In car manufacturing, some manufacturers and, more specifically, certain models enjoy solid reputations of dependability.

Imagine a scenario where, over several years, the manufacturer of such a highly respected model starts cutting expenses and investment in the model (that is, lowers quality), while keeping the price the same, or even increasing it a bit (thus goosing the profit margin).

Imagine that the employees at the car company see the decline in quality but, for the rank and file, it is none of their business, figuratively speaking. They’re designers, line-workers, mid-level management, sales staff, etc. etc. They might joke among themselves (“how many piles of junk are coming off the line today?” or whatever) but, most, without the slightest twinge of guilt, toe the company line — it’s a great car, a great value, etc. — and they sincerely believe it, sort of.

And let’s say someone sues the car company for fraud. The long-boasted high-quality and dependable car is a “pile[ ] of junk as Manufacturer’s own workers admit,” we can imagine the plaintiffs’ lawyers saying in their class action complaint.

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Charlie Chaplin in Modern Times

Andrew Archer sold a wholly-owned company to Bulldog Holdings. Part of the deal, from Archer’s perspective, was that Bulldog Holdings would continue to sell machines that included Archer’s retained intellectual property and Bulldog would be obligated to pay royalties back to Archer upon sale of the machines. Another part of the deal, of value to Bulldog Holdings, was Archer’s promise not to compete with the business that Bulldog bought from Archer.

As it turns out, after the sale, Bulldog sold no Archer machines and apparently has no intention of selling any.

Now Archer wants out of the non-compete and wants money to make up for his disappointed expectation of an income stream from Bulldog’s sales of Archer’s machines.

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Evil Satan DevilUpdate #6 (July 19, 2017): The lawsuit, described below, has to be one of the most dramatic reversals and one of the greatest failures of our legal system we have ever seen. After litigating a case for years, Plaintiff Great Lakes Gas Transmission won a jury verdict of $37.8 million in U.S. District Court. Then, on appeal, the U.S. Court of Appeals for the Eighth Circuit found that the trial court did not have jurisdiction; so the entire case was remanded to the district court with directions to throw the case out, without any determination of the rights of the parties. But, on its way out the door, U.S. District Court Judge Susan R. Nelson (D. Minn.) stood by her decision that Great Lakes Gas Transmission, the once-victorious plaintiff, is now on the hook for defendant’s $1.23 million dollar bond premium (the bond having been required as a condition for taking the appeal). Looks like there may be another visit to the Court of Appeals in this trail of tears.

Update #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.

Update #4 (February 3, 2017):  The Great Lakes Gas Transmission v. Essar Steel lawsuit, filed in October, 2009, tried to a jury August, 2015, resulted in a $37+ million verdict. We’re a little late in reporting that the verdict was thrown out in December by the U.S. Court of Appeals for the Eighth Circuit in December. The Court of Appeals held that the district court (D. Minn.) did not have subject matter jurisdiction. This week, however, we learned that Great Lakes failed to get the Eighth Circuit to reconsider the decision. Now the question is whether Great Lakes will seek review by the U.S. Supreme Court or whether it will give up and start again in state court.

This result highlights a flaw in our legal system. This extraordinary, even mind-boggling, sacrifice of time and money is due to our “dual federalism” — federal courts preside over some cases and state courts over others. The complexity involved in the analysis of federal jurisdiction (or state court jurisdiction), combined with the unbelievable waste if the trial court gets it wrong, and, finally, combined with the fact that ever-shrinking distinctions between states in our country make for an antiquated, inefficient, and deeply faulty dispute resolution system.

Update #3 (October 14, 2015) (under headline: The Dollar’s In the Details: Great Lakes Gas Transmission v. Essar Steel (filed in October, 2009, tried to a jury August, 2015)): We read about litigants “posting bond” often but we do not get to see them very often to see just what they are, what they actually look like. If you are curious, here’s one (for $37,837,510.45).

Update #2 (Sept. 30, 2015): And now we know how much it cost Plaintiff Great Lakes Gas in attorneys’ fees to fight in the case, described below, for six years (over $5.1 million). Whose pocket should that come out of? Whose pocket will it come out of? Stay tuned….(I bet I could have done it for less than $5 million.) 

Update (Sept. 30, 2015): The previous “Pyrrhic post” was about a trial win that probably cost more than the plaintiff was able to recover.

The case discussed below falls into the other category: a case where it looks as if an investment of millions of dollars of lawyer time was cost justified.

The recent trial in a case that went for nearly six year resulted in a jury verdict (after 90 minutes of deliberation) that the applicable discount rate was 4.30%. As discussed below, this did not give Minnesota Litigator the slightest clue of what kind of money they were fighting over. This past week, however, we got our answer: somewhere in the neighborhood of $36-37 million.

Update (August 19, 2015): The case, discussed below, was litigated for nearly six years. Trial on the last remaining issue, the appropriate discount rate, took one day. Jury received case at 11:09 a.m today and returned a verdict at 12:39 p.m. today, determining the discount rate to be 4.30%. I would be curious to know what the “swing” was — the likely range of the jury’s decision in dollars — to determine whether the half decade (and then some) of litigation was really worth it for the litigants. (I noted that plaintiff’s expert was $600/hour, incidentally and there have been 969 entries on the docket of this case since it was filed in October, 2009.)

Original post (August 17, 2015): For those of us Minnesota litigators with relatively small and legally unsophisticated clients, there is often a discussion early on in the attorney/client engagement about the high cost of civil litigation and the high uncertainty of civil litigation.

“What? You mean this could cost more than TWENTY THOUSAND DOLLARS???!!!” some potential clients will say, sincerely stunned.

“HUNH? We could lose even though THE GUY ADMITTED HE TORTED ME OR WHATEVER YOU CALLED IT???!!!” another potential client might cry out in confusion and despair.

Actually, it’s a whole lot worse than that. The more you study any particular legal dispute, the more complexity you find, and the more uncertainty you are likely to unearth.

“Hold on, Mr. Minnesota Litigator,” you counter, “What about a slam-dunk debt collection? You can’t guaranty a win even in one of those cases? You cannot guaranty or cap fees???”

Sure, there are definitely some cases where civil litigators, particularly with a database of past experience and a developed niche expertise, can come up with fairly accurate estimates. They might even cap their fees. It is lawyers’ abilities to have some sense of cost and value of legal claims that gives lawyers in particular niches the ability to charge flat fees or to offer contingent fees. These are cases where the lawyers accept the shift the risk of loss or high cost from their clients to themselves.

But make no mistake, the lawyers can take on, own, or “assume the risk,” as lawyers say, but lawyers cannot eliminate it.

I thought of this when reading the recent orders from U.S. District Court Judge Susan R. Nelson (D. Minn.) on motions in limine in the Great Lates Transmission Ltd. v. Essar Steel case. The trial is scheduled to start today, finally.

Great Lakes Gas Transmission has been suing to collect on a contract since 2009. The case seems quite straight-forward. Defendant purchased something, then did not pay for it.

[T]he only remaining issues for trial are: (1) the discount rate to apply to future damages; and (2) whether the discount rate to apply to future damages is pre- or post-tax. Trial was initially scheduled to begin October 27, 2014.

OMG, rilly?

Imagine who could have predicted the twists and turns (the fees, costs, and likely range of recovery at the end of it all) in this 5-year simple debt collection battle?

On the threshold of trial, the two sides have recently battled over the appropriate prejudgment interest. Interest under Minnesota state law for a breach of contract action (10%) or under the federal law for “Tariff prejudgment interest rate” (3.25%)? Defendant Essar Steel of Minnesota won that round (i.e., answer: 3.25%).

DiceThe point being, there is no imaginable way, I suggest, that Plaintiff could have appreciated that this battle would go for over five years, that the issues at trial (which, by the way, is obviously NOT necessarily the end of this saga) would be what they are, or that the hugely important dice-throws along the way would roll in their favor or against them.

For the sake of the Plaintiff, I would hope it has hired its lawyers on a contingent fee so that it has not had to pay out every last dollar of this long siege to get what it appears to be owed.

 

Lawyers acting for the personal representative of Prince (whom we will call “Prince’s lawyers” for convenience) have their sights on Mr. George Ian Boxill, a mixing and recording engineer, who allegedly had five unpublished Prince recordings when Prince died in April, 2016. The recordings, Prince’s lawyers contend, belong to Prince’s estate, not to Boxill, and they demanded their immediate return, damages, and their attorneys’ fees.

From papers in the lawsuit, it seems like Prince’s lawyers have a winning case here. They already have a court order for Mr. Boxill to return “all recordings acquired through Boxill’s work with Paisley Park Enterprises, Inc., including original recordings, analog and digital copies, and any derivative works, to Plaintiffs’ counsel.”

Unfortunately for Mr. Boxill, the “return process” has not been very smooth. Now, Prince’s lawyers seek to have Mr. Boxill and his related companies held in civil contempt for their alleged failure to abide by the court’s return order.

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Update (July 14, 2017): The Minnesota Supreme Court has granted plaintiff Staffing Specifix’s petition for review, in part (in connection with the case discussed previously (below)). (Linked here is the petition and linked here is the order granting it in part.)

The only issue to be addressed by the Minnesota Supreme Court (in the words of Staffing Specifix appellate lawyers):

After the trial court concludes a contract is ambiguous and if it is not one of adhesion, must the jury be instructed as to which term or terms are ambiguous and the jury is to construe ambiguous terms against the drafter only as a last resort if the parties’ mutual intent cannot be determined from the evidence and does the failure to so instruct constitute prejudicial error?

This must be one of the least comprehensible sentences we’ve read in a while.

The basic question is this: in a dispute over an arm’s length negotiated contract (a.k.a. “a non-adhesion contract”), in which the trial judge concludes that a contract term is ambiguous, is the following jury instruction is appropriate?

If you find the contract is ambiguous, you should determine the intent of the parties.

When contract language is reasonably susceptible to more than one interpretation, the ambiguous contract terms are to be construed against the drafter.

The Court of Appeals held that this instruction was reversible error “because it allowed the jury to construe the contract against the drafter, despite evidence of the parties’ intent.” It seems to us that the Court of Appeals got this one wrong and, presumably, at least someone on the Minnesota Supreme Court seems to agree.

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A Disemboweled Meat Grinder

Update (July 12, 2017): The linked decision of the Minnesota Supreme Court reverses the lower courts’ rulings in favor of the product liability defendant.

This “close case” is a major win for Minnesota product liability plaintiffs and, as stated in our previous post, below, one that we had been rooting for.

Justice Gildea’s dissent powerfully argues that the manufacturer could not have foreseen the employer’s and multiple employees’ multiple mis-steps (and OSHA violations). “The majority essentially imposes a duty on manufacturers to design an ‘accident-proof or fool-proof’ product,” Justice Gildea concludes, a duty that our law does not impose. (Maybe it should?) (more…)

Update (July 12, 2017): Tenacious Fox and friends clawed back victory on appeal for their client, St. Jude.

St. Jude won at trial against a former employee, Heath Carter, and St. Jude’s rival, Boston Scientific, but then Hennepin County District Court Judge Susan Burke snatched away the win by denying St. Jude its claims for injunctive relief and for attorneys’ fees.

This week, the Minnesota Court of Appeals flipped the trial court on this key issues in a published opinion.

Original post (July 21, 2014) (under the headline “Another Win for St. Jude Medical, Ed Fox, & His Team at Bassford Remele”): Mess with a bull, you get the horns. Mess with a fox, and I suppose you get the teeth.

Minnesota Litigator has covered the St. Jude case against Biosense and Jose de Castro in several earlier posts (here and here, for instance). Not all the posts have been fawning and complimentary but one must give credit where it is due.

Congratulations for Ed Fox and his team from Bassford Remele on a recent win in this protracted dispute. ANOTHER WIN, that is. (Earlier run-ins with Fox & friends that did not work out well for their adversaries may be noted here and here.)

Photograph by Maura Teague

Travis Schurhammer was badly hurt in a snow-mobile accident. An employee welfare benefit plan (“the Plan”) took care of Mr. Schurhammer’s significant medical bills (over $150,000). But the Rochester-based law firm of O’Brien & Wolf took on Mr. Schurhammer’s personal injury case against other third-parties (two insurers) on a contingent fee basis and got a gross recovery of $800,000 for Mr. Schurhammer.

Does it seem right that the Plan should be reimbursed every penny that it paid for Mr. Schurhammer’s care out of Mr. Schurhammer’s recovery without paying a penny for O’Brien & Wolf‘s work? To be clear, if the Plan does not pay any share of Mr. Schurhammer’s legal fees and costs, Mr. Schurhammer, the badly injured personal injury plaintiff, effectively pays for all of the law firm’s legal fees and costs out of his own pocket. In fact, there are cases in which the injured plaintiffs end up with no recovery (or even “in the red” – a “negative recovery”) because the Plan is paid off first and then the contingent fee law firm.

To whom does this make sense?

 

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The more things change, the more they stay the same. From the linked annual report of the Lawyer’s Professional Responsibility Board, we learn that 2016 was quite similar to previous years in terms of the number of complaints, the nature of the complaints, and the nature of the discipline imposed (ranging from disbarment at one extreme and “private admonition” at the other). There was a slight up-tick in the severity of discipline applied (“Calendar 2016 was also a year for higher than average public discipline with 44
attorneys receiving public discipline, down from the prior year record high of 65 attorneys receiving public discipline. An “average” year for public discipline is 36…”).

Of potential interest, we note that there was significantly more discipline of lawyers with 11-20 years of practice than those with 0-10 years of experience. This might surprise some readers. It might be caused by greater caseloads by more experienced lawyers (and therefore greater risk of negligence) or maybe by older lawyers not keeping up with new technologies which affect community standards for things like diligence or communication?

And can you guess what areas of practice trigger the most complaints against lawyers?

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All litigators know that judges often write their opinions as if they are not issuing from the judges but from “the court.” This makes sense because we believe our system to be guided by laws, not by people. Thus, it might seem inconsistent and inappropriate for a judge to write something like: “I don’t believe Defendant. I think he is a liar. Accordingly, I grant judgment to Plaintiff.” Rather, judges write things like this: “the court finds [Defendant’s] testimony to be unbelievable in its entirety,” maintaining the illusion that decisions in legal matters are not personal decisions but are impersonal juridical pronouncements.

On the other hand, we all know that our court system is run by people and there is a difference between “the court” and “the judge.” Judges exercise judgment. Courts do not.

We get a glimpse of the distinction when we note the difference between the administrative work of courts versus the decision-making work of judges.

Court personnel do not decide cases. In fact, an important sense, they don’t decide anything. They simply and blindly follow directions. They have no discretion.

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