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Archive for the ‘Business Litigation’ Category

Data Privacy-As the Spokeo Turns

Posted on: August 29th, 2017

By: Jonathan M. Romvary

Lock-on-Keyboard[1]As we all know, the data privacy industry has been paying close attention to ongoing saga of Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), including this firm’s blog, most recently here, here and here. That spotlight is shining a little brighter on the Ninth Circuit in connection with a ruling earlier this month.

Earlier this month, the Ninth Circuit issued its most recent Spokeo decision, holding, on remand, that the plaintiff, Thomas Robins, satisfied the harm requirement for Article III standing in his FCRA claim against Spokeo. Writing for the Court, Judge Diarmuid F. O’Scannlain set forth a two-step inquiry to determine whether a plaintiff satisfies Article III standing:

(1) Was the statute at issue established to protect the plaintiff’s concrete rights?
(2) Did the specific procedural violations cause or present a material risk of actual harm to plaintiff’s concrete rights?

In regards to the first step, the Court concluded that the FCRA was intended to protect consumers from the dissemination of false information regarding credit ratings, and as such the statute was protecting a concrete right. Judge O’Scannlain reasoned that the information that was allegedly falsely reported by Spokeo is of the type that would be important to those reviewing a consumer report. Next, the Court determined that the alleged FCRA violations presented a legitimate and material risk of actual harm to the Plaintiff. It is important to note that Judge O’Scannlain’s opinion is similar to Justice Ginsburg’s dissent to the Supreme Court’s recent majority opinion, focusing its analysis on the potential harm to the plaintiff’s financial prospects in the workforce as a result of the allegedly false information.

Plaintiffs in data breach litigations are likely rejoicing in the Ninth Circuit’s most recent ruling. Judge O’Scannlain’s opinion effectively dilutes the requirement that concrete harm requirement to standing, and making it easier to maintain their litigation. Relying upon the opinion, an affected individual may argue that, similar to Robins, the potential harm to their financial prospects as a result of a data breach involving credit information is sufficient to satisfy Article III standing. The mere prospect of a harm may now be sufficient to maintain standing, at least before the Ninth Circuit.

However, it is not all bad news for defendants in data breach litigations as it is likely that application of the Ninth Circuit’s ruling will be limited. The fact-intensive analysis by the Ninth Circuit suggests that it will be difficult if not impossible to apply the ruling in a class action context. Further, the Ninth Circuit’s opinion clearly distinguished between threat of harm and threat of the statutory violation itself: while a threatened statutory violation would not satisfy standing requirements, the court concluded that an actual violation accompanied by a threatened harm was sufficient. This likely limits data breach plaintiffs until they can show an actual statutory violation by the defendant company. Finally, this opinion does nothing to bridge the significant circuit split interpreting Spokeo (see In Re: Horizon Healthcare Services Inc. Data breach Litigation, No. 15-2309 (3d Cir. 2017) v. Gubala v. Time Warner Cable, Inc., No. 16-2613 (7th Cir. 2017)).

Unfortunately, we likely wait for the inevitable petition to the U.S. Supreme Court for more guidance.

Remember, the Cyber, Data Security, and Privacy practice group attorneys are here to assist you in responding to data security incidents. Please contact Jonathan Romvary at [email protected] if you have any questions or would like more information on how this developing issue of standing may affect your company. 

Will the Georgia Supreme Court Accept this Rehearsal Dinner Invitation?

Posted on: July 14th, 2017

By: Jake Carroll

imageOn June 30, 2017, the Georgia Court of Appeals released a divided opinion addressing the sufficiency of evidence needed to sustain a claim for food poisoning. The case arises out of a BBQ style rehearsal dinner (the #1 “Fun Rehearsal Dinner Theme” by the where, according to the opinion, 17 guests became ill after eating the food of Big Kev’s BBQ, a Morgan County establishment. Some of the guests later sued, alleging that the food prepared and served by Big Kev’s at the dinner had been negligently prepared, was unsavory and contaminated, and made them ill in the days after the dinner.

On appeal, the Court issued a 5-4 decision holding that a person “may prevail in food poisoning cases in Georgia by establishing that the food at issue was defective or unwholesome.” Georgia law also requires that “in the absence of direct evidence of the defectiveness of the food, recovery can be supported by circumstantial evidence only if every other reasonable hypothesis as to the cause of the [persons]’ illness can be excluded by the evidence brought forward. . . .” The Court upheld the trial court’s decision that the guests did not satisfy their burden of proof.

While this holding is not a notable change in Georgia law, two separate dissents reveal strong disagreement on the bench as to whether the trial court improperly “invaded the province of the jury” or misinterpreted the evidence in failing to satisfy the burden of proof. In either event, attorneys for the rehearsal dinner guests filed their notice of intent to appeal to the Georgia Supreme Court on July 10, 2017, and practitioners are eager to see if the dissent got it right. However, Rule 40 of the Rules of the Supreme Court of Georgia dictates that the high court is unlikely to review the case as to the sufficiency of the evidence, but may review the opinion on the issue of whether the trial court improperly acted as the jury.

For any questions, please contact Jake Carroll at [email protected].

Philadelphia Court Granted Summary Judgment in $18 Million Legal Malpractice Case Rooted in the WorldCom Bankruptcy

Posted on: July 6th, 2017

By: Erin Lamb

A blast from the dot-com bubble past took some of its final breaths in a Philadelphia courtroom recently, when a judge granted summary judgment in a legal malpractice action with its roots in the 2002 bankruptcy of telecommunications giant WorldCom. (The bankruptcy was the largest in U.S. history, until 2008, when it was overtaken in rapid succession by Lehman Brothers and Washington Mutual.)

In Communications Network International, LTD v William Mark Mullineaux, Esquire, et al, the Philadelphia Court of Common Pleas (Philadelphia Court) held that, although Plaintiff’s former attorney may have violated the standard of care on multiple occasions, the client, Communications Network International, LTD (CNI), did not conduct reasonable diligence when it failed to read the Opinion from 2006 that gave rise to the action.

Mr. Mullineaux’s representation of CNI began in March 2001. In February 2001, MCI WorldCom Communications, Inc. (World Com) sued CNI for breach of contract in the United States District Court for the Eastern District of Pennsylvania. CNI hired Mr. Mullineaux to represent them in the litigation. In response, Mr. Mullineaux filed a breach of contract claim on behalf of CNI against WorldCom for “slamming,” a practice that CNI claimed constituted, essentially, the theft of tens of thousands of CNI telephone customers. WorldCom soon filed for bankruptcy. Consequently, CNI’s claims were handled by the bankruptcy judge. In 2006, the bankruptcy court denied CNI’s Motion for Judgment on the Pleadings, granted in part WorldCom’s Motion for Judgment on the Pleadings, and dismissed CNI’s claims. The Court specifically noted the slamming allegations were not properly pled.

At deposition, CNI’s CFO, Mr. Cooke, admitted that Mr. Mullineaux sent him a copy of the bankruptcy court’s opinion back in 2006, shortly after it was issued. He testified that he did not read it. In September 2008, Mr. Mullineaux filed an appeal of the bankruptcy court decision to the United States District Court for the Southern District of New York. Two years later, in September 2010, the Southern District of New York affirmed the bankruptcy court’s rulings, including the holding that the filed-rate doctrine barred most of CNI’s claims Mr. Mullineaux did not send the Order and Opinion to Mr. Cooke until the 30 day appeal period passed. He secured leave from the district court to file the CNI appeal nunc pro tunc; however, the United States Court of Appeals for the Second Circuit dismissed CNI’s appeal as untimely filed and brought the appeals to an end. Consequently, CNI filed its legal malpractice action on December 9, 2014. CNI claimed damages in the approximate amount of $18,000,000.

The Defendants sought summary judgment, based on the running of statues of limitations. The Philadelphia Court of Common Pleas agreed, holding held that the statute began to run when the bankruptcy court ruled against CNI in 2006. The Court relied on Pennsylvania law, which has never tolled the statute of limitations in a legal malpractice claim until appeals have been exhausted. The Court did note that Mullineaux may have violated the standard of care on multiple occasions.

The Court went on to take the client to task for its failure to conduct reasonable diligence. CNI alleged it had lost almost $20 million by 2010, which the court noted constituted a “a hefty incentive for the exercise of attention, knowledge, intelligence and judgment by corporate officers with their own fiduciary duties to the corporation.” As a result, the Court determined that had CNI exercised reasonable diligence it should have at least read the courts’ Opinions denying its claims.

For any questions, please contact Erin Lamb at [email protected].

The Supreme Court Buys Into Argument that Plaintiffs Should Not Be Permitted to Forum Shop

Posted on: June 22nd, 2017

By: Kristian Smith & Robyn Flegal

The U.S. Supreme Court decided one of the most important mass tort/product liability decisions ever Monday, effectively ending forum shopping or “litigation tourism.” In its 8-1 ruling, the Supreme Court in Bristol-Myers Squibb Co. v. Superior Court, No. 16-466 (U.S. June 19, 2017) overturned a California Supreme Court decision that had allowed hundreds of out-of-state patients who took Bristol-Myers Squibb’s blood-thinning medication Plavix to sue the company in California.

For years, plaintiffs involved in “litigation tourism” have relied on broad interpretations of personal jurisdiction to sue large companies in plaintiff-friendly jurisdictions. Ever since “general” personal jurisdiction was limited by the Supreme Court three years ago in Daimler AG v. Bauman, 134 S.Ct. 746 (2014) to those states where a corporation is incorporated or has its principal place of business, plaintiffs have tried to use a similar broad interpretation of “specific” personal jurisdiction to forum shop. The California Supreme Court accepted this theory when it allowed plaintiffs from all over the country to sue Bristol-Myers Squibb in California.

But the Supreme Court didn’t buy it and reiterated that the lawsuit itself must arise out of or relate to the defendant’s contacts with the forum.

The Supreme Court rejected the California Supreme Court’s ruling that any “substantial connection” between a corporate defendant’s activities and California, whether or not causally related to a plaintiff’s claimed injuries, would suffice to support jurisdiction. The California Supreme Court conferred jurisdiction over Bristol Myers-Squibb where the plaintiffs did not reside in the state and did not sue over a drug that they purchased in the state. The Supreme Court called this approach a “loose and spurious” form of general jurisdiction.

As the Court held, “a defendant’s general connections with the forum are not enough.” This means that plaintiffs may “join together in a consolidated action in the States that have general jurisdiction over BMS.” Otherwise, “the plaintiffs who are residents of a particular State… could probably sue together in their home States.”

This ruling ends the days of plaintiffs flocking to accommodating jurisdictions to bring claims against large companies, and it is already having widespread effects. Based on the Court’s ruling on Monday, a St. Louis judge declared a mistrial in a talcum powder trial underway in St. Louis Circuit Court based on lack of personal jurisdiction. The mistrial in St. Louis was declared in a trial where a Missouri man and two out-of-state plaintiffs sued Johnson & Johnson and its supplier Imerys Talc America over a claim that talcum powder in its products caused ovarian cancer. Johnson & Johnson’s lawyers prevailed, arguing that the packaging and labeling company with a plant in Missouri was simply one of the company’s contractors, and played no role in establishing jurisdiction over out of state plaintiffs.

For any questions, please contact Kristian Smith at [email protected] or Robyn Flegal at [email protected].

Georgia Supreme Court Finds Fault with the Court of Appeals’ Decision Requiring a Full Retrial on Apportionment

Posted on: June 9th, 2017

By: Robyn Flegal

In July of 2007, Joshua Martin suffered a brutal gang attack outside of Six Flags Over Georgia and was left with severe brain damage. On June 5, 2017, the Supreme Court of Georgia granted certiorari to decide the following two questions: “(1) whether Six Flags could properly be held liable for the injuries inflicted in this attack; and (2) assuming liability was proper, whether the trial court’s apportionment error does indeed require a full retrial.” The Supreme Court reinstated a $35 million verdict for Mr. Martin, holding that the jury was authorized to find Six Flags liable for the breach of its duty to exercise ordinary care in keeping its premises safe for invitees. The Court then remanded the case to the trial court for a determination as to apportionment of fault.

The jury had apportioned fault between the parties by assigning 92% of the $35 million verdict against Six Flags, and 2% against four of Martin’s attackers. Six flags argued that the jury should be entitled to apportion damages among not only named defendants, but also among individuals who were alleged to have been involved in Martin’s attack. Georgia law provides that, when assessing percentages of fault, the trier of fact shall consider the fault of all persons or entities who contributed to the alleged injury or damages, regardless of whether the person or entity was, or could have been, named as a party to the suit. OCGA § 51-12-33.

The Georgia Supreme Court acknowledged that two of Mr. Martin’s assailants should be added to the verdict form, and decided that apportionment could be decided without a full retrial. “[A]s a general matter, where correction of an apportionment error involves only the identification of tortfeasors and assessment of relative shares of fault among them, there is no sound reason to disturb the jury’s findings on liability or its calculation of damages sustained by the plaintiff.” The Court did, however, concede that a retrial on apportionment might require the presentation of much or all of the same evidence as was presented when determining liability.

To be sure that fault is properly apportioned, Georgia attorneys must include on the jury verdict form all individuals, including the plaintiff, who contributed to the injury or damages.¹

For more information contact Robyn Flegal at [email protected].

¹ While this particular case was not a life sciences case, these principles also apply to drug and medical device trials in Georgia.