesses, like to talk about facts, like to talk about their opinion of value.  This information is invaluable in trying to understand both Plaintiff’s counsel and his case.  You will never get that by email alone.  So as we prepare for our upcoming trip to Switzerland, let me encourage each and every one of you to remind all of those work for you and with you that they should try not and take the easy route in shooting an email but instead pick up the phone and call opposing counsel, meet them for lunch, learn about their family, understand what they like and what they don’t like.  I believe by doing so you’ll be a better advocate for your client and you’ll continue to work to make our profession the best it can be.  See you in Switzerland.

 

 

MAY 2017

 

TRANSITIONING TO THE NEXT GENERATION

 

As a trial attorney, is there really any such thing as a work-life balance?

 

I read a lot today about the younger generation and their belief in a work-life balance.  I am currently digging out from the confluence of multiple docket control orders in different cases merging together to create the perfect storm.  I am receiving calls from the clients, adjusters, as well as general counsel, wanting to discuss the upcoming deadlines and how we intend to respond to them.  I know it will all get handled and when we are finished, everyone will be pleased.  I know this because that is the way it has always been.  However, for the short run, there will be no work-life balance.

 

Does the younger generation really appreciate the level of commitment necessary to run a successful trial practice?  In earlier times, it was unthinkable to not be in your office before your boss arrived or to leave before they left.  Today it is the norm.  While clients and carriers attempt to keep hourly billing rates low, the newer and younger work force demands to be paid more money and work less hours.  The clients say they are hiring you because of your ability.  They are not hiring your firm.  The perfect storm is coming.  Clients are sending their biggest files to the more seasoned lawyers, who have gained the trust through years of trials and tribulations.

 

In the next ten years, the pool of truly seasoned litigators is going to greatly diminish.  Out of necessity, each one of us has handpicked a few young lawyers who we think have the right stuff.  In order to prepare our successors, we will need buy-in from the clients.  Only last week, I tried to convince a client to let one of my younger associates defend a case against a plaintiff who would likely lose on their affirmative claim and would allow us to prevail on our counter-claim.  The plaintiff was judgment-proof and yet, the client was reluctant to allow the associate to try the case.

 

I would be greatly interested in hearing your stories about how you are convincing your clients to allow the next generation of trial lawyers to try cases.  Please email me your stories.  I would like to highlight some of them in the next Trial Tactics column.  I think the entire organization could benefit from understanding how to successfully transition clients in large loss cases to the next generation.  I look forward to hearing from you.

 

Respond to myoung@cokinoslaw.com

 

BLOGS

 

 

July 2017 BLOG

What's so Special about Special Damages?

By: Oscar J. Cabanas, Vice-Chair Trial Tactics

 

As many of the more senior members of the Bar probably remember, there was a time when there was a theory that the value of a personal injury case was generally three to five times the value of the special damages. A case with a $10,000.00 medical bill was worth $30,000.00 and you could just add zeros from there. As time marched on and the defense Bar became more sophisticated at assessing damages, the rule became less prominent and, certainly, the rule was always less applicable for higher exposure cases. Nevertheless, the relationship between medical bills and special damages and the non-economic award always existed and was always on the minds of both the plaintiff and defense attorneys. Plaintiffs understood the relationship between special and general damages and always tried to blackboard as big a number as they could create to help them ask for a bigger non-economic number. 

 

All of this, of course, led to lots of medical treatment that was medically unnecessary. The classic examples are the soft tissue automobile cases with months of chiropractic care. Today we have the pain management specialist shooting up their patients more often than Keith Richards shot himself up. Over the course of time, tort reform allowed some in-roads into fighting these manufactured damage claims with collateral source rules and "knockdown statutes" where plaintiffs were limited in what they could blackboard into the amounts actually paid. At the same time, the tort reform was creating these changes; however, the healthcare industry was going through its own changes. The reimbursement rates for these procedures started to fall. Thus, there was an incentive to provide even with more care even though the actually revenue from the healthcare provider was actually dropping. This combination of factors led to an unholy alliance between medical doctors and juris doctors to try to find ways to increase both their revenues (and their special damages) through more innovative ways to bill for unnecessary care. 


Thus, was born the "Letter of Protection" or "LOP." This devise is essentially a contract running between the Plaintiff and their healthcare provider whereby the Plaintiff waives their right to insurance and receives treatment from the healthcare provider with an agreement that the healthcare provider's bill will be satisfied from the proceeds of the tort recovery. Without seeking insurance reimbursement, the healthcare provider is now free to charge whatever they want for the services. Of course, the prices charged are ridiculously high relative to market or the "usual and customary charges." Thus, a $3,000.00 bill can turn into a $30,000.00 bill. A $12,000.00 surgery can turn into a $120,000.00 surgery. In the vast majority of cases, the person who connected the Plaintiff to the participating healthcare provider was the Plaintiff's attorney who would have a long standing relationship with that provider. 
The first line of attack for the defense was to present to a jury the bias that obviously comes from the relationship between the healthcare provider and the Plaintiff's attorney.

 

Unbelievably, some courts have ruled that the referral by a lawyer to a specific doctor is attorney-client privileged. Worley v. Central Florida YMCA, (FL S.Ct. 2017). In addition, however, the defense attorney can argue that the jury is entitled to hear evidence on whether or not the care and treatment and charges were "reasonable and necessary." Previously, the emphasis was on "necessary" with the defense arguing that much of the treatment was not medically indicated or needed. With the advent of the LOP, the reasonableness of the price relative to market becomes more and more important. The argument is that the LOP charges do not reflect what is usual and customary in the community and therefore not reasonable. 


Establishing the market value for services can be approached in a variety of ways. An easy and convenient way is with the use of a billing expert that can testify that they are familiar with the market. More direct ways ( and the author believes more effective) are to subpoena and obtain the healthcare providers records for the procedure at issue and see what they usually receive from insurance for the procedures that they are overcharging under an LOP. In fact, even if the healthcare provider exclusively uses LOP(s), obtaining records of the eventual payment from LOP(s) from a similar procedure yield the reality that the healthcare provider never gets 100% of the LOP, but a fraction of the value charged just as it receives a fraction of the value from insurance from what they would charge wholesale. Plaintiffs' attorneys, like healthcare companies, know the value of bargaining. 


In today's world, a simple 3:1 or 5:1 formula in evaluating damages is overly simplistic. The Plaintiff attorneys have engaged in way to build up their damages and the defense has to find creative ways to counter those efforts. Digging into the numbers and establishing the true market price for services, instead of simply relying on the medical bills to be usual and customary, is going to occupy more and more of the defense lawyer's time and effort. A consistent and comprehensive plan to attack damages has to be part of the defense bar's litigation plan. 


Kurt Paxon and I are going to be discussing these issues at our summer meeting in Montreux at the Trial Tactics Committee meeting on July 26th: look for The Good Fight Against Bad Medical Expenses. 
Hope to see you there. If not, we will have our PowerPoint discussing the issues and the strategies to use to keep fighting the good fight available to you! 

 

 

June 2017 BLOG

 

Proportionality and ESI: The New Rule 26

By:  J. Chris Davis

Johnson Jones, P.C.

 

Likely all of us remember the old version of Rule 26 of the Federal Rules of Civil Procedure, which stated that parties could “obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense . . . .” In 2015, however, the scope of discovery in Rule 26 was changed: “Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” While proportionality had always been part of the discovery process under pre-2015 Rule 26(b)(2)(C)—and was part of the scope of discovery prior to revisions in 1993—the Advisory Committee chose to make it an explicit aspect of the scope of discovery in an effort to increase the parties’ and court’s awareness of the need for proportionality and to “reinforce[] the Rule 26(g) obligation of the parties to consider these factors in making discovery requests, responses, and objections.” Fed. R. Civ. P. 26, Notes of Advisory Committee on 2015 Amendments.

 

The redefined scope of discovery is most apparent in cases involving large amounts of e-discovery, or discovery of electronically-stored information (ESI). The Advisory Committee, in commenting on the changes, noted that the “information explosion” that began with the advent of widespread adoption of computers “has been exacerbated by the advent of e-discovery.” Id. We who represent defendants, particularly larger, corporate defendants, have had to become very familiar very quickly with e-discovery, as it is most often our clients who possess the majority of the ESI that could be relevant in a case. Thus, the shift in the language of Rule 26 has had the largest effect on us, leading to the obvious questions: what does it mean for discovery to be “proportional” and how do courts decide whether a particular discovery request is “proportional”?

 

The first question is decidedly fact-specific. As the factors outlined in Rule 26 make clear, the district court must strike a balance between the broad sweep of discovery and the need to keep discovery from becoming overbearing. Following the changes to the Rule, the issue of proportionality is more likely to be at the forefront of the judiciary’s mind. This would bear out the Advisory Committee’s statement that the addition of proportionality to the scope of discovery “is intended to encourage judges to be more aggressive in identifying and discouraging discovery overuse.” Id.

 

The second question is of greater interest, as the method by which courts have begun to put the new Rule 26(b)(1) into practice will shape how we and our clients participate in discovery. We have reviewed case law from across the circuits, and a few noteworthy trends are emerging. First, proportionality should not be a “boilerplate objection,” as the Advisory Committee Notes. Id. Several courts have explicitly stated that the party objecting to discovery must make a specific argument or objection showing that a particular discovery request is not proportional; simply objecting is not enough. E.g. Sprint Communs. Co. L.P. v. Crow Creek Sioux Tribal Court, 316 F.R.D. 254 (D.S.D. 2016); Carr v. State Farm Mut. Auto Ins., 312 F.R.D. 459 (N.D. Tex. 2015). This is in line with the practice of most courts, which disdain boilerplate objections. E.g. Burlington N. & Santa Fe Ry. v. United States Dist. Court, 408 F.3d 1142, 1149 (9th Cir. 2005) (noting that boilerplate objections “are presumptively insufficient”).

 

More important is the courts’ focus on the specific factors outlined in Rule 26(b)(1) as bearing on proportionality. It is not enough to state that a particular discovery request is disproportionate; courts require the argument to be tied to one of the concerns in the rule, such as the importance of the issues at stake or the burden of production versus the likely benefit. E.g. In re Bard IVC Filters Prods. Liab. Litig., 317 F.R.D. 562, 566 (D. Ariz. 2016) (finding discovery requests to 18 foreign entities disproportionate where extensive discovery of U.S. entities was allowed and the likely benefit of foreign entity discovery was relatively low); Noble Roman’s, Inc. v. Hattenhauer Distrib. Co., 314 F.R.D. 304 (S.D. Ind. 2016) (declining to require a third party to produce documents related to its evaluation of a party’s financial status because the attenuated nature of the documents to the claim at issue did not justify the burden or expense). In practical terms, opposition to discovery based upon proportionality should make every effort to explicitly reference the concerns identified in the statute. A discovery request need not reference every factor to be disproportionate, but the complete failure to reference any of the concerns in the statute will not be sufficient. E.g. State Farm Mut. Auto. Ins. Co. v. Fayda, Case No. 14 Civ. 9792 (WHP) (JCF), 2015 U.S. Dist. LEXIS 162164, 2015 WL 7871037 (S.D.N.Y. Dec. 3, 2015) (requiring production of financial records, over a proportionality objection, where the defendant made no specific argument related to proportionality, such as suggesting that there were other sources of information or that the production would be burdensome). And it would not be unusual for an argument that certain information is not relevant to also apply to whether discovery of that information is not proportional. E.g. Steel Erectors, Inc. v. AIM Steel Int'l, Inc., 312 F.R.D. 673 (S.D. Ga. 2016) (discovery related solely to defendant’s parent company was disproportionate where the parent company played no role in any breach of contract by defendant and where the discovery would be complicated by the parent company’s foreign status).

 

Some courts, though not all, also want the party seeking discovery to address proportionality when discovery requests are challenged. E.g. Carr, 312 F.R.D. at 468-469. The focus of these types of arguments can vary, but the discovering party should be focused on the factors outlined in the Rule. For example, one argument that appears frequently is the need to resolve contradictions in the existing record. E.g., Catalyst Managerial Servs., DMCC v. Libya Africa Inv. Portfolio (In re Catalyst Managerial Servs., DMCC), No. 16-2653-cv, 2017 U.S. App. LEXIS 3242 (2d Cir. Feb. 23, 2017) (concluding the district court did not err in finding discovery proportional where the discovery would allow the requesting party to review the accuracy of production where accuracy had become an issue); State Farm Mut. Auto. Ins. Co. v. Warren Chiropractic & Rehab Clinic, P.C., 315 F.R.D. 220 (E.D. Mich. 2016) (finding the requested discovery to be proportional where the information requested would resolve an inconsistency between written discovery responses and deposition testimony). Being able to offer this type of explanation, which touches on the importance of the issues at stake and the parties’ access to information, appears to make it much more likely that the court will order the opposing party to comply with the discovery request.

 

Finally, both parties should prepare for courts to become much more active in the discovery process. An unpublished case, Benavidez v. Sandia Nat'l Labs., No. CIV 15-0922 JB/LF, 2017 U.S. Dist. LEXIS 47724 (D.N.M. Mar. 30, 2017), offers a view of this trend in action. The plaintiff, who brought a retaliatory failure to hire claim, sought production of all of defendant’s job postings for a two-year period. The Court found that, as written, the request was not proportional, and it affirmatively limited the request solely to postings for which the plaintiff was qualified and that were posted during the period in which the plaintiff was searching for a position. Moreover, the Court found it would be disproportionate to require defendant to produce all postings even with the limitations already made; instead, it required defendant to create a spreadsheet detailing the postings that met those requirements. Plaintiff could then identify the postings she actually wished to be produced, and defendant would then produce them. This is a much more extensive entry into the discovery process than has been common in the past, but it is something that we as practitioners should begin to look for.

 

A Third Circuit case, United States ex rel. Customs Fraud Investigations, LLC v. Victaulic Co., 839 F.3d 242 (3d Cir. 2016), shows this trend developing in a slightly different direction. The appellate court, after rejecting the defendant’s motion to dismiss and before discovery requests were exchanged, cautioned the parties and the district court on the need to craft an “appropriately limited discovery plan” that would allow the plaintiff to test its claims under the False Claims Act while limiting the burden of discovery, which it believed could be incredibly high. It suggested that, before full-throated discovery began, the parties should conduct limited discovery on a “representative sample” of documents and other materials. Victaulic could signal that courts will proactively limit the scope of discovery, at least initially, where full discovery could be disproportional. As defense counsel, we should be aware of the types of cases where discovery could be extensive and suggest this type of approach to the Court.

 

The changes to Rule 26 have made proportionality a front-and-center concern in the discovery process, particularly in e-discovery cases where the production of documents will be a major headache. Although there is not yet a large body of case law discussing proportionality in its new place in the scope of discovery, several trends have appeared across all the Circuits. Most notably, courts want arguments about proportionality, whether for or against, to be tied directly to the factors recited in Rule 26(b)(1). Additionally, courts have begun taking a more active hand in discovery, both in recrafting disproportional discovery requests to make them proportional and in affirmatively limiting discovery to prevent later arguments about proportionality. All counsel, and particularly counsel involved in matters with large amounts of e-discovery, should be prepared for these trends and make the best use of the addition of proportionality to the scope of Rule 26 in representing clients.

 

more Calendar

7/24/2017 » 7/29/2017
2017 FDCC Annual Meeting/ Bridging The Gap Insurance Summit

9/17/2017 » 9/19/2017
Corporate Counsel Symposium

10/23/2017 » 10/24/2017
2017 Fall Deposition Boot Camp

11/9/2017 » 11/10/2017
I3 Registration

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