Update (March 24, 2017): Sr. U.S. District Court Judge David S. Doty’s opinion in the dispute described below makes the case look like a no-brainer. Plaintiff Ayala had an agreement with his employer, CyberPower, that his salary would be $X until the business had revenue of over $Y million (at which time he would get a raise). Based on this, Mr. Ayala argued that CyberPower had given him an open-ended term of employment for as long as it took CyberPower to reach revenue of $Y million. That is, Mr. Ayala argued that the agreement changed his employment status from “at-will” employment, which it had been.

Among other things, Mr. Ayala’s position required him to take the position that he could not quit his job without breaching the contract if CyberPower did not hit the revenue target.

Making the case even weaker for Mr. Ayala, the agreement that included this salary arrangement expressly provided that “It [was] not a multiyear commitment or employment contract for either party.”

It is ironic that Judge Doty found the contract unambiguous when U.S. Mag. Judge Franklin J. Noel had previously found it ambiguous, a finding that Sr. U.S. District Court Judge Michael J. Davis reviewed and agreed with.

I think Judge Doty got it right and the case simply illustrates the overwhelming challenge of predicting the course of civil litigation. One has to wonder whether the case would have dismissed from the get-go had it been before another judge.

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Update (March 24, 2017)Imagine the frustration and humiliation of a candidate losing an election when running unopposed.

This is how trial lawyers can feel when they lose motions for entry of default judgments — that is, when a defendant knows of a lawsuit against it, offers no defense, the plaintiff’s trial lawyer moves for a “default judgment,” and loses the motion.

But courts are protective of parties who are not there to defend themselves. They’re obsessed with ideas like fairness and justice.

That can be very frustrating.

In the case described below, a company bought an egg carton-making machine that allegedly never worked as advertised so it sued several different firms all connected with the design, manufacture, installation, and operation of the multi-million dollar machine.

Samey, one of the defendants did not bother to respond to the complaint so the Plaintiff, LEI, sought a default judgment against Samey.

The problem with LEI’s motion was that other defendants are defending against LEI’s claims. A default judgment against Samey while the other defenses by other defendants are undecided could result in successful defenses to LEI’s claims and an inconsistent judgment against Samey. That hardly seems right or fair and so U.S. District Court Judge Ann D. Montgomery (D. Minn.) denied LEI’s motion as premature.

We wonder whether Samey had legal advice to ride on the coat-tails of the other defendants? That would be an audacious play (by Samey and its lawyers). A more likely alternative is that one of the still-in-the-case defendants agreed to indemnify Samey so, one way or another, Samey’s feeling secure enough to let others fight it out.

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Evil Satan DevilUpdate #5 (March 22, 2017): How much does a contingent promise to pay of $37,837,510.45 dollars cost? As we understand a recent order in the case discussed below (and it is not at all clear that we do), the answer might be $525,000

In any event, defendant Essar Steel appealed the adverse verdict against it, obtained a “supersedeas bond” as a prerequisite for the appeal, won on its appeal, and now “the surety” (the promisor to make good on the verdict if the appeal failed) is released from the bond.

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Update (March 20, 2017): About three years ago, in connection with the lawsuit of Kokocinski v. Medtronic, Minnesota Litigator expressed reservations about the tough obstacle before plaintiffs’ lawyers placed by the PSLRA (Private Securities Litigation Reform Act) and an alternative avenue toward recovery that plaintiffs and their lawyers were forced to pursue: the shareholders’ derivative lawsuit (see the original post, below).

This month, the U.S. Court of Appeals for the Eighth Circuit validated our pessimism for the plaintiffs, affirming the district court’s “termination” of the plaintiffs’ derivative lawsuit in deference to Medtronic’s SLC (Special Litigation Committee) and the SLC’s conclusion that plaintiffs did not have worthwhile claims against the company.

Whether you think this trend represents a positive development for corporate America, helping to free corporations from weak or even meritless “shakedown” lawsuits, or a negative development, stripping investors of essential weapons in the fight against corporate self-dealing, greed, and wrong-doing, will likely depend on your political ideology or your biases.

Without a doubt, policy wonks and academics are collecting and analyzing the data or evidence that should yield proof one way or the other. Over the next 5-10 years, we should have a better understanding of societal cost (or positive value) of this tectonic shift in the landscape of shareholder litigation (more…)

While every life story is unique, Minnesota litigator Rachhana Srey’s journey (and her whole family’s history) is particularly amazing. Ms. Srey was born in a chicken coop in a refugee camp in Cambodia and she is now a preeminent wage-and-hour class action plaintiff’s lawyer in Minnesota at the law firm of Nichols Kaster. Profiling Ms. Srey seems particularly timely given the currently hot issue of U.S. immigration policy. But Ms. Srey’s deep and impressive professional expertise makes for an interesting interview in and of itself.

Minnesota Litigator (“ML”): I’d like this interview to cover your professional life and your personal life in the sense that you have a history, which I think is remarkable and would be interesting to Minnesota Litigator readers. Let’s start with what we really cover, which is you as a Minnesota civil litigator. You have deep expertise in a particular area:  collective actions and class actions on behalf of employees for unpaid overtime and minimum wages?

Racchana Srey: That is right.

ML: Is it as narrow at that?

R. Srey: Currently, all but one of my cases is a wage an hour class or collective action. I have one here in Minnesota that’s pretty large and significant and then other cases all around the country that are either overtime pay or minimum wages or both. Then, I have a large class action age discrimination case that, while it’s only one case out of however many, it takes up a significant amount of time.

ML: Your practice is far broader than just Minnesota?

R. Srey: It is far broader than Minnesota. I wish I actually had more cases in Minnesota but we end up having a lot of lawsuits with companies that are located all around the country. We end up in California, New York, from east to west all over in terms of these wage and hour cases.

ML: How long have you been doing wage and hour cases?

R. Srey: When I started the firm in 2004 I actually did both individual employment discrimination cases and wage and hour cases, so I definitely had more of a practice in Minnesota earlier in my career.  Back then, I only had a couple of the wage and hour cases, one was in Minnesota and couple were elsewhere. As I progressed in my career, I had to make a choice in terms of “do you continue to handle the individual sex discrimination, age discrimination cases that are here in Minnesota or focus more on the class action type practice that takes you elsewhere and has a lot more travel required?” Even though I had a couple of small kids at the time, I  decided to move more towards the class action route. It was difficult, I think, to sort of manage both because I wanted to give the same amount of attention and detail and work effort to the individual cases but there was always something massive, huge, happening in the big class cases that would take me away from the individual cases.

ML: What is the average duration, if you can estimate it, of the individual kinds of cases from start to finish?

R. Srey: For an individual employment case I would say probably a couple of years. For a class case, I worked on a case for seven years and we lost at trial. For this current age discrimination case, we started working on it in 2012 and I thought it was going to wrap up in a couple of years once we got involved. There was a solo practitioner who was handling it from Tennessee, he brought us on and we thought it would wrap up a few years afterwards. Now, it’s been five years and we’re still going.

ML: I noticed in your profile on your law firm website it talks about your “exceptional case management skills” and I’m curious what that entails.

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Update (March 16, 2017): It is widely known that plaintiffs’ lawyers tend to want juries to decide cases. Defense lawyers tend to want judges to decide cases (aka “bench trials”). The Blue Cross v. Wells Fargo case was no exception.

The Blue Cross v. Wells Fargo case went to a jury, with certain issues reserved for the judge. As described below, the jury ruled in favor of the defendants.

After the fact, guess who wants the jury verdict to have a broad application (that is, to be decisive in the issues reserved for the judge) and who wants the jury verdict applied more narrowly (that is, to have no effect on the decisions yet to be decided by the judge)?

(Hint: U.S. District Court Judge Donovan W. Frank (D. Minn.) disclosed after the trial that, in contrast to the jury, he would have found in plaintiffs’ favor.)

You guessed right! Wells Fargo did not want the jury to decide some issues but, when the jury ruled in Wells Fargo’s favor, the bank argued that the jury verdict in its favor should have broad application. Blue Cross’ lawyers, on the other hand, argued that the outstanding issues to be decided by the judge should not be compelled by the jury verdict.

And you might not be surprised to learn that that Judge Frank found that Wells Fargo waived any claim that it might have had that collateral estoppel applied. If the jury verdict were given “collateral estoppel effect,” it would have tied the Court’s hands in reaching conclusions inconsistent though they may be, from the jury verdict.

Minnesota Litigator practice pointer: if the facts are against you, argue the law. If the law is against you, argue the facts. If the entire analysis of the case is flipped upside down on appeal, make a 180-degree turn?

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The Minnesota/Texas law firm of Droel pllc had its lawsuit against a client thrown out of Minnesota court for lack of jurisdiction even though the law firm had exchanged “hundreds” of communications between themselves and Turnkey, their Texas client.

Regular readers of Minnesota Litigator know we have a preoccupation with the doctrine of personal jurisdiction under U.S. law.

Specifically, the analysis focuses on whether someone “has reasonable expectation of being haled into court” and whether someone “purposefully avails himself of of the privilege of conducting activities in a particular state.” This reasoning has some obvious problems and needs some fixing. (The first factor is circular logic. The second is extremely ambiguous.)

But it is what it is. For now at least, it is the law of the land.

What is important about the recent unpublished Minnesota Court of Appeals decision in Droel v. Turnkey for Minnesota litigators is the cautionary tale in Droel’s failure to open the matter with an engagement letter (aka a retainer agreement).

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Drawing of Anger, made possible by Creative Commons, http://goo.gl/pYeceX

Here’s a hypothetical situation:

In, say, 2010, John Doe agreed to lend a Business Partner (“BP”) money and, in exchange,  BP agreed that John Doe could mine gravel on BP’s real property in years to come.

John Doe (“JD”) hired Lawyer to document this transaction in 2010.

Lawyer did not have a background in documenting these transactions and Lawyer made the “rookie error” of failing to record JD’s interest in BP’s property at the county recorder’s office. This is “Real Property Transaction Basics, 101.”

Two years later, BP took a loan out from Bank, secured by a mortgage in BP’s real property(without JD’s knowledge). BP quickly defaulted on the mortgage loan. Mortgage lender foreclosed on the property and took ownership of the property at the foreclosure sale (again, without JD’s knowledge) in 2017.

Because JD’s interest in the property was not “of record” (that is, never recorded in public records), JD’s interest in BP’s land was extinguished as a result of the foreclosure.

And BP has no money to pay back JD’s 2010 loan.

Under the “some damage” rule of Anton v. Mirviss, the statute of limitations ran on JD before he had any knowledge of any loss, even before he had any notice of the possibility of loss.

The whole point of JD’s engagement of Lawyer was so that the transaction would be enforceable against BP if BP defaulted on the loan to JD and did not have the money to make it right.

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marriage-734617_1920 (1)Update (March 10, 2017): Excellent argument of the lawsuit, discussed below, earlier this week before the Minnesota Supreme Court.

The concerns of the various justices of the Minnesota Supreme Court are clear.

On the one hand, if Anton v. Mirviss is overruled, what is the limiting principle? How long, effectively, would the statute of limitation be for legal malpractice? Would the rule be limited to legal malpractice cases? If not, why not?

On the other hand, many of the justices probed whether a lawyer’s second-in-time bad legal advice can really be immune from a negligence claim if the initial bad legal advice is outside the statute of limitation. Justice Lillehaug posed this scenario repeatedly with slight alterations. (What if the second-in-time lawyer is a different lawyer? A different lawyer at the same law firm? A doctor giving bad medical care following up on the doctor’s earlier negligent care?)

We’ll see where the case ends up and we will only point out that, as a practical matter, the law as set out in Anton v. Mirviss, the so-called “some damage rule,” leaves Minnesota clients with no recourse for legal malpractice in many circumstances when they would have absolutely no realistic chance of detecting it within the statute of limitations.

So long as the fuse is long enough on the bomb, the bomber/lawyer not only gets away scot-free with the bombing and gets to keep the money billed for it too!

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Trademark-related litigation is a common area for disputes on the need for expert opinions.

Plasti Dip™ is suing Rust-Oleum in U.S. District Court for the District of Minnesota (Tunheim, J.) for Rust-Oleum’s competing product, FlexiDip™. Both are rubberized coatings that can either be peeled off or left on, both sold at Home Depot, one right next to the other, apparently.

If this case goes to trial, does the jury need an expert to point out that both products use the same-sounding names?

Does the jury need to hear an expert to weigh in on whether having the two products next to each other on the shelves might lead to consumer confusion?

Does the jury need to hear an expert weigh in on Rust-Oleum’s intent when it chose the name FlexiDip for its competing product?

Does the jury need to hear an expert weigh in on Rust-Oleum’s marketing strategy of paying bloggers “to create content based on the creation of projects using the FlexiDip brand that would be viewed by other consumers” so that “the universe of potentially confused and misled consumers would then . . . also grow” and “even more consumers” may become “aware of the FlexiDip name without understanding that FlexiDip is not associated with Plasti Dip”?

Does the jury need to hear an expert weigh in on his personal knowledge of “examples of customer confusion”?

Finally, does the jury need to hear an expert offer an opinion on how much money it would cost Plasti Dip to mount an ad campaign “to address consumer confusion”?

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