Philadelphia Trial Lawyer Max Kennerly : Business and Commercial Litigation : Civil Attorney : The Beasley Firm : Philadelphia Pennsylvania

This time in New Jersey, as described at Electronic Discovery Law:

State v. M.A., 954 A.2d 503 (N.J. Super. Ct. App. Div. 2008)

In this case of first impression in New Jersey, defendant argued that personal information found on his work computers should be suppressed because his employer had no authority to consent to the search. ...

Rejecting his arguments as “implausible”, the court found ownership properly resided with the employer in light of several facts, including, among other things, the employer’s payment for the computers, the placing of the laptop on the depreciation schedule of the employer’s corporate tax returns and the specific instruction to defendant that all computers were company property.  Accordingly, the court upheld the validity of the warrantless search and denied the defendant’s motion to suppress.

Not the first such holding and certainly not the last.

It bears repeating again and again: if you keep non-work materials on your computer, or send/receive "personal" e-mail on your work servers, you are taking a risk of either waving attorney-client privilege or consenting to a warrantless search.

 

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It's no surprise that trial lawyers are often drawn to politics -- politics and trials both hinge on facts, credibility and persuasion, and both are swayed by similar strategies, tactics, persistence, diligence, insight and, unfortunately, fabrications and passions.

That is part of why, this blog, unlike most practicing attorney blogs, often jumps into politics. I believe politicians and political strategists have a lot to teach trial lawyers, or at least do a lot from which trial lawyers can learn.

Or re-learn.

Two months ago I made a prediction that I did not see made anywhere else: that Sarah Palin was announced as John McCain's vice presidential running mate as part of a bait-and-switch strategy designed to disrupt the election narrative (in which John McCain was slowly losing the election), shore up social conservative support for McCain, and change expectations for his running mate.

I had many reasons to reach that conclusion, some of which you can read at the link, but chief among them in my mind was how the selection didn't make any sense.

Sure, a number of pundits identified plausible reasons for the selection, including discontent among former Hillary Clinton supporters, but, long before the election, polls have consistently shown that most voters are both very concerned about electing a president over the age of 65 and uncomfortable with the idea of a female president. Add to those existing preconditions the fact that the McCain team had apparently done no vetting or other investigation of Palin, who had minimal experience, was under investigation for ethical violations, and had not shown any understanding of national politics, and you had, at least in my interpretation, a preponderance of evidence suggesting all was not as it appeared to be.

Put another way, had the vaunted Karl Rove political machine really chosen, without any detailed investigation, an unqualified candidate the voters were predisposed not to like? And had they done so while also conceding their strongest argument, that McCain's experience trumped Obama's vision?

Apparently so. I was wrong.

Here's how Newsweek's embedded reporters described it after the election:

Pawlenty, the popular governor of a swing state the Republicans badly needed to win in November, was the safe choice. Salter especially liked Pawlenty's salt-of-the-earth qualities.

But McCain didn't want the safe choice. A top adviser would later recall that telling McCain that Pawlenty was "safe" was "like guaranteeing" that McCain would not pick him. Prodded by Schmidt and Rick Davis, McCain began asking about Palin, a first-term governor who had shaken up the Alaska political establishment by taking on her own party elders, who was fearless and defiant, who was … a little bit like McCain.

There was no strategy: McCain, Schmidt and Davis were thinking, as Stephen Colbert would say, with their guts.

In one sense, there is no need for self-reflection, as the end result was the one I wanted, so does it really matter how we got there? Yet, every trial lawyer has had a trial end successfully but not in the way they imagined. After they fought hard, trapped the opposing party in their own contradictions, marshalled their strongest evidence and highlighted their opponent's weakest evidence, the trial lawyers interviewed the jury afterwards and discovered the case the jurors decided bore little resemblance to the case the lawyers argued.

Sure, all the facts were the same, but in the end the jurors took the issues the lawyers thought were, respectively, dispositive and tangential, and flipped them. That's as much as reason to re-evaluate how you tried the case than if you had lost it.

So it's time to re-learn a lesson taught best to me by my brother, the theoretical physicist and poker player, who a while back related to me this strategic mental exercise:

Q: It's early in a no-limit Texas Hold 'Em tournament.  The last cards you've played to showdown were pocket kings for a flopped set that turned a boat.  Since then you've folded every single hand for the last 45 minutes.  From early position, you open-raise to 4 times the big blind with about 45 blinds behind.  What is your opponent thinking?

A: Nothing.

Sometimes, your complicated feigns are irrelevant and your opponent isn't feigning anything at all.

Sometimes, they're just thinking from the gut.

Next time you ask yourself, "what are they thinking?", consider that the answer could be "nothing."

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The United States District Court for the Eastern District of Pennsylvania punts an easy one:

Counts I and II of the complaint arise under the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601, et seq., Home Ownership and Equity Protection Act of 1994 ("HOEPA"), 15 U.S.C. § 1639 and Regulation Z of the Federal Reserve Board ("Regulation Z"), 12 C.F.R. §§ 226.1 et seq. Plaintiff seeks rescission of the loan transaction and actual and statutory damages. ...

Under TILA, a borrower has the right to rescind certain consumer credit transactions [either until midnight of the third business day or, if the consumer was not provided the rescission forms, within 3 years or delivery of those forms] ...

Regulation Z requires the creditor to deliver two copies of the notice of right to rescind to each consumer entitled to rescind and specifies the information that the creditor must include in the notice.

...

Defendants believe plaintiff's rescission claim is untimely because the three-day limitations period under 15 U.S.C. § 1635 (a) applies and plaintiff failed to notify them of her intention to rescind until January 9, 2007. Defendants claim to have complied with 12 C.F.R. § 226.23 (b) (1) by delivering to plaintiff two copies of the required rescission form on January 22, 2004. ...

Defendants support their motion for partial summary judgment with evidence that plaintiff received two copies  of the required rescission form. Exhibit C, attached to Defendants' memorandum of law, is a rescission form dated January 22, 2004 and titled "Notice of Right to Cancel." ... Ms. Gonzales' signature appears below the following sentence: "The undersigned each acknowledge receipt of two completed copies of this Notice of Right to Cancel." Plaintiff does not deny it is her signature.

Counsel for plaintiff contends that, contrary to the written acknowledgment, only one copy of the Notice of Right to Cancel "wound up in the hands of Plaintiff, the borrower." (Plaintiff's Memorandum at 13.) TILA addresses the effect of written acknowledgments of receipt, such as the Notice of Right to Cancel  [*7] produced by Defendants:

Notwithstanding any rule of evidence, written acknowledgment of receipt of any disclosures required under this title ... does no more than create a rebuttable presumption of delivery thereof.

15 U.S.C. § 1635 (c). Plaintiff's written acknowledgment of the Notice of Right to Cancel creates the presumption that plaintiff received two copies of the document. ...

On a motion for summary judgment, the nonmoving party must come forward with evidence setting forth specific facts showing that there is a genuine issue for trial. The nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). Plaintiff has failed present evidence sufficient to rebut the presumption of delivery. Absent from the record is any sworn statement from Ms. Gonzales or other witness that plaintiff received one copy rather than two. Plaintiff relies entirely on the assertions of counsel and the Closing Checklist. No reasonable jury could conclude, on the basis of the Closing Checklist alone, that plaintiff received one copy rather than two. The three-day limitations period under 15 U.S.C. § 1635 (a) applies and commenced on January 22, 2004, the date plaintiff received the Notice of Right to Cancel. Plaintiff is not entitled to rescission because her letter demanding rescission on January 9, 2007 was untimely.

Gonzales v. CIT Group/Consumer Fin., Inc. (E.D.PA, October 30, 2008, Shapiro, J.).

And just like that, the Truth In Lending rescission claim and all the other pendant federal claims are dismissed, with the state law claims remanded back to state court.

The plaintiff's counsel apparently made a complicated argument relying upon words in the agreement itself that arguably reflected their position that the plaintiff had only received one copy.

But there was no need to go down that road: all they needed was an affidavit from the plaintiff saying that she had only received one copy. That's all. At that point, it would've been a fact issue for the jury and would have survived summary judgment.

Federal Rule of Civil Procedure 56(e) provides for exactly this situation:

(e) Affidavits; Further Testimony.

(1) In General.

A supporting or opposing affidavit must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on the matters stated. If a paper or part of a paper is referred to in an affidavit, a sworn or certified copy must be attached to or served with the affidavit. The court may permit an affidavit to be supplemented or opposed by depositions, answers to interrogatories, or additional affidavits.

(2) Opposing Party's Obligation to Respond.

When a motion for summary judgment is properly made and supported, an opposing party may not rely merely on allegations or denials in its own pleading; rather, its response must — by affidavits or as otherwise provided in this rule — set out specific facts showing a genuine issue for trial. If the opposing party does not so respond, summary judgment should, if appropriate, be entered against that party.

Keep that in mind the next time you get a motion for summary judgment saying the evidence revealed in discovery failed to meet an essential element of your claim: odds are your client or another witness can fill that gap based on their own recollection.

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Carolyn Elefant kicks off a discussion on "The Deterioration of Legal Writing," beginning with a Financial Week story, concluding:

While I believe that both factors -- the informality of e-mail and lack of quality teaching -- have contributed to the decline of legal writing skills today, I think the main problem is  the easy availability of low-cost, computerized legal research tools. These days, both students and lawyers can gorge on a glut of cheap reference sources, from today's less expensive LexisNexis and Westlaw, to tools like Casemaker or Versuslaw, to Google and other Internet search engines. Consequently, legal research has devolved into an exercise in "piling on", with lawyers adding cases and quotes merely to show strength through quantity of cases rather than quality.  At the end of the day, with so many resources available, legal analysis is suffering, and as a result, so too is the quality of legal writing, which relies on the quality of the underlying analysis for its impact and effectiveness. 

Evan Schaeffer chimes in with links to many of his great legal writing posts.

I had two "legal writing" classes in law school. Both were terrible; I encountered one teacher later who said she was glad to have moved back to consulting because it was "more funner" than teaching.

I'm not kidding.

Two points.

First, I challenge the notion that today's law students write any worse than their predecessors. It may be true, but I have seen no objective evidence of that. Complaints about writing ability are common for all employers, and complaints about the upcoming generation are as old as written history. Take this complaint:

On the matter of overwork they are particularly stern. They want to work hard, but not too hard; the good, equable life is paramount and they see no conflict between enjoying it and getting ahead. The usual top executive, they believe, works much too hard, and there are few subjects upon which they will discourse more emphatically than the folly of elders who have a single-minded devotion to work. Is it, they ask, really necessary any more? Or, for that matter, moral?

....Out of necessity, then, as well as natural desire, the wise young man is going to enjoy himself — plenty of time with the kids, some good hobbies, and later on he'll certainly go for more reading and music and stuff like that. He will, in sum, be the apotheosis of the well-rounded man: obtrusive in no particular, excessive in no zeal.

That's from 1956; Kevin Drum dug it up in response to an article just posted that was virtually identical.

Second, while great legal writing requires a career-long dedication to excellence, not-bad legal writing just requires keeping in mind a couple points:

1. There may be rules for the formatting of legal arguments, but there are no rules for the content — do not force the content of your writing into an artificial form.
    
2. Remember and use the twenty-odd years of writing education that preceded law school. Write sentences in which nouns perform specific actions upon direct objects. Use topic headings and thesis sentences and appropriate paragraph divisions. Present information in a logical form. Read what you wrote aloud; does it sound confusing? If so, then it's confusing to read, too.
    
3. The very worst examples of legal writing are the edits of cases in law school textbooks. Judges usually do not write opinions with frequent leaps in logic, sentence fragments, and the generous use of the ellipsis.
    
4. The second worst examples of legal writing are Supreme Court opinions, which are the product of a delicate compromise amongst multiple Justices and which are deliberately limited in scope so as not to exceed the actual holding.
    
5. The third worst examples of legal writing are law review articles, which must conform to multiple literary conventions that have nothing to do with ease-of-reading or persuasion.
    
6. The best examples of legal writing that are easily accessible are trial court and intermediate appellate court opinions. These opinion state facts and then apply them to law, with little interference (at least apparent on the face of the opinion) from politics or compromise or convention.

In short, writing not-bad requires reading a few short books on writing, like Strunk & White's Elements of Style and Joseph M. Williams' Style, then reviewing some basic court opinions, and then applying the same principles to your own work.

Finally, never be afraid to disregard your writing instructor's advice; odds are they're looking to move on to something "more funner" anyway.

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Good news for everyone:

The agreement also resolves lawsuits that were brought against Google in 2005 by a group of authors and publishers, along with the Authors Guild and Association of American Publishers (AAP). While Google, the Authors Guild and the AAP have disagreed on copyright law, we have always agreed about the importance of creating new ways for users to find books and for authors and publishers to get paid for their works.

...

With this agreement, in-copyright, out-of-print books will now be available for readers in the U.S. to search, preview and buy online -- something that was simply unavailable to date. Most of these books are difficult, if not impossible, to find. They are not sold through bookstores or held on most library shelves, yet they make up the vast majority of books in existence. Today, Google only shows snippets of text from the books where we don't have copyright holder permission. This agreement enables people to preview up to 20% of the book.

What makes this settlement so powerful is that in addition to being able to find and preview books more easily, users will also be able to read them. And when people read them, authors and publishers of in-copyright works will be compensated. If a reader in the U.S. finds an in-copyright book through Google Book Search, he or she will be able to pay to see the entire book online. Also, academic, library, corporate and government organizations will be able to purchase institutional subscriptions to make these books available to their members. For out-of-print books that in most cases do not have a commercial market, this opens a new revenue opportunity that didn't exist before.

...

As part of the agreement, Google is also funding the establishment of a Book Rights Registry, managed by authors and publishers, that will work to locate and represent copyright holders. We think the Registry will help address the "orphan" works problem for books in the U.S., making it easier for people who want to use older books. Since the Book Rights Registry will also be responsible for distributing the money Google collects to authors and publishers, there will be a strong incentive for rightsholders to come forward and claim their works.

In addition to expanding the commercial market for these books, Google, the authors and the publishers have worked hard with our library partners at Stanford, the University of Michigan, the University of California and the University of Wisconsin-Madison to ensure this agreement advances libraries' efforts to preserve, maintain and provide access to books for students, researchers and readers. The agreement gives public and university libraries across the U.S. free, full-text viewing of books at a designated computer in each of their facilities. That means local libraries across the U.S. will be able to offer their patrons access to the incredible collections of our library partners -- a huge benefit to the public.

The agreement also authorizes Google and the libraries to create new services that will help people with disabilities such as visual impairment better experience these books. We are grateful to our library partners for investing so much painstaking effort over so many years to maintain their book collections, and we are excited at the prospect of their participation in this landmark project.

You can read the 300+ page settlement agreement here.

 

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Another post at Drug & Device Law that makes me want to gnash my teeth:

... Does tort litigation improve the safety of drugs?

The plaintiffs' bar screams yes: It insists that lawsuits unearth new information that protect the public.

Is that true?

We haven't seen any empirical scholarhip on this point (though, Lord knows, it might exist, and we simply haven't come across it). And it's pretty hard to research this question, given the nature of what you're looking for.

But we've found a few authorities that suggest that tort litigation rarely contributes to protecting public health.

Thus, for example, Richard Epstein recently wrote:

"The drugs that usually generate the most litigation -- such as Rezulin and Vioxx -- usually are withdrawn before litigation commences. Indeed the plaintiffs' bar rightly free rides on FDA determinations, reducing the social gain from litigation."

Richard A. Epstein, "The Case For Field Preemption Of State Laws in Drug Cases," 103 Northwestern University Law Review Colloquy 54, 59-60 (2008) (and the usual link).

Why, pray tell, are pharmaceuticals so quick to withdraw these drugs when a problem is discovered? Maybe, just maybe, to avoid further civil liability?

Indeed, without tort litigation there would be no consequences at all to squeezing a little (or a lot) more profit out until the manufacturer reached the point of criminal liability.

I'd call that "unsafe."

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The Boston Globe details the $175 million settlement of the 200 injured or killed persons who filed civil suits against 75 defendants:

An analysis of the tentative settlements in US District Court in Rhode Island reveals a stark fact: Several defendants whom plaintiffs blamed most for the disaster will likely pay relatively little because of negligible assets; other defendants with more tenuous links to the tragedy - but deeper pockets - will pay more.

"I don't think there's any logic to it at all," said SuS Longiaru, whose disabled 23-year-old son, John, was killed in the fire, which erupted moments after the band took the stage.

Still the 51-year-old Johnston, R.I., woman said she is eager for the settlements to be accepted so she and her family can begin to heal. Corporations and local governments linked to the disaster, even loosely, she said, must take responsibility.

They even have a proportional graph. Of course, we're all supposed to look at that breakdown, where the defendants with the closest causal link to the harm apparently pay the lowest amounts, and conclude that the companies were scared into settlement to avoid a runaway jury abandoning all reason and common sense to throw a jackpot justice verdict at the bereaved, as they always do in wrongful death or catastrophic injury cases.

And so the article dutifully quotes a law professor with no apparent experience in torts practice (whose CV reveals a stint at the insurance-company funded American Enterprise Institute):

Peter H. Schuck, who specializes in tort law at Yale Law School, said some well-heeled companies likely settled to avoid bad publicity and the possibility of huge jury awards.

"The prospect of a jury verdict with punitive damages is one that casts a shadow over these negotiations, even if the defendants feel they have a strong case and aren't liable," he said.

But let's backup. Polyurethane foam has been known since its widespread use to be extraordinarily flammable, and the industry has operated since the early 1970s under a consent decree banning them from the previously-widespread practice of describing their materials in misleading ways to conceal their flammability.  I do not know what the specific allegations were against the polyurethane foam manufacturers and distributors, but it's not crazy talk to say that for decades they have been making a profit off of an extraordinarily dangerous material, the risks of which they have not always been candid about. Would it be surprising if, say, they had not been candid about the risks when selling this foam or that they had manufactured it in a way known to increase the risk of fire deaths? That's over $60 million of the settlement.

Then there's over $40 million from the radio station and beer distributors who paid money to attach their name to and to promote a traveling nightclub pyrotechnic show which apparently possessed none of the required licenses and training to conduct such an event.

Then there's $30 million from the TV station that employed a cameraman who allegedly hindered people from escaping, and $10 million each from the town and state which repeatedly inspected the nightclub and found nothing wrong with its blatant fire code violations.

The balance then comes largely from the more obvious defendants, like the club owners.

Tellingly, there's no indication whatsoever if any of these defendants with "tenuous links to the tragedy" are paying any of the settlement out of pocket, or if it's all insurance coverage. Based on that, I'd assume it's all or nearly-all insurance coverage.

At the end of the day, there is a simple lesson to this settlement: if you have a history of intentionally or recklessly wrongful conduct (like the polyurethane manufacturers), or you are profiting from the intentional or reckless wrongful conduct of others (like the promoters), you should expect to foot the bill for any tragedy relating to that wrongful conduct.

Want to avoid liability in the future? Don't intentionally mislead consumers about matters of life-and-death. Pay attention to what your ostensible agents are doing, particularly with regard to the safety of the public.

Most of the big settlements and verdicts I've seen arise from one problem: the failure to give a second's thought about one's fellow citizen. That's all it would have taken here.

 

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Legal Blog Watch points us to an interesting development:

A project spearheaded by the Media Bloggers Association will provide bloggers access to first-of-its-kind liability insurance along with free training in media law. The insurance program, called BlogInsure, will provide coverage for claims against bloggers involving defamation, invasion of privacy and copyright infringement. According to the MBA's announcement, its members will be eligible to purchase liability insurance at a "significant discount." Offered through Media/Professional Insurance, a division of AXIS Insurance, the policy will cover costs and damages for claims against bloggers and will parallel coverage offered to tradition media organizations.

In conjunction with this announcement, the MBA has partnered with The Poynter Institute's News University and the Berkman Center's Citizen Media Law Project to create a free e-learning course on media law designed specifically for bloggers and other online publishers. Bloggers wishing to join the MBA and take advantage of its insurance program will be required to take this course and take a test on what they learn (and pay an MBA membership fee of $25). But the course is open to anyone to take, free of charge, by registering at News University.

It is usually good for everyone involved when previously uninsured parties become both insured and educated in how not to to cause damage in the first place.

Of course, there is a flip side: there will likely be a substantial increase in the number of defamation suits filed against bloggers.

Is that necessarily a bad thing? No. Given how truth is an absolute defense to defamation, and the burden rests with the plaintiff to prove falsity, defamation suits are by and large only filed in the most egregious cases, when a defendant knowingly lies about someone else and refuses to correct the mistake. As such, defamation suits serve an important counterbalance to the ease with which rumor and innuendo can spread in the modern age.

I think the real impact of this policy will be to provide costs of defense for generally honest bloggers, thereby protecting them from meritless suits filed solely to intimidate them into silence, suits which could crush (or at least distract) those without insurance coverage. And that's a good thing.

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Over at PhilaLawyer, an anonymous (and largely humor-focused) part of the Rudius blog network, there are four ideas for "Shyster-Proofing the Courts:"

1. Immediate Mandatory Mediation
2. Allow Expert Witnesses to be Deposed
3. Give Frivolous Litigation Claims Teeth and Allow Expert Witnesses to Be Sued in Such Claims
4. Eliminate Referral Fees

First, let's keep something important in mind: the bulk of civil cases involve automobile accidents. So in some sense we're really missing the boat unless we're talking about that specifically. That said, I doubt any of these would make a difference.

1. Immediate Mandatory Mediation

Because I work on a contingent fee, I would like nothing better than to settle cases as quickly as possible.. Settlement puts money in my pocket, does not require my own money put out on the street for costs and fees, and puts my client back on their feet, a particular concern in personal injury and medical malpractice cases. So don't think I am ever the one driving the litigation.

Problem is, even a hypothetically perfect insurance company that promptly and fairly evaluates every claim, sets an appropriate reserve, and begins negotiation has multiple incentives not to settle early. The insurance company makes a return on every single penny in their reserves, a return that evaporates the moment they tender a check to me. The insurance company also typically starts blind on damages; they know a lot about their insured's liability, but very little about my client's medical expenses, lost wages, and the impact the injury has had on their life, and for obvious reasons the insurance company is not going to take my word for any of them. Finally, the insurance does not know how highly I really value the case. The only way they believe they can estimate my bottomline is by pushing back against me and seeing how I respond. Even at a firm with a strong reputation for taking cases to trial and for rejecting weaker (even though meritorious) cases, there is still a belief among insurers and defense counsel that some of the cases are "nuisance value" cases taken to maintain cash flow, with little expectation of a substantial settlement or verdict.

In the real world, the above analysis does not even happen at the insurance company until the case is ready for trial. The insurance adjuster, who, as a cog in a bureacracy, has the primary goal of demonstrating their usefulness to the bureaucracy by creating an extensive paper trail, frequently does not even bother to set a reserve for the case until trial schedules have been finalized. Similarly, the defense attorney, who gets paid by the 10th of the hour they spend defending the case, has little incentive to encourage a swift resolution of the case, thereby extinguishing a source of income and appearing feckless in the face of controversy.

Thus, by and large early mandatory mediation conferences will function as a subsidy for defense lawyers — by giving them something else to bill for — and a tax on plaintiff's lawyers — by taking them away from their other contingent fee cases. At the conference, the defense attorney will have authority only for a nuisance value while the plaintiff's attorney (who will be a junior associate, if the firm has them) will have authority only for the highest number the plaintiff's attorney can reasonably demand. If there is some external force which could drive early settlement, that force will do so regardless of court intervention.

2. Allow Expert Witnesses to be Deposed

That's already the case in the federal system. While it probably does reduce the need for trial because it puts almost everything on the table, it won't do anything to cut back on litigation. The point about having experts who write bogus opinions expecting a case will never go to trial is well taken, but that's already factored into our current system — if one of the sides thinks the expert will pull out the event at trial, they'll just push the case straight to trial, extracting a favorable settlement while teaching the other side a lesson. Adding a deposition, which would naturally have to occur after discovery (as it does in the federal system), won't really change that dynamic, it just slightly advances the time when the expert pulls out. There might be some savings to that, since it obviates the need for full trial preparation, but those savings would be minimal.

I don't think expert witness depositions are a bad idea, I just don't think they will result in any significant savings. Moreover, in cases worth less than, say, $100,000, expert witness depositions could have the perverse effect of making settlement less likely, because they hike up the costs of bringing the case to trial, thereby requiring the plaintiff and their attorney to raise the demand accordingly to protect the amount they get in the end, which in turn makes it less likely the insurer will meet the demand.

3. Give Frivolous Litigation Claims Teeth and Allow Expert Witnesses to Be Sued in Such Claims

Frivolous lawsuits are already actionable in most states, and are frequently acted upon right here in Philadelphia County. In Pennsylvania, there is specific statutory authorization for them under the so-called Dragonetti Act, named after the first attorney to get really walloped under it. The elements of such a wrongful use of civil proceedings suit seem reasonable to me:

§ 8351.  Wrongful use of civil proceedings

(a) ELEMENTS OF ACTION.-- A person who takes part in the procurement, initiation or continuation of civil proceedings against another is subject to liability to the other for wrongful use of civil proceedings:
 
   (1) He acts in a grossly negligent manner or without probable cause and
   primarily for a purpose other than that of securing the proper
   discovery, joinder of parties or adjudication of the claim in which the
   proceedings are based; and
 
   (2) The proceedings have terminated in favor of the person against whom
   they are brought.

...

§ 8352.  Existence of probable cause

A person who takes part in the procurement, initiation or continuation of civil proceedings against another has probable cause for doing so if he reasonably believes in the existence of the facts upon which the claim is based, and either:
 
   (1) Reasonably believes that under those facts the claim may be valid
   under the existing or developing law;
 
   (2) Believes to this effect in reliance upon the advice of counsel,
   sought in good faith and given after full disclosure of all relevant
   facts within his knowledge and information; or
 
   (3) Believes as an attorney of record, in good faith that his
   procurement, initiation or continuation of a civil cause is not
   intended to merely harass or maliciously injure the opposite party.

42 Pa.C.S. § 8351 et seq.
 

If there is a way to improve these elements, I would love to hear it. I personally can't think of any way of strengthening it without making it, at best, confusing and, at worst, a violation of the rights of due process and access to the courts.

As for moving against experts, there is always perjury. Beyond that, it's hard to imagine a worse idea than intimidating witnesses not to say what they really think. The point about this honest experts is, again, well taken, and I have tangled with my fair share of them, but such annoyances must be balanced against minor concerns like truth, justice and fairness. The best you can do now to retaliate against a lying expert is to report them to whatever professional organization of which they are a member, which hopefully have a deterrent effect against future offenders. I am loath to really encourage that idea, though, because by and large professional associations have a serious pro-defense bias, the natural result of a (perhaps understandable) desire to protect and shield their members from liability.

4. Eliminate Referral Fees

I have no idea how that would help anything. Plaintiffs lawyers bill on a contingent fee; if the case is meritless, they're a waste of time and money to pursue. Indeed, referral fees in my opinion actually reduce the number of cases filed, because they cut into the fee earned by the attorney actually pursuing the matter, thus requiring the case be stronger and have larger damages than if the case been brought in directly. Moreover, if there really is a problem of "recidivist professional plaintiffs," what good would it do to eliminate referral fees? They'll simply go to the same attorneys over and over or they'll find attorneys on their own — they're among the few people who really can find the right attorney for them on their own.

More importantly, referral fees serve a critical purpose in the civil justice system, introducing economic efficiency to an ordinarily inefficient process: the selection of a personal injury attorney by a nonlawyer. Corporate lawyers and clients don't need anything like a referral system because, as part of their paying jobs, they interact with all kinds of attorneys and generally have connections that can set them up with the right person for the job.

Your typical Wal-Mart or Wawa cashier hasn't the faintest clue about what to do when they get paralyzed by a drunk truck driver or when their spouse's brain gets blown out by an overdose of Heparin. Most lawyers don't even know to whom they'd turn in the event of a catastrophic injury. The referral system creates an incentive for the initial attorneys not just to half-assedly send a case away, but to diligently choose an appropriate attorney who can get the best result for the client.

Finally, and to me this is the most important function of the referral system, referral fees — specifically large referral fees — encourage attorneys who are not really qualified to handle large matters to refer those matters out to attorneys who are qualified. I cannot tell you the number of times I have been referred a case either because "it's just too big for me" or because "after I filed suit, the defense attorneys went nuclear on me." That is a good thing; attorneys should have no hesitation to radio SOS when the waters get rough. Eliminating referral fees gives them an incentive to hold on to these cases and "do their best," which is frequently not in the client's best interest.

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Via Electronic Discovery Law:

Based on the evidence presented, the court found that:

...

•  Defendant reinstalled his computer's operating system after he had received plaintiffs’ requests for copies of various files on his computer

•  Defendant downloaded a program called Aevita Wipe & Delete shortly after he filed his answer in the case, then, in the middle of the discovery period, used that program to permanently delete all traces of certain files on his computer

...

The court found that defendant’s “brazen destruction of evidence” had wholly undermined the integrity of the proceedings and made it impossible to decide the case on the merits.  It concluded that the prejudice to the court and to the recording companies was irretrievable, and that default judgment was the only appropriate sanction, both for its deterrent effect and to remedy the prejudice inflicted on plaintiffs and on the court.

Accordingly, the court struck defendant’s answer and entered default judgment against defendant for $40,500 in statutory damages.

More at EDL, including the opinion.

Sounds like an appropriate remedy, right?

Except that this remedy is rarely applied when a large corporation does it, even if the evidence is clear that they willfully destroyed evidence that would have made the proof or defense of the claim very simple and obvious, like surveillance tapes, internal investigations, and satellite tracking data. The Qualcomm / Broadcom hiding-of-emails case comes to mind (here's the primary sanction order, currently vacated awaiting further fact-finding, check EDL for plenty of info), but other than that few examples come to mind.

Typically, blatant destruction of evidence gets you, at most, a spoliation charge, allowing you merely to argue to the jury that it would have been helpful. Not an instruction that the jury should or must believe it would have been helpful; just an instruction that the jury may infer it was helpful to the other side. And corporations have an escape hatch for that, too, Federal Rule of Civil Procedure 37(e):

(e) Failure to Provide Electronically Stored Information.

Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.

Someday, someone will explain to me why this provision was needed, considering that "good faith" conduct by definition won't result in sanctions. All it does it muck up sanction arguments, to the benefit of evidence-destroying defendants.

 

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Steve Rubel at Micropersuasion complains about the Official Google Docs Blog encouraging students to automatically cut-and-paste images found online, without attribution:

Fans of Google Image Search will be happy to see that you can also find and insert images into your documents. Again, you just highlight a word or phrase. Then, use Tools>Search... using Image Search. Once you find the right image, you can drag-and-drop that image directly into your document.

Steve has a simple, elegant solution:

There's a simple solution here. Add a Creative Commons filter for re-usable content to any image search activated from Google Docs and teach students how to source them.

That's not just a good idea -- as Lawrence Lessig has been shouting from the roof tops, under the Grokster decision,

one who distributes a device with the object of promoting its use to infringe copyright … is liable for the resulting acts of infringement by third parties.

Photographs can and do sue over infringement of their photos, like PhillySkyLine did recently (see here for more; frankly, it looks like a slam dunk for them).

Probably not what Google intended.

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Sometimes I read Kevin, M.D. out of what I can only assume is a hidden desire to gnash my teeth thinking about medical malpractice:

Massachusetts is allowing a new form of malpractice lawsuit to go forward:

A woman wrecked her car, killing an innocent bystander. Now the bystander’s widow is suing the woman’s doctors, arguing that they should have warned her not to drive while taking the pain medicines they prescribed.

The problem is, a majority of medications can lead to lightheadedness and dizziness, which in theory, can impair the ability to drive. Blood pressure and diabetes drugs for instance. Should patients taking these medications be warned not to drive?

At the very least, I would be very wary of prescribing any form of narcotic medications if these types lawsuits were to succeed. Patients lose again.

I'll put aside the assertion that "a majority of medications" are at issue; I imagine he wrote that as a throw-away line.

On to the merits, it's interesting that Kevin does not attack the nominal "problem" with the ruling, in that it creates the right of third parties to sue physicians where the physician was negligent in their treatment of a patient and that negligence injured the third party. That's what all the doctors in Massachusetts were freaking out about. So we'll leave that to another day.

Instead, he apparently frets that physicians should not be held liable where they failed to warn patients about the risks of the medications they are prescribing.

Why not? Is it really so hard to hand a patient a brochure or to talk over the risks on the package with them? Is it really so terrible if the standard of care requires a physician listen to their patient and, upon hearing an elderly woman say she feels faint while driving, suggest she stop driving?

The practical answer most physicians would give is that of course they want to take the time to discuss every detail of the medication they are prescribing to their patients, but they simply can't. If they did that, they wouldn't make nearly enough money to support their practice.

That's not a complaint about medical malpractice, trial lawyers, or torts. It's a complaint about insurance reimbursements, which encourage doctors to treat patient visits like speed dating.

So stop blaming us.

* gnashes teeth *

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If you haven't been following, Victoria Pynchon at the Settle It Now Negotiation Blog and I have been having a running discussion about The Settlement Unicorn, which I originally defined as follows:

I've heard of a mythical beast, which I'll call The Unicorn Settlement, where two hostile parties on the verge of a lawsuit get lawyers, almost file suit, and then, through deft representation, settle their differences peacefully and move on.

Let me exclude from The Unicorn a particular class of dispute, where two businesses with an ongoing relationship have a big dispute. I exclude that because, while I've seen many such disputes resolved pre-litigation, it has always been in the context of an ongoing relationship the value of which exceeds the value of the dispute. So I don't call that a "settlement of a case," I call it a "continuation of a business relationship."

Victoria most recently gave an example in a medical malpractice case, which caused me to move the goal posts:

Thus, when the parties agreed to mediate, there was likely $40-60,000 "on the table," which could either be used to help settle the case or could be thrown away on experts. As noted above, that sum alone -- putting aside attorneys' fees and all the other costs and issues -- likely represented between one quarter and one half of the eventual settlement value, and the lawyers, whom I am guessing were experienced in medical malpractice, both deserve credit for recognizing this economic waste.

But that's why I just can't verify this as an actual sighting of the mighty unicorn. To me, it's analytically similar to my initial example of two businesses who resolve their dispute not because they really reach an agreement, but because the cost of the dispute is less than the value of their continuing relationship. The equation above doesn't work in a wrongful death or birth injury case. It frequently doesn't apply in cases worth more than $250,000 and virtually never applies to cases worth more than $500,000.

So Victoria commented:

On to the main point, isn't there ALWAYS some "external" factor that brings litigating parties to the table?

Which external factors do you want to rule out for our poor unicorn?

I deftly didn't answer for several days [sorry, Vickie]. Let me clarify: my biggest issue with her example was my suspicion that the final settlement didn't substantially exceed the cost of continued litigation. As such, it doesn't really look like a genuine desire to settle, it looks like a cost-avoidance measure with a little bit of personal understanding (the scar) involved.

That's all well and good, and covers a lot of cases, but it's not what I'm looking for and what I think needs more consideration. What I'm looking for is a settlement reached, for substantial money, because the lawyers sat down, considered the case, and came to an agreement on its value.

The frustratingly inefficient process that nags at me is this: after my investigation of a case, I have a good idea of three different numbers:

1. the highest reasonable verdict value of the case;
2. the likely settlement / verdict value;
3. the lowest reasonable successful resolution.

Unspoken there is #4, a defense verdict / abandoning the case, which I guess you could say is a consideration, except that, given how I'm largely in the business of contingent fee cases, I'm not in the business of taking cases I think can't win. It's always a concern, but not for settlement: if I settle a case, I settle it at a "win" amount. Otherwise I go for #1 and don't look back.

Here's the frustrating part. Every insurer is different, as is every defense attorney, and certainly every defendant, and there are disincentives for all of them (respectively bureaucratic, financial, and emotional disincentives) not to settle early. And even though I've done defense work, I know I just don't get how this adjuster works, how this case is evaluated, how my client is lying, blah, blah blah.

But at some point the adjuster, lawyer and/or client will start throwing numbers around in their head. At least along the lawyers, the #2 numbers usually aren't that far apart, and will be within half (plus or minus) of what a judge / mediator would put on it for settlement purposes.

Time after time, I litigate a case for months / years, for which I've known #2, and after all that time and money, no one knows any more than when they started. Some defense lawyers will, after the close of discovery, start talking settlement. Others refuse to discuss until jury selection.

Now, in some circumstances, such litigation is inevitable. Take a birth injury (hypoxia) / medical malpractice case. The potential damages are enormous, and heavily dependent upon developmental / life care / economic assumptions. There's always a thrombophilia defense, there's always some Chair-of-Whatever who can describe how a fetal strip says the opposite of what it actually does. So we'll need to litigate, depose the doctors, find the experts, wave to the insurance surveillance, and get the whole thing ready for trial before appropriate numbers are offered.

On others, it's just plain silly. Here's a hypothetical: industrial product failed, 54yo male client spent 16 days in the hospital, lost $80,000 in wages while recovering in physical therapy for months, now earns $15,000 less per year at a crummier job, has a recurring severe pain in legs, and can't engage in normal physical recreation anymore. He'll need continuing care plus a couple surgeries.

There are thousands of cases like that every year, more than enough to get a contemporary sense of "what they're worth."

Months of discovery will create dozens of copies of his medical records, find out he had three workplace safety violations in the past 15 years (none related to the machine), and reveal the company has had two other incidents with this same product, but no smoking guns.

Just before trial, we're exactly where we started, except the insurance company is poorer $50,000-$150,000 in legal fees and experts, I've put out $20,000-50,000 in costs and experts, and my client has gone more than a year since filing suit living off loans from family to pay off the massive credit card debt and home equity loans they took on immediately after the accident.

Why did we mess around all that time? The defense lawyers would have known proving liability wouldn't be that hard for me, and that neither me nor my firm ever shows up to trial unprepared. All of their discovery was, at best, a half-hearted fishing expedition. The bulk of what they did was force me to "prove" things that should have been beyond any genuine dispute. Why couldn't we get this done sooner?

Victoria, do you have any examples of two parties sitting down, before largely completing litigation, and wrapping up a case for substantially more than nuisance / cost of suit? If so, what brought them to the table?

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From the Middle District of Pennsylvania:

In Pennsylvania, an individual who sustains injury in a motor vehicle collision that is aggravated by subsequent medical negligence may recover damages for both injuries either from the driver exclusively or from the driver and the negligent medical practitioner in tandem. See RESTATEMENT (SECOND) TORTS § 457 (s1965) [hereinafter "RESTATEMENT"]; Smialek v. Chrysler Motors Corp., 290 Pa. Super. 496, 434 A.2d 1253, 1258 (Pa. Super. Ct. 1981) (stating that "the original tortfeasor[ in an automobile collision] is . . . fully responsible . . . for the negligent manner in which a physician or surgeon treats the case"). The plaintiff may recover all damages solely from the negligent driver because subsequent faulty treatment is deemed to be a foreseeable consequence of the automobile accidence. See RESTATEMENT § 457 cmt. a ("[D]amages assessable against [a negligent driver] include not only the injury originally caused by the [driver's] negligence but also the harm resulting from the manner in which the medical, surgical, or hospital services are rendered"); Boggavarapu v. Ponist, 518 Pa. 162, 542 A.2d 516, 517 (Pa. 1988).

However, if the plaintiff sues both the driver and the physician, liability should be allocated according to each tortfeasor's separate negligence. 1 See Frazier v. Harley Davidson Motor Co., 109 F.R.D. 293, 295-96 (W.D. Pa. 1985) (stating that negligent motorists and subsequently negligent physicians commit separately identifiable acts of negligent); Smith v. Pulcinella, 440 Pa. Super. 525, 656 A.2d 494, 497 (Pa. Super Ct. 1995); Harka v. Nabati, 337 Pa. Super. 617, 487 A.2d 432, 434 (Pa. Super Ct. 1985) (quoting Voyles v. Corwin, 295 Pa. Super. 126, 441 A.2d 381, 383 (Pa. Super. Ct. 1982)) ("[T]o the extent that the acts of the original tortfeasor and those of the physician are capable of separation, the damages should be apportioned accordingly."). The court determines as a matter of law whether injuries are capable of apportionment; however, the jury determines the value of the claim against each defendant. Voyles, 441 A.2d at 383.

Trout v. Milton S. Hershey Med. Ctr., 2008 U.S. Dist. LEXIS 65553 (emphasis added).

If the medical malpractice causes a catastrophic injury, there are very few situations in which you would want to proceed only against the car driver, not least because they likely have far less available insurance than the medical provider. Indeed, in this case the plaintiff's leg became necrotic and had to be amputated allegedly due to medical malpractice, an injury that, when combined with the accident itself, likely exceeds the insurance coverage of most drivers.

Then again, if neither the auto accident nor the medical malpractice was catastrophic, and the damages are within the coverage limits, the action can be substantially simplified by proceeding only against the car driver. You will still need expert medical testimony, but you might not get nearly the same fight as you would going against the medical provider directly. You might also have more settlement leverage against the car driver's insurance company because they run the risk of eating all of the damages at trial.

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Morales v. Sun Constructors, Inc., 2008 U.S. App. LEXIS 18513 (3d Cir., August 28, 2008) reiterated an important point for non-lawyers to know:

The Supreme Court has observed: “It will not do for a man to enter into a contract, and, when called upon to respond to its obligations, to say that he did not read it when he signed it, or did not know what it contained.” Upton v. Tribilcock, 91 U.S. 45, 50, 23 L. Ed. 203 (1875). The “integrity of contracts demands” that this principle “be rigidly enforced by the courts.” 1 Richard A. Lord, Williston on Contracts § 4:19 (4th ed. 2008). As one noted treatise explains:

According to the objective theory of contract formation, what is essential is not assent, but rather what the person to whom a manifestation is made is justified as regarding as assent. Thus, if an offeree, in ignorance of the terms of an offer, so acts or expresses itself as to justify the other party in inferring assent, and this action or expression was of such a character that a reasonable person in the position of the offeree should have known it was calculated to lead the offeror to believe that the offer had been accepted, a contract will be formed in spite of the offeree's ignorance of the terms of the offer. The most common illustration of this principle is the situation when one who is ignorant of the language in which a document is written, or who is illiterate, executes a writing proposed as a contract under a mistake as to its contents. Such a person is bound, in the absence of fraud, if the person does not require the document to be read to him … .

Id. See New York Life Ins. Co. v. Kwetkauskas, 63 F.2d 890, 891 (3d Cir. 1933) (recognizing that “[i]t is true that an illiterate man may bind himself by contract by negligently failing to learn the contents of an instrument which he has executed”); Hoshaw v. Cosgriff, 247 F. 22, 26 (8th Cir. 1917) (holding that every contracting party has the duty “to learn and know the contents of a contract before he signs and delivers it”). Arbitration agreements in the employment context are not exempt from this principle. ...

Morales, in essence, requests that this Court create an exception to the objective theory of contract formation where a party is ignorant of the language in which a contract is written. We decline to do so. In the absence of fraud, the fact that an offeree cannot read, write, speak, or understand the English language is immaterial to whether an English-language agreement the offeree executes is enforceable. ...

Morales is not claiming fraud, see App. 78, 95, and he is not alleging that Sun misrepresented the contents of the Agreement to him. Cf. Am. Heritage Life Ins. Co. v. Lang, 321 F.3d 533, 538 (5th Cir. 2003) (recognizing that “[i]t is a widely accepted principle of contracts that one who signs or accepts a written instrument will normally be bound in accordance with its written terms,” and that a defendant,  “illiterate or not, would be bound by the terms of the arbitration agreements,” but remanding for adjudication of a claim of fraud in the inducement); Pimpinello v. Swift & Co., 253 N.Y. 159, 163, 170 N.E. 530 (1930) (stating that “[i]f the signer is illiterate, or blind, or ignorant of the alien language of the writing, and the contents thereof are misread or misrepresented to him by the other party … unless the signer be negligent, the writing is void”) (emphasis added). Fn1 Further, there is no evidence that Sun tried to hide the arbitration clause; indeed, it comprised about one-half of the Agreement.

Here's Footnote 1:

The dissent analogizes this case to American Heritage Life Insurance Company v. Lang. Unlike Morales, however, the illiterate plaintiff in Lang asked the defendant's agent to explain each of the documents Lang signed, and he submitted evidence that the agent deliberately mislead him as to what he was signing by claiming that the papers were loan or insurance documents rather than an arbitration agreement.

It bears repeating: by and large, only explicit fraud will relieve someone from a material contract condition. If you're going to take someone's word for something, make sure you actually get their word. Silence usually won't work for fraud.

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As mentioned yesterday, a jury awarded Mattel $100 million* for the Bratz infringement, one-twentieth of the $2 billion requested in their closing argument, just over three times the $30 million suggested by MGA (and which may be reduced to $40 million, discussed below).

* see end of post, damages are apparently only $20 million due to duplication on verdict sheet

What happened? Mattel misjudged the jury's outrage and overshot.

Here's the jury's breakdown:

The jury awarded damages of $20 million against MGA and $10 million against [MGA CEO] Larian in each of three causes of action, intentional interference with contractual relations, aiding and abetting breach of fiduciary duty, and aiding and abetting breach of the duty of loyalty.

They also found that MGA owed Mattel $6 million for copyright infringement, while Larian owed $3 million in distributions he'd received from Bratz-related sales, and MGA Hong Kong owed $1 million.

Here is what each side claimed:

Quinn said MGA owed Mattel for the entire Bratz empire, amounting to at least $1 billion in Bratz profits and interest. Quinn argued that Larian, too, personally gained nearly $800 million in stock value and distributions flowing from the success of the dolls.

...

MGA attorneys countered that the jury should award Mattel as little as $30 million because the company had built the doll line's value with smart additions, branding and packaging.

(emphasis added) And here's a critical fact:

The four original dolls made just $4 million in profit their first year and comprised only 2.5% of MGA's entire Bratz revenue, said Raoul Kennedy, one of MGA's attorneys.

In the past seven years, MGA has built the popular brand to include more than 40 characters and expanded it with spin-offs such as Bratz Babyz, Bratz Petz, Bratz Boyz and items like helmets, backpacks and bedsheets.

(emphasis added) Recall that excellent Learned Hand quote unearthed by the Eleventh Circuit (and discussed in my post on the Watchmen lawsuit:

It must be obvious to every one familiar with equitable principles that it is inequitable for the owner of a copyright, with full notice of an intended infringement, to stand inactive while the proposed infringer spends large sums of money in its exploitation, and to intervene only when his speculation has proved a success. Delay under such circumstances allows the owner to speculate without risk with the other's money; he cannot possibly lose, and he may win.

I don't believe the Bratz trial addressed laches and the suit was somewhat timely filed from what I can tell, perhaps two years after the infringement was discovered. I doubt any of the jurors were familiar with Learned Hand, but the core idea is well-accepted in America: expanding upon others' ideas is a legitimate enterprize.

The jury essentially found that MGA was entitled to 95% of the Bratz empire's profits, despite accepting that:

• the original idea was wrongfully lifted from Mattel;
• MGA willfully interfered with Mattel's business;
• MGA aided and abetting in breaches of fiduciary duties;
• MGA aided and abetting in breaches of the duty of loyalty duties.

Despite that, the jury accepted MGA's proposed $30 million and then, perhaps as a deliberations compromise or perhaps in confusion, awarded it thrice. That alone presents a big problem for Mattel, as it's possible the judge will strike two of the three $30 million awards as duplicative, resulting in a $40 million final verdict.

After, say, a 40% gross contingency fee (which is probably on the high end, given the massive damages both Mattel and Quinn thought they could get, but which is common in commercial and business litigation) and costs, that would leave Mattel with about $20-24 million, or less than 5% of their annual profit. Yikes.

For MGA's greedy, unjustified, wrongful conduct, the jury awarded $0 in punitive damages and a fraction of the plaintiff's proposed compensatory damages. What the heck happened?

I'm not in a position to question the tactical decisions of Mattel's counsel, so I won't. With the benefit of hindsight, though, I believe Mattel dramatically overshot. It's indisputable that MGA did virtually all of the work and invested virtually all of the funds that made Bratz the success it is today. They didn't start the fire, but they gathered all the wood, they sheltered it from the rain, and they used it to kindle others. Yet, Mattel claimed it was entitled to everything, that for MGA's risk it should be granted all the reward.

There were three elements missing, at least two of which are essential for a large verdict:

1. fairness,
2. the absence of a windfall, and
3. outrage.

First, jurors try very hard to be fair. What Mattel proposed was not fair. Sure, Mattel may be entitled to it under the law, and it was unfair that their design was stolen. But it's just as unfair to all the people at MGA who didn't know they were working with stolen goods, and, indeed, it's unfair to the infringing parties themselves, since it denies their own contribution to the final work.

Second, jurors don't like to give money for nothing. Mattel proposed a windfall. Why should they get all the profits? Mattel did almost nothing to earn those profits, it just had some design sketchs stolen. Big whoop -- for that you get an entire empire that someone else built?

Third, If the jury had been outraged by MGA's conduct, "fairness" would have already been decided in the plaintiff's favor, and the windfall would have mattered less. But they weren't outraged; they thought it was an unjustified way to do business, but obviously not enough to warrant punishment.

And here's where I think Mattel made its biggest mistake: Mattel only asked for a number, while MGA gave them the tools to reach their own decision in a way that was favorable to MGA. How do I know the jury used MGA's tools? Look at the numbers they used, right out of MGA's closing: $30 million, around 2.5% of $1 billion in Bratz profit.

It can't be said enough: in closing arguments, arm your jurors with the arguments they need to prevail over the others in liability and the tools they need to reach your proposed award.

Either way, MGA is breathing a deep sign of relief today. And Mattel is digging deeply through the transcript to find something warranting a retrial.

UPDATE: MGA has been pushing heavily in the press that it's apparently undisputed the damages were overlapping, so the final sum really is just $20 million. Which means the jury took Mattel's damages instructions almost verbatim. I have cleaned up slightly (typo) and moved the old discussion of that issue below the fold, to keep around for posterity, and pasted the MGA press release.

OLD DISCUSSION

Indeed, it looks like the jury entered deliberations with barely any tools to work with, considering that the meaning of the verdict slip is already in dispute. The jury awarded exactly $30 million thrice on parallel claims. That doesn't make any sense: if the jury thought the damages were really $30 million, which they clearly did, but wanted to punish MGA, they had a punitive damages element readily available. If the jury thought $90 million was the damage, they likely would have apportioned it across the entites in relation to their involvement.

MGA PRESS RELEASE

LOS ANGELES--(BUSINESS WIRE)--In light of the verdict in MGA Entertainment’s trial against Mattel, MGA today said that certain media reports regarding the damages awarded in the trial are inaccurate.

The jury awarded $20 million to Mattel in damages. Some media reports have incorrectly reported that Mattel was awarded $100 million.

MGA said that the jury made its award pursuant to a variety of legal claims, each based on the same damages theory, and subject to the Court's instruction not to be concerned about duplicative damages. MGA pointed out that during the trial Mattel even conceded that the damages it sought were overlapping and duplicative.

MGA further stated that it intends to appeal any amount of awarded damages at the end of the case.

“We are pleased to have this trial behind us,” said Isaac Larian, CEO of MGA Entertainment. “We can now concentrate all of our energies on what we do best - providing dolls and other toys that are the consumers’ first choice.”

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Victoria Pynchon at Settle It Now says she has spotted a settlement unicorn out in the wild. Indeed, she says she actually caught it and fully and finally released its to become the certified check it always wanted to be.

I dispute the taxonomy. What she caught was nice, but it was at most a narwhal. The case, a medical malpractice action, had already progressed through substantial discovery, including the plaintiff's deposition and, I presume, the written discovery, which usually happens before the major depositions. Moreover, there seems to be an element of res ipsa, too, as it was not just an unwanted scar after surgery but after plastic surgery, and the substantial focus paid to it by the lawyers and insurance adjuster suggests to me that the scar represented not only the damages but much of the breach of the standard of care as well.

Most importantly, the damages and ultimate settlement value did not appear to be substantially greater than the cost to the insurer of defending the case through trial.

Given how it was a scar case, with the plaintiff initially demanding $500,000 (and the insurer initially offering nuisance value), I would presume the case settled for $150-250,000 in an urban jurisdiction or $75-150,000 elsewhere. That's more than the cost of defending the case at trial, but not much more. Defending a simple plastic surgery malpractice case is probably between $75-125,000, including attorneys' fees and experts and costs. Could be less if they're lucky, could certainly be more.

Which brings me to the biggest question here: why did they agree to mediation? I think I know the answer. Given where they were in the litigation, the parties had not yet spent substantial sums on expert fees. The plaintiff's lawyer had had probably spent less than $5,000 on experts, depending on their relationship with the experts (some get the experts heavily involved from day one to help guide them, others are comfortable with their own knowledge up until discovery has been substantially completed). The defense expert fees were minimal, as the insurance company has a much larger roster of experts and did not yet need to select them and fully brief them.

Thus, when the parties agreed to mediate, there was likely $40-60,000 "on the table," which could either be used to help settle the case or could be thrown away on experts. As noted above, that sum alone -- putting aside attorneys' fees and all the other costs and issues -- likely represented between one quarter and one half of the eventual settlement value, and the lawyers, whom I am guessing were experienced in medical malpractice, both deserve credit for recognizing this economic waste.

But that's why I just can't verify this as an actual sighting of the mighty unicorn. To me, it's analytically similar to my initial example of two businesses who resolve their dispute not because they really reach an agreement, but because the cost of the dispute is less than the value of their continuing relationship. The equation above doesn't work in a wrongful death or birth injury case. It frequently doesn't apply in cases worth more than $250,000 and virtually never applies to cases worth more than $500,000.

Frankly, in those cases, I can't blame defendants and insurance companies from making me work for it. As a purely economic analysis, why not spend $50-100,000 just to see if I get a crummy expert or if I bungle a deposition or are unable to pry those incriminating e-mails out of their servers?

I know, it sounds like I'm changing the definition of the unicorn by taking these smaller cases off the table and by discounting settlements reached after substantial discovery. I'm not trying to create a moving target, I'm trying to figure something out. At the end of the day, I just can't see how to bring parties to the table without an external factor narrowing the issues, whether that factor be an ongoing business relationship, the "money on the table" that exists before expert and other fees, or, most commonly, the discovery and litigation that reveals in detail the strengths and weaknesses of each other's position.

To put it another way, I can't see, as a matter of game theory, how to convince a defendant to settle a large case prior to them exhausting all their options in litigation.

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One of my favorite cases, Huber v. Taylor, filed 2002, loaded with allegations against the plaintiffs former attorneys and all kinds of fun remedies like disgorgement, just finished its second round on appeal, back down to the District Court for the third time.

The prior opinion, Huber v. Taylor, 469 F.3d 67 (3d Cir. 2006), was one of the more important recent opinions for "lawyer's lawyers" in the Third Circuit. The case is also a great example of how the paperwork these cases, e.g. attorney malpractice or