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What is important about the recent unpublished Minnesota Court of Appeals decision in Droel v. Turnkey for Minnesota litigators is the cautionary tale in Droel’s failure to open the matter with an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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CatAndMouseChaseJeorenMoeszUpdate (March 7, 2017): John Steele entered a plea agreement yesterday. Looks quite likely he will be going to prison and for a while. Minnesota Litigator focuses on civil litigation and we have no background or expertise in criminal law but the plea agreement appears to set out a Sentencing Guideline range of 97-121 months imprisonment, so 8-10 years…

Update (December 16, 2016): Now it is looking like Mr. Hansmeier and Mr. Steele (discussed at length, below) might be headed to prison for their $6 million porno shakedown operation…The indictment, incidentally, includes a simple and understandable description of how BitTorrent is used to distribute copyrighted work illegally. It also reveals that these University of Minnesota Law School grads actually filmed some of the porn that they peddled themselves. They are undoubtedly the proverbial jerks-of-all-trades…

Update (September 30, 2016): “Coda” is a musical term, originating from the Italian word for “tail.” It is a musical passage that brings a piece (or a movement) to an end. Counsel for an adversary of Mr. Hansmeier passed on this linked letter to me, apparently sent by Mr. Paul Hansmeier, the subject of the string of posts below. 

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As regular Minnesota Litigator readers (or people who are generally conscious of current events nationwide and worldwide) know, human society is convulsing with change in the realm of sexual mores. As bizarre as it seems, some men and women have radically divergent feelings and ideas about what is “consensual sex” versus what is “sexual assault” (related posts: here, here, here).

While many of us might find it dumbfounding that two people could engage in intimate sexual contact, one sincerely believing it is consensual and the other sincerely believing that it is not, most of us if not all of us understand and appreciate more common/more subtle interpersonal/social disconnects (e.g., “Stop yelling at me!” “I am not yelling at you.”).

In Doe v. University of St. Thomas (“UST”), now pending before the U.S. District Court for the District of Minnesota (Tunheim, J.), “[John] Doe does not dispute that Jane Doe did not verbally consent to [his] digital penetration [of her vagina]. Doe alleges, however, that Jane Doe did not object to removal of her pants and that Jane Doe stroked his penis, which Doe interpreted as consent to the digital penetration.”

The police did not prosecute Mr. Doe but UST suspended him as a result of this incident. And then Mr. Doe sued UST for:

(1) Declaratory Judgment under Title IX (Count I); (2) Violation of Title IX – Erroneous Outcome (Count II); (3) Violation of Title IX – Deliberate Indifference (Count III); (4) Breach of Contract (Count IV); (5) Breach of the Covenant of Good Faith and Fair Dealing (Count V); and (6) Negligence (Count VI).

UST brought a motion to dismiss John Doe’s complaint, which Judge Tunheim granted, in part, and denied in part. Judge Tunheim threw out all of John Doe’s case (some for good and other claims, “without prejudice”) except the judge allowed Mr. Doe’s claim of negligence against UST to go forward.

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Photo by Jonathan Rotondo-McCord

Every day, heated controversies force businesses and other large institutions to utter public statements. Here, below is a statement that Macalester College released last November in response to litigation brought by Kristin Naca, a fired Macalester professor:

Kristin Naca’s employment at Macalester was terminated as the result of a serious violation of the college’s policies relating to Title IX protections, following a complaint about her conduct with a student, and was not in any way related to her work as a teacher or writer. The decision to terminate her employment came after an intensive investigation that included proceedings before an elected faculty committee. Unfortunately, Naca’s response to these findings by Macalester and her faculty peers has been to attack, intimidate and retaliate against the survivor who brought forward the complaint. Macalester condemns Naca’s ongoing actions in the strongest possible terms and intends to vigorously defend against her claims in court. We will continue to enforce our policies and to do all in our power to create a safe environment for our students. We will also continue our strong commitment to diversity in our hiring and retention practices.

Ms. Naca is apparently seeking to amend her complaint to add claims for defamation based on the underlined words.

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It seems to be a rite of passage for many of us to horse around with prank telephone calls. Such shenanigans go back to the dawn of the technology as evidenced by that oldest of chestnuts: “Do you have Prince Albert in a can?” (“Yes, we do.” “Well, for God’s sake, let him out!!!”)

Taken too far, though, we all recognize that so-called “prank phone” calls can be vicious harassment. They can and sometimes do result in civil liability and the imposition of significant damages. (In the linked case, the South Dakota Supreme Court let stand a verdict for a plaintiff for “vulgar and obsene” calls.)

The class action complaint of Troy Scheffler v. Prankdial, LLC, et al., takes the issue to a new level. Pending in U.S. District Court (D. Minn.) before Sr. Judge Richard H. Kyle, Sr., a company whose business model is facilitating prank phone may face class-wide liability for pranks that might range from the innocuous, to tasteless, and even, some believe, to downright vicious?

We can all go to PrankDial on the internet and choose from an overwhelming array of “robo-calls,” perhaps to delight a friend, to tease a sort-of friend, or annoy a non-friend. While we might be sympathetic to Mr. Scheffler, who appears to have been particularly vulnerable, we think it is safe to predict that any liability here will likely be on an individual basis rather than a class-wide basis, but time will tell. Plaintiff’s counsel, Peter Nickitas, has claims under the TCPA (Telephone Consumers Protection Act) and maybe he will find a route to a class-wide recovery.

 

 

ESI is “electronically stored information” or digital data. The relatively new reality of U.S. litigation is that some degree of knowledge of ESI is critical for every legal matter for every lawyer.

“E-discovery” is a particularly nasty sub-part of the ESI beast; it is the management of ESI in litigation — that is, in the adversarial context where opposing counsel will exploit false steps, slips, and lapses with a vengeance.

We came across a 35-year veteran large Minneapolis business litigator this past week who said that “e-discovery” is the single worst development, as far as he is concerned, over the span of his entire career.

Have a look at the linked ESI protocol from the monster-of-a-case of St. Jude vs. Muddy Waters (previously discussed here). The protocol has some interesting bits negotiated by some of the country’s most sophisticated lawyers, law firms and, presumably, their in-house IT experts (or specially retained outside vendors).

Note:

Within 45 days of requests for production being served, the producing party shall propose a list of search terms to use in locating responsive material. The requesting party may propose additional terms, and the parties shall confer in good faith to finalize a search term list.

In our experience, it is the requesting party that has been first responsible for devising a list of search terms. But it makes sense that the producing party and not the requesting party — the one with superior knowledge of the data being searched — should generate the search terms in the first instance.

Putting aside the interesting pointers that this protocol gives all civil litigators, looking at the complex technical details, we also wonder out loud, “How is a solo lawyer or a small non-technologically outfitted law firm supposed to deal with ESI?”

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Previous Minnesota Litigator “Tales from the Trenches” posts have been first-person narratives — mundane trials and tribulations of LEVENTHAL pllc.

This trench-tale is second-hand.

Last week, the trial of C.H. Robinson Worldwide, Inc. v. XPO Logistics, Inc., et al., started before Hennepin County District Court Judge Ronald Abrams. C.H.Robinson claims misappropriation of trade secrets and violation of its non-competition agreement by several individuals and XPO, the corporate defendant.

One defendant invoked the Fifth Amendment in response to particular questions posed to him and this has complicated the case. As civil litigators know, the fact that someone invokes the Fifth Amendment can be brought to the jury’s attention and courts often give the jury an instruction about it. The court tells jurors that they can draw an “adverse inference” when a witness refuses to answer a question in a civil trial by invoking the Fifth Amendment.

On the other hand, there is some tension between one party’s Fifth Amendment rights and other parties’ rights to a fair proceeding, so courts have held that there are certain limits on when a court in a civil case may give an adverse inference instruction that accompanies a witness’s invocation of the Fifth Amendment. Also, courts must craft the specific words of the adverse inference instruction with care.

At the start of the C.H. Robinson v XPO Logistics trial, the dilemma of how to handle one party’s taking the Fifth was unresolved. The various lawyers were not on the same page as to how to proceed. So when Plaintiff’s counsel nevertheless made a reference in his opening statement to the jury to a court instruction about the adverse inference, other lawyers objected, and this resulted in the judge finding a mistrial.

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