Update (December 18, 2014): Insurers lose coverage battles all the time. They lick their wounds, they cut the checks (to their adversary and to their lawyers, of course), they may change their policy language to avoid similar losses in similar cases and/or maybe they bump up their premiums. In games of chance (is insurance anything but?), the house always wins.

Last summer, I noted, that “American Family’s lawyer, Mark Bradford, seemed to face a skeptical Court” as he argued on behalf of an insurer who fought an appraisal panel’s decision on the scope of the insurer’s obligation with regard to replacing siding for a condo complex. My sense was correct. This week, American Family lost before the Minnesota Supreme Court.

Watching Paint DryUpdate (June 11, 2014) (under the Subject Line: “Watching paint dry…”): As it turns out, the drama of whether insurers have to replace building materials entirely or partially (discussed below) may be a frequent (if deadly boring) niche of legal disputes. The Minnesota Supreme Court heard argument this past week as to whether American Family can properly refuse to pay for replacement of all siding because there was only damage to some of the siding when the policy agrees to replace siding with “comparable” siding and there is no available comparable siding (maybe). An appraisal panel concluded that “the amount of loss included all of the siding” because, they concluded, the available new siding would not match the undamaged original siding. American Family’s lawyer, Mark Bradford, seemed to face a skeptical Court

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prison-barsStillwater promotes itself as “the birthplace of Minnesota.”

And Minnesota’s Stillwater State Correctional Facility is home to the Prison Mirror, the nation’s oldest, continuously-operated offender newspaper, which “has won many national awards for outstanding penal journalism.” I wonder if former Stillwater mayor Kenneth Frank Harycki will be looking at himself in a prison mirror or penning penal journalism some time soon. Today, we have the news that Harycki’s been charged with conspiracy to defraud the United States.

Seems like only a few weeks ago I was pondering how we seem to have such a lower threshold of morals and scruples when it comes to stealing from the government. It seems that some people view taxes us unamerican and therefore tax evasion is patriotic (seriously).

CatAndMouseChaseJeorenMoesz

Image by Jeroen Moesz, subject to Creative Commons license.

Trials are relatively infrequent and they are expensive. They are one-time (normally) theatrical productions or, if you prefer, laboratory experiments – that is, they are multi-player orchestrations, requiring a great deal of preparation, resources, and time. So courts understandably are extremely reluctant to order “encores.”

This reluctance, in turn, gives trial lawyers the incentive to bend, if not break, the rules — not egregiously so that they are all but assured stern condemnation and punishment, but just so much, just enough to help their cause without tanking the entire effort.

Giving into this temptation presents obvious and serious risk. I would invariably advise against it, across the board, in any case. But, on the other hand, lawyers can and do get away with shenanigans…

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Crow-head-from-Mangalore

By Vaikoovery (Own work) [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC-BY-3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons

A few steps down memory lane to December, 2013 brings us to the Minnesota Litigator post about a well-known Minneapolis St. Paul lawyer who noted to a court that he billed 3.04 hours for “reviewing an email regarding dislike for him and the lawsuit and researching how to respond.” This was in the context of a petition for award of attorneys’ fees for $65,000 for a settled class action that he represented plaintiffs in.

U.S. District Court Judge Joan N. Ericksen (D. Minn.) torpedo’d the motion for $65,000 in legal fees. In short, she suggested that we wait a while and just get a feel for the size of the benefit the plaintiffs’ counsel ultimately recovered for their class. How many people got and used the vouchers at the St. James Hotel, Veranda, Clara’s Gift Shop, Jimmy’s Pub, Port Restaurant, and Shoe Box Café recovered as a result of the Red Wing fixtures’ alleged failure to comply with the Electronic Funds Transfer Act?

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jean-michel_basquiat_icon_6_d5858832hIf you sold bogus cancer cures for even a mere $10-a-pop, you are a sleaze and we all hope that the government will root you out and prosecute you. If you sold the image to the left (Icon 6 by Jean Michel Basquiat, painted in 1982) at auction for $2,201,453 earlier this month, you are the renowned Christie’s Auction House in Paris. Congratulations!

The difference, of course, is that sellers of bogus cancer cures prey on desperate buyers who are are being deceived. Christie’s, on the other hand, is simply getting the highest price it can get for an object that some obviously regard as extremely valuable (though most of us do not).259px-Sapphire_Gem

The extremes of when the government should step in and when the government should leave markets alone are uncontroversial and obvious to most of us. Let the rich throw their money around however they please. Prevent fraudsters from tricking people. These are easy calls (to most of us (exceptions: extreme libertarians or Marxists)).

But what about the vast swath of commercial transactions between the extremes? The kinds that we are all involved in every day. What about the Gem Shopping Network (“GSN”)?

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Patriotic T-Shirt

Random Patriotic T-Shirt

“Oh, what a tangled web we weave/When first we practise to deceive!” were a couple of lines in a poem published in 1808 called Marmion by Walter Scott about the Battle of Flodden Field. Marmion is a tale of lust, treachery, deceit, redemption, heroism, justice and honor according to Wikipedia. (No one has actually admitted to reading Marmion for over 150 years.)

For thousands of years and to this day, we desperately need tales like Marmion — constant new ones, that is, but along the same lines — because our lives (in particular our work lives), in truth, are generally devoid of drama, heroism, and justice. For years on end. Admit it. For the most part they are as dull as reading back issues of a trade publication. Some days, it is miraculous that none of us crumple to the floor in a state of catatonia induced by a complete lack of honest-to-god intellectual stimulation.

That is, the daily grind might be dull until you’re the person on the hook for $560,000 worth of patriotic t-shirts that were ordered but the t-shirt maker never got paid. (The maker was paid $75,000 for the >$600,000 order.) That might seem a little dramatic if the cash were coming out of your pocket anyhow…

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Money Roll

Update (12/12/2014): Last week, U.S. District Court Judge Donovan W. Frank (D. Minn.) ordered the final pretrial settlement conference for the Securian v. Wells Fargo case to occur on January 14, 2015. The jury trial is currently scheduled to start on March 16, 2015. The sequelae of banks’ insane reckless overly optimistic investment practices are still working their way through our legal system. Securian Financial Group filed this lawsuit in October, 2011. Remember? That was back when there was the civil war in Libya and former Beatle Sir Paul McCartney married American heiress Nancy Shevell at a ceremony in London.

Original post (12/3/2013): A Wells Fargo executive described a particular investment opportunity for some Wells Fargo clients as “free money.”  That opportunity was Wells Fargo’s “Securities Lending Program” (or “SLP”), a program that heavily invested in “structured investment vehicles (or “SIVs”).

In March 2008, however, Wells Fargo Chief Executive Officer John Stumpf allegedly said publicly that Wells Fargo did not invest in SIVs because they were “nonsense” and enormously risky.  At that time, the evidence suggests that Wells Fargo’s own SLP was “heavily invested in SIVs” (a.k.a., “enormously risky nonsense” (?)).

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Poker ChipsDramatic reversals of fortune in judicial proceedings do not seem to be consistent with the idea of justice. One judge finds a contractual clause “unambiguously” favors Party A, for example. Three reviewing judges, looking at the came clause, find it “unambiguously” favors Party B, and not A. How can that be?

Flips like this can be nauseating. It seems almost impossible to suggest that a system that violently zig-zags from one result to the opposite extreme can merit the term “justice system.”

On the other hand, few would suggest that an institution that was incapable of “changing its mind,” or that failed to include any appellate review (that is, that did not have, built in, the realistic possibility of “changing its mind”), was consistent with the idea of “justice.”

To understand and appreciate how our justice system, while far from perfect, is truly a model of integrity, fairness, and justice worth world-wide respect, we have to recognize that (1) it, and any human institution, certainly is not only capable of error but, like all people, includes some element of inevitable error, and (2) rather than judging the entire system on a particular decision or even a handful of decisions, it is critical to take in the broader picture. Thousands of courts make tens of thousands of decisions nationwide every day. Pointing to a small number and showing conclusively that they’re wrong is unpersuasive.

Having said that, we all should be sympathetic to cases in which the case goes down in flames after an earlier resounding win.

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St_Jude_Medical_pacemaker_with_ruler2A securities fraud class action trial in Minnesota? Really? Anything’s possible but such trials are exceedingly rare. Since 1995, of the hundreds, if not thousands of securities fraud class actions brought over that time period (it seems the average per year might be about 150-165), there may have been fewer than a dozen trials nationwide. So the smart money is on a settlement between now and the February 23, 2015 start of trial.

But it is not looking like Defendant St. Jude is going to get out of trial before trial any way but by a cash settlement. Not for lack of trying. St. Jude and the co-defendants moved to dismiss, without success. They moved for summary judgment, with mixed results. Recently, they asked for permission to move to decertify Plaintiffs’ class, without success:

Defendants had the information they needed to bring their motion for decertification—or at least to notify the Court and Plaintiffs that they intended to seek leave to bring such a motion—in January 2014. Yet, they waited ten months to do so…the Court finds Defendants’ delay to be inexplicable and prejudicial.

U.S. District Court Judge Susan R. Nelson (D. Minn.) denied St. Jude’s request for leave to file a motion to decertify the class (and went on to rule that the motion would not have prevailed anyhow). It seems that St. Jude has one last chance to knock out plaintiff’s before trial with a pending Daubert motion to exclude plaintiffs’ expert. I’ve not dug into the arguments so as to be able to handicap that motion but in light of Judge Nelson’s rulings thus far and the plaintiffs’ expert’s qualifications, I will go out on a limb and predict that plaintiffs will prevail in opposition to that motion and further predict that this case will NOT go to trial, before or after the Court rules on the motion…
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Fire Alarm2A trio of federal district court decisions issued last month in the district of Minnesota should remind Minnesota civil litigators of the high bar required to obtain a temporary restraining order or a preliminary injunction.

Denial of a party’s motion for an injunction is not generally noteworthy because an injunction “is an extraordinary remedy never awarded as of right” so they’re more often denied than granted.  But the Minnesota federal district court’s reasoning in these recent cases highlights the potential pitfalls of moving for an injunction without strong legal arguments, backed by a solid evidentiary record.

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