THE SUPREME COURT GIVETH AND THE SUPREME COURT CLARIFIETH?

By on May 17, 2011

Eileen Millett is  Counsel to the law firm of Epstein Becker & Green, P.C. where she represents clients on environmental matters, including solid and hazardous waste and the Clean Water Act,  and counsels clients on general regulatory compliance questions, including issues related to toxic waste and water quality, permitting, emerging obligations under impending climate regulations and other federal, state, and local environmental statutes and regulations.  Ms. Millett previously served as Assistant Counsel with the Hazardous Waste Task Force at NYDEC and as General Counsel to the Interstate Environmental Commission, a tri-state water and air quality enforcement authority, where she conducted and managed litigation to control and abate water pollution and ensure adequate water and sewer infrastructure.  She teaches environmental law at the Syracuse University College of Law. 

 

Is the EPA over regulating and hurting business? Has EPA lagged behind in regulating Greenhouse Gases? The right answer depends on who you ask. But in deciding American Electric Power v. Connecticut the United States Supreme Court may indeed transform the way we produce and obtain energy. The case concerns the right of states and private parties to sue electric utilities under public nuisance theory for contributing to global warming. The United States Supreme Court will be asked to consider whether the plaintiffs have standing to bring the case, or whether the case presents a non-justiciable political question. In ordinary parlance, on standing — is there a connection between the utilities emissions’ and the injuries alleged, or does the causal chain depend on independent actions of others, and will the remedy sought, by itself, slow or reduce global warming; on political question —is the legislature and the Executive branches doing their jobs in a such a way that the Constitution envisions, making judicial intervention inappropriate. Said another way should we be about the business of sanctioning judicially engineered solutions to caps.

On April 19, 2011 in an expanded argument before only eight judges,with Justice Sotomayer recusing herself, six states, New York City and three private land trusts, sought an injunction in the form of an order to compel the reduction of carbon dioxide emissions and then to compel the reduction of those emissions from six major power producers, who they claimed, were the five largest emitters of carbon dioxide in the United States. 

By agreeing to take this case the U.S. Supreme Court is sending a strong signal that they will likely overrule this greenhouse gas public nuisance case, since they ignored the U.S. Solicitor General, who urged the Court to vacate the circuit decision, remand the case to the district court and to take note of the administration’s push to regulate. All this fuss, because states and private parties believe that power companies are creating a public nuisance by emitting greenhouse gases (GHGs) that contribute to global warming. Some states clearly feel that tracking and reporting requirements imposed by EPA do not go far enough, and what better time than now to place caps on emissions and reduce them. Proponents focused on reducing global warming mounted a multi-prong strategy to strike at the administration, Congress and the courts. The administration has indeed made efforts, but a change in the political climate, has diminished what was once a top priority. The House passed a bill that would have established a cap and trade program, but no law was enacted as the Senate could not agree on a proposal. EPA did enact some regulation, but obviously not enough to mollify the states; EPA’s regulation requires monitoring, reporting and registering, after which EPA will release that information to the public and enable us to see who indeed, are the largest emitters of carbon dioxide. These requirements will culminate in a national database and will enable EPA to establish a baseline. The question pending before the court is whether it is appropriate for the courts to step in. 

The District Court felt that the courts were not the appropriate forum. The Southern District Court of New York dismissed states and non-state plaintiffs (New York City and the private land trusts) complaint, holding that the plaintiffs’ claims would require the court to engage in the sort of balancing of competing public policy concerns that are the province of Congress and the President, and therefore presented a non-justiciable political question.  On appeal, a two-judge panel of the Second Circuit (the panel originally included Judge Sonia Sotomayor, who was elevated to the Supreme Court during the pendency of the case) vacated the district court’s dismissal and remanded the matter. The Second Circuit pointed to the lack of a detailed legislative or executive branch policy as evidence that courts could adjudicate such cases without interfering with the prerogatives of the political branches. Moreover, the court held that the obvious political ramifications of any decision that a court might render in the case did not necessarily transform the issue into a “political question.” The appellate court held that both the states and non-state plaintiffs could assert public nuisance. In particular, the non-state plaintiffs could assert such claims because of the widespread, interstate nature of the harm alleged. Finally, the Circuit held that the plaintiffs’ claims were not displaced by the Clean Air Act. Walking a fine land between the Supreme Court decision in Massachusetts v. Environmental Protection Agency, 549 U.S. 497(2007), which held that EPA has the authority under the Clean Air Act to regulate carbon dioxide as an air pollutant, and the principle that federal common law is displaced when Congress has spoken directly to a particular issue, the appellate court held that at least until EPA takes some specific regulatory action — beyond its proposed (but not final finding that GHGs endanger public health and welfare) —the statute does not regulate greenhouse gas emissions, or does not regulate such emissions from stationary sources. The day after the Second Circuit issued its opinion, EPA promulgated its Final Mandatory Reporting of Greenhouse Gas Rule. 

Before the Supreme Court ruling in Massachusetts v. Environmental Protection Agency, EPA had insisted that Congress had not given it the authority to deal with global warming, and EPA had cast doubt on the connection between GHGs and global warming, however, the Supreme Court ruling in case of Massachusetts v. Environmental Protection Agency, and granting certiorari in American Electric Power v. Connecticut demonstrates that the court is very willing to weigh in on climate change, or at a minimum provide some direction on the appropriate vehicle for such decision making.

The Supreme Court has for decades recognized a federal common law nuisance right, but has said that if Congress passes specific legislation that seeks to protect the public health and safety, the courts may and probably will have to allow those remedies to work in place of court crafted mandates. The states are seeking a policy outcome that the administration, Congress and EPA have not been willing to adopt. The outcome of American Electric Power v. Connecticut will have implications for two other common law public nuisance cases grounded in common law tort claims and alleging damage from climate change. Comer v. Murphy Oil, USA, 609 F.3d 1049 (5th Cir. 2010), and Native Village of Kivalina v. ExxonMobil Corp. 663 F.Supp.2d 863 (N.D. Cal. 2009).

The tone and tenor of the questioning a couple of weeks ago suggests that the court may well rule that EPA’s regulations of GHGs leaves no room for federal common law nuisance, which would invalidate any attempts to use federal common law nuisance to challenge GHG emissions, which leaves state common law nuisance, the CAA, amending the CAA and EPA regulating. Given that regulations are subject to ongoing legal challenges, climate change law may be uncertain for some time to come. Some have gone so far as to say that the CAA was not designed for the complexities of climate change. If you agree that the current vehicles available to us are inadequate to the task, we could be looking toward new legislation that will require attorneys to gear up and become knowledgeable at this evolving area of law so critically important to our energy needs.

Note: in May 2010, the EPA passed a rule to control greenhouse-gas emissions from light duty vehicles, and on January 2, the agency began to force power plants, oil refineries and other major emitters of greenhouse gases to obtain permits when making major modifications to their facilities or building new ones.

Filed under American Electrical Power v. Connecticut, Climate Change, Comer v. Murphy Oil USA, et al, Supreme Court, u.s. solicitor general Tagged with ,

Lenient Asbestos Causation Standard Rejected In Toxic Tort Case

By on November 8, 2010

Guest Blogger M.C. Sungaila, one of California’s most best known appellate advocates,  briefed and successfully argued the Molina appeal discussed here on behalf of Shell and Chevron. 

A California appeals court rejected the lenient increased risk causation standard used to establish causation in asbestos cases in a toxic tort case not involving asbestos.  The Second Appellate District of the California Court of Appeal in Los Angeles upheld a defense verdict last month, in  Molina v. Shell Oil Company et al, determining that the trial court correctly refused to charge the Rutherford “increased risk” instruction applicable in asbestos cases because the ability of a product to cause the type of harm suffered by the plaintiff was hotly contested.

After a five-week trial and four days of deliberations in the trial court, a jury concluded that William Molina – who suffered from a variety of cancers and other ailments — was not entitled to damages for his alleged exposure to defendants’ solvents during his 17-year career at a Firestone tire plant. The jury found that neither the solvents’ design nor any warning associated with them was a substantial factor in causing Molina’s non-Hodgkins lymphoma (NHL). Molina appealed, claiming among other things that the causation instruction used in California’s asbestos litigation should have been given to the jury.

The appeals court court stopped short, however, of holding that the more liberal  Rutherford causation standard can never apply outside the asbestos context. Nevertheless, the Court of Appeal addressed a question repeatedly posed to trial courts throughout the state over the last five years: should a more lenient causation standard adopted by the California Supreme Court in the asbestos context be extended to other types of toxic tort cases like benzene? The appellate court’s answer was a qualified "no".

Causation, of course, is an essential element of a tort action. California has definitively adopted the substantial factor test of the Restatement Second of Torts for cause-in-fact determinations. Implicit in the substantial factor causation standard in a toxic tort case is the requirement of proving both that a chemical can cause a particular adverse health effect and that it did cause that effect in the plaintiff.  In other words, proof of causation necessarily includes a threshold determination whether, in reasonable medical probability, a particular chemical is capable of causing in humans the type of harm suffered by the plaintiff (i.e., “general causation”).　 If the chemical does not possess that capacity, the chemical cannot have caused the particular plaintiff’s claimed harm.　 But if the chemical does have that capacity, then the causation inquiry shifts to whether the plaintiff’s exposure to the chemical in question was, in reasonable medical probability, a substantial factor in causing this particular plaintiff’s harm (i.e., “specific causation”).　Toxic tort causation also involves a threshold element of exposure. In order to determine whether an exposure is a possible contributing factor to a plaintiff’s injury, ‘[f]requency of exposure, regularity of exposure, and proximity of the . . . product to [the] plaintiff are certainly relevant.” (Lineaweaver v. Plant Insulation Co. (1995) 31 Cal.App.4th 1409, 1416.)

Molina contended that California Civil Jury Instruction (CACI) No. 435, a relaxed “increased risk” causation instruction, should have been given because of the difficulties of proving cancer causation. The defendants successfully urged that the increased risk instruction under Rutherford should not apply where, as in Molina’s case, the ability of a chemical to cause a particular type of cancer is hotly disputed and far from well-established.

In Rutherford v. Owens-Illinois, Inc. (1997) 16 Cal.4th 953, 960, at the end of the first phase of trial, the jury concluded that exposure to asbestos fibers proximately caused the decedent’s lung cancer and awarded damages. After this phase, several defendants settled. In a second phase of trial, the jury was asked to apportion damages and allocate fault to the remaining defendant, Owens-Illinois. Owens-Illinois objected to the use of an instruction in the second phase of trial which stated that, once the plaintiff had established both that he was exposed to defendants’ asbestos and that his injuries were legally caused by asbestos exposure generally, the burden then shifted to the defendant to establish that its product was not a legal cause of the plaintiff’s harm.

The California Supreme Court rejected the use of the burden-shifting instruction as too “fundamental” a departure from traditional substantial factor causation. However, the Court concluded that, rather than be required to “trace the unknowable path of a given asbestos fiber,” a “plaintiff[] may prove causation in [an] asbestos-related cancer case[] by demonstrating that the plaintiff’s exposure to defendant’s asbestos-containing product in reasonable medical probability [fn. omitted] was a substantial factor in contributing to the aggregate dose of asbestos the plaintiff or decedent inhaled or ingested, and hence to the risk of developing asbestos-related cancer, without the need to demonstrate that fibers from the defendant’s particular product were the ones, or among the ones, that actually produced the malignant growth.”

Thus, in Rutherford, “it was already determined what caused the plaintiff’s illness—asbestos. The only remaining issue before the Court was the proper standard for determining who manufactured or supplied the asbestos that caused the plaintiff’s illness.” (Loewen, Causation in Toxic Tort Cases: Has the Bar Been Lowered? (Spring 2003) 17 Nat. Res. & Env’t 228, 229 (hereafter Loewen).) As one commentator observed: “This is undoubtedly the reason that the Rutherford court consistently and repeatedly limited its holding to ‘asbestos-related cancer cases’: its language linking risk to cause was expressly limited to cases where it has been determined that the cancer was ‘asbestos-related.’” (Ibid.) Accordingly, Rutherford does not apply in a case like this, where the ability of the defendants’ products to cause the plaintiff’s type of cancer is hotly disputed.

In Molina’s case, defendants’ toxicology expert testified that solvents do not cause NHL.  While one plaintiffs’ expert asserted that solvents could cause NHL, another plaintiffs’ expert testified that the evidence of a causal link between benzene and NHL was “weak” and therefore he could not state to a reasonable degree of medical probability that benzene could cause NHL.  Moreover, one of plaintiffs’ experts admitted that NHL is frequently idiopathic or of unknown origin.

The Court of Appeal agreed that the trial court correctly refused the Rutherford “increased risk” instruction applicable in asbestos cases. Rutherford involved a very different situation: in that case, a jury had already determined that the asbestos had caused the plaintiff’s lung cancer. The only remaining question was which manufacturers were responsible. The cause of Mr. Molina’s NHL, however, was not established.  In fact, the capability of defendants’ products to cause Mr. Molina’s injury was one of the most critical and hotly disputed issues in the case.

Filed under Asbestos, California, Causation, Increased Risk, M.C. Sungaila, Restatement of Torts, Rutherford v. Owens-Illinois, Theories of Liability Tagged with

Insurers Uphill Fight On Coverage In Indiana

By on October 25, 2010

Guest Bloggers David L. Guevara, Ph.D., and Bradley R. Sugarman are attorneys in the environmental practice group in the law firm of Taft Stettinius & Hollister LLP in Indianapolis, Indiana.  Messrs. Guevara and Sugarman provide services in the areas of trial practice, Superfund defense and negotiation, enforcement defense, cost-recovery for plaintiffs and defendants, criminal environmental defense, environmental insurance and toxic tort litigation.  Mr. Guevara is the co-editor of a forthcoming book from ABA Book Publishing titled “Environmental Liability and Insurance Recovery.”   

 

In a recent decision, the Seventh Circuit Court of Appeals provided insurance companies doing business in Indiana with guidance on how to draft pollution exclusion clauses—provisions typically included in commercial general liability (“CGL”) policies that seek to exclude coverage for claims based on environmental contamination. Indiana is known for the tough standards it imposes on insurance companies with respect to withholding coverage based on policy exclusions. Since the Indiana Supreme Court’s 1996 decision in American States Insurance Co. v. Kiger, 662 N.E.2d 945 (Ind. 1996), Indiana courts will not exclude coverage based on pollution exclusion clauses unless the language of the insurance policy explicitly excludes the “pollutant” at issue. If the policy language is vague as to whether the pollutant is included, then the pollution exclusion clause does not apply. In West Bend Mutual Insurance Company v. United States Fidelity and Guaranty Company, et al., 598 F.3d 918 (7th Cir. 2010), the Seventh Circuit Court of Appeals confirmed that clear and unambiguous language in pollution exclusion clauses is necessary in order to bar coverage for environmental contamination claims. 

The issue in West Bend was whether CGL policies issued by Federated Mutual Insurance Company (“Federated”) covered liabilities for petroleum released from underground storage tanks and associated piping from a 7-Eleven gas station in Goshen, Indiana. The petroleum contaminated the groundwater and migrated underneath a nearby residential neighborhood.  The contamination vaporized into homes causing property damage and personal injury. The neighborhood residents sued 7-Eleven and West Bend Mutual Insurance Company’s (“West Bend”) and Federated’s mutual insured, MDK, who formerly owned and operated the station. After lengthy litigation, MDK eventually settled for $4 million.  West Bend sued Federated to recover its costs of defending MDK. 

Federated argued that it owed no duty to defend because it had no duty to indemnify claims arising from petroleum contamination pursuant to the pollution exclusion clause in its policy. West Bend countered by arguing that the Federated pollution exclusion clause was similar to the exclusion rejected by the Kiger court. 

The Seventh Circuit found that the Federated pollution exclusion clause explicitly excluded “bodily injury” or “property damage” caused by the release of “pollutants” or “motor fuels” from “tanks” and “underground piping.” While the term “pollutants” did not include gasoline or petroleum, the term “motor fuels” did. Moreover, the court noted that the Federated policy included an “Indiana Changes Endorsement” which emphasized that the pollution exclusion applied even to “pollutants” that had an ongoing function in the business. Thus, the court was convinced that “a gas station owner . . . would know to a certainty that Federated would not be responsible for damage arising out of gasoline leaks taking place during the covered period” after reading these two policy provisions.

While the West Bend decision is one of the only opinions to uphold the denial of coverage for environmental contamination in Indiana, it underscores that insurers who wish to deny coverage on the basis of the pollution exclusion face an uphill battle in this jurisdiction. The Federated policy explicitly excluded the type of pollutant (i.e., petroleum) and the manner in which it was released (i.e., from USTs and associated piping). Few CGL policies issued in Indiana are drafted with this degree of specificity. Indeed, pollution exclusion endorsements added to Indiana CGL policies even after Kiger still contain pollution exclusion clauses that may be deemed vague and overly broad. The insurance industry can address the problem posed by Indiana courts by drafting what those courts consider clear and unambiguous contractual pollution exclusions with a precise definition of “pollutants”. 

 

Filed under Brad R. Sugarman, CGL Policies, David L. Guevara, Federal Court Litigation, Indiana, Insurance Coverage, Pollution Exclusion, Seventh Circuit Court Of Appeals, Taft Stettinius & Hollister LLP, West Bend Mutual Insurance Company v. United States Fidelity and Guaranty Company, et al. Tagged with ,

The Failure Of Climate Change Legislation

By on October 15, 2010

If Theodore J. Lowi, the John L. Senior Professor of American Institutions, teaching in the Government Department at Cornell University, one day decides to again update his classic study of American Government, End of Liberalism: The Second Republic of the United States, he could find further validation for his book’s thesis in the compelling article by Ryan Lizza, "As The World Burns: How the Senate and the White House missed their best chance to deal with Climate Change", which appeared in New Yorker Magazine (October 11, 2010).  Mr. Lizza describes  how an unlikely coalition comprised of Senators John Kerry, Lindsey Graham and Joseph Lieberman (which came to be known as the "K.G.L") came tantalizingly close to putting together a bipartisan climate change bill, but failed in the end for several reasons. 

In End of Liberalism, Lowi examines how the American Republic has grown to gargantuan size without the necessary self-examination or  recognition that this growth has been fueled by delegation of power to interest groups. According to Lowi, Congress’s delegation of its responsibility to govern to administrative agencies has led in turn to an unwholesome process of accommodation in which regulatory agencies become virtual captives of interest groups.  Lowi called this tendency "clientelism".  New governmnental policies have only served to tighten the vice-like grip of interest groups over the machinery of government. 

In preparing his article, Mr. Llzza asked former Vice President Al Gore why he thought the K.G.L. climate change legislation  failed.  The first reason given was Republican partisanship; the second reason was the Great Recession.  However, Mr. Gore’s  third explanation for the legislation’s failure pinpointed how Kerry, Graham and Lieberman approached the issue and is emblematic of our Congress’ failure to take up necessary legislation in many areas, not merely in the environmental arena.  Mr. Gore stated:

 "The influence of special interests is now at an extremely unhealthy level.  And it’s to the point where it’s virtually impossible for participants in the current political system to enact any significant change without first seeking and gaining permission from the largest commercial interests who are most affected by the proposed change."

Professor Lowi, are you listening?

 

Filed under Al Gore, As the World Burns, Climate Change, Climate Change Legislation, Cornell University, End of Liberalism, interest groups, Professor Theodore J. Lowi, Ryan Lizza, Senator John Kerry, Senator Joseph Lieberman, Senator Lindsey Graham Tagged with

FTC’s Revised Green Guides

By on October 15, 2010

On October 6, 2010, the Federal Trade Commission proposed revised “Green Guides”, the guidance provided to corporate marketers to help them avoid making misleading environmental claims. The Green Guides were first issued in 1992 and revised in 1996 and 1998. The proposed Guides issued last week are designed to significantly strengthen the FTC’s prior guidance and provide new guidance on marketing claims that were not commonly asserted in the 1990’s before the “Green Revolution”. Although the FTC is seeking public comments on the proposed revisions through December 10, 2010, the guidance issued last week is not likely to be significantly modified.

Based upon a review of the new Green Guides, there are some basic rules of the road that, if followed, will help companies avoid “Greenwashing” claims and the consumer class action suits which are likely to become increasingly common: (1) Avoid unqualified general environmental marketing claims that are difficult, if not impossible, to substantiate; (2) General claims of environmental benefit should be accompanied by qualifiers that are clear, specific and accurate; (3) When using a certification or a seal of approval to promote the green nature of a product, use clear and prominent language to clarify that the certification or seal relates to a particular environmental attribute, which the company can substantiate; (4) If the company is endorsing a product with its own seal of approval, use clear prominent and qualifying language to alert consumers that the company created the certifying program, not an independent third-party; and (5) – Learn about budget skip bins in Sydney – If only a portion of the product is made with recycled or renewable material, clearly and prominently clarify which portion of the product is made from a recycled or renewable source.

Perhaps surprisingly, FTC’s consumer revealed research found that the public overestimates the significance of “Green” claims, which suggests that “greenwashing” is common and probably profitable. Despite consumers’ increasing cynicism, there must be some deep-seated need to believe that you are a buying an “eco-friendly” product. Going forward, companie seeking to comply with the new guidelines may want to rethink their marketing strategies and avoid making general claims of “environmental friendliness” and focus instead on advertising claims that can be are based on scientific research.

The FTC’s Green Guides are largely devoid of regulatory jargon often found regulations and are easy to read and understand. The Green Guides provide helpful examples of which kind of claims are acceptable and which are not. Following the adoption of the Green Guides, should we expect that FTC will initiate a spate of enforcement actions to emphasize to industry that the new Green Guides should be taken seriously?  You bet!.

Filed under Agencies, Associations, & Organizations, consumer class actions, Deceptive And Unfair Trade Practices, Green Revolution, Greenwashing, guidance, revised Green Guides Tagged with

Ed Lowenberg Retires From ExxonMobil

By on October 6, 2010

Ed Lowenberg, the Coordinator of the Toxic Torts Group in the Litigation Department at ExxonMobil, is retiring after 32 with the company on November 30, 2010.  Before he retired, he calculated his retirement account using this link https://www.sofi.com/roth-ira-calculator/ . He will be greatly missed by members of the toxic tort bar–by both the defendant and plaintiff lawyers with whom he has worked over his long career  To many of us, Ed Lowenberg personified Exxon.  Over the years, he was responsible for some of the most high profile toxic tort litigations in the United States.  Like the consummate fighter that he was, Ed always looked to land a decisive  knockout blow on an adversary. At the same time, however , Ed handled all of his matters with professional integrity, creativity and good humor.  He will be greatly missed by the toxic tort bar.

After receiving a B.A. in Political Science from the City College of New York in 1967 and a J.D. from the University of Texas in 1970, Ed worked at HEW, as a Trial Counsel for Justice, and as Special Counsel for the SEC. He also served as Special Assistant United States Attorney in Houston, New Orleans and in other venues. However, he found his true calling working in-house at Exxon, which he joined in 1978, defending the the company’s toxic tort litigation.

Ed was an early advocate of joint defense groups in mass tort litigation.  In cases in which plaintiffs would sue 20 chemical manufacturers, each manufacturer would routinely retain its own legal team to defend the case.  In a joint defense, the defendants agree to waive conflicts and to retain a single law firm to represent the entire defense group.  When joint defense groups were initially proposed, there was a tremendous backlash within both the in-house bar and among outside law firms, who feared the  loss of significant clients to the “joint defense counsel”  and bemoaned the the loss of revenue from defending the case.  However, Ed and other pioneering in-house lawyers recognized that the industry could more properly defend baseless toxic tort cases once a joint defense group comprised of in-house lawyers could was able to instruct defense counsel how best to defend a case.  With multiple law firms appearing for multiple defendants, the temptation for some companies to settle for “nuisance value” to avoid high defense costs was often irresistible.  In a joint defense, in which each of the twenty law firms pays only a fraction of the cost of defense, nuisance value is greatly diminished and plaintiff lawyers often lose their enthusiasm about their claims.  The joint defense was just one of many innovations Ed brought to toxic tort defense.

 

Filed under Ed Lowenberg, Edward Lowenberg, Exxon, ExxonMobil, Joint Defense Groups, Oil & Gas, retirement, Toxic Tort Litigation Tagged with

Conflicts Of Interest Involving Corporate Affiliates

By on September 27, 2010

In GSI Commerce Solutions, Inc. v. BabyCenter LLC, No. 09-2790, the Second Circuit affirmed the ruling of SDNY Judge Jed S. Rakoff, who disqualified the Blank Rome law firm from representing a company adverse to a subsidiary of Johnson & Johnson, which was a client of Blank Rome.

The Second Circuit’s ruling is noteworthy because it addressed for the first time whether a law firm infringed on its duty of loyalty by taking on a representation adverse to an existing client’s corporate affiliate. In disqualifying Blank Rome, Judge Rakoff found that the overlap between BabyCenter LLC and Johnson & Johnson in effect made them a single company for various purposes. Judge Rakoff observed that BabyCenter LLC did not have a separate in-house legal department, but instead relied exclusively upon the in-house lawyers at Johnson & Johnson for legal advice.  Drawing upon extensive discussion by other courts as well as the ABA, the Second Circuit held that a law firm cannot take on a matter adverse to an affiliate if it diminishes the parent client’s level of confidence in its lawyers.

The Court first examined the ABA’s Model Rules of Professional Conduct, which provide that a “lawyer who represents a corporation or other organization does not, by virtue of that representation, necessarily represent any constituent or affiliated organization, such as parent or subsidiary.” ABA Model Rule of Prof’l Conduct 1.7 cmt. 34 (2006). This statement embodies what is often termed the “entity theory” of representation. However, the exception to this rule is that an attorney may not accept representation adverse to a client affiliate if “circumstances are such that the affiliate should also be considered a client of the lawyer.”

For its own part, Blank Rome argued that no conflict existed because: (1) the dispute between GSI and BabyCenter involved matters unrelated to Blank Rome’s Johnson & Johnson matters; and (2) Johnson & Johnson had waived any conflict by signing Blank Rome’s engagement letter. Both of these arguments proved unpersuasive to the unanimous appeals court. In particular, the Second Circuit observed that Blank Rome’s engagement letter contained provisions that might constitute a waiver by Johnson & Johnson of some, but not all, corporate affiliate conflicts. However, these conflict waivers were specifically limited to patent litigation and, even more specifically, to matters brought by generic drug manufacturers. Therefore, the Second Circuit held, Blank Rome failed to “contract around” the corporate affiliate conflict at issue. 

In a footnote, Judge Ralph K. Winter, Jr., writing for the Court, stated that the Circuit was not addressing issues that would arise if a blanket waiver had been executed and left open how it might rule in those circumstances.

Filed under ABA, Blank Rome, Conduct', conflict waiver, Conflicts of Interest, corporate affiliate, disqualification, entity theory" of representation, Hon. Jed S. Rakoff, Hon. Ralph K. Winter, Jr., Johnson & Johnson, Litigation Issues and Factors, Model, Professional, Rules, Second Circuit Tagged with ,

Protecting The Privacy Of Scientists & Physicians

By on September 23, 2010

 When a scientist or physician signs on as a litigation expert, he opens himself up to scrutiny, not only about the bases for his opinion but also, to the extent permitted by law, his personal biases and professional background. In accepting a fee for service, the expert tacitly agrees to submit to intensive scrutiny. 

But what about the scientist or physician who is not involved in litigation? What privacy protections should be afforded to an expert whose scientific work becomes a linchpin for one or another party’s position in a toxic tort litigation? Increasingly, authors of scientific journal articles, FDA advisory panel members and other public health advocates have been subjected to increasingly intrusive subpoenas with the intent of undermining their scientific research or opinions. 

In a decision protective of the privacy of scientists and scholars involved in research benefiting public health and safety, New York Supreme Court Justice Sherry Klein Heitler refused to permit a company that marketed asbestos-containing products from obtaining the private papers of a former faculty member of the Mount Sinai School of Medicine (“Mt. Sinai”). Victor Reyniak and Sybille Reyniak v. Barnstead International et al. (2010 NY Slip Op. 30819)  In that case, Kentile Floors, Inc. (“Kentile”) served a subpoena duces tecum on Mt. Sinai seeking disclosure of Dr. Irving Selikoff’s private papers, including his personal correspondence and memoranda. Dr. Selikoff, who died in 1992, was a pioneering researcher in asbestos who devoted his career to enhancing public awareness of the hazards of asbestos and published over 380 scientific articles. Largely on the basis of Dr. Selikoff’s research, OSHA imposed safeguards for asbestos workers in the 1970’s. Kentile argued that Dr. Selikoff’s private papers might potentially shed light on “state of the art” issues crucial to their defense.  

In rejecting Kentile’s argument, and granting Mt. Sinai’s motion for a protective order, Judge Heitler held that the “expense Mt. Sinai would incur as a result of such a broad interpretation of the subpoena could well discourage other institutions from conducting vital health and safety research. Other scholars in the laboratory may fear that their unpublished notes, observations and ideas could be released to the public as a result of litigation. Although a scholar’s right to academic freedom is not absolute, it should factor into a court’s analysis on whether forced disclosure of documents is permissible (see, In R.J. Reynolds Tobacco Co., 136 Misc.2d supra at 287).”

Justice Heitler further held that “in  the circumstances of this case, Kentile’s request is sweeping and indiscriminate. The relative burden on Mt. Sinai to conduct such a mass production of documents covering 30 years of Dr. Selikoff’s studies outweighs any benefit Kentile might receive by conducting such a search.”

There is surprisingly scant case law  addressing the privacy concerns of scientists and physicians who find their professional work (and themselves) ensnared in litigation not of their own making.  In one case,  In re New York County Data Entry Worker Product Liability Litigation, No. 14003/92, 1994 WL 87529 (N.Y. Sup. Ct. N.Y. County Jan 31, 1994), discovery related to studies performed by a non-party scientist was denied because “special circumstances” warranting disclosure were not found to exist.. Noting that the non-party scientist  had made his studies public, the parties were directed to obtain the information from other sources. Similarly, Dr. Selikoff’s 380 published scientific works are also clearly available to Kentile in the public domain. However, his unpublished notes and preliminary ideas were never intended to be exposed to the public or subject to use in litigation.

As noted in Plough Inc. v. National Academy of Sciences, 530 A.2d 1152, 1157-58 (D.C. 1987) "Although premature disclosure of ongoing research may be the most severe form of ‘chill’ on scientific research, it is not the only form. Even limited disclosure of the preliminary conclusions, hypotheses, thoughts and ideas ventured by [scientists] prior to their being tested and criticized would not only embarrass those members, it would discourage [scientists] in the future from expressing themselves freely during their deliberations, and might cause some potential volunteer to refrain from participating in [] studies altogether.

 

 

 

Filed under New York State Litigation

Jay Walder’s Vision Of MTA’s Future

By on September 22, 2010

 

 On September 22, 2010, the New York League of Conservation Voters Education Fund (“NYLCV Education Fund”) hosted Jay Walder, Chairman of the Metropolitan Transit Authority (“MTA”), at an Eco-Partner Breakfast, a quarterly event at which leaders from around New York State meet to network and discuss issues of environmental concern. Jay Walder was nominated by Governor David A. Patterson on July 14, 2009 and confirmed as chairman and chief executive officer of the MTA on September 10, 2009. We applaud Mr. Walder for his vision and the aggressive steps that he has taken in his one year in office to keep the largest mass transit system in the United States moving in the right direction. Walder has prior experience in public transportation within the MTA, where he previously served as Chief of Staff and later as Executive Director and Chief Financial Officer. Mr. Walder left the MTA in 1995 to teach public policy at the John F. Kennedy School of Government at Harvard. Thereafter, he joined Transport for London, where he was credited with the introduction of that system’s extremely successful “Oyster card” and with leading the transportation charge as part of London’s successful bid for the 2012 Summer Olympics. 

Mr. Walder set the tone for the morning’s discussion by emphasizing the importance of seeking “transformational” change rather than “evolutionary” change at MTA. Mr. Walder identified two significant transformational milestones in the New York subway system. The first occurred in 1982, when the MTA’s first capital program was established. As a New Yorker, Mr. Walder recalled to mind how the New York subway system was considered a symbol of urban decay in the 1970’s, characterized by graffiti, constant breakdowns, oppressive heat in summer and ineffectual heating in winter. As a result of capital improvements, today’s subway system no longer suffers from the systemic problems of the 1970’s. He points out that there was a breakdown every 7,000 system miles in the 1970’s as compared to today when there is a breakdown only every 150,000 miles. 

The second transformational milestone was the introduction of the MetroCard in 1991. As a result of the MetroCard’s introduction, tokens became relics of the past, and monthly and weekly passes and automatic bus/rail transfers became a pleasant reality. Subway ridership increased from 3.5 million riders daily in 1992 to over 5 million riders daily today. Although the MTA has been criticized for recently announced service cuts, Mr. Walder has made significant strides in his one year in office in reducing MTA’s annual operating budget. This cost-cutting initiative has resulted in the removal of 3,500 jobs, a reduction by 20% of positions at MTA HQ, reduction in overtime, consolidation of functions and renegotiation of contracts with vendors. MTA is now introducing “countdown” clocks in subway stations to remove rider angst over train delays and to make New Yorkers’ long-time habit of constantly looking over the edge of the platform toward the tunnel for the next train a thing of the past.

 

Filed under eco-partner breakfast, Environmental, metrocard, mta, nyclv education fund, nylcvef, oyster card, subway, tokens Tagged with

CPLR Article 16 Protection for NY Defendants

By on September 16, 2010

The application of CPLR Article 16 can significantly limit a defendant’s exposure in NY litigation for non-economic loss to his or her equitable share of fault. The CPLR defines “non-economic loss” to include pain and suffering, mental anguish, loss of consortium or other similar categories of damages. Thus, Article 16 does not avail a defendant in a claim to recover lost earnings or unreimbursed medical expenses. However, for claims seeking recovery for pain and suffering, Section 1601 modifies the common law rule of joint and several liability by making a joint tortfeasor, whose share of fault is fifty percent or less, liable for plaintiff’s non-economic loss only to the extent of that tortfeasor’s equitable share. For a thoughtful analysis of whether to assert a contribution claim or to rely on the application of Article 16, I commend you to “Securing Full Protection of CPLR Article 16 for Defendants,” an article by John Lyddane and Ellen B. Fishman, partners at Martin Clearwater & Bell, which appeared in The New York Law Journal on September 14, 2010. Although the article focuses on the application of Article 16 in defending medical malpractice actions, the authors’ analysis is equally applicable to the defense of toxic tort litigation. In particular, Mr. Lyddane and Ms. Fishman provide a valuable discussion concerning how to keep Article 16 issues, (i.e., the non-defendants’ wrongs) before the finder of fact.

CPLR Article 16 contains many traps for the unwary practitioner. In particular, the exceptions to CPLR Article 16 must be considered in advising clients concerning the relief this section potentially affords them as defendants. For example, tortfeasor liability on property damage and wrongful death claims remains joint and several in respect to all categories of damages. There may be instances when a defendant should implead a co-tortfeasor as a third-party into the case rather than seek relief from Article 16. Another trap for the unwary litigant is in construction litigation. A tortfeasor shown to have violated what the law denominates a “non-delegable duty” gets no several-only status. Thus, in Labor Law Section 240 and 241 cases, a tortfeasor found liable under those sections may be found joint and severally liable for satisfying an adverse judgment if that liability is predicated upon a “non-delegable duty.”

Filed under CPLR Article 16, ellen b fishman, john lyddane, joint and several liability, labor law 240, labor law 241, martin, clearwater & bell, New York State Litigation, non-economic loss, pain and suffering Tagged with ,

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