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07/27/2010

MYRON CORPORATION v. ATLANTIC MUTUAL INSURANCE CORPORATION

Prevailing Policyholder in Coverage Dispute Entitled To Counsel Fees Pursuant to New Jersey Fee-Shifting Provision For Litigation That Occurred in Illinois
Supreme Court of New Jersey

Plaintiff Myron Corporation and defendant Atlantic Mutual engaged in a coverage dispute regarding underlying lawsuits involving sending “junk faxes” in violation of the Telephone Consumer Protection Act (TCPA), 47 U.S.C.A. § 227, and various state laws. Atlantic filed a complaint against Myron in the United States District Court for the Northern District of Illinois seeking a declaration that the Atlantic policy did not cover the underlying claims. The Illinois federal court dismissed Atlantic’s action for lack of diversity jurisdiction. Atlantic re-filed the federal court complaint after finding additional defense invoices to meet the $75,000 threshold. On August 29, 2005, Myron filed its own declaratory judgment complaint in New Jersey state court. The New Jersey court dismissed Myron’s action without prejudice pending the resolution of the earlier-filed Illinois federal court action. Subsequently, the Illinois federal district court abstained from the litigation. Myron re-filed its declaratory judgment action in New Jersey and obtained a favorable decision on the coverage issues. The parties settled all of Myron’s counsel fee claims in connection with an underlying case and the New Jersey declaratory judgment action. They did not settle Myron’s claim for counsel fees for the Illinois federal declaratory judgment litigation. The New Jersey state court denied Myron’s application, under Rule 4:42-9(a)(6), for approximately $160,000 in legal fees and costs it claimed to have incurred in defending against Atlantic’s two Illinois federal court actions. The decision was based, in part, that the New Jersey Supreme Court would not have intended to apply Rule 4:42-9 “extraterritorially.” Myron appealed to the Appellate Division, which reversed and remanded for further proceedings, finding that Myron was entitled to counsel fees for the Illinois litigation, which was part of the same controversy over the coverage issue. Reviewing the matter de novo, and acknowledging the novelty of the issue, the Appellate Division disagreed with the trial court’s conclusion that applying Rule 4:42-9(a)(6) under the circumstances was “extra-territorial” and concluded that Myron’s right to counsel fees stemmed from its success in the New Jersey litigation. The Appellate Division further concluded that allowing Myron to recover ensured the bargained for coverage. The New Jersey Supreme Court affirmed the Appellate Division without opinion. One Justice dissented, stating that the Court’s award of counsel fees incurred entirely in actions litigated outside of New Jersey represents an unwarranted and unwise extension of the fee-shifting Rule.

Submitted by: Anthony J. Zarillo, Jr. [Bevan, Mosca, Giuditta & Zarillo, P.C.] - Posted: 07/30/2010
07/26/2010

HARTFIELD, ET AL. v. THE GETAWAY LOUNGE & GRILL, INC., ET AL.

Scope of Punitive Damages Limited and Liability of Bars for Acts of Driver
The Supreme Court of South Carolina

In a case involving a vehicular accident, the Respondents filed suits against the three bars the drunk driver (Helton) visited that evening. A jury awarded a $10 million verdict against The Getaway Lounge & Grill. The trial court also granted Respondents' motion to pierce the corporate veil of The Getaway. The Getaway appealed, arguing that the trial court erred (1) in admitting the testimony of an expert concerning Helton's blood alcohol level, (2) in failing to direct a verdict in favor of The Getaway, (3) in allowing a permissive inference from the criminal statute on driving under the influence, (4) in failing to charge the jury that the plaintiff must prove Helton was visibly intoxicated at The Getaway, (5) in instructing the jury that The Getaway was liable if employees should have known Helton was intoxicated, and (6) in piercing the corporate veil of The Getaway. The South Carolina Supreme Court affirmed the trial court's decision. The circumstantial evidence presented by Respondents was sufficient to support the expert's opinions. Given the deferential standard of review with regard to motions for directed verdict, the Court held that Respondents presented sufficient evidence for a jury question. In addition, so long as a sufficient chain of custody exists to authenticate the evidence in a civil case, the trial court committed no error in allowing evidence of Helton's BAC. The Court further rejected an argument allowing for liability only where the intoxicated person is visibly intoxicated. Similarly, Respondents met meet their burden of proof by showing that Gateway's employees served alcohol to a person they "should have known" was intoxicated. Finally, the Court rejected the argument that Respondents failed to prove the fundamental unfairness in recognizing the corporate entity and allowing for piercing of the corporate veil.

Submitted by: Anthony J. Zarillo, Jr. [Bevan, Mosca, Giuditta & Zarillo, P.C.] - Posted: 07/30/2010
07/26/2010

RSR CORPORATION v. INTERNATIONAL INSURANCE COMPANY

Fifth Circuit Interprets Environmental Impairment Insurance Policies
United States Court of Appeals for the Fifth Circui

The Court of Appeals reviewed a District Court ruling that RSR Corporation could not recover from International Insurance Company because: (1) an “other insurance” clause in International’s Environmental Impairment Insurance policies limited RSR’s recovery to sums it had already received from settlement agreements with several other insurance companies; and (2) in the alternative, because Texas’s “one recovery” rule barred RSR from collecting money from International when it had already been fully compensated for its Harbor Island liability through its settlement agreements with other insurance companies. The Fifth Circuit affirmed the District Court’s ruling, first holding that in determining the applicability of the other insurance clause, the relevant question was not whether RSR’s CGL settlements were “insurance.” The relevant question was whether RSR sought to recover for liabilities under its Environmental policies that were also “recoverable” under its CGL policies, which it did. Next, the Court ruled that RSR was estopped from asserting that the CGL and Environmental policies covered different liabilities. Therefore, the other insurance clause applied. Finally, the Fifth Circuit affirmed the District Court’s ruling that its CGL settlements fully compensated RSR for its Harbor Island liabilities. Moreover, the Court concluded that, where a settling party (RSR) failed to allocate its settlement, the nonsettling party (International) was entitled to a credit equaling the entire settlement amount.

Submitted by: Anthony J. Zarillo, Jr. [Bevan, Mosca, Giuditta & Zarillo, P.C.] - Posted: 07/27/2010
07/26/2010

PAPADOPOULOS v. TARGET CORPORATION

Masschusetts Abolishes The Tort Law Distinction Between Natural and Unnatural Accumulations Of Snow and Ice
The Supreme Judicial Court of the Commonwealth of Massachusetts

Existing Massachusetts law held that a property owner did not violate the duty of reasonable care by failing to remove natural accumulations of snow and ice. As a result, the trial court concluded that, as a matter of law, the plaintiff could not prevail on his claims of negligence and granted summary judgment. The appeals court affirmed the decision. The Supreme Judicial Court reversed and discarded the distinction between natural and unnatural accumulations of snow and ice, which had constituted an exception to the general rule of premises liability that a property owner owes a duty to all lawful visitors to use reasonable care to maintain its property in a reasonably safe condition in view of all the circumstances. The Court noted that determining liability for a slip and fall injury based on whether the plaintiff fell on a natural rather than an unnatural accumulation of snow or ice was not “based upon proper considerations." Going forward, Massachusetts courts will apply to hazards arising from snow and ice the same obligation that a property owner owes to lawful visitors as to all other hazards: a duty to "act as a reasonable person under all of the circumstances including the likelihood of injury to others, the probable seriousness of such injuries, and the burden of reducing or avoiding the risk."

Submitted by: Anthony J. Zarillo, Jr. [Bevan, Mosca, Giuditta & Zarillo, P.C.] - Posted: 07/27/2010
07/19/2010

FOWLER, ET AL. v. HUNTER, ET AL.

Scope of Punitive Damages Limited
The Supreme Court of South Carolina

The South Carolina Supreme Court reviewed the court of appeal’s reversal of the trial court's grant of summary judgment to an insurance agency. With respect to a professional negligence claim, the trial court found a covenant not to execute entered into by the parties relieved several defendants from further liability from any and all claims arising from a motorcycle accident. Therefore, the trial court found that the plaintiffs, standing in the shoes of the defendants, could never prove damages with respect to the insurance agency’s alleged failure to procure automobile insurance coverage. The trial court granted a motion for summary judgment. The court of appeals recognized that South Carolina courts favor settlement and determined that there was no collusion involved in the settlement and, thus, reversed the trial court's order granting summary judgment as to the assigned professional negligence claim. The Supreme Court found the court of appeals' reasoning sound and affirmed with respect to this issue. The trial court also granted summary judgment as to an insurance carrier’s cause of action for equitable indemnification finding that the insurance company was not harmed by the insurance agency’s alleged negligence. The trial court determined that it was impossible to determine whether the carrier was harmed by the insurance agency’s mistake. Therefore, the trial court ruled there could be no finding of harm and granted summary judgment as to the equitable indemnification claim. The court of appeals found a genuine issue of material fact as to damages precluding summary judgment and reversed the trial court's grant. The Supreme Court agreed with the narrow grounds upon which the court of appeals reversed the trial court's grant of summary judgment on the equitable indemnification claim and affirmed its decision.

Submitted by: Anthony J. Zarillo, Jr. [Bevan, Mosca, Giuditta & Zarillo, P.C - Posted: 07/27/2010
07/09/2010

SABINSA CORP. v. CREATIVE COMPOUNDS, LLC

Any reasonable fact finder, weighing the Lapp factors properly, would find that Sabinsa had demonstrated a likelihood of confusion between her mark, “ForsLean” and Creative Compounds’ mark “Forsthin” to establish a claim of trademark infringement
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Sabinsa Corporation appealed the District Court’s judgment in favor of Creative Compounds on Sabina’s claim for trademark infringement and unfair competition claims. The District Court found that there was no likelihood of confusion between Sabina’ mark, ForsLean, and Creative Compounds’s mark, Forthins, both of which refer to an ingredient used in weight management products. In reversing the District Court, the Appeals Court found that the lower court had erred in applying the Lapp factors and in concluding that there was no likelihood of confusion. The lower court failed to set forth in an opinion an analysis using all of the factors. Applying all of the factors the Court found that the lower court had erred. The Appeals Court did not remand, but reversed holding that it was so evident that any reasonable factfinder applying the correct legal standards would hold that Sabinsa had demonstrated a likelihood of confusion.

Submitted by: Scott A. Burr, CONCEPCION, SEXTON & MARTINEZ - Posted: 07/12/2010
07/07/2010

Lev v. Beverly Enterprises-Massachusetts, Inc.

No employer liability for alcohol-related accident involving employee following after-work meeting at lounge between management employees, at which work-related issues were discussed.
Massachusetts Supreme Judicial Court

The chef and a dietary services manager employed by the defendant corporation met after work at the lounge in a restaurant, and discussed, over drinks, business issues, the employer had no liability for the chef’s alcohol-related accident on his way home following the meeting. There was no vicarious liability, as the chef was not in the course of his employment while traveling home, under the “coming and going” rule. Since the restaurant, rather than the employer, supplied the alcohol, there were no “host” liability. In addition, the Court ruled that there was no “special relationship” involved which required the employer to control the employee’s conduct, so there was no common law negligence. Finally, the fact that the employer’s substance, drug and alcohol abuse policy prohibited the consumption of alcohol might be evidence of negligence, the policy did not create a duty of care, and because the employer did not otherwise owe a duty of care in the circumstances, there was no liability

Submitted by: Scott L. Machanic of Cunningham, Machanic, Cetlin, Johnson & Harney, LLP, Natick, MA - Posted: 07/26/2010
07/07/2010

FARM BUREAU INSURANCE COMPANY OF IDAHO v. KINSEY, ET AL.

Idaho Supreme Court Affirms Determination That Grandson Was Not A Resident Of Grandmother’s Home And, Therefore, Not An Insured Under A Homeowners Policy
Supreme Court of the State of Idaho

The sole issue was whether the trial court was correct in its determination that the defendant in a personal injury action (Jamey) was not a resident of the named insured’s household. The underlying plaintiff was injured when he collided with defendant Jamey’s dog while riding his motorcycle. The named insured under a homeowner’s policy was Jamey’s grandmother. The underlying plaintiff subsequently filed suit against Jamey to recover damages arising from the incident. Farm Bureau issued the homeowners policy and filed an action for declaratory judgment against Jamey and the named insured seeking a determination of whether the policy covered the underlying plaintiff’s claim against Jamey. The Idaho Supreme Court held that the trial court’s determination that Jamey was not a resident of the named insured’s household and not entitled to coverage under the policy was reasonably supported by the record. According to the Supreme Court, the trial court was entitled to rely on the fact that Jamey had no bedroom on the premises, his contact with the named insured was infrequent, he spent much of his time elsewhere, and neither the named insured nor Jamey considered Jamey to be a resident of the named insured’s household. Therefore, it was reasonable to infer that Jamey was not a resident of the named insured’s household and, thus, not an insured under the policy.

Submitted by: Anthony J. Zarillo, Jr. [Bevan, Mosca, Giuditta & Zarillo, P.C - Posted: 07/27/2010
07/07/2010

FLOMERFELT v. CARDIELLO

Duty to Defend: Exclusion in Homeowner’s Policy Ambiguous and Unenforceable
Supreme Court of New Jersey

This matter arose from injuries allegedly sustained by Plaintiff, a young woman, as a result of ingesting drugs and alcohol at a house party hosted by Matthew Cardiello in his parents’ absence. Plaintiff claims she became unresponsive during the party, but was not discovered by Cardiello until he awoke the next afternoon. As such, she was not provided with medical care in an expedient fashion and, according to Plaintiff, Cardiello delayed calling for help out of fear of being caught with illegal substances. Plaintiff brought a civil action against Cardiello, alleging she was served alcohol when visibly intoxicated, and for negligent failure to properly summon aid. Cardiello tendered defense to and sought indemnification from his parents’ homeowners’ insurance company, Pennsylvania General Insurance Company. In response, the insurer declined to provide either defense or indemnity based upon language in a policy exclusion for claims “[a]rising out of the use, . . . transfer or possession” of controlled dangerous substances. Cardiello filed a Declaratory Judgment action as to the insurer’s obligations under the policy. The trial court granted summary judgment in Cardiello’s favor, and directed that the insurer provide both a defense and indemnity. The Appellate Division reversed, and held that, as the proofs linked Plaintiff’s injuries to drugs and alcohol, the “arising out of” exclusion was satisfied. In addition, the appellate court concluded that the exclusion barred Cardiello’s defense under any circumstances. On further appeal, the Supreme Court reasoned that the duties to defend and indemnify should be analyzed separately. As to the insurer’s duty to defend Cardiello against the claims made in the Complaint, the Court reviewed the language of the exclusion and concluded that the phrase “arising out of” was ambiguous and lacked qualifying language in the event other concurrent causes existed. The Court explained that, construing the language against the drafter, the insurer could have written the exclusion to characterize the use, transfer or possession of controlled dangerous substances as a “substantial nexus” to the injury for the exclusion to trigger. The Court held that the ambiguity called for the exclusion to be construed in connection with the reasonable expectations of the insured. "The insurer’s proposed construction that “arising out of” means “incident to” or “in connection with” cannot be correct. That would expand the phrase to mean the injury is connected in any fashion, however remote, to the excluded act, rather than one with a “substantial nexus” to the excluded act." As to the duty to indemnify, the Court remanded to the trial court for findings as to the sequence of events leading to Plaintiff’s injuries and the cause(s) thereof.

Submitted by: Anthony J. Zarillo, Jr. and Dana K. Ferrera [Bevan, Mosca, Giuditta & Zarillo, P.C.] - Posted: 07/29/2010
07/06/2010

ELHASSAAD v. INDEPENDENCE AIR, INC.

The Federal Aviation Act does not preempt state law concerning tort claims arising from an air carrier’s conduct in overseeing the disembarkation of passengers.
UINITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Passenger, an amputee, disembarking from a small commuter plane fell off of stairs and landed on tarmac injuring his shoulder. Passenger filed negligence action against airlines in state court, which was removed to federal court. Airlines sought summary judgment because under Air Carrier Access Act airlines are only obligated to assist passengers upon their request; the federal law preempted state negligence standards. District court granted motion. On appeal, the Third Circuit reversed. The Court observed that the statutory and regulatory framework of the Aviation Act provided no evidence of any intent to regulate safety during disembarkation. In addition, the Court found that the Air Carrier Access Act did not apply as it is aimed at ensuring respect and equal treatment for disabled passengers. The Court held there was no basis to conclude that state law was an obstacle to the purposes and objectives in the federal acts and thus the case was governed by state law negligence principles.

Submitted by: Scott A. Burr, CONCEPCION, SEXTON & MARTINEZ - Posted: 07/09/2010
07/06/2010

FIRST VAGABONDS CHURCH OF GOD v. CITY OF ORLANDO

City of Orlando’s Large Group Feeding Ordinance does not violate First and 14th Amendments to the U.S. Constitution or Florida’s Religious Freedom Restoration Act.
UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

The First Vagabonds Church, which consists of approximately 40 homeless persons, holds services on Sunday at Langford Park in Orlando and receives food from charitable/political activist groups. City Ordinance required anyone conducting a “large group feeding” within Park District to obtain a permit first. Ordinance limits number of permits to 2 per 12 months. The Court found that to an objective observer the feeding of people was not sufficiently expressive to receive protection under the First Amendment. Similarly, the Court found that the City’s stated goal of park preservation met the rational basis test so as not to violate the Free Exercise Clause. The Court further found that the ordinance’s exemption of city concessionaires did not fail the rational basis test so as to violate the Equal Protection Clause because the City could more easily regulate its vendors through contracts and licenses. Finally, the Court found that limiting the number of times a group could hold religious services in a park did not to impose a substantial burden in violation of the Florida Religious Freedom Restoration Act. Groups could simply rotate among parks.

Submitted by: Scott A. Burr, Concepcion, Sexton & Martinez, Coral Gables, Florida - Posted: 07/09/2010
07/02/2010

ALVAREZ v. ROYAL ATLANTIC DEVELOPERS, INC.

Employer cannot fire employee earlier than it otherwise would have because she complained about discrimination, at least not unless something in her complaint or the manner in which she made it gave the company an objectively reasonable basis to fear that unless employee was fired she would sabotage its operations or endanger others.
UNITED STATES COURT OF APPEALS FOR ELEVENTH CIRCUIT

Employer decided to terminated employee upon finding a replacement. After this information became known to employee, employee complained to employer that she was being discriminated against because she was Cuban. Employer then fired employee immediately on the basis that it would be “awkward and counterproductive” to keep her around and she could sabatoge its operations. The Court found that the record did establish that the employer had legitimate non-discriminatory reasons to fire employee before she complained, and it remained free to act on those reasons afterward. The one thing the employer could not lawfully do is fire the employee earlier than it otherwise would have because she complained about discrimination, at least not unless something in her complaint or the manner in which she made it gave the company an objectively reasonable basis to fear that unless employee was fired she would sabotage its operations or endanger others. The Court held that unless the employer convinces a jury that it had a reasonable basis for fearing that unless it fired the employee immediately she would sabotage its operations or harm others, and there was no less drastic means of reliably preventing that other than firing her, the employee was entitled to damages for the length of time she would have remained on the job if she had not sent the letter complaining of discrimination.

Submitted by: Scott A. Burr of Concepcion, Sexton Martinez - Posted: 07/06/2010
07/01/2010

Vivenzio v. City of Syracuse

Second Circuit U.S. Court of Appeals Rejects District Court’s Summary Judgment Award Granted to City of Syracuse On Reverse Racial Discrimination Claims
Second Circuit Court of Appeals

David Vivenzio and Scott Wilkinson (the “Applicants”), Caucasians whose employment applications to the fire department of the City of Syracuse (the “City”) were denied, sued the City for racial discrimination under Title VII and the Fourteenth Amendment. The U.S. District Court granted summary judgment in favor of the City on grounds that the City was permitted to take race into account in its hiring decisions under a 1980 consent decree designed to have the percentage of the City firefighters who were African Americans approximate to the percent of African Americans in the City’s labor pool. On appeal, the Applicants contended that the district court erred in its decision because the City could not rely on the consent decree as its basis for rejecting their applications since the consent decree’s goals had been met prior to the rejection of their applications. The Second Circuit U.S. Court of Appeals opined that the racial makeup of the City’s labor pool was the key factor in determining whether the City’s reliance on the consent decree was justified. Because the district court relied on the percentage of the City’s overall African American population, as opposed to the percentage of African Americans in the City’s labor pool, and there was no evidence that all African Americans in the City’s overall population were members of the labor force, the Court ruled that the district court’s decision was flawed. Finding that neither the City nor the Applicants adduced any evidence as to the percentage of African Americans in its labor pool at the time of the challenged hiring decision to warrant summary judgment in either party’s favor, the Court vacated and remanded the district court’s decision for further proceedings.

Submitted by: Thomas K. Hanekamp and Kathryn Formeller (Tressler LLP) - Posted: 07/06/2010
06/29/2010

CARGILL, INCORPORATED, ET AL. V. ACE AMERICAN INS. CO., ET AL.

The Minnesota Supreme Court Overrules Its Prior Decision In Iowa National And Holds That A Primary Insurer That Provides A Duty To Defend Has An Equitable Right To Contribution From Other Insurers With Triggered Policies
Minnesota Supreme Court

Cargill, Inc. sued several insurers, including Liberty Mutual, in federal district court claiming that each insurer had a joint and several duty to defend and indemnify it against lawsuits which alleged property damage and bodily injury as a result of exposure to Cargill’s contaminated poultry litter. Cargill filed a summary judgment motion on the duty to defend and Liberty Mutual filed a cross-motion for summary judgment asking the court to require Cargill to enter into a loan receipt agreement or, in the alternative, to declare that such an agreement was unnecessary in order for Liberty Mutual to seek contribution of incurred defense costs from other liable insurers. The district court ruled in favor of Liberty Mutual but certified for appellate review the question of whether a court can order primary insurers with policies that insure and are triggered by the same risk to be equally liable for an insured’s defense costs where there is otherwise no privity between them in light of the Minnesota Supreme Court’s previous ruling in Iowa National Mut. Ins. Co. v. Universal Underwriters Ins. Co (holding that an insurer who undertakes a defense is responsible for its own defense costs and cannot later seek reimbursement from the other). The Minnesota Court of Appeals answered the certified question in the affirmative. On further review, the Minnesota Supreme Court rejected its holding in Iowa National, opining that “the Iowa National rule … is no longer an appropriate result when multiple insurers may be obligated to defend an insured … [and] is contrary to principles of equity…”. Affirming the appellate court’s decision, the Court concluded that “a co-primary insurer’s right to contribution from other primary insurers with a duty to defend is supported by public policy and is the better reasoned position.”

Submitted by: Thomas K. Hanekamp and Devin C. Maddox (Tressler LLP) - Posted: 07/01/2010
06/29/2010

The Kroger Co. v. LuAnn B. Plonski

Protecting Customers: Indiana Declares Landowner’s Duty to Business Invitees Rests Upon Reasonable Foreseeability Test
Indiana Supreme Court

The Supreme Court of Indiana was presented with the issue of whether a store owed a duty to a business invitee who was assaulted in a Kroger’s parking lot. After Plonski, a Kroger’s customer, filed a complaint for damages against Kroger for negligence, Kroger filed a motion for summary judgment arguing that it did not owe a duty to protect Plonski from the criminal act of a third party who was not a guest of the store. In support of its motion, Kroger argued that that store was located in a low level criminal area and therefore Plonski’s attack was not foreseeable. Kroger’s discovery responses however reflected more than 30 police runs to that location over a two year time period. The trial court denied Kroger's summary judgment motion and the Court of Appeals affirmed. The Supreme Court held Kroger, as the moving party, failed to meet its burden of demonstrating that criminal activity on its premises at the time of Plonski’s assault was not foreseeable. Indiana law provides that landowners have “a duty to take reasonable precautions to protect their invitees from foresee-able criminal attacks.” A key element of that duty is the foreseeability of the kind of criminal attack in which the plaintiff was involved, considering the totality of circumstances. The Court noted that summary judgment is rarely appropriate in negligence actions since “negligence cases are particularly fact sensitive and are governed by a standard of the objective reasonable person-one best applied by a jury after a hearing of all the evidence.”

Submitted by: Thomas K. Hanekamp and Kathryn Formeller (Tressler LLP) - Posted: 07/01/2010
06/29/2010

THOMPSON ET AL V. RELATIONSERVE MEDIA, INC. ET AL

The Eleventh Circuit Affirmed The District Court’s Dismissal Of The Plaintiff’s Twice-Amended Claims Of Violations Of Sections 10(B) And 20(A) Of The Securities Exchange Act Of 1934, Holding That The Plaintiff Had Failed To Plead Fraud With Particularity Pursuant To The Private Securities Litigation Reform Act (“PSLRA”). The Circuit Court Also Vacated The District Court’s Orders Denying Three Motions For Rule 11 Sanctions And Fees And Remanded The Case For Further Proceedings On Those Issues
Eleventh Circuit Court of Appeals

The District Court dismissed plaintiff Jacoby’s federal securities fraud complaint after twice giving him the opportunity to comply with the PSLRA’s rigid pleading standards, but it also denied defendant Karp’s three motions for sanctions and fees against Jacoby through conclusory orders that were “. . . not sufficient to permit meaningful appellate review.” Both litigants appealed to the Eleventh Circuit. Jacoby lost his appeal of the dismissal order. Also, the Eleventh Circuit vacated the orders that had denied the sanctions motions and remanded that issue for ab initio review. It held that the District Court had failed to comply with the PSLRA’s stringent procedures that courts must follow in sanctions motions. In a 138 page dissenting opinion and factual review of the case, Circuit Judge Tjoflat criticized the vacating and remanding of the sanctions orders for reconsideration ab initio. He observed that frivolous pleading of the complaints had occurred as a matter of law. He further opined that the correct procedure the Eleventh Circuit should have followed was vacatur of the orders and remand with an instruction that the District Court sanction the plaintiff’s attorneys.

Submitted by: Gerald Kline and Raymond Moss (Sims Moss Kline & Davis LLP) assisted by MJ Mitchell and Eric Van Atta - Posted: 07/01/2010
06/29/2010

COX V. M.A. PRIMARY AND URGENT CARE CLINIC ET AL

Tennessee Supreme Court Holds That The Standard Of Care Applicable To A Physician Assistant Is Distinct From That Applicable To Physicians
Tennessee Supreme Court

In this case, plaintiff Cox sued both the clinic owned by Maddox, a physician assistant, and the physician that supervised Maddox for alleged misdiagnosis of her medical condition. The trial court granted the defendants’ summary judgment motion on the basis that the plaintiff had failed to establish through her expert that Maddox had violated the standard of care applicable to him. The Tennessee Court of Appeals reversed, holding that the standard of care applicable to both a physician and a physician assistant is the same. On further appeal, the Tennessee Supreme Court canvassed the law of other states on the applicable standard of care and ultimately held that the Tennessee General Assembly did not intend for physician assistants to be held to the same standard of care as physicians when administering medical care. It observed that physician assistants do not enjoy the same autonomy that is accorded to physicians and are statutorily limited to performing only those tasks that are within the assistant’s range of skill and competence. The Supreme Court reversed the Court of Appeals and reinstated summary judgment for the defendants as to Maddox’s alleged negligence.

Submitted by: Gerald Kline and Raymond Moss (Sims Moss Kline & Davis LLP) assisted by MJ Mitchell and Eric Van Atta - Posted: 07/01/2010
06/28/2010

SCOTT V. RAYHRER

Trial Court did not err when it required the jury rely on expert testimony in finding negligence
THE COURT OF APPEAL, SECOND DISTRICT, DIVISION 6, CALIFORNIA

Plaintiff sued his doctors for medical malpractice and appealed after the jury returned a verdict in favor of Defendants. The Honorable Judge Perren affirmed, finding no error with the instructions given to the jury. Plaintiff Scott filed his medical malpractice suit after undergoing a series of surgeries for colorectal cancer. Dr. Iwasiuk performed Plaintiff’s first surgery. A year later, Plaintiff underwent a second surgery by Dr. Rayhrer. The second surgery Dr. Rayhrer performed entailed placing two Penrose drains in Plaintiff’s pelvis to drain fluid that was causing discomfort. Dr. Iwasiuk performed Plaintiff’s follow-up care, including trimming the Penrose drains and re-securing them. Dr. Iwasiuk then removed the drains days later. Plaintiff’s symptoms worsened, and Dr. Iwasiuk performed a third surgery on Plaintiff, wherein he discovered a seven-inch Penrose drain that he thought he had removed during Plaintiff’s follow-up care post Plaintiff’s second surgery. The trial court instructed the jury to base any finding of negligence on expert testimony, rather than on common knowledge. On appeal, Plaintiff argued this instruction was error and that the jury should have found negligence based on the common knowledge that it is negligent to leave foreign instruments in one’s body after surgery. The Court of Appeal acknowledged that it had never addressed whether Penrose drains should be treated like a retained surgical instrument such that the res ipsa loquitur doctrine would apply. Under res ipsa loquitur (“the thing speaks for itself”) the jury would not need to rely on expert testimony to find negligence. Judge Perren reviewed the conflicting case law of various states, some of which holds Penrose drains do not fall within the res ipsa loquitur doctrine because “expert medical testimony is required . . . to describe the proper use, purpose, insertion, and removal of a Penrose drain.” Other states, like Wisconsin, permit a Penrose drain to fall within the doctrine of res ipsa loquitur. The Court of Appeal followed Washington’s approach in a similar case where one doctor implanted the drains and another removed them. The Washington case required that the jury rely on expert testimony in that instance to determine “whether the physicians failed to act in a reasonably prudent manner” consistent with the professional standard of care. The Court of Appeal affirmed because it found a Penrose drain was not similar to a clamp or sponge inadvertently left in the body for the purposes of res ipsa loquitur. The Court distinguished Penrose drains since they are purposefully left in the body for a period of time before they are removed. Because their placement, retention, and removal involve complex medical procedures, the trial court did not err in instructing the jury to rely on expert testimony for its findings. The Court of Appeal affirmed, accordingly.

Submitted by: Carrie A. Scrufari, summer associate, Semmes, Bowen & Semmes - Posted: 07/12/2010
06/24/2010

BIFULCO v. PATENT BUSINESS & FINANCIAL SERVICES, INC.

Workers’ compensation retaliation claims brought against the State of Florida under section 440.205, Florida Statutes, are not subject to the pre-suit notice requirements of section 768.28(6), Florida Statutes.
FLORIDA SUPREME COURT

Employee filed suit against defendant state employer alleging that she was fired in retaliation for filing a workers’ compensation claim in violation of section 440.205, Florida Statutes. The Supreme Court heard the case to decide conflict among appeals courts as to whether presuit notice pursuant to section 768.28(6) is required. The Court looking to the plain language of 440.205 and its legislative history concluded that because section 440 contains a waiver of sovereign immunity independent of the waiver contained in section 768.28, presuit notice requirements of section 768.28(6) do not apply to retaliatory discharge actions brought against the State.

Submitted by: Scott A. Burr, ConcepcionSexton&Martinez - Posted: 07/06/2010
06/18/2010

GUEVARA v. REPUBLIC OF PERU,

An effect is direct, when considering under the Foreign Sovereign Immunities Act whether a foreign sovereign’s commercial activity has a “direct effect” in the United States, if it followed as an immediate consequence of the defendant’s activity.
UNITED STATES COURT OF APEALS FOR THE ELEVENTH CIRCUIT

Informant Guevara who had disclosed hiding place of fugitive, former Peruvian government president and arranged to have him delivered to authorities, brought action against Republic of Peru, its Ministry of Interior, and its present and former Ministers of Interior after Peru refused to pay a $5 million reward that it had offered for information about fugitive’s whereabouts. The Court reversed the district court’s grant of summary judgment for Guevara. The Court found that to come within the commercial activity exception to the Foreign Sovereign Immunities Act the commercial activity must be based in the United States. The Court held that Peru did not cause a direct effect within United States by offering reward in Peru, that was to be administered in Peru by committee that was part of Ministry of Interior, for information about fugitive’s whereabouts.

Submitted by: Scott A. Burr, ConcepcionSexton&Martinez - Posted: 07/06/2010
06/18/2010

ERVIN V. DELTA REG’L MED. CTR.

Court of Appeals finds mechanical compression devices would not have prevented woman’s death from pulmonary embolism after a hysterectomy.
COURT OF APPEALS OF MISSISSIPPI

The Honorable Judge Ishee for the Court of Appeals of Mississippi affirmed the rulings of the trial court, finding that substantial, credible, and reasonable evidence supported the lower court’s findings. Plaintiff Curtis Ervin filed a wrongful death action after his wife, Janice, died of a pulmonary embolism three days after Dr. James Beckham performed her hysterectomy at Delta Regional Medical Center (DRMC). The Court of Appeals found that mechanical compression devices would not have prevented the death. Janice consented to a hysterectomy in order to remove uterine fibroid tumors after other treatments had failed. Dr. Beckham did not order any prophylactic measures to reduce the risk of deep vein thrombosis or pulmonary embolism because 40 year-old Janice was categorized as a low-risk patient, having no prior history of blood clots. Janice’s condition rapidly deteriorated the day after surgery, and she ultimately died as the result of a blood clot that traveled to her lung, causing her breathing and heart to stop. At the bench trial, the circuit court ruled in favor of DRMC and Curtis appealed. The Court of Appeals reviews factual determinations made at bench trials under “the substantial evidence standard.” The Court held that substantial evidence supported the trial court’s findings of fact and agreed that Curtis’ expert witness failed to establish the national standard of care with respect to the use of sequential compression devices to prevent blood clots following surgery. At trial, Curtis’ expert witness, Dr. Miller, failed to refer to any peer-reviewed literature or studies to support the use of compression devices for low-risk hysterectomy patients. Additionally, the Court found Curtis’ argument that Janice should have been classified a moderate-risk patient without merit since that would require re-weighing the credibility of witnesses. Such an assessment would exceed the substantial evidence standard of review appropriate for Mississippi medical malpractice cases. Lastly, while the origin of the clot was disputed, the Court found the defense offered credible and substantial evidence to demonstrate the clot formed in the pelvis rather than the leg, in which case mechanical compression devices could not have prevented its formation. As a result, the Court affirmed the factual findings of the trial court under the substantial evidence standard of review.

Submitted by: by Marisa A. Trasatti and Carrie A. Scrufari, summer associate, Semmes, Bowen & Semmes - Posted: 07/12/2010
06/17/2010

CÁRDENAS V. MUANGMAN

Court of Appeals reinstates Plaintiff’s jury verdict after finding expert witness’ testimony was admissible and sufficient to establish the national standard of care.
UNITED STATES DISTRICT OF COLUMBIA COURT OF APPEALS

The Honorable Judge Ruiz for the United States District of Columbia Court of Appeals held that the expert testimony of Dr. Girard was admissible and sufficient to permit a jury to determine the national standard of care on the use of laminaria in second-term abortions. Plaintiff Cárdenas filed a medical malpractice suit against Defendant Dr. Muangman because she suffered severe complications after receiving a dilation and evacuation procedure (D & E) upon learning her 20-week old fetus had Trisomy 21. Following the procedure, Cárdenas suffered lacerations of her uterus, damage to her ovaries, blood loss, hemorrhaging, and developed sepsis. A hysterectomy was then required. At trial, Plaintiff’s expert witness, Dr. Girard, testified that Defendant deviated from the national standard of care for a D & E procedure when he failed to use laminaria to dilate Plaintiff’s cervix prior to surgery. After the trial court admitted Dr. Girard’s expert testimony, the jury awarded Plaintiff $263,557.96. Defendant then moved for judgment as a matter of law, contending Dr. Girard’s testimony was inadmissible and insufficient to establish a national standard of care for D & E procedures. The trial court then set aside the verdict and entered judgment in favor of Defendant. On appeal, the Court found that the trial court properly admitted Dr. Girard’s expert testimony. The Court found that Plaintiff demonstrated by a preponderance of the evidence that the use of laminaria in D & E procedures is the national standard of care and that Dr. Girard’s testimony was not based solely on his own experience. Rather, his testimony was based on familiarity with textbooks, national medical journal publications, his attendance at national and international meetings, and his discussions with physicians across the country. As such, his testimony was admissible and sufficient to allow the jury to find that Plaintiff proved the national standard of care by a preponderance of the evidence. The Court thus reversed the trial court and reinstated the jury verdict.

Submitted by: Marisa A. Trasatti and Carrie A. Scrufari, summer associate, Semmes, Bowen & Semmes - Posted: 07/12/2010
06/17/2010

INTERNET SOLUTIONS CORPORATION v. TABATHA MARSHALL

A non-resident commits a tortuous act within Florida for purposes of the State’s long-arm statute when he or she makes allegedly defamatory statements about a company with its principal place of business in Florida by posting those statements on a website, where the website posts containing the statements are accessible and accessed in Florida.
FLORIDA SUPREME COURT

Marshall, a Washington state resident, operated a website on which she posts consumer-related issues. She made posts about plaintiff, whose principal place of business is in Florida, accusing it of criminal activity. The U.S. Court of Appeals certified to the Florida Supreme Court the question of whether defendant’s conduct constituted a tortuous act for purposes of Florida’s long-arm statute. The Court concluded that allegedly defamatory material about a Florida resident placed on the Web and accessible in Florida constitutes an “electronic communication into Florida” when the material is accessed (or “published”) in Florida. The Court held that in the context of the World Wide Web, given its pervasiveness, an alleged tortfeasor who posts allegedly defamatory material on a website has intentionally made the material almost instantly available everywhere the material is accessible. By posting allegedly defamatory material on the Web about a Florida resident, the poster has directed he communication about a Florida resident to readers worldwide, including potential readers within Florida. When the posting is then accessed by a third party in Florida, the material has been “published” in Florida and the poster has communicated the material “into” Florida, thereby committing the tortuous act of defamation within Florida.

Submitted by: Scott A. Burr of Concepcion, Sexton Martinez - Posted: 07/06/2010
06/09/2010

IN RE ZIMMER DUROM HIP CUP PROD. LITIG.

The Judicial Panel on Multidistrict Litigation finds the 45 actions against Zimmer Hip Cup should be centralized in the District of New Jersey, pursuant to 28 U.S.C. § 1407.
THE JUDICIAL PANEL ON MULTIDISTRICT LITIGATION

Chairman of the Judicial Panel on Multidistrict Litigation, John G. Heyburn II, found that centralizing the 45 pending suits against Zimmer’s Durom Acetabular Component (Durom Cup) would eliminate duplicative discovery, inconsistent pretrial rulings, and excessive consumption of judicial resources. The panel found that all the actions contained common questions of fact such that centralizing all the actions under Section 1407 was appropriate. The Plaintiffs have filed separate product liability actions against Durom Cup for manufacturing allegedly defective devices that are used in hip replacement surgeries. Plaintiffs further allege that the cups were designed defectively and that Zimmer failed to warn adequately consumers about the devices. After filing their claims, Plaintiffs then motioned to centralize the actions. Chairman Heyburn II concluded that centralization in New Jersey was proper since 33 of the 45 pending actions were filed in New Jersey. Centralizing the claims, he reasoned, would be convenient for the majority of the parties and the witnesses involved. Additionally, centralization aids the efficient resolution of the litigation. While not all plaintiffs will have identical facts, especially with regard to causation, the panel noted that such is usually the case in products liability litigation. Moreover, centralization under Section 1407 does not require complete identity of all issues, or even a majority of common issues. Section 1407 is satisfied here because there is commonality with regard to the manufacturing, testing, and marketing of one single product: the Durom Cup. The advantages of centralization further support the panel’s decision because one single judge can manage all pretrial proceedings to ensure a speedy and fair resolution to the issues at stake. Centralization also does not preclude discovery for non-common issues since that discovery could occur simultaneously with discovery on the common issues. Lastly, centralizing the actions would not impede Durom’s ability to settle or mediate cases. In light of all these considerations, the panel determined centralization in New Jersey was appropriate.

Submitted by: Marisa A. Trasatti and Carrie A. Scrufari, summer associate, Semmes, Bowen & Semmes - Posted: 07/12/2010


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