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Posts Tagged ‘Massachusetts’

States are Busy on the Cyber Front

Posted on: February 19th, 2020

By: Amy C. Bender

2020 is off to a busy start, with several states taking action on cybersecurity legislation and issuing other legal updates. Highlights include:

California – California’s Attorney General has issued revised proposed regulations regarding the California Consumer Privacy Act (“CCPA”), which creates consumer rights relating to the access to, deletion of, and sharing of personal information that is collected by businesses. The updates, which are aimed at providing more relief for consumers and clarity to covered businesses, include changes to definitions, notice and other requirements for covered businesses, and consumer rights and requests. The revised proposed regulations are available here and are currently under a public comment period.

Maryland – In the first decision of its kind under Maryland law, a federal court has ruled that a loss of software and data due to a ransomware attack was covered under a business owner’s property insurance policy. Specifically, the court found that the loss qualified as a “direct physical loss of or damage” to covered property (the affected computer server and networked computers) based on the loss of the data and software in the computer system and the loss of functionality to the computer system itself. The court reasoned that the policy did not limit covered losses to tangible property only or to total property losses. The decision is available here.

Massachusetts – The state’s legislature has stalled a proposed consumer data privacy law (available here) that would have imposed notice and disclosure requirements on businesses that collect consumers’ personal information, provided consumers the right to delete and opt out of third-party disclosure of collected personal information, and allowed consumers to sue for violations of the act without having to show any resulting damage. The bill has been sent to a “study order,” where a committee will study it and report its findings.

New York – The Stop Hacks and Improve Electronic Data Security Act (“SHIELD ACT”), available here, amends the state’s existing data breach notification law to require any person or business that owns or licenses computerized data that includes private information of New York residents to develop, implement, and maintain reasonable safeguards to protect the security, confidentiality, and integrity of the private information, including disposal of data. The data security provisions go into effect on March 21, 2020.

Virginia – Similar to Massachusetts, Virginia’s legislature has delayed and referred to study several privacy-related bills, including bills relating to consumer rights regarding access and sale of their personal data, destruction and disposal of records containing personally identifiable information, and collection and safekeeping of biometric data by employers.

Washington – The legislature has introduced a revised version of a proposed law, the Washington Privacy Act (available here), which would apply to certain private business that control or process consumer personal data and that are located within or targeted to residents of the state. The law would provide consumers rights regarding their personal data, impose responsibilities on covered controllers and processors, and regulate facial recognition services. The bill is now scheduled for a public hearing.

Freeman Mathis & Gary’s Data Privacy and Security Practice Group is here to help clients with policies and training. If you have any questions or would like more information, please contact Amy Bender at [email protected].

What Should an Attorney Do If Attorney Has Mistakenly Produced a Privileged Document Under Massachusetts Law?

Posted on: February 14th, 2020

By: Adrianna Michalska

In the event that an attorney has mistakenly produced a privileged document in discovery, Massachusetts Rule of Civil Procedure 26(b)(5)(B) requires that he give prompt notice to the party receiving the document and takes reasonable steps to rectify the error.

The same Rule also prescribes conduct for the party receiving the mistakenly produced privileged document. After being notified of the inadvertent disclosure, the receiving party shall:

  1. Promptly return, sequester, or destroy the specified information and any copies of it;
  2. Refrain from using or disclosing the information until the claim is resolved; and
  3. Take reasonable steps to retrieve the information if the party disclosed it before being notified.

If the receiving party first discovers that a privileged document has been mistakenly produced, Massachusetts Rule 4.4(b) of the Rules of Professional Conduct requires that the party who receives information relating to the representation of the attorney’s client and knows or reasonably should know that the information was inadvertently send, shall promptly notify the sender.

Additionally, the receiving party may choose to present the disclosed privileged information to the court for a determination of the claim. Massachusetts Supreme Court has held that as long as “reasonable precautions against disclosure were taken,” inadvertent disclosure does not impair the privilege. In the Matter of the Reorganization of Electric Mutual Liability Ins. Co. Ltd. (Bermuda), 425 Mass. 419, 422 (1997). Even if the disclosure could be preventable with more careful attention, the court may find it to be nonetheless inadvertent. Vigor Works, LLC v. Skanska (Mass. Super. Ct. Feb. 12, 2019), 35 Mass. L. Rep. 425, 2019 Mass. Super. LEXIS 15, at *9. Thus, the court will not deem the privilege waived, unless it can determine that: (1) the disclosure was not inadvertent, (2) the holder of the privilege did not take reasonable steps to prevent the disclosure, and (3) the holder of the privilege did not take reasonable steps to promptly rectify the error.

To ensure that you are taking reasonable steps to protect the privilege, especially when working with voluminous document production, consider taking additional precautions, such as “creat[ing] a detailed privilege log, engag[ing] a litigation support company . . . , and numbering [and indexing] . . . documents . . . in a manner consistent with a detailed privilege log.” Commerce & Indus. Ins. Co. v. E.I. du Pont de Nemours & Co. (Mass. Sup. Ct. Dec. 11, 2000), 12 Mass. L. Rep. 574, 2000 Mass. Super. LEXIS 680, at *11.

About half of the states have imposed similar obligations on litigating lawyers in their jurisdictions. Some states that do not follow similar language to Massachusetts Rule of Civil Procedure 26(b)(5)(B) are New York (not prescribing any conduct on the receiving party, beyond notifying the sender) and Virginia (a receiving party is obligated to immediately terminate review or use of the inadvertently produced document, promptly notify the sender, and abide by the sender’s further instructions).

If you have any questions or would like more information, please contact Adrianna Michalska at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

Consent-To-Settle Clauses Upheld by Massachusetts’ Highest Court

Posted on: February 13th, 2020

By: Zinnia Khan

The Supreme Judicial Court of Massachusetts (“SJC”) recently issued its highly anticipated decision in Rawan v. Continental Casualty Co. regarding the enforceability of consent-to-settle clauses.  The SJC held that consent-to-settle clauses do not violate G.L. c. 176D, § 3(9)(f), the Massachusetts statute which regulates the insurance business and defines unfair claim settlement practices.

Many professional liability insurance policies include “consent-to-settle” clauses, which require an insurer to seek its insured’s consent prior to settling a covered claim.  The consent-to-settle clause at issue in Rawan stated only that the insurer “will not settle any claim without the informed consent of [the insured].”  After the insured, an engineering firm, refused to authorize any reasonable settlement toward the plaintiff homeowners’ claims, as recommended by the insurer, a jury found the insured liable for $400,000 in compensatory damages, and an additional $40,000 in punitive damages.  The insurer paid the homeowners $141,435,98 of that figure, which was the amount within its policy limit after paying defense costs.

The homeowners then sued the insurer on the basis that the consent-to-settle clause it relied upon to refuse settlement in the initial lawsuit violated Chapter 176D.  In its decision, SJC addressed both the legislative intent of Chapter 176D and the public interests affected by consent-to-settle clauses.  First addressing the statute, the court held that Chapter 176D’s silence on consent to settle clauses was sufficient to indicate that the legislature did not intend to invalidate consent-to-settle clauses.  With respect to public interest considerations, the court noted the insurer’s duty to third parties to effectuate settlement was still subject to the insurer’s contractual and statutory duty to its insured.

Although the court concluded that consent-to-settle clauses are enforceable, the Rawan decision has important implications for insurers, insureds, and third-party claimants.  Indeed, the court made a point to emphasize that its opinion does not mean that insurers owe no duty to third parties in cases involving consent-to-settle clauses.  The insurer must still abide by its obligation to effectuate settlement, which includes “a thorough investigation of the facts, a careful attempt to determine the value of the claim, good faith efforts to convince the insured to settle for such an amount, and the absence of misleading, improper, or ‘extortionate’ conduct.”  If these measures are not taken, insurers could be held liable under Chapter176D (and potentially under Chapter 93A, Massachusetts’ consumer protection law), even where the insured ultimately refuses to provide its consent to settle.

For businesses and professionals, the fact that consent-to-settle clauses remain enforceable in Massachusetts is encouraging.  However, because the court cautioned that the duty to effectuate reasonable settlement remains, insureds should seek the advice of their trusted insurance advisors on whether efforts toward resolution are warranted.

Insurers should pay careful attention to the court’s decision in Rawan.  An insurer’s good faith duty to reasonably investigate claims and to effectuate prompt, fair, and equitable settlement of claims remains in place – particularly in cases which liability is reasonably clear.

If you have any questions or would like more information, please contact Zinnia Khan at [email protected].

Statute of Repose Does Not Bar Claims Resulting from Improper Maintenance

Posted on: January 9th, 2020

By: Tom McCraw

The Massachusetts Appeals Court recently held that the six-year statute of repose (G.L. c. 260, § 2B) did not bar a homeowner’s insurer’s subrogation claim against a gas company for damages caused by the company’s failure to maintain a gas meter that caused a fire on the homeowner’s property in February 2015.

The gas company, Bay State Gas d/b/a Columbia Gas, had installed the gas meter on the property in 1996, attaching the meter to a high-pressure gas pipe rising out of the ground but not installing supports to brace the pipe.  Bay State Gas retained ownership of the meter and maintained it over the years prior to the fire.  The incident occurred when the meter broke off from the pipe under the weight of significant snowfall, causing a fire that damaged the homeowner’s property.  The insurer, Penn-America, paid the homeowner’s claim and subrogated against Bay State.  Bay State obtained summary judgment in the trial court on grounds that the claim was barred by the six-year statute of repose, as the meter had been installed nearly 20 years before the incident.

The Appeals Court vacated the decision, noting that the six-year statutory period applies only to actions of tort “for damages arising out of any deficiency or neglect in the design, planning, construction, or general administration of an improvement to real property.”  The Appeals Court rejected Bay State Gas’ argument that the failure to include supports for the pipe was a defect in the original design in 1996. Instead, it agreed with Penn-America that the incident resulted from Bay State Gas’ breach of its continuing duty to maintain the meter – as Bay State had done throughout the years – and was beyond the scope of the statute.

In light of the Penn-America case, those in the construction industry should carefully evaluate whether any ongoing maintenance obligations for older improvements are sufficiently up to code as those obligations are seperate and distinct from issues with the original design, and not within the statute of repose.

If you have any questions or would like more information, please contact Tom McCraw at [email protected].

Penn-America v. Bay State Gas Co. d/b/a Columbia Gas, No. 19-P-86 (Mass. App. Ct. Dec. 20, 2019)

The Courtroom Sins of Your Attorney: Punishable?

Posted on: December 9th, 2019

By: Thomas Hay

Two recent Massachusetts cases: Wahlstrom v. IPA IV Management Company, Inc., et al., and Fitzpatrick v. Wendy’s Old Fashioned Hamburgers of New York, Inc., et al., were granted motions for a new trial following a jury verdict awarded in the plaintiffs’ favor. The courts’ decisions to award a new trial in both matters involved the plaintiffs’ attorneys improperly questioning witnesses or going over the line in either opening or closing statements.

The defendants in each of these cases urged their respective judges to apply the four-factor framework for considering claims of prejudicial misconduct by an attorney, as set forth by the Massachusetts Appeals Court in its 2014 decision of Fyffe v. Massachusetts Bay Transp. Auth. Most importantly, the fourth factor of the Fyffe framework states that the court should prove “whether the error, in the circumstances, possibly made a difference in the jury’s conclusion.”

However, the Appeals Court, in its decisions in Wahlstrom and Fitzpatrick, held that the Fyffe framework is not a proper standard for a trial judge to use when considering motions for a new trial due to prejudicial attorney misconduct. Rather, the appropriate standard can be found in Evans v. Multicon Construction Corp. That case provides that a judge is to conduct a “survey of a whole case” and determine whether a “miscarriage of justice” would result if the jury’s verdict were upheld.

In the Wahlstrom matter, Judge Wilson temporarily voided a jury award of $4 million for a woman raped in a Boston parking garage. In the Fitzpatrick matter, Judge Brieger temporarily voided a jury award of $150,000 for a woman who required oral surgery after biting into a bone that was inside a Wendy’s hamburger. Each case involved its own set of claimed errors for which the judges relied on in ruling whether a new trial was warranted. Both Judge Wilson and Judge Brieger concluded, respectively, that curative instructions were inadequate to cure the claimed errors and granted motions for a new trial.

In Wahlstrom, the Appeals Court reversed the granting of defense’s motion for a new trial and concluded that the claimed errors upon which Judge Wilson based his decision were not sufficient to rise to the level of a “miscarriage of justice.”

In Fitzpatrick, Judge Brieger oversaw a retrial where a different jury awarded a plaintiff’s verdict of $10,000 – which amounted to $140,000 less than the initial jury award to the plaintiff. The Appeals Court stated, on remand, Judge Brieger “need not reconsider whether aspects of plaintiff’s counsel’s closing [argument] were impermissible.” In its decision, the Appeals Court instructed that a judge is not to act as a “13th juror” and set aside the verdict, just because they would have reached a different result. Nor is a judge to use a mistrial as a form of sanction for attorney misconduct. Moreover, the Appeals Court cautioned that a smaller verdict size awarded in a second case does not necessarily indicate that the jury in the first case was “misled or swept away” when a decision as to liability is consistent in both cases.

The Appeals Court’s decision in both Wahlstrom and Fitzpatrick appear to indicate that trial judges do not have the authority to punish parties for the sins of their attorneys, unless they create a “miscarriage of justice.” As such, greater incentive now exists for attorneys to “toe the line” in regard to courtroom conduct, stopping short of creating such a “miscarriage of justice.”

If you have any questions or would like more information, please contact Thomas Hay at [email protected].