Unsophisticated litigants sometimes imagine they can just pick a number from thin air and claim it as their damages. (See, e.g., here and here (Congressman Nunes’ complaints claiming over $1 billion in defamation damages in two separate lawsuits).)

As most civil litigators know (putting aside Congressman Nunes’ lawyers, perhaps), in general, there is considerably more analysis, discipline, and evidence required to prove up damages. Southern Minnesota Beet Sugar Cooperative (“SMBC”) v. Agri Systems d/b/a ASI Industrial, Inc. (“ASI”), illustrates the point.

It turns out that, if you have silos containing 30,000 tons of sugar that fill from the top and empty from the bottom, you need machinery inside the silos to churn the sugar, in essence. Otherwise, the sugar sticks to the sides of the silos and the silos cannot completely emptied. The machines installed in the sugar silos to loosen the sugar from the silo walls are called “reclaimers.”

SMBSC contracted with ASI to build six silos with reclaimers. One failed catastrophically soon after start-up. (If you are interested in the engineering and technology detail, look here at pp. 8-12 to learn of SMBC’s theory, at least, as to how and why ASI blew it in its reclaimer design.)

The contract barred recovery of “consequential damages” and the parties are disputing (among other things) whether certain claimed damages (damages for “cover”) are “consequential damages” that SMBC waived by contract (see here at pp. 15-16).

As SMBSC points out (here at p. 26) , in the breach of contract context, “direct damages arise from the breach itself…Consequential damages are damages foreseeably resulting from the breach, such as lost profits.”

Maybe it is just us, but this distinction between “direct damages” and “consequential damages” seems at least a little unclear. It is therefore no surprise to us that there is some uncertainty in the law as to whether costs of “cover” are “direct damages” or “consequential damages.” This is the issue addressed in SMBSC v. ASI (whether SMBSC’s claimed damages are “consequential damages, which SMBSC waived).

The simple point of this post is that, notwithstanding a widespread misapprehension that damages in civil litigation are simply funny money wish-lists in commercial litigation, plucked from thin air, damages analysis is complex, critical, and the antithesis, really, of open-ended or arbitrary.

Mr. David Modeen allegedly left his employer PetroChoice last April. He allegedly fibbed about the next stop in his professional life, claiming to take “an executive marketing position with a promotional products company.” Instead, PetroChoice alleges, Mr. Modeen went to a direct competitor of PetroChoice, Como Lube. Moreover, he is alleged to have misappropriated PetroChoice confidential and proprietary information.

PetroChoice suspected Mr. Modeen of this subterfuge (see here at p. 10). And, in September, a PetroChoice employee (that is, Mr. Modeen’s son!) told a co-worker that his father was selling environmental services for Como. (Id.) In fact, PetroChoice allegedly knew about it in August. (Id. at p. 13).

In PetroChoice’s complaint and accompanying motion for a restraining order (TRO) filed the day before Thanksgiving, PetroChoice suggests “has good reason to believe that Defendant misappropriated, retained, and disclosed PetroChoice proprietary property, confidential information, and trade secrets…” (id. at p. 11). “This belief is supported by the ease with which Defendant successfully solicited-away business from PetroChoice,” PetroChoice contends. (id. at 12).

So why did PetroChoice wait until the Wednesday before Thanksgiving for the motion for an expedited TRO? Just a naked act of opportunism or vindictiveness? Of course, the timing inconveniences the defendant, defense counsel, and court personnel. And does it really confer a strategic advantage worth the bad PR?

In PetroChoice’s defense, we emphasize that we have not read all of the filings accompanying PetroChoice’s motion (the accompanying affidavits and attachments).

Perhaps there is an innocent, maybe even compelling, explanation for the timing. However, in our view, if there were, ProChoice should have made that clear up front and early in its memorandum of law.

Courts do not and should not punish aggressive or “zealous” lawyering, per se. Even if PetroChoice’s sole motive was to inconvenience its adversary, nothing that PetroChoice or its lawyers have done is improper. On the other hand, TROs are “extraordinary remedies.” See GreatAmerica Leasing Corp. v. Dolan, No. 10-4631 (JRT/JJK), 2011 U.S. Dist. LEXIS 9301, at *14 (D. Minn. Jan. 31, 2011) (denying a motion for a TRO in a “brain raid” case).

The movant has the burden of proving all four of the so-called “Dataphase factors,” one of which is irreparable harm. A delay of weeks, if not months, in seeking a TRO might count against the movant and a court might be more inclined to place emphasis on a movant’s delay if it suspects the timing was calculated for strategic advantage rather than necessity, of course.

Also, seeking emergency injunctive relief at the very start of litigation is, of course, a party’s (and its lawyers’) self-introduction to the judge in a lawsuit. Such timing, especially if viewed as tactical rather than of necessity, might not create the best first impression, which could have a lingering and lasting effect. (On the other hand, we note that a vast majority of these “brain raid” cases settle quite promptly. So perhaps counsel and clients feel they don’t need to worry all that much about the court’s first impression.)

My severely fractured knee-cap.

Regular Minnesota Litigator readers will have noticed a drop-off in the frequency of Minnesota Litigator posts since early October.

On October 2 at about 5:20 p.m., a man driving a BMW 5 Series southbound on Colfax Ave. South crossed 28th Street without looking both ways.

Riding my bike home from work that late afternoon, the last conscious thought I remember as I saw the car skidding immediately to my right (I was biking on the cross-street in a dedicated bike lane) was, “That guy almost hit me….”

The next thing I knew, I was on the ground. I had no idea how badly hurt I was.

I was wearing a helmet. It cracked so my brain and skull did not. The helmet, may it rest in peace, did its job.

It is time to give thanks. Thanks to the healthcare providers and other care-givers (including patient family members near and far) helping me mend. Thanks to Minnesota Litigator readers for their patience. Thanks to a smaller set of Minnesota Litigator readers for their contributions, tips, and comments.

Best wishes to all during the Thanksgiving holiday long weekend and here’s to looking forward to on-going recovery and more time to write posts about news and commentary in Minnesota civil litigation!

P.S. Notwithstanding the accident, LEVENTHAL pllc was up and running throughout, representing businesses and individuals in Minnesota civil litigation.

When a U.S. federal court throws out all federal claims with prejudice in a case and then dismisses the case (which includes additional claims under state law), can “the prevailing party” bring a motion for award of attorneys’ fees (based on a contract provision) in the federal court that just threw the case out?

(“Prevailing party” is in quotes because the party obviously prevailed on the federal claim(s) but, just as obviously, did not prevail on the state law claims, which the federal court held it had no authority to address.)

All of us can appreciate that Prime Therapeutics, LLC would like to recover the $157,671.00 that it claims it had to spend on lawyers to defeat Plaintiff Physician Specialty Pharmacy’s apparently non-viable federal antitrust claim. On the other hand, it seems incongruous for Prime to argue (1) the federal court has no jurisdiction over state law claims; and (2) the federal court should award legal fees to Prime under a contract (the application and construction of which are hotly disputed).

(In case any readers have an interest in trying to navigate the labyrinth of the pharmaceutical maze, we link to the plaintiff’s second amended complaint. Knock yourself out.)

We will follow this motion with interest to see whether the U.S. District Court views the issue as clearly as we do. (Hypothetically, if the plaintiff, Physician Specialty Pharmacy, LLC, only brought an antitrust claim (and it was thrown out), would the defendant be entitled to its attorneys’ fees? (NO.))

Update (November 15, 2019): The case described below was argued before the Minnesota Supreme Court this week. In the underlying district court decision by retired Hennepin County District Court Judge Mel I. Dickstein, it seems clear that Judge Dickstein felt required to rule against the plaintiff by established law and strongly suggested the possibility that that the courts consider “articulat[ing] a different standard.” (Here at p. 11.)

It seems that some on the Court might think that the issue in the case is for the legislature to address rather than for the courts. This is somewhat ironic because the courts, and not the legislature, engrafted a “severe or pervasive” element onto a viable claim for sexual harassment.

There was much discussion as to whether the “severe or pervasive” is “an element” or “a standard.” It seems the point is whether the fact-finder must find the behavior is “severe or pervasive” or not. Would it be error for a trial court not to instruct the jury that the conduct has to have been “severe or pervasive,” Justice Lillehaug pressed defense counsel? The Court seems unclear or undecided on this important point.

Original post (June 10, 2019): The Minnesota Human Rights Act defines sexual harassment.

“Severe or pervasive” conduct is not included in the definition:

“Sexual harassment” includes unwelcome sexual advances, requests for sexual favors, sexually motivated physical contact or other verbal or physical conduct or communication of a sexual nature when:

(1) submission to that conduct or communication is made a term or condition, either explicitly or implicitly, of obtaining employment, public accommodations or public services, education, or housing;

(2) submission to or rejection of that conduct or communication by an individual is used as a factor in decisions affecting that individual’s employment, public accommodations or public services, education, or housing; or

(3) that conduct or communication has the purpose or effect of substantially interfering with an individual’s employment, public accommodations or public services, education, or housing, or creating an intimidating, hostile, or offensive employment, public accommodations, public services, educational, or housing environment.

Minn. Stat. 363A.03, subd. 43.

Courts engrafted this “severe or pervasive” requirement onto a sexual harassment claims over 30 years ago. (See the Kenneh v. Homeward Bound Minnesota Court of Appeals decision at p. 8) (and see here (the seminal case) (and see here (a thorough recent article on the subject by Sheila Engelmeier, Heather Tabery, with assistance by Colin Thomsen)). Why? Because the statutory definition of “sexual harassment” is so vague and subjective that the courts felt compelled to constrict its application to balance the rights and interests between employers and employees.

Earlier this year, there were legislative efforts to remove the “severe or pervasive” requirement from plaintiff’s burden in a sexual harassment case. Those efforts failed. Now we will see whether Ms. Assata Kenneh and her lawyers have better luck before the Minnesota Supreme Court, which has granted her petition for review of her case against Homeward Bound, Inc. (petition, here, response, here).

Update (November 11, 2019): Linked here is the defendants’ response to the plaintiff’s efforts to obtain documents and testimony withheld from discovery on claims of attorney work product doctrine (discussed below). It is strong advocacy; given our experience of rather broad and deferential treatment of privilege claims, we predict these defenses will win the day. (If not total victory, we predict that the privilege claims will generally be upheld.)

Original post (November 8, 2019): If you stop and think about it for even a second or two, you will recognize the significant challenge that germs and bugs present to manufacturers of food products. As we all know, it is hard enough keeping a kitchen sink and countertop pristine. It is undoubtedly a relentless and expensive challenge for a company like S.T. Specialty Foods (STSF), which presumably has large industrial facilities. (STSF makes macaroni and cheese dinners, pasta, and rice side dishes and other packaged meals for the retail grocery and foodservice channels.)

And when STSF hired Wil-Kil Pest Control Company, Inc. to deal with the ever-present pestilential challenge in STSF’s facility, perhaps the greatest worry STFS might have had was making sure that Wil-Kil’s fumigation processes worked on the bugs but spared its food products and its workers.

To STSF’s shock and surprise, however (according to the company), whatever Wil-Kil did in STSF’s facility caused:

sudden and calamitous damage to, inter alia, the electrical components of its manufacturing equipment, forklifts, printers, computer servers, phone systems, air conditioner units and systems, Wi-Fi, vending machines and many other devices and fixtures throughout the entire Facility, including in areas outside the fumigation area.

(“[I]ncluding areas outside the fumigation area”???)

Indeed, STSF alleges that Wil-Kil’s fumigation process shut down six of STSF’s seven production lines in the STSF facility.

STSF’s recent motion to compel withheld evidence from Wil-Kil’s insurance company’s post-incident investigation should be interesting reading for Minnesota civil litigators.

When STSF notified Wil-Kil (and Defendant Copesan, its corporate parent) of its concern that Wil-Kil’s work was lethal to STSF’s business (along with the bugs, we assume), would one assume that Wil-Kil and Copesan might have seen the menacing thunderheads of litigation on the horizon? How about their insurance company, when it investigates the insurance claim?

We would think so.

This might tilt in favor of a broader reading of the attorney work product doctrine to cover some or all of the insurance company’s communications about its post-incident investigation. That is, the insurer’s work was presumably performed with an awareness of a substantial likelihood of litigation in the near future. (Under the case law, there is some ambiguity of just how “substantial” the likelihood must be. Must a “specific threat” of litigation became “palpable”? (see here at p. 11))

On the other hand, among many other things, in support of a narrower reading, STFS points out that the insurer and insureds appear not to have hired an outside lawyer for several months during which the insurer and insureds collected information about the incident over which they now claim a privilege. (It is the attorney work product doctrine, after all.) Further, there is case law highlighting that courts “refuse[] to afford broad work-product protection to factual investigations conducted by insurance companies” (here at p. 13).

The issue raised in STSF v. Wil-Kil et al. is a critical issue in many “accident cases.” (Also, STSF served third-party subpoenas on insurance company employees who failed to respond, object, or move to quash. STSF argues that any privilege claims have therefore been waived.)

We will be sure to follow how this issue plays out in this case in light of its importance generally to a lot of civil litigation, which very often involves insurance companies behind the scenes. Stay tuned.

Being a solo civil litigator presents enormous challenges — far too many to list in this post. But one obvious one is document management.

In those eighteen letters and two simple words, there can be a horrifying and bottomless abyss for solo (or small firm) lawyers (or even large law firms or corporations).

E-discovery poses a challenge to all civil litigators in law firms of all sizes. However, as a simple matter of fact, solo lawyers face tracking a volume of documents that no single human can possibly track without help of one kind or another.

Aggravating this substantial risk considerably, solo lawyers disproportionately represent legally unsophisticated clients who might not be aware of (or might not take seriously) their obligations with regard to document collection and production. Many solo/small firm clients are “one and done” when it comes to civil litigation; they have a single sortie into civil litigation combat and they are oblivious to the rules of engagement.

They might collect (and the lawyer might produce) thousands of documents that are irrelevant; they might withhold critical documents with or without bad intent (without their lawyer’s knowledge). (“Even if [the client] could be excused for his lack of technological savvy, [client’s lawyer] is responsible for overseeing his client’s collection of documents in response to discovery requests.” (here at p. 12).

The recent sanctions order in Darmer v. State Farm (an insurance coverage claim arising from the ashes of a house fire) is a scary cautionary tale, appropriate for Halloween week.

Mr. Darmer, represented by a solo lawyer, produced over twenty-thousand documents, without bates numbers. From U.S. Mag. Judge Katherine M. Menendez’s (D. Minn.) recent sanctions order, it is clear that Mr. Darmer’s counsel did not have knowledge of what had been produced and what had not been produced. Judge Menendez found the plaintiff’s initial document productions to be “essentially nullities” — “so unusable that it was as if he made no document production at all.”

In subsequent document productions, it seems that Mr. Darmer omitted several emails that, “to put it mildly,” (here at p. 5) were damaging to his case…

Judge Menendez found “[t]he discovery misconduct and mismanagement by [the plaintiff and his lawyer]… significant, persistent, and troubling.”

How is a solo lawyer supposed to manage document discovery then?

The easiest, safest (but most expensive) way is for the solo lawyer to work with an e-discovery vendor, like one of our sponsors, Shepherd Data Services.

Data collection and production are not taught in law school. They are not normally the tasks of lawyers. Companies like Shepherd Data have the experience and expertise so that, if Shepherd Data‘s involved, document collections and productions as occurred in Mr. Darmer’s case never happen.

Mind you, with or without help of an e-discovery vendor, there is no substitute for active attorney involvement in the document collection.

At a minimum, even if solo/small firm lawyers do not hire an e-discovery vendor, we would suggest that nearly every document production in every case be (1) bates-numbered; (2) text-searchable.

Judge Menendez was extremely critical of the “massive dump of data” in Mr. Darmer’s case. If Mr. Darmer’s document productions had been bates-numbered and text-searchable, this, by itself, would not have ensured better organized productions, of course, but it would have been a step in the right direction. It would have made it easier for all of the parties and lawyers to get their arms around what was produced and what wasn’t.

In our practice, we have found Everlaw, a cloud-based e-discovery vendor, to be extremely useful for orderly document collection and production. Again, neither hiring a e-discovery vendor nor using a cloud-based e-discovery company will guarantee a flawless process.

Ultimately, there is no work-around or technological solution to recklessness or dishonesty. Whether one’s client is a single person or a large business, the integrity of a document collection or production is dependent on the thoroughness and integrity of the individuals involved. In some cases, the root cause of e-discovery disasters are not technical; they might be baked in from the get-go: flawed client intake (sometimes discoverable only in hindsight, unfortunately).

VICTORY!

Computer Forensic Services (“CFS”) had a stinging defeat some years ago in Hennepin County District Court (“CFS v. Afremov”), which other adversaries then sought to exploit in unrelated litigation. CFS vigorously defended the accusations that the court leveled against it in CFS v Afremov, pointing out that the Hennepin County District Court decision against CFS in CFS v. Afremov had been reversed on appeal and was void.

How sweet the victory on remand had to have been for CFS this month (a jury verdict of $807,587.33)! Congratulations to CFS and its lawyers, Chris Madel and Cassandra Merrick.

Here is Prof. Adams’ guilty plea (misdemeanor, violation of 26 U.S.C. 7603). Sentencing will be up to Sr. U.S. District Court Judge Donovan W. Frank (informed by the sentencing guidelines, of course).

Minnesota lawyers know (or should know) all about Minnesota Rule of Professional Conduct 1.16(e) (“Papers and property to which the client is entitled…”). The rule sets out lawyers’ obligations to give clients’ their files on termination of representation.

The ethics rule tries to balance the interests of lawyers and clients as to their respective rights to lawyers’ files. In a nutshell, a lawyer’s file for a particular client belongs to the client but the rule makes exceptions to avoid clients’ ripping lawyers off.

That is, it would be awful if a lawyer were retained to perform work, performed the work, did not get paid for the work, and then had an ethical obligation to surrender the lawyer’s work to the dead-beat client. This exception to the general rule that a client’s “papers and property” in a lawyer’s possession belong to the client seems sensible and uncontroversial.

Under this ethical rule, are Minnesota lawyers required to produce documents that reflect evidence of legal malpractice? Are they required to produce internal documents that are embarrassing or unflattering to clients who request their “papers and property”?

Rule 1.16(e) does not provide a comprehensive description of what “papers and property to which the client is entitled” includes.

To be sure, the rule expressly says, “Papers and property to which the client is entitled include the following, whether stored electronically or otherwise….” However, the rule does not provide that clients are only entitled to the listed documents.

In fact, the included list of “client papers and property” is quite limited. It does not include, for example, attorney notes, all client communications, all case-related communications to third parties, all internal firm communications, lawyer/law firm billing records, payment records, or time sheets. Do Minnesota lawyers have an ethical obligation to provide these to former clients on request under Minn. R. Prof. Conduct 1.16(e)? Are these “papers and property to which the client is entitled”?

The focus in case law considering such questions is on whether any withheld “papers or property” “would be useful” to the former client. See Crawford v. Logan, 656 S.W.2d 360, 363 (Tenn. 1983) (quoting ABA Opinion 10333 (“the conscientious lawyer should not withhold from the client any item that could reasonably be anticipated would be useful to the client”)). These decisions and the general consensus appears to be that client “papers and property” under Minn. R. Prof. Conduct might not include many documents in a particular “client matter file,” including internal documents that are embarrassing or unflattering to clients.

Having said that, Minnesota lawyers should recognize that client “papers and property” might be a subset, a significant subset, of documents to which a disappointed client would be entitled in discovery in a legal malpractice case. While careful curating and culling may well be ethical under Minn. R. Prof. Conduct on the termination of a client matter, it is extremely unlikely to be an acceptable approach in response to discovery in a professional negligence lawsuit.