The Appellate Strategist

Insights on appellate issues, trial consultations, and evaluating appeals

Florida Appellate Court Finds Daubert Standard Applies Retrospectively and Prohibits “Pure Opinion” Testimony

By on Posted in Florida

 

In the first civil appellate case in Florida to address the newly adopted Daubert standard for the admissibility of expert testimony, Florida’s Third District Court of Appeal held that the standard applies retrospectively and, unlike the former Frye test, prohibits “pure opinion” testimony.  See Perez v. Bell South Telecommunications, Inc., 39 Fla. L. Weekly D865b, 2014 WL 1613654 (Fla. 3d DCA Apr. 23, 2014).  To read the full opinion click here. 

In this case, Maria Perez sued Bell South for damages stemming from the premature birth of her first son.  To establish causation, Ms. Perez offered Dr. Isidro Cardella, a board-certified obstetrician and gynecologist, who “opined in his deposition that workplace stress, exacerbated by Bell South’s alleged refusal to accommodate Ms. Perez’s medical condition, was the causal agent of the [placental] abruption and early delivery of her son with medical consequences.”  Dr. Cardella testified that there was no way of ever knowing for sure what caused Ms. Perez’s placental abruption and that his conclusions were purely his own personal opinion, not supported by any credible scientific research.  The basis of Dr. Cardella’s opinion was that Ms. Perez worked during this first pregnancy, but did not work during the pregnancy leading to the birth of her second child.

The trial court struck Dr. Cardella’s opinion as inadmissible under Frye and granted Bell South’s motion for summary judgment based on Ms. Perez’s failure to proffer admissible evidence to prove causation.  Ms. Perez appealed.  In observing that the legislature’s purpose in adopting Daubert was “to tighten the rules for admissibility of expert testimony,” the court recognized that the Daubert test applies to all expert testimony and expressly prohibits “pure opinion” testimony.  The Frye test was held not to apply to “pure opinion” testimony.  Agreeing with the First District, the court also found that the new standard “indisputably applies retrospectively” because, as a rule of evidence, it is procedural in nature.

The court succinctly stated the Daubert standard as requiring expert testimony to be based on “scientific knowledge.”  In order to qualify as “scientific knowledge,” the court said, “an inference or assertion must be derived by the scientific method.”  The court also noted that while the Frye test (i.e., general acceptance in the scientific community) is no longer a sufficient basis to admit expert testimony, it is now “simply one factor among several.”  In upholding the trial court’s ruling, the Third District stated:  “Dr. Cardella had never before related a placental abruption to workplace stress and knew of no one who had.  There is no scientific support for his opinion.  The opinion he proffers is a classic example of the common fallacy of assuming causality from temporal sequence.”

Plaintiff did not file a motion for rehearing and the decision is now final.

What We Learned About the Illinois Supreme Court in 2013

By Kirk Jenkins on Posted in Illinois

 

 

[The following post was originally published on Law360.com on February 19, 2014.]

With the publication of “The Behavior of Federal Judges,” by Lee Epstein, William M. Landes and Judge Richard A. Posner, rigorous statistical analysis of the appellate courts is beginning to move from academic publications to mainstream bar journals. Although academic analysts have focused largely on the federal appellate courts — the United States Supreme Court in particular — my focus for the past several years has been on the civil docket of the Illinois Supreme Court.

For 2013, the court decided 34 civil cases (not including attorney discipline and juvenile matters). More than 80 percent of the civil docket consists of appeals taken from final judgments and orders. The court decided four civil cases, each where the primary issue was civil procedure, domestic relations and constitutional law, as well as three cases each in insurance, wills and estates, and workers compensation. In addition, the court decided two cases each in the areas of taxation, labor law, tort and public pensions.

Not surprisingly, a dissent at the Appellate Court helps in getting the court’s attention — 29.4 percent of the civil cases involved dissents below, right in line with the court’s trend in recent years. The court rarely allows petitions for leave to appeal from unpublished decisions (known in Illinois as Rule 23 orders) — only 8.8 percent of the civil docket in 2013.

The court decided 58.8 percent of its civil cases unanimously. This is similar to the court’s experience in 2012, when the unanimity rate was 52.6 percent, but significantly below the court’s unanimity rate for most of the past decade. From 2003 to 2005 and 2007 to 2011, the court’s unanimity rate in civil decisions fell along a narrow range, from a low of 69.8 percent in 2003 to a high of 82.1 percent in 2009. The only exception was in 2006, when the cCourt dipped to 56.5 percent.

As always, the court produced decisions much more quickly in 2013 when there was no dissent. Unanimous decisions came down an average of 103.7 days after oral argument, while cases with dissenters took much longer — 185.8 days after argument. The court’s average lag time on nonunanimous decisions has been relatively static since 2011, but the average lag time on unanimous decisions has been cut by more than three weeks in that time.

The court reversed in 55.9 percent of its civil decisions in 2013. With the exception of 2012 (78.4 percent) and 2009 (75.7 percent), the court’s reversal rate has narrowly fluctuated around the 50 percent mark since 2003. Since 2003, the court has reversed in 57.99 percent of its civil cases.

Every year at the end of the United States Supreme Court’s term, the legal press reports on the rise and fall of reversal rates for the federal circuit courts. The problem with overemphasizing this statistic is that in any single year, an intermediate court’s reversal rate is based on a small number of cases. This is particularly true for my work on the state Supreme Court’s civil docket, so rather than focusing on year-to-year ups and downs, I look for sustained deviations from the norm over time.

The single biggest part of the court’s civil docket comes from Chicago’s First District, which comprises between 30 and 40 percent of the case load each year. Reversal rates in four of the six divisions of the First District (the Second, Third, Fifth and Sixth) were down in 2013 from 2012. Since 2003, four of the six divisions’ reversal rates are clustered between 50 and 60 percent. The Third Division is a bit higher (61.8 percent), and the Fourth a little lower (44.4 percent).

Both the Second and Third Districts saw lower reversal rates in 2013 — 60 percent for the Second, 50 percent for the Third, but in both cases, the courts were reverting to form. Since 2003, 61 percent of the Second District’s civil decisions reviewed by the court have been reversed, while 52.5 percent of the Third District’s decisions have been.

Last year, I noted that Springfield’s Fourth District had shown the lowest reversal rate in the state — only 25 percent. This was part of a three-year swing in the numbers, with only 30 percent of the court’s decisions reversed between 2010 and the end of 2012. But in 2013, the Fourth reverted to its long-term pattern as the Supreme Court reversed in six of 10 civil cases. Since 2003, the reversal rate for the Fourth District is 53.1 percent.

Many observers consider the Fifth Appellate District to be the most pro-plaintiff appellate court in the state. The Supreme Court’s response has been relatively consistent: In seven of the 11 years since 2003, the Fifth’s reversal rate has been 67 percent or more, and 2013 was no exception. The Fifth District leads the state for the entire period with a 75.9 percent reversal rate.

Justices Anne B. Burke and Lloyd A. Karmeier wrote for the court’s majority most often this past year, with seven majority opinions apiece in civil cases. Justice Robert R. Thomas added six, Chief Justice Rita B. Garman wrote five and Justice Mary Jane Theis four.

Collectively, written dissents were down 20 percent in 2013 over 2012. Justices Thomas L. Kilbride and Charles E. Freeman, who wrote the fewest majority opinions in civil cases, wrote the most dissents — five and three, respectively. Justices Burke and Thomas filed two dissents apiece, with the other justices dissenting only once each in civil cases.

In order to study individual justices’ voting patterns, I next considered how often each justice votes when the court is divided. Chief Justice Garman and Justice Mary Jane Theis each voted with the majority in 92.9 percent of the court’s nonunanimous civil decisions last year. Justice Thomas voted with the majority in 84.6 percent of such cases in 2013, almost identical to his percentage in 2012 (83.3 percent). Justice Karmeier voted with the majority in 78.6 percent of the court’s nonunanimous civil decisions, only slightly down from 2012 number. Only Justice Freeman’s percentage was slightly increased, voting with the majority in divided cases 78.6 percent of the time in 2013, up from 63 percent a year earlier. Justice Kilbride voted with the majority in 46.2 percent of nonunanimous cases.

The court’s center is even more sharply defined when we limit the database to two and three-dissenter decisions. In such decisions, the chief justice was in the majority every time. Justice Theis joined the majority decision in 85.7 percent of such cases, with Justices Thomas and Karmeier voting with the majority 71.4 percent of the time. Most often in the minority were Justice Freeman, voting with the majority in 57.1 percent of closely divided cases; Justice Kilbride, with the majority half the time; and finally, Justice Burke, who voted with the majority in 42.9 percent of closely divided cases.

I turned next to agreement rates between pairs of justices. For 2013, Chief Justice Garman and Justice Theis voted together in 85.7 percent of nonunanimous civil cases. The chief voted with Justice Thomas in 84.6 percent of such cases, and with Justice Karmeier 71.4 percent of the time. Similarly, Justice Theis voted with Justice Thomas in 76.9 percent of such cases and with Justice Karmeier 71.4 percent of the time. Justices Thomas and Karmeier voted together in 76.9 percent of nonunanimous civil cases.

On the other hand, Justice Burke voted with Chief Justice Garman and Justices Karmeier and Theis in 57.1 percent of such cases. Justice Burke voted with Justice Thomas 46.2 percent of the time. Similarly, Justice Kilbride voted with the chief justice in 38.5 percent of nonunanimous civil cases, with Justice Thomas in 58.3 percent, and with Justice Theis in 53.8 percent of such cases. Because Justice Freeman voted with the majority in each of the court’s seven one-dissenter cases, his agreement rates are a bit higher — 85.7 percent with Justice Burke, 71.4 percent with Chief Justice Garman, 61.5 percent with Justice Thomas, 57.1 percent with Justice Karmeier and 71.4 percent with Justice Theis.

When appellate specialists get together, we frequently debate whether or not an experienced appellate attorney should be able to predict the outcome of a case or even the vote at the conclusion of an oral argument. To study whether this question can be approached objectively, I added data on questioning patterns to my study.

The court asked 848 questions during arguments of civil cases decided during 2013: 417 to appellants during their opening remarks, 316 to appellees and 115 to appellants during rebuttal. Justice Thomas asked 222 questions. Justice Theis was second with 171. Justice Burke was third with 126 questions. After Justice Burke came Chief Justice Garman with 109 questions, Justice Karmeier with 101, Justice Freeman with 61 and Justice Kilbride with 58 questions. Appellants were asked an average of 15.4 questions per argument, appellees 9.3.

There are a lot of theories among appellate lawyers about questions from the court. Some lawyers insist the justices sometimes ask questions to play devil’s advocate, or to attempt to persuade another justice. There is no evidence to support either of these theories in the court’s 2013 civil arguments. Rather, the court’s questions tend to indicate that the inquiring justice may be having difficulty with that side’s argument. Losing appellants average 17.7 questions per argument to 13.6 for winners. Similarly, losing appellees average 10.6 questions per argument, while winners average 7.9 per argument.

In nonunanimous affirmances, appellants averaged 20.0 questions to 15.6 for appellants in unanimous cases. Appellees received an average of 8.9 questions in nonunanimous decisions to 7.0 in unanimous decisions. But in nonunanimous reversals, the difference was far smaller: Appellants received 14.4 questions in nonunanimous cases, compared to 13.2 in unanimous decisions. Appellees received an average of 9.3 questions in nonunanimous cases, but more in unanimous decisions: an average of 11.1 questions.

In order to account for the effect of complex cases on the data, I next asked whether the difference between total questions asked each side in a particular case might suggest a probable winner.

The answer is yes, at least in 2013. Appellees received more questions than their opponents in eight civil cases; they lost seven of eight. Appellants received more questions in 24 cases, winning 11 (the sides received an equal number of questions in two cases). The more an appellant’s total questions exceeded the appellee’s, the more likely the court would ultimately affirm. Losing appellants averaged 9.8 questions more than their opponents, while winning appellants averaged only 3.06 questions more than their adversaries.

Each of the seven justices averages more questions to appellants than appellees. For some justices, such as Chief Justice Garman (1.8/1.4), Justice Kilbride (1.0/0.8) and Justice Karmeier (1.7/1.4), the difference was small, but Justices Burke (2.5/1.5), Freeman (1.4/0.5), Thomas (4.2/2.7) and Theis (3.5/1.3) tended to ask appellants significantly more questions on average.

Dividing the data into unanimous and nonunanimous decisions does not make a consistent difference in the justices’ patterns. Justices Burke (1.8/3.1), Kilbride (0.7/1.5), Thomas (3.7/4.8) and Karmeier (1.1/2.4) averaged more questions to appellants when the court wound up divided, but Justices Freeman (1.6/1.1) and Theis (4.3/3.1) averaged fewer. Chief Justice Garman (0.3/4.8), Freeman (0.4/0.6) and Karmeier (1.0/1.8) averaged more questions to appellees in cases decided unanimously, but Justices Burke (2.1/0.9), Kilbride (0.9/0.5) and Thomas (3.0/2.5) averaged fewer.

However, several Justices’ questioning patterns might be suggestive of how they will ultimately vote. Five of the seven justices — Burke (2.4/2.2), Kilbride (1.3/0.8), Thomas (6.4/2.4), Karmeier (2.4/1.0) and Theis (4.4/3.0) — asked more questions of appellants they ultimately voted against than of appellants they voted for. Three justices — Chief Justice Garman and Justices Kilbride and Thomas — asked more questions of appellees they voted against than of appellees they voted for.

This past year suggests three lessons for counsel appearing before the Illinois Supreme Court: (1) for most issues, the court has a centrist voting bloc of Chief Justice Garman and Justices Thomas, Karmeier and Theis; (2) the court does not grant review predominantly to reverse, like some appellate courts with discretionary dockets; and (3) answer every question carefully — there’s a good chance those are the justices you must persuade to prevail.

Image courtesy of Flickr by anneh632 (no changes).

 

Law Lags Science? Not in the Ninth Circuit

By on Posted in Drug & Device

In 1996, Judge Posner of the Seventh Circuit burnished his reputation for pithy legalisms by observing that “the courtroom is not the place for scientific guesswork, even of the inspired sort. Law lags science; it does not lead it.” Rosen v. Ciba-Geigy Corp., 78 F.3d 316, 319 (7th Cir. 1996). Alas, the truth of that statement appears to be in doubt in the Ninth Circuit.

In Messick v. Novartis Pharmaceuticals Corp., — F.3d —, 2014 WL 1328182 (9th Cir. Apr. 4, 2014), the Ninth Circuit considered the district court’s grant of a Daubert motion against plaintiff’s specific causation expert, a medical doctor employing a “differential diagnosis.” The district court excluded the expert because he never explained the scientific basis for his conclusion, and thus was unreliable. The Ninth Circuit reversed, holding that the expert’s clinical experience and reference to a medical association’s diagnostic criteria were sufficiently scientific to support his specific causation opinion. This holding improvidently blesses a physician’s diagnosis of disease and approximation of its cause in the clinical setting – a pragmatic process necessarily born of little time, incomplete information, and risk aversion – as a product of the scientific method, and thus raises the potential for the law to impose liability for which there is insufficient scientific support.

DISTRICT COURT OPINION

Factual Background

Linda Messick was diagnosed with breast cancer, and subsequently underwent a regimen of radiation therapy and several medications. Thereafter, she was diagnosed with osteoporosis, which was treated with Zometa and Aredia therapies. Those drugs, manufactured and sold by Novartis, are bisphosphonates prescribed for the management of metastatic disease to the bone and other bone diseases and conditions.

During and after her use of Zometa and Aredia, Messick developed a series of dental maladies culminating in exposed bone in her mouth that did not heal completely for 3 years, and which she characterized as osteonecrosis of the jaw (“ONJ”). She subsequently filed suit against Novartis, alleging that Aredia and Zometa caused her ONJ, and that Novartis knew or should have known that its drugs were capable of causing ONJ, but failed to warn her prior to her use of them. Novartis filed Daubert motions challenging several of Messick’s experts, as well as a motion for summary judgment. This article, however, will focus solely on Novartis’ Daubert motion challenging Messick’s retained medical causation expert.

Daubert Analysis 

After acknowledging its gatekeeping responsibility under F.R.E. 702 to ensure that all expert testimony was relevant and reliable, the district court began its analysis by noting the expert had not conducted any prelitigation research into bisphosphonates or ONJ. His opinion was instead predicated on his “extensive experience” with ONJ and his review of 6 medical articles. The court held that his opinion that bisphosphonates were generally capable of causing ONJ was supported scientifically by his reliance articles. It was in the differential diagnosis underlying his specific causation opinion – that Aredia and Zometa caused Messick’s ONJ – that was unscientific.

“Differential diagnosis” is a standard diagnostic technique amongst medical clinicians by which a patient’s disease is diagnosed by “ruling-in” all potential diseases that might cause his symptoms, then “ruling-out” all diseases whose symptoms do not match his presentation. In the end, a physician is left with the disease that most likely accounts for the patient’s condition. Diagnosis of disease, however, is much different from a scientific determination of its cause. Thus, several federal appellate courts have noted that when a physician uses the “rule-in, rule-out” methodology to determine the cause of a plaintiff’s disease, this is properly a “differential etiology,” not “differential diagnosis.” See, e.g., Myers v. Illinois Central R.R. Co., 629 F.3d 639, 644-45 (7th Cir. 2010); McClain v. Metabolife Int’l, Inc., 401 F.3d 1233, 1252 (11th Cir. 2005); Tamraz v. Lincoln Elec. Co., 620 F.3d 665, 669-73 (6th Cir. 2010).

Thus, while the expert characterized his analysis as a “differential diagnosis,” the resulting specific causation opinion demonstrates he was actually performing a differential etiology. His analysis, however, identified not only 6 potential risk factors for ONJ causation, but also 3 criteria for bisphosphonate-related ONJ (“BRONJ”) diagnosis set forth by the American Association of Oral Maxillofacial Surgeons (“AAOMS”). He thus opined that bisphosphonates caused Messick’s ONJ because the criteria for BRONJ diagnosis were met, but did not “rule out” the 5 risk factors for ONJ causation he identified other than bisphosphonate use. It was the absence of a scientific explanation for his disregard of the remaining 5 risk factors that caused the district court to rule his specific causation opinion unreliable. Indeed, the court noted, “when asked if there is ‘any scientifically reliable way for him to determine in a patient who has multiple risk factors at one time which of those particular risk factors is causing the underlying necrotic bone in the jaw,’ he answered ‘no.’”

As a result of its Daubert rulings on the medical causation expert and other of Messick’s experts, the district court found she had insufficient evidence to prove causation. The district court therefore granted summary judgment, from which Messick appealed.

NINTH CIRCUIT OPINION AND ANALYSIS

The Ninth Circuit reversed the district court’s exclusion of the expert’s specific causation opinion for failure to explain its scientific basis. It was enough, the Court said, that the expert relied on “his own extensive clinical experience” and “his examination of Messick’s records, treatment, and history.” “Medicine partakes of art as well as science,” the Court held, “and there is nothing wrong with a doctor relying on extensive clinical experience when making a differential diagnosis.” The Ninth Circuit therefore held that a physician’s clinical experience in determining the etiology of disease is a scientifically rigorous process sufficient to meet Daubert’s reliability standard. However, as numerous courts have noted, this is simply not the case.

Doctors are driven by “the rigors and necessities of their clinical practices to conclude that temporal association equals causation, or at least that it provides an adequate proxy in the chaotic and sometimes inconclusive world of medicine. This shortcut aids doctors in their clinical practices because their most important objective day-to-day is to help their patients and ‘first, do no harm,’ as their Hippocratic oath requires.” Siharath v. Sandoz Pharms. Corp., 131 F. Supp. 2d 1347, 1372 (N.D. Ga. 2001), aff’d sub. nom., Rider v. Sandoz Pharms. Corp., 295 F.3d 1194 (11th Cir. 2002), reh’g and reh’g en banc denied, 48 Fed. Appx. 330 (11th Cir. 2002).

As a result, “[w]hen physicians think about etiology in a clinical setting, … they may think about it in a different way from the way judges and juries think about it in a courtroom. Getting the diagnosis right matters greatly to a treating physician, as a bungled diagnosis can lead to unnecessary procedures at best and death at worse. But with etiology, the same physician may often follow a precautionary principle: If a particular factor might cause a disease, and the factor is readily avoidable, why not advise the patient to avoid it? Such advice – telling a welder, say, to use a respirator – can do little harm, and might do a lot of good. This low threshold for making a decision serves well in the clinic but not in the courtroom, where a decision requires not just an educated hunch but at least a preponderance of the evidence.” Tamraz v. Lincoln Elec. Co., 620 F.3d 665, 673 (6th Cir. 2010) (emphasis in original) (overturning district court’s admission of expert as an abuse of discretion).

There is therefore an enormous gap “between clinical process, in which conclusions must be extrapolated from incomplete data” immediately in order to avoid patient injury, “and the scientific method, in which conclusions must be drawn from an accepted process.” Rider, 295 F.3d at 1196.  That is why most federal appellate courts, including the Ninth Circuit, require that an expert using differential etiology not only demonstrate the potential causes he “rules-in” are actually capable of causing the disease, but that he “systematically and scientifically rul[e] out specific causes until a final, suspected cause remains.” Kilpatrick v. Breg Inc., 613 F.3d 1329, 1342 (11th Cir. 2010); see also Norris v. Baxter Healthcare Corp., 397 F.3d 878, 885 (10th Cir. 2005); Clausen v. M/V NEW CARISSA, 339 F.3d 1049, 1057-58 (9th Cir. 2003); Myers, 629 F.3d at 644-45; Tamraz, 620 F.3d at 674. Remarkably, the Messick Court specifically acknowledged that “[w]hen an expert rules out a potential cause in the course of a differential diagnosis, the expert must provide reasons for rejecting alternative hypotheses using scientific methods and procedures.” Yet it allowed the expert’s specific causation testimony despite his failure to rule out 5 risk factors for ONJ other than bisphosphonates, and despite his inability to provide a scientific basis for his conclusion that bisphosphonates caused Messick’s ONJ.

The Messick Court added that the expert also relied on the AAOMS definition of BRONJ. But that definition is for the purposes of disease diagnosis, not causation, and thus does nothing to aid his differential etiology.   More importantly, the Court was unconcerned by the fact that “the current level of evidence does not fully support a cause-and-effect relationship between bisphosphonate exposure and necrosis of the jaws.” The resulting willingness to allow the plaintiff’s claims to proceed, despite a fundamental deficit of supporting scientific evidence, has already been warned against by numerous federal appellate courts – and, arguably, the Supreme Court. See, e.g., Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 596-97 (1993); Tamraz, 620 F.3d at 677-78; Rosen v. Ciba-Geigy Corp., 78 F.3d 316, 319 (7th Cir. 1996); Rider, 295 F.3d at 1202.

CONCLUSION

Instead of accepting the current limitations of science, the Messick Court deemed the medical clinician’s truncated etiological determination – which is properly focused on avoiding harm to the patient, rather than ascertaining a disease’s true cause – as sufficiently “scientific” to satisfy Daubert. As a result, specific medical causation may now be testified to by a physician in the Ninth Circuit despite a deficit of support in the scientific literature, and despite the physician’s inability to identify which among a multitude of risk factors actually caused a disease. In short, the Ninth Circuit has signaled its willingness to allow the law to get ahead of science. This will affect more than the truth of Judge Posner’s observation: Entire industries whose members are unfortunate enough to face suit in the Ninth Circuit now face the unnecessary destruction of jobs and stifling of innovation that comes from the imposition of liability with inadequate scientific support. See, e.g., Tamraz, 620 F.3d at 677-78 (citing New York Times article “describing how scientists concluded, years after litigation, billions in settlements, and the bankruptcy of a major manufacturer, that no evidence tied breast implants to health problems.”).

Image courtesy of Flickr by Steve Snodgrass (no changes).

Florida Supreme Court Decides that Florida Civil Rights Act Prohibits Pregnancy Discrimination

By on Posted in Florida

             On April 17, 2014, the Florida Supreme Court resolved a certified conflict between two of Florida’s district courts of appeal, to hold that the Florida Civil Rights Act (FCRA) prohibits pregnancy discrimination. To read the full opinion click here.  In so doing, the supreme court quashed the Third District’s decision in Delva v. Continental Group, Inc., 96 So. 3d 956 (Fla. 3d DCA 2012), and approved the Fourth District’s decision in Carsillo v. City of Lake Worth, 995 So. 2d 1118 (Fla. 4th DCA 2008).  

            The FCRA (formerly known as the Florida Human Relations Act and the Florida Human Rights Act) was enacted five years after the Civil Rights Act of 1964 (Title VII), and is patterned after it.  In 1978, Congress enacted the Pregnancy Discrimination Act, which amended Title VII by redefining sex discrimination to include discrimination on the basis of pregnancy:  “The terms ‘because of sex’ or ‘on the basis of sex’ include, but are not limited to, because of or on the basis of pregnancy, childbirth, or related medical conditions.”  42 U.S.C § 2000e(k).  The FCRA, unlike the federal statute, has never been amended to specifically say that pregnancy discrimination is sex discrimination.

            The supreme court found that the FCRA phrase making it an “unlawful employment practice for an employer . . . to discriminate . . . because of . . . sex” includes discrimination based on pregnancy, which is a natural condition and primary characteristic unique to the female sex.  The court also concluded that this construction of the FCRA is consistent with the FCRA’s legislative intent, which “shall be liberally construed.”  The Court rejected the Third District’s reasoning in Delva that “ascribed legal significance to the Florida Legislature’s failure to amend the FCRA” after Title VII was amended to specifically include discrimination based on pregnancy.

            Chief Justice Polston, who dissented, took a more literal reading of the statute, believing that “the plain meaning of the [FCRA] does not encompass pregnancy discrimination.”  The word “sex,” he reasoned, “does not refer to whether one is pregnant or not pregnant even though that status is biologically confined to one gender.”

Image courtesy of Flickr by Joe Goldberg (no changes).

Florida High Court Declares that Person Who Facilitates Attack on Third-Party Owes Duty of Care to Third-Party

By Erin E. Dardis on Posted in Florida

On March 27, 2014, the Florida Supreme Court reversed the Third District Court of Appeal’s decision in Reider v. Dorsey, 98 So. 3d 1223 (Fla. 3d DCA 2012), and ruled that a person in an altercation with another person owes that other person a duty of care when he blocks his means of escape, allowing a third party to strike him from behind with a weapon.  The supreme court’s review was premised on conflict with its decision in McCain v. Florida Power Corp., 593 So. 2d 500 (Fla. 1992), the seminal case in Florida on “duty” in negligence cases. 

 

To read the opinion, click here.

 

Background & Earlier Court Proceedings

 

Dorsey was drinking with Reider and Reider’s friend, Noordhoek, at a local bar and all were intoxicated over the legal limit.  While in the bar, Reider became belligerent, saying that he wanted to fight everyone.  Dorsey called Reider a vulgar name and walked out of the bar.  Reider and Noordhoek followed him, with Reider demanding to know why Dorsey called him the vulgar name.

 

Dorsey’s path took him between Reider’s parked truck and an adjacent car and as Dorsey walked between the vehicles, Reider managed to trap Dorsey between them.  Noordhoek followed Dorsey between the vehicles.  After several minutes of Reider harassing Dorsey over the epithet he used, Noordhoek reached into Reider’s truck and retrieved a tomahawk, a tool which Reider used as part of his work to help him clear land.  Dorsey attempted to push Reider aside in order to escape and after the two men grappled for about fifteen seconds, Noordhoek suddenly struck Dorsey in the head with the tomahawk, rendering him temporarily unconscious.  Noordhoek and Reider fled the scene.  Dorsey regained consciousness and drove himself to the hospital. 

 

Dorsey sued Reider for negligence and following a jury trial, Reider filed a motion for a judgment in accordance with a prior motion for directed verdict.  The trial court denied the motion and awarded damages to Dorsey.  Reider appealed the order. 

 

On appeal, Dorsey argued that Reider created a foreseeable zone of risk because (1) he failed to lock the doors of his truck before he went into the bar or at the time he accosted Dorsey in the parking lot; and (2) he thwarted Dorsey’s efforts to escape after Noordhoek retrieved the tomahawk from Reider’s vehicle.   The Third District Court of Appeal disagreed and held that Reider did not owe a duty of care to Dorsey, as a duty of care could exist only if keeping a tool in a truck “has so frequently previously resulted in the same type of injury or harm that in the field of human experience the same type of result may be expected again.”  The court further held that while Reider’s resistance to Dorsey’s effort to escape enabled the strike, there was no record evidence that Reider colluded with Noordhoek to harm Dorsey, or that Reider knew Noordhoek had the tomahawk in his hand before the strike. 

 

Supreme Court Proceedings

 

The supreme court noted that it recognized in McCain that a duty of care arises from four potential sources, including the general facts of the case.  Whether a common law duty flows from the general facts of the case depends upon an evaluation and application of the concept of foreseeability of harm.  When a person’s conduct is such that it creates a “foreseeable zone of risk” posing a general threat of harm to others, a legal duty will ordinarily be recognized to ensure the conduct is carried out reasonably.

 

The supreme court stated that it cautioned in McCain that it is important to note the difference between the type of foreseeability required to establish duty as opposed to that which is required to establish proximate causation – establishing the existence of duty is primarily a legal question and requires demonstrating that the activity at issue created a general zone of foreseeable danger of harm to others.  Establishing proximate cause requires a factual showing that the dangerous activity foreseeably caused the specific harm suffered. 

 

The supreme court found that Reider’s conduct in blocking Dorsey’s escape from the situation created a foreseeable zone of risk posing a general threat of harm to others, thus establishing a legal duty on the part of Reider.  The supreme court then analyzed whether this duty of care extended to the misconduct of Noordhoek, a third party, and held that it did, as the facts of this case met the exception to the general rule that a party has no legal duty to prevent the misconduct of third persons.  In particular, Reider was present and had the ability to control access to his truck where the tomahawk was located.  Furthermore, Reider not only provided access to the tomahawk, but he blocked Dorsey’s escape and was present when the tomahawk was used to injure Dorsey.  Finally, and significantly, Reider was in a position to retake control of the tomahawk and prevent an injury, as Dorsey testified that when Noordhoek took the tomahawk out of Reider’s truck, Dorsey asked Reider, “Bobby, what is this?”  Ten or fifteen seconds passed before Dorsey was then struck.  In this amount of time, Reider had the opportunity to prevent the injury.

 

The district court thus misapplied the supreme court’s precedent in McCain when it concluded that the evidence failed to demonstrate that Reider owed a legal duty of care to Dorsey under the facts of the case.  The McCain decision does not require that there be evidence that the defendant colluded with the third party to cause harm or knew exactly what form the harm might take – only that his conduct created a general zone of foreseeable danger of harm.  The supreme court quashed the district court’s decision and remanded the case for reinstatement of the trial court’s judgments.

 

Image courtesy of Flickr by Alan English (no changes).

Argument Report: Illinois Supreme Court Appears Skeptical of Due Process Challenge to Liquor License Revocation

By Kirk Jenkins on Posted in Illinois

 

The Illinois Supreme Court appeared skeptical of a due process challenge to revocation of a liquor license during the recent oral argument in WISAM 1, d/b/a Sheridan Liquors v. Illinois Liquor Control Commission. Our detailed preview of the facts and underlying court opinions in WISAM 1 is here.

WISAM 1 involves a liquor store whose license was revoked by the City of Peoria pursuant to Section 3-28 of the city ordinances, which forbids any “officer, associate, member, representative, agent or employee” of a liquor licensee from violating a city ordinance, state or federal law “in or about the licensed premises.” The administrative charges were based upon the federal criminal conviction of a former manager of the plaintiff store for “structuring” currency deposits – deliberately manipulating deposits to keep them under the $10,000 limit which triggers an automatic currency transaction report. The Appellate Court affirmed the revocation, finding that although the proceedings below were somewhat dubious (the Commissioner entered a directed finding of the violation at the outset of the hearing based upon the federal trial transcript), the defendant had suffered no prejudice as a result. The court pointed to the testimony of the plaintiff’s president, who conceded that the plaintiff deliberately kept withdrawals for its check cashing business below $10,000 because of the limits on the store’s insurance. The court held that the Commission permissibly concluded that the true purpose of the withdrawal pattern was structuring.

Counsel for the defendant began the argument, explaining that before opening statements at the administrative hearing, three volumes of testimony from the federal trial were admitted pursuant to stipulation. Justice Thomas asked why the decision couldn’t be affirmed on the basis that the stipulations were sufficient to support revocation. Counsel responded that the stipulation had been misrepresented in the record, with some suggesting that the stipulation admitted that the charges in the federal indictment were true. Justice Thomas asked whether it was disputed that the former manager was convicted at his trial of offenses relating to the financial and business operations of the store. Counsel said that it was not. Justice Thomas then repeated his question – why isn’t the stipulation enough. Counsel responded that it was not sufficient because the Municipal Code required that the offense occur “in or about” the licensed premises. Justice Theis pointed out that counsel had framed the issue as one of due process in the petition for leave to appeal, not as sufficiency of the evidence. Counsel responded that sufficiency of the evidence was part of the due process violation. Justice Theis asked whether it was true that the main thrust of the defendant’s argument was being denied the opportunity to be heard. Counsel agreed that the hallmark of due process was the opportunity to be heard. Justice Theis pointed out that defendant had the opportunity to present evidence, so how was defendant denied the opportunity to be heard? Counsel answered that the evidence was given in an offer of proof; the Commissioner agreed that the principal question had already been settled in favor of finding a violation. The defendant’s offer of proof was never considered, defendant argued. Justice Theis questioned whether that was a due process violation; the defendant was allowed to offer exhibits. Counsel again argued that defendant was merely making an offer of proof after already having lost. Justice Theis pointed out that defendant’s offer of proof was to show that the pattern of bank deposits was explained by the insurance limits – so what was the prejudice?   Counsel answered that no one ever considered the evidence. Justice Theis asked whether the evidence was presented to the federal jury and rejected. Counsel agreed that it was, albeit inartfully. The defendant merely stipulated to things which were not subject to question, according to counsel. Justice Burke asked whether the Liquor Commission had considered the defendant’s offer of proof, and counsel answered that he had tried to lay out in his initial brief exactly what happened. Justice Burke asked whether defendant’s position was that the Commission had not been allowed to consider defendant’s evidence. Counsel answered that the Appellate Court had concluded that the evidence had been considered by the Liquor Commission. Justice Theis asked what specific statements the defendant objected to. Counsel noted one witness’ comments that he had worked at the store in the 1990s and recalled the store was charging 2% for cashing checks, although the liquor license hadn’t been granted until 2002. Justice Theis asked what the due process violation was, and counsel answered that the Liquor Commission used transcripts to find a violation. Justice Theis suggested that the defendant had testified that checks were being cashed at the store, and the store owner had to figure out how to structure deposits. Counsel agreed, and Justice Theis asked then what was wrong with admitting the transcript? Counsel again answered that nobody at the hearing had said that violations occurred in or about the licensed premises. Justice Thomas asked whether the fact finder could make a reasonable inference from the stipulation, and counsel answered that the stipulation never said that anything had happened at the store; even the federal prosecutors alleged that the unlawful conduct occurred solely at the bank.

Counsel for the state Liquor Commission followed, arguing that the stipulation plus the indictment was sufficient evidence for the fact finder to infer the needed facts. Justice Burke asked whether the Commission had made its decision based totally on the stipulation, thus making proof unnecessary. Counsel answered that the Commission did have a hearing; the hearing officer did make an initial finding, which the Commission agreed was premature. The defendant was permitted to offer additional information, including insurance documents and the owner’s testimony. The Commission looked at all evidence that had been submitted. Justice Theis asked whether the Commission has any rules for hearings. Counsel answered that the Municipal Code governed. Justice Burke asked whether the defendant was allowed to cross-examine witnesses before the Commission. Counsel responded that the defendant could cross-examine any witness, and pointed out that if the stipulation was sufficient support for the judgment, there was no need to reach the question of whether the transcripts had been incorrectly admitted. Justice Burke asked what proof the City had without the federal transcripts, and counsel pointed to the stipulation. Justice Burke suggested that there were no live witnesses needed, and counsel argued that the owner of the liquor store had testified and acknowledged the handling of the store’s money; that was enough for a reasonable inference. Justice Kilbride asked what evidence there was that the conduct had occurred in or about the premises. Counsel answered that the parties’ stipulation provided that the offenses were convicted as charged in the indictment, and involved the operations of the store. Based on that, the Commission could make a reasonable inference that the two-year conspiracy of the manager must have occurred, at least in part, at the store. Justice Kilbride suggested that the stipulation didn’t really concede that the offenses occurred in or about the premises. Counsel agreed, but again argued that it was a reasonable inference, further supported by the transcript.

Counsel for the City of Peoria argued next, insisting that every act of the manager was imputable to the licensee. Justice Burke asked whether the licensee was part of the federal case, and counsel answered no.   The defendant had argued that the withdrawals had been structured to stay under $10,000 for insurance reasons, counsel argued, but in fact, the limit for amounts held outside the store was only $5,000. So if insurance limits were the reason for the pattern, why wouldn’t withdrawals have been half as high?

In rebuttal, counsel for the defendant argued that the Deputy Commissioner’s finding had indeed been based on the federal indictment and transcripts. Justice Theis asked counsel what additional evidence he would have introduced but for the due process violation, and counsel answered that he would have cross-examined the witnesses presented in federal court. Justice Theis asked whether the heart of the defendant’s case was that there needed to be a retrial of the federal claim, and counsel said essentially, yes – the defendant was not present for the federal trial, so its result was not binding upon the defendant. Counsel asked what other evidence the defendant would have presented, and counsel answered that defendant would have confronted every witness with the insurance policies. Justice Theis noted that the defendant had presented the insurance policies to the Commissioner – what else would defendant have done? Counsel again answered that the defendant would have cross-examined the witnesses. Justice Burke asked whether it was a structural error in an administrative hearing where the defendant is not permitted to present a defense, and counsel agreed that the error was fundamental. Chief Justice Garman asked whether the federal indictment and conviction had any effect on the case, and counsel answered that since the indictment said that the structuring occurred at the Bank, it actually supported the opposite of the inference needed to justify the violation finding. Justice Kilbride asked about counsel’s earlier statement that the criminal verdict hadn’t ripened into a judgment. Counsel answered that the sentencing hadn’t occurred at the time of the hearing, but has now happened. The manager has not appealed, according to counsel; he has already completed his sentence. Justice Thomas noted that the Liquor Commission has held that licensees are strictly accountable for all violations on the premises – does that bring the employer into the mix? Counsel answered no – the question would still be whether a violation occurred on the premises.

We expect WISAM 1 to be decided in three to four months.

Image courtesy of Flickr by josephleenovak (no changes).

Argument Report: Illinois Supreme Court Likely to Find Wrongful Death Lawyer Owes Duty to Next of Kin

By Kirk Jenkins on Posted in Illinois

Based upon the especially heavy questioning directed at the appellant during the recent oral argument in Estate of Powell v. John C. Wunsch, P.C., the Illinois Supreme Court seems to be contemplating holding that counsel who brings a wrongful death action owes a duty of care not only to the administrator or administratrix of the estate, but also to the next of kin. Our detailed summary of the facts and lower court opinions in Estate of Powell is here.

The plaintiff in Estate of Powell was adjudicated disabled in 1997.  The plaintiff’s father died two years later, and his mother retained the defendants to bring a wrongful death action. The action was settled in two steps in 2005 – first, a $15,000 settlement with three defendants, split between the plaintiff, his mother and sister; and second, a $350,000 settlement which the mother and the plaintiff split equally, with the sister waiving her share. By 2008, a dispute had arisen between the plaintiff’s sister and his mother, who was plaintiff’s guardian, about whether the mother was still capable of caring for plaintiff, and whether his share of settlements was being expended towards his care. Plaintiff’s sister was substituted as his guardian in 2009. She then sued the defendants for malpractice. Plaintiff’s theory was that the defendants had failed to ensure that plaintiff’s share of the settlements was supervised by the probate court pursuant to the Wrongful Death Act, and plaintiff had accordingly lost access to the funds. The trial court dismissed, finding that the defendants owed the plaintiff no duty of care, since it was his mother who had brought the action as administratrix of the estate, not the plaintiff himself. The Court of Appeal reversed in part, finding that a duty of care was owed, and that plaintiff had stated a claim for relief pursuant to the second settlement.

Counsel for the first group of defendants began the argument, noting that the majority of jurisdictions have declined to extend an attorney’s duty of care beyond the person administering the deceased’s estate to unnamed and sometimes unknown heirs. Justice Thomas asked how the Court should get around the statute and case law stating that wrongful death actions are brought for the benefit of next of kin as the real parties in interest. Counsel responded that extending the duty to heirs carried with it considerable risk of creating conflicts between a single beneficiary’s best interest and that of the estate. Justice Karmeier asked whether there was any dispute between the heirs in the case at bar, and counsel responded that matters had never reached that point. Justice Karmeier asked whether the attorney has a duty to ensure that a recovery is properly paid out, and counsel answered no. Justice Burke suggested that the Court had previously found a fiduciary duty to next of kin in DeLuna v. Burciaga. Counsel disagreed, arguing that DeLuna had merely addressed the duty to beneficiaries. Justice Thomas again pointed out that previous cases had said that next of kin are the real parties in interest, and they are statutorily prohibited from representing their own interest. Isn’t this a textbook example of attorneys being hired to represent a third party? Counsel disagreed, arguing that if an attorney is representing the administratrix, duties flow only to her. To extend those duties across the board to all possible beneficiaries creates a real risk of conflicts of interest – counsel pointed, for example, to the need to advise plaintiff’s sister about her eventual waiver of any interest in the second settlement. Justice Thomas pointed out that one could hold that the counsel for the estate owed a duty to advise beneficiaries to get their own attorneys. Counsel responded that no across-the-board duty was justified, and briefly concluded by arguing that plaintiff had failed to establish proximate causation as well.

Counsel for the second group of defendants followed. He addressed the DeLuna issue, stating that his firm had represented the defendant, and the case related to statute of repose, not duty. Counsel stated that he didn’t believe DeLuna was wrongly decided, it was simply distinguishable. Counsel then turned to Justice Thomas’ question about heirs’ status as the real party in interest, arguing that while next of kin are the intended beneficiaries of a wrongful death action, there is too much potential for conflict involved in holding that counsel owes them a duty of care. Justice Thomas asked whether there was a duty to investigate if knowledge came to the attorney’s attention suggesting a possible conflict between the estate and the next of kin. Counsel responded that there was no duty to investigate a mere possibility of a conflict. Counsel argued that the system only works if obtaining a recovery is kept separate from the issue of distributing it to next of kin. The heirs’ remedy is against a person who distributed the money wrongfully, not against the attorney.

Counsel for the plaintiff began by commenting that it was “telling” that the defendants didn’t perceive a conflict until suit was filed; at no time did they advise the plaintiff or his sister of any possible conflict. Chief Justice Garman asked counsel to describe the scope of the defendant’s duty. Counsel answered that the duty was to represent the estate in connection with the claim, and at the time of distribution, should a conflict arise, to describe the conflict to beneficiaries, and advise them to seek separate counsel. The Chief Justice asked about minors, and counsel answered that for such beneficiaries, a minor’s estate must be opened in the probate division. Chief Justice Garman asked whether in plaintiff’s view there was always a potential for conflict, and counsel said yes; the Chief then suggested that counsel will always be advising beneficiaries to seek their own attorneys. Justice Thomas asked whether the plaintiff was arguing that the defendants should have been aware that the plaintiff’s mother was wrongfully expending funds from the plaintiff’s part of the settlement. Counsel answered that if the matter had been properly handled through a probate estate, there would have been no opportunity to misappropriate anything. Justice Karmeier asked counsel how he responded to the defendant’s contention that its duties were fully satisfied once the recovery was properly paid to the guardian. Counsel responded that in the case of a disabled person, payment to a plenary guardian was not sufficient; a probate estate must be opened so that the court can supervise the settlement. Justice Karmeier asked whether another estate and another guardian was needed; counsel answered that it could be the same guardian, but the guardian would be required to post a bond. Justice Karmeier asked whether the attorney has an obligation to confirm that the guardian has a bond. Counsel answered that that’s what the probate court does. Counsel briefly concluded by arguing that proximate causation was adequately pled by the allegations that the mother would have had no opportunity to misappropriate funds if the settlement had been properly handled.

Counsel for the first defendants group began her rebuttal by explaining that defendants hadn’t addressed any conflict because, as the law then stood, there wasn’t one. Justice Theis asked how the Wrongful Death Act and the Probate Act fit together in this instance. Counsel answered that the defendant’s duty was to the administratrix. The trial judge was advised of the plaintiff’s disability. As for the interplay between the Acts, counsel answered that the only workable solution was to find that the lawyer’s duty was to the estate only. Justice Theis asked whether there was a duty to consider the Probate Act and the Rules of Court re distribution of the settlement. Counsel answered that such a duty was met here. Justice Theis asked counsel whether she was conceding that there is a duty to follow the Probate Act and the Rules of Court, and counsel agreed that defendants had a duty to follow the law. Justice Burke asked whether there was a probate action, and counsel said that there was not after the settlement. Counsel argued that the plenary guardian was responsible for the plaintiff’s needs, but Justice Burke said she did not have responsibility for the plaintiff’s money. Counsel concluded by once again arguing that there was no basis for believing that any misappropriation would have been prevented if the settlements had been distributed differently.

Counsel for the second group of defendants began by addressing Justice Theis’ earlier question about duty. He argued that there is certainly a duty, but the question is to whom. If the Local Rules or the Wrongful Death Act were not followed, then it’s the administrator who has a cause of action against the attorney. Justice Thomas asked whether there was no duty to open a probate estate because the plaintiff already had a guardian – or is there never a duty?  Counsel responded that there is a duty to the administrator, nothing more. Justice Thomas wondered whether counsel’s position was contrary to rule, but counsel responded that the rules don’t create a duty. Justice Thomas pointed out that attorneys were opening up probate estates all the time. Counsel answered that only Cook County bifurcates the process – in other places, the same judge handles everything. Justice Thomas asked whether counsel had a duty to tell an administratrix that a probate estate was needed.   Counsel answered that if so, it was only owed to the administratrix. Counsel responded that that wasn’t what was pled here. Any duty has to be uniform in all cases, otherwise attorneys don’t know how to handle potential conflicts. Justice Theis pointed out that this wasn’t just any kind of conflict, the case involved specifically a disabled adult – and there’s a statutory procedure for dealing with that sort of conflict. Counsel responded again that if there is a mistake in distributing the recovery, it’s the administratrix’s cause of action. Thus, the wrong party was suing.

We expect Estate of Powell to be decided in three to four months.

Image courtesy of Flickr by tracie7779 (no changes).

Argument Report: Illinois Supreme Court Seems Undecided on Child Support for Non-Custodial Parents

By Kirk Jenkins on Posted in Illinois

Actively questioning both sides, the Justices of the Illinois Supreme Court seemed conflicted during the recent oral argument in In re Marriage of Turk. Turk poses a potentially important question of domestic relations law: when the non-custodial parent of a child has significantly fewer financial resources, can the custodial parent be ordered to pay child support? The Justices seemed sympathetic to the less affluent mother’s situation, while at the same time questioning whether the Illinois Marriage and Dissolution of Marriage Act authorizes such payments. Our detailed discussion of the facts and underlying court decisions in Turk is here.

The parents in Turk were divorced in mid-2005. Pursuant to the parties’ agreement, the father agreed to pay maintenance and child support for 42 months. At the end of that period, any further child support obligations would be calculated pursuant to the Illinois Marriage and Dissolution of Marriage Act. In 2011, the father petitioned to have his support obligations terminated and sought child support from the mother on the grounds that he was custodial parent of both children. The trial court granted in part and denied in part the motion, ordering the father to continue paying child support, despite the custodial situation. Division Five of the First District of the Appellate Court affirmed the trial court’s conclusion that a custodial parent could, in appropriate circumstances, be ordered to pay child support, but reversed and remanded for recalculation using updated expense data.

Counsel for the father began, arguing that the statute repeatedly distinguished between the custodial and non-custodial parents in describing support obligations. Justice Burke asked whether the real measure wasn’t the best interest of the child and pointed out that the record suggested that at least one child spent substantial time with the non-custodial parent. Counsel responded that it was not a split custody arrangement; one child spent no time at all with the non-custodial parent, the other split time about equally. Counsel acknowledged that the court was free to deviate from the standard statutory support percentage, but could not deviate past zero and reverse the support obligation. Chief Justice Garman asked whether it was counsel’s position that a non-custodial parent was never entitled to support, and counsel responded that that was what the statute said. Justice Theis asked counsel to describe the terms of the custody order, and counsel answered that the father had sole custody, with one child spending significant visitation time with the mother. Justice Kilbride asked whether the custody order was permanent or temporary, and counsel responded that it was permanent. Chief Justice Garman asked counsel whether he was arguing that the court had erred both in ordering payment of child support to the mother, and in not ordering payments from the mother to the father. Counsel responded yes. The Chief Justice asked whether it was proper for the court to consider the significant disparity in income, and that the non-custodial parent would need resources to allow the child to visit without a significant drop-off in lifestyle, and counsel once again argued that the court’s only option was to deviate down to zero – it could not order payments to the non-custodial parent. Justice Thomas asked what recourse a trial judge had if a destitute mother had a child fifty percent of the time – how could the mother put food on the table for visits? Counsel argued that because of the statute’s repeated references to custodial and non-custodial parents, the only option was to deviate from the statutory percentage down to zero. Justice Burke noted that the statute says both parents should pay a reasonable amount for support, but counsel answered that such language was only found in a portion of the statute addressing the situation where a non-parent had custody. The rest of the statute maintains the distinction between custodial and non-custodial parents in discussing support. Justice Karmeier asked whether the statute was ambiguous, and counsel answered no. Justice Karmeier pointed out that custody wasn’t one of the statutory factors to be used in calculating child support. Counsel answered that nevertheless, there was no authority in the statute to deviate past zero and order payment of child support to the non-custodial parent.

Counsel for the mother began by arguing that in fact, the statute provides that either or both parents can be required to pay child support. Justice Karmeier asked counsel to respond to the appellant’s point about the statute using custodial vs. non-custodial.  Counsel answered that the statute uses a variety of terms to refer to the parents. Justice Theis pointed out that Section 6 of the statute – the enforcement section – refers only to custodial and non-custodial parents. Counsel responded that not all of the enforcement section used those terms. Justice Theis asked counsel to direct her specifically to the portion of the enforcement section that uses any term other than custodial and non-custodial , and counsel cited part (b) of Section 6. The body of the text makes it clear that either or both parents can owe child support, counsel claimed. Justice Freeman pointed out that the financial disclosure forms were now seven years old, and counsel stated that while the forms were admittedly stale by the time of the hearing, neither side had objected to their use.   Justice Freeman asked whether, if the court were to agree that a non-custodial parent could be awarded child support, the proper result was a remand for reconsideration using current data. Counsel responded that although her client would be better off if the matter was calculated again using current data, a remand was not essential. Justice Thomas wondered whether affirmance would open up the domestic relations divisions to parsing through income statements rather than focusing solely on the best interests of the child. Counsel answered no, that this case represented an atypical situation.   Justice Thomas noted the argument made by counsel for the father, that the judge had discretion to deviate to zero, but no further. Counsel responded that that wasn’t what the statute says – support is a joint and several obligation. Chief Justice Garman asked whether there was any difference between support to a non-custodial parent and maintenance. Counsel answered that a maintenance payment would be considerably higher. Justice Theis asked counsel whether she would concede that most of the references in the statute refer only to custodial and non-custodial parents. Was the statute ambiguous? Counsel answered that is was not; the statute was neutrally and broadly drawn. Would affirmance amount to reading the references to custodial and non-custodial parents out of the statute, Justice Theis asked? Counsel answered that on the contrary, holding that there was no discretion to separate the support obligation from custody created superfluous language in the statute. Justice Theis pointed out that subsection (b) of the enforcement section actually talked about discovering assets of non-custodial parents. How should that be read under the mother’s position – as either parent? Counsel answered yes, noting that language just above the quoted passage referred to “parent,” not custodial or non-custodial. If the legislature had intended to tie support to custody, it would have said so.

On rebuttal, counsel for the father stated that opposing counsel was arguing equity, not law. Counsel predicted a flood of petitions from less affluent parents if the mother’s position was accepted. The statute contemplated only one result: a custodial parent receiving support. The order under review, counsel argued, was nothing more than a thinly disguised maintenance order.

We expect Turk to be decided in four to five months.

Image courtesy of Flickr by banjo d. (no changes).

California Supreme Court to Clarify What’s In, What’s Out in the Five-Years-to-Trial Rule

By Kirk Jenkins on Posted in California

According to Section 583.310 of the California Code of Civil Procedure, “An action shall be brought to trial within five years after the action is commenced against the defendant.”

On the surface, it seems like a simple rule. But as with so many things, the devil is in the details. During last week’s conference, the California Supreme Court agreed to further clarify how to calculate the five-year period, granting a petition for review in Gaines v. Fidelity National Title Insurance Company.

According to Section 583.340, there are only three situations in which the five-year clock pauses – during times that (1) the jurisdiction of the court to try the action was suspended; (2) prosecution or trial of the action was stayed or enjoined; or (3) bringing the action to trial, for any other reason, was impossible, impracticable, or futile.  Once the clock runs out, dismissal is mandatory. Gaines involves the application of the second and third exclusions.

Gaines started in 2006 when two senior citizen homeowners fell behind on their mortgage. An individual defendant contacted the homeowners and identified herself as an employee of the loan holder. She explained that she had given a copy of the homeowners’ refinance application to her fiance, who helped homeowners find refinancing loans. Within a few months, after a complicated series of transactions, the fiance and his business partners wound up owning the homeowners’ home – which they allegedly bought for $300,000 less than it was worth – and the homeowners held only a month-to-month lease with no option to buy. Around this time, the husband homeowner died.

The surviving wife filed suit in November 2006 against the original loan holder, the loan holder’s employee, her fiance and his business partners, and various others. In January 2008, the plaintiff filed a fourth amended complaint adding additional defendants. In April 2008, the plaintiff’s counsel successfully obtained an order staying the action for 120 days, excepting only outstanding discovery, and directing the parties to participate in good faith in a mediation. The stay was terminated in November 2008 after the mediation failed to produce a settlement.

The new presiding judge set an August 2009 trial date. Around that time, one of the newly added defendants indicated that it didn’t have title to the property after all, and the trial date was vacated. In a declaration filed in November 2009, counsel for that defendant indicated that a bankrupt entity in New York owned the relevant loan, and his client had no interest in the property or the loan.

The wife died in November 2009. Leave was granted two months later to substitute her son as the successor in interest and plaintiff, and the court set yet another trial date in 2010. At a mid-2010 status conference, with the real loan holder still in bankruptcy, the plaintiff’s counsel suggested a further continuance to allow time to bifurcate proceedings, carving out the claim against the bankrupt entity and proceeding against the other defendants. Three months later at another status conference, plaintiff’s counsel said they were ready to proceed to trial, but one of the defense counsel pointed out that plaintiff had made no attempt to proceed against the bankrupt entity. By February 2011, plaintiff’s counsel indicated he had authorization to retain New York counsel to seek relief from the bankruptcy stay as to the missing party. In October 2011, the bankruptcy court entered an order lifting the bankruptcy stay for the missing party as to the plaintiff’s claims. Plaintiff amended her complaint to name the bankrupt entity in mid-November 2011, and trial was finally set for August 2012.

In May 2012, one group of defendants moved to dismiss the action under Section 583.310 on the grounds that it had been pending five years without being brought to trial. The trial court granted the motion and – concluding that violation of the five-year statute was jurisdictional – dismissed the remaining defendants as well. A divided Court of Appeal (Second District, Division Eight) affirmed in part and reversed in part.

The trial court declined to exclude the seven-month 2008 stay from the five-year calculation. The Court of Appeal agreed. The Supreme Court had held in Bruns v. E-Commerce Exchange, Inc. that a partial stay was not enough to pause the five-year clock, the court pointed out. Since the 2008 stay in Gaines exempted already-outstanding discovery, it was a partial stay, and Bruns governed. Nor were the defendants estopped from arguing that the 2008 stay counted in the calculation just because they had agreed to it.

The Court of Appeal further held that the trial court was within its discretion to find that it was not impossible, impractical or futile to bring the case to trial during the 2008 partial stay.  The plaintiff had failed to establish a causal connection between the stay and missing the five-year deadline, the court found. Moreover, even if the causal connection existed, the court agreed with the trial court’s finding that plaintiff had not been reasonably diligent at all times in prosecuting the case. Nor was the fact that certain defendants hadn’t formally joined the motion to dismiss a barrier to dismissal, the Court held. As long as those defendants were named in the original complaint, they were entitled to dismissal, even on the court’s own motion.

The Court of Appeal reversed the dismissal only with respect to the bankrupt defendant. That defendant had been named for the first time in the Fourth Amended Complaint, the court pointed out. There’s an additional wrinkle here for counsel to be aware of here, however. When a defendant is brought into the action by being identified as a previously sued Doe defendant, the five-year clock begins when the Doe defendant is sued, not when the defendant is finally identified.

Associate Justice Laurence D. Rubin dissented, writing that he would have reversed the trial court’s judgment in its entirety. Justice Rubin’s dissent is noteworthy to appellate practitioners for its initial section – a scholarly discussion of the abuse of discretion standard and its shortcomings as a guide for appellate decision-making.

We expect Gaines to be decided in eight to ten months.

Image courtesy of Flickr by Alan Cleaver (no changes).

One Step Forward, One Step Back: Court of Appeal Denies Arbitration in Imburgia

By Kirk Jenkins on Posted in California

Fresh on the heels of signs during the Iskanian oral argument that the California Supreme Court might at least partially fall in line behind the rule of Concepcion (subscr. req.), we received a reminder that arbitration clauses continue to receive an uncertain reception in the Courts of Appeal. In Imburgia v. DirecTV, Inc., Division One of the Second Appellate District affirmed a trial court decision invalidating a consumer arbitration clause in its entirety. (See here for a quick sketch of the background law at the federal and California state level.)

The plaintiff in Imburgia filed a putative class action complaint alleging a laundry list of consumer claims: unjust enrichment, declaratory relief, false advertising, and violation of the Consumer Legal Remedies Act, the unfair competition law and Civil Code Section 1671(d). Plaintiff’s theory was that the defendant improperly charged early termination fees to its customers.

The parties litigated for two and a half years, but less than a month after Concepcion was handed down in 2011, the defendant petitioned to compel arbitration. The trial court denied the motion.

Two provisions of the defendant’s then-standard customer agreement were at issue. Section 9 provided that “any legal or equitable claim” relating to the Agreement or service would first be addressed informally, and then through “binding arbitration” under JAMS rules. The clause barred all class claims, both in litigation and arbitration:

Neither you nor we shall be entitled to join or consolidate claims in arbitration by or against other individuals or entities, or arbitrate any claim as a representative member of a class or in a private attorney general capacity . . . If, however, the law of your state would find this agreement to dispense with class arbitration procedures unenforceable, then this entire Section 9 is unenforceable.

Section 10 was called “Applicable Law”:

The interpretation and enforcement of this Agreement shall be governed by the rules and regulations of the Federal Communications Commission, other applicable federal laws, and the laws of the state and local area where Service is provided to you . . . Notwithstanding the foregoing, Section 9 shall be governed by the Federal Arbitration Act.

The plaintiffs’ argument on appeal went like this. Class action waivers are unenforceable under the Consumer Legal Remedies Act. The final sentence of Section 9 referring to “the law of your state” means “the law of your state disregarding any impact of the FAA.” Since California law bars class waivers in CLRA cases, “this agreement to dispense with class arbitration procedures [is] unenforceable,” and the entire arbitration clause falls.

The Court of Appeal agreed. The court based this conclusion on two general principles. First, the final sentence of Section 9 is a specific exception to the general invocation of the FAA in Section 10, and a specific contract clause always governs a more general one. Second, the clause was ambiguous as written, and ambiguities must be resolved against the drafter – here, the defendant. In so holding, the Court of Appeal declined to follow directly contrary decisions from the federal district court hearing the parallel MDL action and the Ninth Circuit.

The California Supreme Court should grant review in Imburgia and reverse. Defendants made two arguments before the Court of Appeal which seem to me to dispose of the plaintiff’s “imagine there’s no FAA” argument.

First, the plaintiffs’ arguments, adopted by the Court of Appeal, depend on the proposition that the last sentence of Section 9 and Section 10 conflict. But they don’t. The plaintiff argues that the CLRA bars class waivers. But that tells us nothing. Section 9 does not invoke California law in a vacuum. The clause asks whether “the law of your state would find this agreement . . . unenforceable.” Well, California law couldn’t find the defendant’s subscriber agreement unenforceable.  The agreement deals with interstate commerce and is therefore subject to the FAA.  If the Supremacy Clause means anything, it’s that Concepcion is the law of every jurisdiction, including California.  The class waiver is perfectly valid under Concepcion and Concepcion preempts the CLRA.

Second, Section 10 provides that “Section 9 shall be governed by the Federal Arbitration Act.” As the federal MDL court held, the plaintiffs’ interpretation of Section 9 renders that clause completely meaningless, in violation of the most fundamental principles of contract construction. The Court of Appeal disagreed, describing Section 9 as a “narrow and specific exception to the general provision” of Section 10, which “[i]t does not render . . . meaningless,” but this seems conclusory. Before the Supreme Court, the plaintiffs are likely to have considerable difficulty explaining what practical impact the FAA clause of Section 10 can ever have if their construction of the contract is correct.

The likely petition for review in Imburgia adds another element of uncertainty to the Court’s deliberations over what to do about Iskanian. The Appellate Strategist will be following both cases closely.

Image courtesy of Flickr by Yale Law Library (no changes).

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