The Product Liability Dilemma: Product vs. Service.

By on December 18, 2012

Courts have long struggled with hybrid fact scenarios that  involve both a product and a service. When a corporate defendant is sued for personal injury, is it more advantageous for the defendant to be characterized as a service provider rather than a product manufacturer? The knee jerk reaction of some defense lawyers is that they would prefer their client to be cast as service providers. After all, who wants their client to be subjected to a strict liability product claim if it could be avoided, right? Not so fast. The answer to this question may be more complicated that it appears at first blush.

In an article titled, “The Shirt Off My Back: Using the Relationship Between a Product and a Service to Your Advantage,” Brigid M. Carpenter and Caldwell G. Collins, lawyers at Baker Donelson Bearman Caldwell & Berkowitz, P.C., weigh the product versus service dilemma in a thoughtful article that appeared in the IADC Product Liability Committee Newsletter (November 2012).

Carpenter and Collins point out that there are many reasons why a plaintiff or defendant might want to fall within or avoid the products liability statutory schemes that exist in many jurisdictions. On the one hand, strict liability is liability without fault. In those cases, plaintiff has to prove the product is defective and unreasonably dangerous, but there is no burden of proving fault on the part of the manufacturer or seller.

On the other hand, depending upon the circumstances, the authors point out that it might be easier for a plaintiff to prove a defendant breached the duty of reasonable care with regard to its behavior than to proffer credible expert testimony about the defective nature of a product. One factor to be considered is that in negligence actions, sellers and manufacturers may have the advantage of certain defenses not available in product liability cases, such as contributory negligence. However, another consideration is that product liability statutes often carry different damages caps and statutes of limitations, depending upon the jurisdiction.

 Equally important, the authors provide a valuable discussion of how courts tend to resolve the product versus service issue. Their litigation  tip: based upon their survey of the case law, courts tend to focus on the relationship between the product and service in question. Therefore, in the Hathaway v. Cintas Corporate Services case involving a plaintiff burn victim who alleged that the defendant uniform rental company was responsible for his injuries, either as a service provider or a product seller, the authors analyze how the Indiana federal district trial court, in denying summary judgment, focused on the “service” aspects of the uniform rental company’s contract, which provided for the cleaning and maintenance of uniforms provided. 
 

Filed under Hathaway v. Cintas Corporate Services, IADC, Lone Pine Order, product manufacturer, product seller, product versus service, service provider, Toxic Tort/Product Liability Litigation Tagged with

Ex Parte Communication With Plaintiff’s Prescribing Physician

By on December 15, 2012

In product liability litigation, a single tactical advantage may determine whether the case is won or lost. Often, being able to anticipate an issue before it arises and addressing it in the Case Management Order may be critical.  This is particularly the case  in pharmaceutical mass tort litigation.

In pharmaceutical product liability cases, the plaintiff’s treating physician is a critically important witness. If one of the parties in the case  is permitted to “woodshed” the treating physician, it gives that party an enormous tactical advantage.  

For example, if only the plaintiff’s’ attorney can interview the treating physician and is able to control what information that the physician is able to see, such as defendants internal documents, plaintiff may have an enormous advantage when the physician’s deposition takes place. The physician’s opinion at deposition concerning whether a drug’s prescribing information provided an adequate warning may well be influenced by his prior review of internal company documents that she never would have seen but for review of those documents with her patient’s lawyer.

The plaintiff bar is very concerned about a defendant’s ability to be in touch with plaintiff’s treating physicians. To them, control of their client’s prescribing physician is sacred ground. 

In an excellent article on this subject titled “Ex Parte Communications with Healthcare Providers in Pharmaceutical  Mass Torts–Highlights of Recent Rulings,” Lela Hollabaugh, a partner in the Nashville office of Bradley Arant Boult Commings LLP, discusses how plaintiffs and defendants lawyers continue to jockey for position with regard to their ability to talk with treating physicians and other healthcare providers outside of the presence of opposing counsel. Increasingly, courts handling pharmaceutical mass tort litigation are entering case management orders that directly address communications with healthcare providers by all parties. Therefore, it is critically important for defense counsel to make the court aware of their concerns as early in the case as possible.

On their side, plaintiff’s counsel seek to prohibit all communications between defense lawyers and healthcare providers regardless of the subject matter. Plaintiffs vehemently argue that such communications are prohibited by the physician-patient privilege.

On the other hand, defense counsel often seek both the opportunity to talk with the doctor about the patient’s care and work to prevent the plaintiff from “woodshedding” the doctor with confidential documents from the defendant company’s internal files.

According to Ms. Hollabaugh, a frequently cited decision on this issue is that of Judge Eldon Fallon in the Vioxx litigation. In re Vioxx Products Liability Litigation, 230 F.R.D. 473 (2005).

Judge Fallon’s decision gave significant deference to the attorney-client privilege and reasoned that defendants had access to the prescribing physician’s information through medical records, depositions and defendant’s sales representative’s records. Judge Fallon’s decision does not place any limitations on plaintiff’s ex parte discussion with these private physicians. Other decisions, particularly in the MDL context, have done more to even the playing field between adversary counsel.

Ms. Hollabaugh’s paper discusses a number of decisions that have placed a limit on the part of the communications with treating physicians. These decisions prohibit plaintiff’s counsel from discussing with their client’s physicians anything other than “the particular plaintiff’s medical condition at issue in the current litigation”. In at least one case cited by Ms. Hollabaugh, plaintiffs agree to this limitation during oral argument over case management issues. 

In another important MDL, In Re Yasmin and Yaz (Drospirenone Marketing, Sales Practices and Products Liability Litigation, plaintiff’s counsel was permitted to provide treating physicians with documents not previously seen by physicians, including confidential and internal documents of the defendant, but plaintiff was required to provide detailed descriptions or copies of all documents shown to the physician to the defendants at least 72 hours before the doctor’s deposition. In addition, the plaintiffs were not permitted to provide notes, highlighting or underlining to the documents provided to the physician. 

This case law cited in the article reflects that courts recognize that the parties before the court are seeking to gain an advantage for their clients by controlling the information provided to a future trial witness. While Ms. Hollabaugh advises that we may expect the courts to continue to protect the physician-patient privilege would exist, that privilege does not and should not be permitted to extend to allow the “woodshedding” of physicians with documents and information that they have never seen, known and that have no bearing on their treatment of the individual plaintiff.  Her article providesa discussion of how several MDL courts have addressed these concerns.

For the practitioner, Ms. Hollabaugh has highlighted an important issue for defense counsel that may not otherwise be picked up during the routine course of defending a pharmaceutical product liability case. This case law should apply not just in mass tort litigation, but in “one off” pharmaceutical product liability cases as well. 

 

Filed under drug product liability, ex parte communication, In Re: Yasmin And Yaz (Drospirenone) Marketing, Sales Practices And Products Liability Litigation, Lela Hollabaugh, Pharmaceutical & Medical Device, pharmaceutical mass tort, Pharmaceutical Product Liability, Vioxx Litigation Tagged with ,

Defense Lawyers: Keep This Decision In Your Back Hip Pocket

By on December 7, 2012

Having now completed discovery, you have provided the client with a thorough assessment of its potential liability exposure in the case. You are set for trial.

On the eve of trial, plaintiff’s counsel serves notice that it plans to call four eyewitnesses and an expert, and introduce 18 photos and a video, none of which were provided pursuant to your earlier discovery demand or a subsequent Preliminary Conference Order. As any trial lawyer like criminal lawyers Melbourne who practices in the Second Department can attest, this is not an unfamiliar scenario. But what is exasperating is the trial judge’s denial of defendant’s motion to preclude the untimely evidence from coming in at trial and effectively places the court’s imprimatur on plaintiff’s bad behavior, and assault, so it was important to get the right lawyer for this, and there are easy to find at sites like www.denvercocriminaldefenselawyer.com/assault/.

Given the widespread tendency by some Second Department trial judges to “cut  slack” for those who repeatedly flaunt the court’s rules regarding timely disclosure, it was refreshing to review the decision of the Appellate Division, Second Department, in Arpino v. F.J.F. & Sons Electric, 2012 NY Slip Op 08271, 201-02636 (12/5/12) which held a Long Island law firm responsible for its “intentionally false and misleading” responses to discovery demands, which the Court held could not be cured by belated disclosure.

In the interest of full disclosure, it was the defendant who committed the wrongful conduct in Aprino, not the plaintiff. However, because this is a “defense blog”, we will discuss the importance of the Court’s holding from a defense perspective. Needless to say, the conduct at issue is reprehensible and sanctionable no matter which side commits it. If you’re from Sydney and looking for a lawyer, we highly recommend criminal lawyers Sydney.

As reported by the New York Law Journal on December 6, 2012, the Second Department cited Court of Appeals case law to the basis for its ruling.  The Court stated:  “As the Court of Appeals has noted, the failure of attorneys to comply with court-ordered deadlines has increasingly become a problem in our court system.”  Further, the appellate panel stressed that the Court of Appeals had previously found  that “chronic and incompliance with deadlines breeds disrespect to the dictates of Civil Practice Law and Rules” and stressed that court orders cannot be ignored with impunity. On the strength of these admonitions from the the state’s highest court, the Second Department ruled that Suffolk County Supreme Court Justice Paul Baisley, Jr. had improvidently exercised his discretion in declining to sanction the defendant’s law firm from professionals at sites like https://www.stoneinjurylawyers.com.

The underlying facts of this auto accident case are fairly straight forward.  In June 2008, the defendants’ Ford Explorer collided with the plaintiff motorcyclist, who alleges that he sustained serious injuries in the accident.  Shortly after commencing an action against the Ford Explorer’s driver and his employer, plaintiff served a discovery demand seeking production of information and accident photos. Thereafter, this discovery was further directed in a Preliminary Conference Order. After missing the deadline for disclosure, a paralegal at the defendants’ firm advised by letter that defendants neither processed photos nor were aware of additional witnesses. This turned out to false.

In its decision, the Second Department rejected the defendant law firm’s claim that it was merely careless. To the contrary, it held that the firm’s responses were “intentionally false and misleading, and were interposed for the purpose of avoiding the defendants’ obligation to provide timely and meaningful discovery responses. The defendants neglected a court-ordered deadline and misrepresentation of the knowledge of possession of clearly discoverable material and information, without providing any excuse for doing so must be deemed willful and contumacious.”

Significantly, the Second Department held that the failure to comply with “basic rules governing compliance with disclosure orders cannot and will not be tolerated in our courts.” Unfortunately, all too often, trial courts not only tolerate and excuse this behavior to the extent that it has become almost accepted practice to “hide the ball” until immediately prior to trial. As a result of limitations placed on the defendants by the appellate court’s modification of the trial court’s order, substantial prejudice to plaintiff was prevented and appropriate sanctions imposed.

It is worth noting that plaintiff’s counsel was diligent in pursuing discovery throughout.  This is not a case where plaintiff arguably could have been more diligent in pursuing disclosure.

Therefore, printout a copy of Aprino, slip it into your back hip pocket, and pull it out in court the next time you find yourself in this situation.

Filed under Aprino, Arpino v. F.J.F. & Sons Electric, CPLR 3126, Discovery, New York Law Journal, New York State Litigation, Preclusion, Preliminary Conference Order, Sanctions, Second Department Tagged with

Mayor Bloomberg To Tackle Climate Change Post-Sandy

By on December 6, 2012

Mayor Michael Bloomberg provided his inspiring vision of New York City in the wake of Hurricane Sandy this morning at the Downtown Marriott at a breakfast titled, “Shaping New York City’s Future After Sandy.” The surprise guest at the event was Vice President Al Gore, who addressed Climate Change issues in the wake of Hurricane Sandy and introduced the mayor.

Gore advised the overflow breakfast crowd that New York City was fortunate to have Mayor Bloomberg heading and driving the re-building effort. In his mind, and in the minds of leading Climate Change scientists, such as Dr. James E. Hanson  and Dr. Kevin Trenberth, the ferocity of Hurricane Sandy was clearly attributable to global warming.

Although Hurricane Sandy was a Category I storm, it had the lowest barometric pressure of any storm in history north of the Mason Dixon Line. Gore asked rhetorically, “What will it take for a national government to take action?” Using a computer analogy, Gore argued that our democracy had been “hacked.” The American people, he said, cannot afford four more years of governmental dysfunction.

Addressing New York’s recovery from Hurricane Sandy, Bloomberg thanked New York City’s policemen, firemen, sanitation workers and volunteers. He congratulated the Marriott Hotel, where the event was held, for reopening so quickly in a flood ravaged neighborhood. He said that he could see the waterline from the flood still visible in the Hotel lobby.

Although many buildings in Lower Manhattan still have no electricity and remain unoccupied, he applauded  the City Sanitation Department for removing over 350,000 tons of debris from Lower Manhattan, which has at least restored the appearance of business as usual to the area, even if buildings there remained uninhabitable and unoccupied..

Bloomberg stated that New York had never before been hit with a storm with Sandy’s ferocity. Water levels at the Battery reached 14 feet in elevation, an event that FEMA previously predicted had a less than 1% probability of occurring. He urged the audience not to leave Climate Change to future generations to address. He cautioned that a child born today would see a two and a half foot rise in sea level by his 40th birthday.
 

Bloomberg urged New Yorkers to take a leadership role on the issue of Climate Change. If New York City takes action, the rest of the country will follow. In discussing New York’s leadership role, Bloomberg said that when California banned smoking in public places, no one took notice. But when New York City banned smoking in public places, the rest of the world followed. Quoting former Mayor Ed Koch, “New York City is where the future comes to audition.”

Cities around the world are not waiting for national governments to act on Climate Change. Mayors around the world formed the C40 Cities Climate Leadership Group in 2005, a network of the world’s largest cities committed to addressing Climate Change. Bloomberg is the current C40 Chair.

Bloomberg stressed that the next climate-related event to strike New York may not come in a manner planned for or predicted. However, referencing past catastrophic events to strike New York over the past two hundred years, he predicted that New Yorkers would continue to thrive through adaptation, and placing “politics as usual” aside, to come up with the best solution for the City. In particular, he discussed the Great Fire of 1835, which burned most of Lower Manhattan to the ground. As a result of that experience, the City reformed the Fire Department and built a municipal water supply at the Croton Dam upstate to ensure that water would be available to fight future fires. The Great Blizzard of 1888 resulted in the planning for a subway system; the Triangle Shirtwaist Factory Fire of 1911 resulted in the promulgation of a new fire code, child labor laws and workplace safety rules; and 9/11 resulted in the City establishing a sophisticated security apparatus.

 Looking to the future, Bloomberg advised that he had formed a “After Action Review” to critique the response to Hurricane Sandy. He expected to receive the report by the end of February 2013, and to make it public thereafter. He also informed attendees that he had retained Seth Pinsky , President of the NYC Economic Development Corporation, to develop New York’s action plans for the future under the guidance Deputy Mayors Cass Holloway and Bob Steel. Pinsky’s report will discuss comprehensive planning and building proposals for each community that was stricken by Hurricane Sandy, and examine, among other things, schools, businesses, homes and hospitals in those areas.

 Bloomberg stressed that the City needs to adapt to Climate Change risk and the attendant rising sea levels and increasing storm intensity. He said that he planned to propose new zoning regulations that will permit homeowners and businesses to elevate boilers above ground. He will modify zoning rules to permit residents to have rebuild their homes to build higher without regard to existing height restrictions. He will work with FEMA to revise the 1983 FEMA Flood Maps so that appropriate structural requirements in those vulnerable zones may be addressed.

 Bloomberg stressed that he has no intention of abandoning the waterfront, but recognized that it is not possible to merely rebuild and hope for the best. The rebuilding has to be performed smarter and more sustainably. Bloomberg is examining Staten Island’s Green Belt and restoring wetlands in and around Manhattan that will provide protection to the City.

 Bloomberg advised that he recently met with the CEO of Verizon to discuss plans for rebuilding its network in Lower Manhattan. Some 95% of Verizon’s copper network was taken out of commission in Lower Manhattan as a result of the hurricane. Because wireless networks are increasingly important, Verizon must rebuild with fiber, rather than copper. In addition, the Mayor said that it was unacceptable that cell towers had only eight hours of battery backup due to the City’s heavy reliance on cell service. Those towers must provide power for much longer periods. In addition, he announced that Con Edison would make a $250,000,000 investment to "harden" its electrical, gas, and steam systems.

The morning’s event was co-sponsored by The New York League of Conservation Voters (“NYLCV”) and the Regional Plan Association.Marcia Bystryn, the President of NYLCV, opened the meeting by reminding the audience that PlaNYC was announced by the Mayor almost six years ago to the day. PlaNYC was created as a bold agenda to meet the challenges of a changing climate and challenged New Yorkers to ask each other how they wanted their city to look and feel in 2030. Bystryn stated that, “We can build on the principles of PlaNYC in the wake of Hurricane Sandy, but with a renewed sense of urgency and creativity.”

 Robert D. Yaro, the President of the Regional Planning Association, who spoke next, urged that new approaches to how we build our homes, roads and infrastructure had to be adopted to make them more resilient against storms like Hurricane Sandy.

Michael Brune, the Executive Director of the Sierra Club, pointed out that in the Presidential Campaign, it was not one of the candidates running for office who made Climate Change an issue; rather; it was Mayor Bloomberg.

 According to Brune, the United States has retired 125 coal plants during the last several years. As a result, the percentage of the nation’s power needs from coal plants has sprung from 52% to 32% during this period, and largely explains why the United States has reduced greenhouse gas emissions more than any other country in the world. Brune argued that, although an international treaty on greenhouse gas reduction might be necessary, a treaty alone would not resolve the issue. Rather Climate Change needs to be fought city by city and plan by plan.

 

Filed under Al Gore, C40 Cities Climate Leadership Group, Climate Change, Hurricane Sandy, James E. Hanson, Kevin Trenberth, Lower Manhattan, Robert Steele, Seth Pinsky, Vice President Albert Gore Tagged with

First Amendment Bars Pharmaceutical Company Prosecution

By on December 4, 2012

The Second Circuit yesterday rendered its much-anticipated decision in United States v. Caronia, the most important Food Drug and Cosmetics Act enforcement case pending in the country. Not only did  the court’s 2-1 holding determine that the First Amendment bars the criminal prosecution of pharmaceutical manufacturers or their sales representatives for truthful, non-misleading speech promoting the lawful, off-label use of an FDA-approved drug affect criminal FDA enforcement cases, it also has great potential impact on False Claims Act cases.

Stuart Gerson, an Epstein Becker & Geen partner in Washington, D.C., who has defended a number of significant  False Claims Act cases (and qui tam cases), opined  this morning that "the Caronia decision is revolutionary, dealing the government a very hard blow in its effort to quash all off-label promotion, and incidentally to try to limit off-label use, irrespective of the fact that such use is a lawful matter to be decided by doctors and patients. And that is the point, since such use is lawful, making truthful statements about such use would infringe allowable speech."

According to Gerson, the Second Circuit "read the FDCA in a hyperliteral way, holding that the misbranding provisions of the Food Drug and Cosmetics Act do not prohibit such truthful promotion of an off-label prescription drug that otherwise is approved, and thus avoided having to make what it also held would have been the constitutional determination that blocking such speech would have violated the First Amendment."  Caronia adopts a view that pharmaceutical companies and trade associations have attempted to advance for years. Gerson believes that the issue  might well reach the Supreme Court.

In any event, Caronia will stand as an important precedent, not only in criminal cases like this one, but in civil fraud cases as well where the government and qui tam relators have argued that off-label promotion is tantamount to false certification and hence a violation of the federal False Claims Act.

Given the importance of the case, it is likely that rehearing en banc will be sought and, perhaps, a petition filed by the government with the Supreme Court. However, it also may be the government’s strategy to follow a policy of non-acquiescence and litigate the point in other circuits, hoping to create a split. In any event, this is a case that pharmaceutical and medical device companies need to watch closely.
 

Filed under False Claims Act, FDCA, First Amendment, Misbranding, Off-label Promotion, Pharmaceutical & Medical Device, Qui Tam, Second Circuit, Stuart Gerson, United States v Caronia Tagged with

Resurgent Mold Litigation In Sandy’s Wake

By on December 1, 2012

There is a significant risk that there will be a resurgence of mold claims and mold litigation in the wake of Hurricane Sandy.  Sandy left behind thousands of homes and offices in New York and New Jersey with flood-soaked flooring and sheet rock and water-damaged carpeting and personal belongings, which are all potential sources of mold if not removed and replaced.  In addition to potential mold exposure to property owners and lessees, there is the potential occupational risk to the thousands of workers in the construction trades who are working to repair damaged homes and offices.

The most likely source of mold-related claims, however, will arise over disagreement concerning the scope of work of remediation contractors, construction companies and others involved in returning storm-ravaged communities to some semblance of normality.  The contractor who replaces ruined sheet rock walls or wooden flooring, for example, may not be thinking about the water-soaked floor joists that may be a breeding ground for mold. The contractor who rebuilds an HVAC system may not feel responsible for sources of mold that may be spreading via that system.

Although certain affected surfaces may appear to recovered after being submerged under storm water for days, those surfaces may in fact be a breeding ground for mold. A service such as mold remediation cleveland can be necessary to inspect and ensure the removal of any trace of mold. As much as possible, a building contractor should clarify with the client in writing what responsibility, if any, the building contractor has for addressing mold conditions, particularly those conditions that may be adjacent to area of new construction.

On November 30, 2012, WNYC broadcast a highly informative program on the Leonard Lopate Show titled, “Mold: Please Explain“, which can be downloaded from WNYC’s website. The guests on the program were Monona Rossol, an expert in environmental health and industrial hygeine, and Chin Yang, a microbiologist with Prestige EnviroMicrobiology. Ms. Rossol and Mr. Chin discussed what mold is, where it comes from, how it grows, what it can do to your home and health, and how to get rid of it.  The listener Q&A following the initial presentation made clear that there are widespread misperceptions about mold and how to address it.

Thankfully, there are many publicly available websites that provide first-rate information concerning mold hazards and how to address it.  These sources should be the first place anyone with a mold concern should look for answers.  They are also excellent sources of information for toxic tort practitioners defending mold cases, who need to identify relevant regulations and standards of practice in the industry.  These sources also provide valuable insights into how to protect human health during the restoration process.

These sources, most of which are provided on the WNYC website, include NYC’s excellent site at: The NYC Department of Health and Mental Hygiene; EPA’s “Mold Regulation in Schools and Commercial Buildings“, EPA’s “A Brief Guide to Mold, Moisture, and Your Home“, “Flood Cleanup: Avoiding Indoor Air Quality Problems” and “The Inside Story: A Guide to Indoor Air Quality” “An Introduction to Indoor Air Quality“, FEMA’s “Dealing With Mold and MIldew in Your Floor Damaged Home” and “Eradicating Mold and Mildew” HUD’s “Healthy Homes Programs Resources” and Disaster Recovery: Mold Removal Guidelines for Your Flooded Home” and lastly, the “Guidance for Clinicians on the Recognition and Management of Health Effects related to Mold Exposure and Moisture Indoors“, published by the University of Connecticut Health Center, Division of Occupational and Environmental Medicine, Center for Indoor Environments and Health.

There is no dearth of strong science-based resources concerning mold and mold rememdiation on the internet. Unfortunately, these resources are often consulted only after some ill-advised action is taken with regard to a mold concern, not before.

Filed under Chin Yang, environmental exposure, FEMA, Health, HUD, Hurricane Sandy, Leonard Lopate, Mold, mold remediation, Monona Rossol, NYC, WNYC Tagged with

Did the Supreme Court’s 2009 BNSF Decision Change CERCLA Cost-Recovery Practice?

By on November 27, 2012

The U.S. Supreme Court’s decision in Burlington Northern Santa Fe Railway Co. v. United States, 129 S. Ct. 1870 (2009), examined two unsettled areas of CERCLA: (1) the proof necessary to establish whether a PRP has “arranged for the disposal or treatment… of hazardous substances…”; and (2) CERCLA apportionment, i.e., whether a PRP is jointly and severally liable for an entire site, or rather only severally liable for a portion of the site. 

In an article on Lexology titled, “Four Years Later: How Has BNSF Changed CERCLA Practice?”, posted on November 20, 2012, Anthony G. Hopp and Colin O’Donovan of Edwards Wildman and Paul S. Kline of Three Rivers Management, Inc., explore the ramifications of the BNSF decision.

In summary, the authors conclude that the Supreme Court’s decision has made it more difficult to establish “arranger” liability by tightening the proof requirements. At the same time, however, most trial courts in the post-BNSF era have failed to embrace that portion of the decision dealing with “divisibility.” This article, which provides an excellent survey of CERCLA jurisprudence, is required reading for lawyers involved in cost recovery litigation. 

The BNSF facts are straightforward. B&B operated an agricultural chemical distribution business that purchased pesticides and other chemicals from Shell Oil Company. Shell’s products arrived in tanker trucks and were transferred to storage facilities. Leaks and spills were apparently “common place” during B&B’s handling and transferring of Shell’s products. B&B eventually became insolvent and the Government sought cleanup costs from Shell as an “arranger” under § 9607(a)(3) of CERCLA. The Ninth Circuit affirmed the trial court’s ruling that Shell was liable as an “arranger.” 

The Supreme Court reversed the Ninth Circuit, holding that a PRP is an arranger only when it takes intentional steps to dispose of a hazardous substance. The Court found that “Shell’s mere knowledge that spills and leaks continued to occur is insufficient grounds for concluding that Shell ‘arranged for… disposal…’.” and that the evidence at trial did not support the inference that Shell intended such spills. In so holding, the Court effectively overruled twenty years of “arranger” jurisprudence, which had created a much more liberal standard for establishing liability.  Therefore, defendants that sell useful products and/or have no role in the actual spill are more likely to find BNSF helpful in avoiding CERCLA liability.

The second half of the BNSF decision was devoted to apportionment. As the authors observe, apportionment is different from allocation in that apportionment deals with whether a defendant is jointly and severally liable for an entire site, or rather only severally liable for a portion of the site. Allocation, by contrast, deals with how courts calculate a defendant’s share of liability after it has been determined that the defendant is, in fact, jointly and severally liable. 

In Yankee Gas Servs. Co. v. UGI Utils., Inc., No. 10-cv-580, 2012 WL 1067644 (D.Conn. March 30, 2012), the district court analogized the distinction between apportioning and allocating costs to several guests splitting a dinner check. “To apportion is to request separate checks, with each party paying only for its own meal. To allocate is to take an unitemized bill and ask everyone to pay what is fair.” 

But does the Yankee Gas court’s analysis blur the line between apportionment and allocation? Yankee Gas suggests that § 107 defendants may be able to reduce their overall exposure by taking certain costs off the table – those which a PRP can demonstrate it did not cause. Following the court’s analogy, if the guests each ordered their own entrees and a few bottles of wine, everyone would pay for their own entrees and equitably split the wine, with those guests who did not drink paying only for their entrées. Yankee Gas, therefore, suggests that there may be some interplay between apportionment and allocation.  

This debate is far from being merely academic. Only by demonstrating divisibility of harm is a cost recovery defendant able to defend against a joint and several liability finding. Many CERCLA courts have acknowledged that the universal starting point for the divisibility of harm analyses in CERCLA cases is §433(A) of the Restatement (Second) of Torts. But post-BNSF, the Restatement (Second) of Torts takes on new significance in the divisibility determination.  Thus, trial courts are empowered to look beyond CERCLA case law to other federal decisions interpreting Section 433(A) to determine what showing is required to establish divisibility. 

 Inasmuch as the Supreme Court has clarified the law with regard to allocation, the Edwards Wildman authors ask why not a single post-BNSF trial court has accepted this defense?  Shortly after the issuance of BNSF, it was widely predicted that "divisibility" would emerge as the new frontier in CERCLA litigation.  However, this has not yet occurred.  As difficult as establishing a “divisibility” defense remains in the courts, the article provides excellent strategies for attempting to establish the defense.

Filed under Burlington Northern & Santa Fe Railway Co. v. United States, CERCLA, CERCLA and Cost Recovery, Divisibility, Yankee Gas Servs. Co. v. UGI Utils., Inc, §433(A) of the Restatement (Second) of Torts, §9607(a)(3) Tagged with ,

Strong Contractual Terms Can Deflect Tort Liability

By on November 21, 2012

Well drafted contracts provide an effective means to mitigate tort liability. In particular, contractual risk allocation provisions can assist companies in better controlling their litigation disposing of claims when they arise.

In an article titled, “Minimizing Tort Liability with the Right Terms,” which appeared in Law360 on February 29, 2012, Shook Hardy & Bacon authors, Paul A. Williams,Charles C. Eblen andKristina L. Burmeister, discuss the importance of various contractual provisions in blunting tort liability.
To illustrate their point, the SH&B lawyers discuss the Third Circuit’s opinion in Greenspan v. ADT Security Servs., Nos. 10-2901, 10-202 (3d Cir., Sept. 20, 2011). The case involved property damage claims resulting from a fire at the plaintiffs’ Pennsylvania residence. The Plaintiffs sued ADT for breach of contract and negligence, claiming that ADT insufficiently repaired and monitored their fire alarm system.

On appeal, the Third Circuit agreed with ADT that the contract’s risk allocation provisions provided a valid defense against all of plaintiff’s claims, including gross negligence. The court ruled that plaintiff could recover in contract only, not tort, because the common law did not impose a separate tort duty to monitor an alarm system. By strictly enforcing the contractual risk allocation provisions in the contract, jurisprudence such as Greenspan provides business with the ability to mitigate tort risk and litigation costs through well drafted contracts.

Increasingly, plaintiffs are attempting to broaden what should be contractual disputes into tort litigation. Greenspan is a perfect example of this trend. In addition to a well drafted contract, defendants are often able to escape tort liability by invoking the economic loss rule. In practice, courts have generally applied the economic loss rule either when the loss claimed in tort is the subject matter of a contract between the parties, or when the plaintiff asserts product liability claims and the defect harmed the product only and not people or other property.

The SH&B article advises that an effective risk-allocation framework should contain the following provisions:

• Waiver of Subrogation;
• Limitation of Liability;
• Limitation of Action;
• Insurance Requirements; and
• Indemnity Clause

In drafting each of these provisions, it is necessary to be mindful of the legal requirements underlying each of these contractual terms. General contractual construction rules to keep in mind include:

1. An effective contract spells out the expectations to ensure that the waiver of subrogation provision is deemed a true waiver of subrogation and not merely an exculpatory provision;

 2. The waiver of subrogation provision should provide that the customer agrees to procure insurance for damages that might arise in connection with the performance of the contract and that the company be named as an additional insured;

 3. The customer should be required to waive all right of recovery beyond the proceeds of his insurance policy and agree that his insurer will not have a right of subrogation against the company;

 4. Each of these contractual provisions should be placed under separate headings in the contract so that they do not blend into and become obscured by other provisions in the contract;

5. Effective contracts should be signed by both parties and definitively indicate if the contract contains more than one page. The customer should sign or initial each page of the contract, or acknowledge that she has read and agrees to all terms and conditions of the contract on each page;

6. It is good practice for language disclaiming consequential damages or otherwise limiting recovery under warranty appear conspicuously in the contract, preferably in bolded caps; and

7. Indemnification provisions should explicitly state that the company has the right to select its own counsel to represent it in any action subject to the indemnification clause in the contract.

What’s Next?

Now that the company has a well drafted, legally binding contract with the customer, the company must take steps to ensure that it doesn’t misplace the contract. The SH&B authors point out that document management is essential to the defensive use of a contract in litigation. If the contract at issue cannot be found, it may be difficult to assert contractual offenses and may unnecessarily expose the company to significant liability.

 Or, as famed criminal defense lawyer, Johnnie Cochran, might have cautioned, “If you lose it, you can’t use it!”

 

Filed under commercial litigation, Economic Loss Doctrine, Greenspan v. ADT Security Servs, risk allocation, Theories of Liability Tagged with

The Role Of The Heeding Presumption In Failure To Warn Litigation

By on November 19, 2012

In many jurisdictions, a product liability plaintiff is not permitted to testify concerning what he or she would have done had there been an adequate warning on a product; such testimony is considered both self-serving and speculative. In the absence of such testimony, some states have adopted the Heeding Presumption.

This rebuttable presumption instructs the jury that had an adequate warning accompanied the product, they are to presume that plaintiff would have “heeded” or followed the warning. This presumption establishes causation by permitting the inference that an adequate warning would have altered plaintiff’s conduct.  

In a compelling article published in the Bloomberg BNA Prduct Safety & Liability Reporter on August 23, 2012, titled," ‘If Only I would Have Been Told…..’ A Failure to Warn Discussion: Causation, the Uncertainty Principle, the Benign Experience Principle", William O. ("Skip") Martin Jr., a partner at Haight Brown and Bonesteel in Los Angeles, discusses the Heeding Presumption and provides strategies for defense counsel to overcome the presumption at trial.

In Reyes v. Wyeth Laboratories, 498 F.2d 1264 (5th Cir. 1974), the Fifth Circuit adopted the Heeding Presumption and described it as follows:

Where a consumer, whose injury the manufacturers should have reasonably foreseen, is injured by a product sold without a required warning, a rebuttable presumption will arise if the consumer would have read any warning provided by the manufacturer, and acted so as to minimize the risks. In the absence of evidence rebutting the presumption, a jury finding that the defendant’s product was the producing cause of the plaintiff’s injury would be sufficient to hold him liable. 

Martin advises that the Heeding Presumption may be rebutted by demonstrating either that the plaintiff did not read or look for any warning, or that plaintiff failed to follow adequate warnings on the product. In the article, Martin provides good case law examples of both scenarios. If it can be demonstrated that the plaintiff would not have read the warning or, if he or she had read them, would not have heeded the warning, the Heeding Presumption is overcome. The key to a successful defense of a failure to warn claim is to require plaintiff to demonstrate that his or her failure to warn claim was a proximate cause of the injury. Often, trial judges overlook that it is plaintiff’s legal burden to establish that an allegedly inadequate or missing warning was a cause of the injury.

In addition to his discussion of the Heeding Presumption, Martin also provides a good outline for taking the deposition of an adversary human factors or warnings expert. Most plaintiff warnings experts fail to present any competent evidence as to whether a warning would have altered the plaintiff’s conduct. Human factors/warnings experts criticize the existing warning or lack of a warning on a product label, but often have done little or nothing to determine how a different warning would have altered the outcome. Again, by focusing on the causation element in plaintiff’s burden of proof, a defendant can reduce the “sting” of plaintiff’s failure to warn allegation.

 

Filed under BNA Product Safety and Liability Reporter, Causation, Failure to Warn, Heeding Presumption, human factors experts, Reyes v. Wyeth Laboratories, Toxic Tort/Product Liability Litigation, warnings experts, William O. (Skip) Martin Tagged with

Chuck Yeager’s Sham Affidavit Not “the Right Stuff”

By on November 5, 2012

Practitioners should be cognizant of the “Sham Affidavit” rule and how it can be applied to self-serving attempts to manufacture issues of fact for the purpose of defeating summary judgment. In an excellent article titled, “Ignorance Is Not Bliss: ‘Sham Affidavit’ In 9th Cir." published in Law 360 on October 29, 2012, Jones Day lawyers,Eric K. Swanholt, Michael S. McCauley and Craig M. Hirsch, discuss the Ninth Circuit’s reaffirmation of the “Sham Affidavit” rule in Yeager v. Bowlin, 693 F.3d 1076 (9th Cir. 2012).  
 

As discussed by the trio of Jones Day authors, every lawyer has no doubt sat through a deposition where a witness answers question after question “I don’t recall… I don’t recall… I don’t recall.” Even after being shown documents designed to refresh the witness recollection, the witness fails to recall the most basic facts concerning his claim. In Yeager v. Bowlin, the Ninth Circuit recently strengthened a weapon for combatting the forgetful witness. The “Sham Affidavit” rule states that “a party cannot create an issue of fact by an affidavit contradicting his prior deposition testimony.” The rule prevents a party from supporting or opposing the motion with a declaration attesting to facts that directly contradict the witness’s deposition testimony.

The Yeager case presented a somewhat new twist to the “Sham Affidavit” scenario. In Yeager, the plaintiff testified at deposition that he did not recall particular facts. Can the “Sham Affidavit” rule thwart the plaintiff from later recalling those same facts in a declaration opposing summary judgment? The Ninth Circuit answers this question in affirmative, holding that the rule applies when the forgetful witness suddenly remembers significant events in his declaration. 

The plaintiff in Yeager v. Bowlin was legendary test pilot Chuck Yeager, who was the subject of Tom Wolfe’s classic 1979 book on the American aviation industry, The Right Stuff.  Later, Sam Shepard played Chuck Yeager in the heralded screen version in 1983.

In Yeager v. Bowlin, Yeager sued former friends who owned a company specializing in the sale of aviation-related memorabilia. Yeager claimed that the Bowlins exceeded the scope of a limited consent to use his name and likeness to sell Chuck Yeager memorabilia. At his deposition, Yeager responded “I don’t recall” in response to 185 questions.

As Todd M. Noonan, the defendant’s lawyer, argues in his brief before the Ninth Circuit, “Yeager obstructed all meaningful inquiry at his deposition with his pat response, ‘I don’t recall.’ The subsequent submission of a detailed, substantive declaration in opposition to the motion for summary judgment represents exactly what the “Sham Affidavit” rule is intended to prevent. Despite suing for fraud, for example, Yeager did not recall whether the Bowlins made any initial representations. Despite asserting breach of oral contract, Yeager had no recollection of the supposed agreements. Despite asserting a claim for breach of written agreement, Yeager did not recall any written contracts with the Bowlins".

Based upon his deposition record, defense counsel argued that Yeager obstructed all meaningful inquiry into the material facts. His testimony amounted to the direct statement that he had no recollection of any facts relevant to his claims.” 

Yet, when faced with a dispositive motion, “Yeager’s memory came flooding back” – a miraculous restoration which the trial court deemed “unbelievable.” Although Yeager claimed that his recollection had somehow been refreshed by several documents, these documents were not attached to his affirmation. Moreover, no expert or medical declaration was filed attesting to any memory lapse or confusion suffered by Yeager as a result of age.

In its holding, the Ninth Circuit cautioned that courts should not disavow a declaration as a sham due to minor contradictions between the deposition and the declaration. Such minor inconsistencies might result from honest mistake, newly discovered evidence or credibly refreshed recollection. For the rule to apply, the “inconsistency between a party’s deposition testimony and subsequent affidavit must be clear and unambiguous.”  Some form of the "Sham Affidavit" rule exists in many jurisdictions around the country.  Both the Ninth Circuit decision and the Defendant’s Ninth Circuit brief contain references to many of these precedents outside the Ninth Circuit. 

 In light of Yeager, Swanholt, McCauley and Hirsch provide valuable lessons for practitioners preparing a witness for or defending a deposition:

 1. Witness preparation is of paramount importance. To avoid being the target of a “Sham Affidavit” contention, it is necessary that the practitioner properly prepares his client prior to a deposition and to familiarize him or her with all key documents;

 2. Counsel taking the depositions of a “I-don’t-recall” witness must explore any excuses the witness can later use to justify a newfound recollection of events. Are there particular documents the witness would ask for if she or he wanted to have his or her recollection refreshed? What efforts did the witness make to prepare for the deposition, including the identification of documents reviewed? Conversely, if you are defending the deposition of a witness who repeatedly answers, “I don’t recall,” or does so on a key point, it may be necessary to ask pointed questions on redirect; and

3. Finally, Yeager is instructive for parties submitting a declaration that arguably contradicts prior deposition testimony. It is necessary that such a declaration provides a “sufficiently reasonable” explanation for any inconsistencies with prior deposition testimony. Chuck Yeager provided no specifics about the documents he purportedly reused to refresh a recollection, did not attach those documents to his declaration, and did not provide any other explanation for his initial inability to remember key facts.

Considering his remarkable legacy in the field of American aviation, it is sad that, at the very end of his career, Chuck Yeager did not have “the right stuff.”
 

Filed under ADR, chuck yeager, Eric K. Swanholt, McCauley', Recall, sham affidavit, sham affidavit rule, the right stuff, Todd M. Noonan, Yeager v. Bowlin, Yeager v. Bowlin, 693 F.3d 1076 (9th Cir. 2012) Tagged with ,

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