Florida High Court Again Leaves Emotional Distress “Impact Rule” In Place

In Willis v. Gami Golden Glades, LLC, No. SC04-1929, 2007 WL 3024039 (Fla. Oct. 18, 2007), the intermediate appellate court certified questions to the Florida Supreme Court that invited reconsideration of the state’s “impact rule.” Under that rule, Florida treats emotional distress claims differently depending on whether the plaintiff has suffered a physical impact from an external force.

If there was an impact, Florida permits recovery for emotional distress not only from the impact itself but also for distress stemming from the incident during which the impact occurred. Without an impact, a plaintiff can only recover for mental distress manifested by the physical injury and the plaintiff must have been directly involved in the traumatizing event.

Although the certified questions raised important questions about the application of the impact rule, and invited reconsideration of the rule itself, the majority in Willis concluded that the facts of the case -- involving an assault and battery in a parking lot that plaintiff used at defendant’s direction -- so clearly satisfied the rule that none of the other issues argued by the parties needed to be addressed. However, the concurring and dissenting opinions addressed those issues and the underlying policy questions at length.

New York Does Not Recognize Tort Of Negligent Spoliation By Third Parties

In Ortega v. City of New York, No. 118, 2007 N.Y. Slip Op. 07741, 2007 WL 2988760 (N.Y. Oct. 16, 2007), New York’s highest court refused to recognize spoliation of evidence as an independent tort.

Plaintiff had suffered injuries in a vehicle that caught fire, but the City of New York negligently destroyed the vehicle in the ordinary course of its handling of unclaimed vehicles despite plaintiff’s attorney having obtained an order to preserve the car. Plaintiff did not attempt to sue the manufacturer, but sued the city on a theory of negligent spoliation.

The high court joined the majority of other courts considering the question, and ruled that no such cause of action exists. It also observed that here the plaintiff was not without some recourse given that she could pursue at least some damages for the city’s contempt of court.

Internet service providers, computer backup companies, on-line storage outfits and similar companies in New York perhaps heaved a collective sigh of relief, knowing that they could not be sued (at least in New York) for spoliation because of accidental or even intentional deletion of electronic files.

Plaintiff Has Right To Re-Present Evidence At Retrial Before New Judge

In Anderson v. Kohler, No. 2-05-1212, 2007 WL 2964372 (Ill. App. (2d Dist.) Oct. 4, 2007), plaintiffs sued for breach of contract but the court granted defendants’ motion at the close of plaintiffs’ evidence in a bench trial after finding, without making credibility determinations, that plaintiffs had not proven that the contract existed. The appellate court reversed and remanded for “further proceedings.”

However, the successor judge before whom the case was retried did not permit plaintiff to start again. Rather, he relied on the transcript of the first trial and only heard defendants’ case and plaintiffs’ rebuttal live, and then entered judgment for defendants after crediting their testimony over plaintiffs’.

On a second appeal, the appellate court ruled that the refusal to allow plaintiffs to present all evidence through live testimony violated their due process rights. The court held that absent agreement of the parties, a successor judge may not make credibility determinations based on a transcript of proceedings over which another judge presided, even if the new judge heard some live testimony from all the same witnesses.

The opinion did not discuss it, but a serious problem here is that a plaintiff who suffers a directed verdict has put on her entire case, while defendant has not reciprocated. Thus, defendant knows what plaintiff's case is, but plaintiff does not know defendant's case. If remanded for a new trial, a plaintiff must be given the chance to vary how she presented her case, so that the first half of the case is not entirely following a script that defendant has already read.

One might argue that the judge was just trying to save time on remand. But the system should not try to save time at the expense of a party.

State’s Agreement To Federal Venue Clause Waived Immunity Defense

The State of Massachusetts has learned that its agreement to a venue clause in a license agreement had the unintended consequence of waiving its defense of immunity under the Eleventh Amendment.

In Baum Research and Devel. Co. v. Univ. of Massachusetts at Lowell, No. 2006-1330, 2007 WL 2937300 (Fed. Cir. Oct. 10, 2007), a patent owner sued the state university for breach of a patent license agreement in Michigan federal court. The venue was chosen pursuant to a clause that stated “all parties agree to proper venue and hereby submit to jurisdiction in the appropriate State or Federal Courts of Record sitting in the State of Michigan.”

Defendant asserted Eleventh Amendment immunity, but the trial and appellate courts held that the venue clause waived that defense. While the state may have assumed it would be able to assert immunity and the clause simply established Michigan courts would hear that defense, the clause actually had the broader effect of waiving the defense altogether.

New York Savings Statute Does Not Apply To Substituted Plaintiff

New York, like many states, has a statute that allows a plaintiff whose case is dismissed other than voluntarily or upon a final judgment on the merits to re-file the case within a certain amount of time, presumably after correcting defects, which in effect extends the statute of limitations. Under CPLR § 205(a), New York allows such a plaintiff a grace period of an additional six months to re-file after the dismissal.

In Reliance Ins. Co. v. Polyvision Corp., No. 117, 2007 N.Y. Slip Op. 07500, 2007 WL 2947396 (N.Y. Oct. 11, 2007), answering a certified question from the Second Circuit, New York’s highest court held that § 205(a) does not apply if the plaintiff seeking to “re-file” is not the same plaintiff. The lower courts found the particular plaintiff who originally filed in Reliance Ins. Co. was not the correct entity, and a corporate affiliate un­suc­cessfully sought to re-file in reliance on § 205(a) to extend the statute of limitations.

Ninth Circuit Determines Removing Defendant’s Burden

In Guglielmino v. McKee Foods Corp., No. 05-16144, 2007 WL 2916193 (9th Cir. Oct. 9, 2007), the Ninth Circuit determined as a matter of first impression the burden that a removing defendant must meet to establish federal jurisdiction where plaintiff moves to remand but the complaint specifically alleges damages below the diversity amount.

Here, defendants removed a case in which the complaint alleged damages of “less than $75,000,” and plaintiff’s motion to remand under 28 U.S.C. § 1447 attached affidavits with similar disclaimers. The appellate court observed that its precedents have placed three different burdens on removing defendants, depending on the circumstances. First, when the complaint alleges an amount on its face suffucuent to meet the jurisdictional threshold, the Ninth Circuit presumes that federal jurisdiction is satisfied "unless it appears to a 'legal certainty' that the plaintiff cannot actually recover that amount." (That could be called the "we take the plaintiff at his word unless it is undeniably only wishful thinking" rule.) Second, when the complaint is unclear or ambiguous about the jurisdictional amount, the removing defendant must establish by a preponderance of the evidence that the jurisdictional amount is met. Finally, when a complaint specifically alleges an amount in controversy that is less than the jurisdictional threshold, the party seeking removal must prove with legal certainty that the jurisdictional amount is met.

The new wrinkle here is that the complaint did not allege an amount but also pled that, whatever the damages were, they were less than $75,000. The Ninth Circuit concluded that this situation fit the second category of complaints best because the controlling factor was the ambiguity of the allegations. Thus, where a plaintiff specifically alleges damages are below the jurisdictional amount for diversity, but does not allege an actual total amount in controversy, the defendant must support removal by a “preponderance of the evidence.”

I have wondered about why, in a situation in which plaintiff is the movant -- having filed a motion to remand -- the court expresses its view in terms of the burden the non-movant defendant faces. Usually the movant bears the burden on his own motion. Why shouldn't the plaintiff have the burden of demonstrating the lack of federal jurisdiction by a preponderance of the evidence, rather than the defendant having the burden to establish the existence of federal jurisdiction? Perhaps the answer is that federal jurisdiction is never assumed and always must be established to the court's satisfaction. It follows that whoever is the proponent of the federal forum has to bear the burden of estabilshing entitlement to that forum, and in this case it is the removing defendant. That principle apparently trumps the ordinary rule that a movant bears his own burden.

Judge O'Scannlain filed a concurrence in Guglielmino examining the issue of defendants' and plaintiffs' competing burdens that the majority glossed over. He disagreed with the majority's imposition of a "legal certainty" burden on the removing defendant, a party seeking to invoke federal jurisdiction, rather than the moving plaintiff, a party seeking to defeat federal jurisdiction. He concluded that "in all cases where removal to federal court is challeneged in any appropriate way, it is incumbent upon the party seeking federal jurisdiction to prove the facts giving rise to such jurisdiction by a preponderance of the evidence. Only then, and only by proof to a legal certainty, can a party defeat the exercise of federal jurisdiction which those established fact support." He quoted approvingly from Judge Frank Easterbrook's opinion in Meridian Security Ins. Co. v. Sadowski, 441 F.3d 536 (7th Cir. 2006), which he says attempted to organize and clarify that court's removal law into a coherent whole. He observed that his proposal was consistent with the views of the Fifth, Sixth, Seventh and Eighth Circuits, and would resolve the multiple approaches of his own court into a single standard.

Illinois Courts Lacked Jurisdiction To Hear Federal Civil Rights Claims

The intermediate appellate court of Illinois has reversed a judgment upon a jury trial because the trial court lacked jurisdiction.

In Blount v. Stroud, No. 1-06-2428, 2007 WL 2820964 (Ill. App. (1st Dist.) Sept. 28, 2007), the plaintiff sued her former employer for common law retaliatory discharge and for violation of 42 U.S.C. § 1981, ultimately receiving a favorable jury verdict of over $3 million in largely punitive damages.

However, the appellate court held that the Illinois Human Rights Act provided that the Illinois Human Rights Commission was the exclusive venue for hearing civil rights claims in Illinois in the first instance, and that trial courts were authorized only to hear such matters on administrative review.

Intersting footnote: The court noted that the Act has been amended so that beginning in 2008 plaintiffs may bring civil rights claims before either the Commission or the trial courts. Thus, the problem in Blount is not likely to be repeated in the future.

Courts Refuse To Enforce Class Action Waivers In Arbitration Agreements

Many businesses favor requiring contracting parties to agree to arbitration clauses as part of their transactions, particularly in situations involving individuals such as consumers and employees. The clear trend in the courts is to favor arbitration and to enforce properly made agreements to arbitrate, even in some "adhesion" situations. However, courts hae been much less willing to enforce some of the strings businesses attempt to attach. As two recent decisions illustrate, businesses that require agreements to arbitrate may not be able to avoid arbitrations purporting to be brought on behalf of a class.

In Gentry v. Superior Court, 42 Cal.4th 443, 165 P.3d 556, 64 Cal.Rptr.3d 773 (Aug. 30, 2007), for example, the California Supreme Court considered a law suit brought by a Circuit City employee claiming violations of the Labor Code and Business and Professions Code. Plaintiff sued on behalf of a class of similarly situated employees. Circuit City argued that plaintiff was obligated to arbitrate, and to do so only on his own behalf.

The California Supreme Court agreed to take the case to clarify its decision in Discovery Bank v. Superior Court, 36 Cal.4th 148 (2005), in which it held that class action waivers in consumer contracts can be unconscionable and unenforceable. The court noted that Discovery Bank had not involved claims based on statute, but that plaintiff's claims in Gentry were in pursuit of statutory rights. Furthermore, the statute at issue was expressly made non-waivable by the legislature. The court concluded that under some circumstances the class action waiver Circuit City sought to enforce would lead to a de facto waiver of statutory rights provided in wage/hour cna overtime cases, and therefore would be unenforceable.

Firm’s “Continuous Representation” Tolling Ceases When Attorney And Client Leave

I recently discussed New York’s “continuous representation doctrine” under which the limitations period for legal malpractice actions is tolled during the period that the client was represented by defendant counsel. (“New York Declines To Extend ‘Continuous Representation Doctrine’ To Auditor,” posted here). The Supreme Court of California, which had adopted the doctrine, recently examined a variation on the traditional fact pattern.

In Beal Bank, SSB v. Arter & Hadden, LLP, 42 Cal.4th 503, 167 P.3d 666, 66 Cal.Rptr.3d 52 (Cal. Sept. 27, 2007), an attorney rendered legal services to plaintiff while employed by a particular firm. The attorney then left and the client followed him, continuing to engage him for further services in the same matter. Later, the client sued the attorney for malpractice and also named the former firm as a defendant. The original firm argued that once the client followed the attorney to his new firm the statute of limitations resumed running, and had expired by the time the plaintiff filed its lawsuit.

Resolving a split in the intermediate appellate courts, the California Supreme Court held that tolling under the continuous representation doctrine ceases with respect to the original firm when the attorney leaves and the client follows him. Noting that the doctrine is a judicially-created exception to the statute of limitations for legal malpractice actions expressly adopted by the state in reaction to high court precedent, the court refused to assume legislative intent to broaden that exception in the absence of clear textual support.

No Cause Of Action Exists For “Genericide” Or Disparagement Of A Trademark

The Ninth Circuit has rejected a plaintiff’s attempt to sue a defendant who publicly pressed his opinion that the term “freecycle” should be in the public domain.

In Freecycle Network, Inc. v. Oey, No. 06-16219, 2007 WL 2781902 (9th Cir. Sept. 26, 2007), plaintiff brought claims purportedly under the Lanham Act to enjoin defendant from proclaiming that plaintiff had no right to assert that “freecycle” is a trademark, which it termed “trademark disparagement.” Plaintiff also sought to stop defendant from trying to use the term as part of the English language so as to make it a generic term incapable of being registered as a trademark, which it called “genericide.”

The Ninth Circuit refused to recognize that the Lanham Act or common law provided such causes of action. The statute permitted claims for disparagement of a product itself, not the trademark for the product. The court also noted that the means for trademark owners to avoid letting a mark become generic is by using publicity campaigns to encourage the public not to use a mark in common parlance, rather than by suing people who allegedly misuse it.