Ma & Pa Kettle Days in Kettle River, Minnesota are a pretty big deal. The population of Kettle River, 50 miles Southwest of Duluth, is only 180 people. During the 2012 celebration, Craig DeWitt sat at a picnic table at the Tower Tap Full Bar & Grill (Tower Tap) on Main Street in Kettle River. The picnic table collapsed on his hips. He appears to have suffered serious injuries.

This year, M & P K Days are coming right up (August 11 & 12) and you will note the promotion repeatedly warns (or brags?) “No Mud Bog this year.” (There is a good story in there somewhere…)

With or without the Mud Bog, we imagine M & P K Days are likely the biggest money-maker of the year for Tower Tap on Main Street in Kettle River. Unfortunately for Tower Tap, however, the injury that Mr. Craig DeWitt sustained could cost the bar and grill a pretty penny.

The DeWitt decision that came down from the Minnesota Court of Appeals this week is important reading for personal injury litigators.

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In our legal system, as all lawyers know, the so-called “American Rule,” generally applies. The American Rule is that each litigant pays for its own lawyers. This contrasts with “the English Rule” in which “loser pays,” also called “fee shifting.”

The implication infuriates many Americans. We can be sued, can be blameless, can defend the case at great expense, can win, but the other side does not have to pay our lawyers’ bills?

As a general matter, like it or not, this is how our system normally works.

We recently noted a motion for award of attorneys’ fees (that is, fee-shifting) that attempts to back into “the English Rule” in a clever (though maybe too clever) way.

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Flickr Creative Commons phote by Simon Scott

A personal injury plaintiff’s lawyer (“PI Guy”) takes a contingent fee case for a car accident victim (“Vic”). PI Guy explains to Vic that PI Guy “would not pursue litigation” for Vic’s case.

But PI Guy makes a settlement demand on Vic’s behalf of $50,000 on the adversary insurance company. Adversary counters with an offer of $20,000. PI Guy and Vic disagree on whether Vic accepted the $20,000 settlement offer. Vic says he did not accept the offer. PI Guy says Vic did.

PI Guy tells Vic that Vic is bound by and required to take the $20,000. Predictably, Vic fires PI Guy.

PI Guy turns around and sends this email to Adversary, the insurance company:

I was notified my [sic] [client] yesterday that he is terminating my representation and that he is not accepting the settlement offer. He got upset apparently that Medicare is taking a while, as it always does, and now doesn’t want the settlement. I advised him that he already accepted it, there is no rescinding his acceptance. He is picking his file up today apparently. I’m going to send a lien for our fees and costs to you. I’m assuming you will be having legal bring a motion to enforce the settlement. He’s been advised of all of this. Sorry for the inconvenience but he is a very difficult client. Let me know if you have any questions.

Do you see any ethical problem there?

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Photo by Tom Olmscheid of the Minnesota State Capitol Building refurbished rotunda.

If you were a state legislator, what laws would you try to pass? What laws would you try to repeal or amend?

You might not have spent a lot of time thinking about it and these might be tough questions to answer quickly.

It seems that the closest thing to a correct answer (if cynical to some) might be that you would try to pass, repeal, or amend legislation that would get you re-elected.

And what kind of legislative work would that be?

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Update (July 28, 2017): A free-lance writer published criticisms on-line of Guruji Mahendra Trivedi, a man who claims to be a miracle worker, of sorts (“an ordinary man – with an extraordinary ability”). Our courts have held that most of the writer’s criticisms enjoyed heightened protection from defamation claims because Mr. Trivedi is a “limited-purpose public figure.” But not allegations about alleged sexual misconduct? Publication of these allegations does not enjoy heightened protection?

So held the Minnesota Court of Appeals (see the original post, below) and, in spite of Mr. Lang’s well-written (and to us, compelling) petition to the Minnesota Supreme Court for review, the Supreme Court recently rejected the writer’s petition. (Here is Mr. Trivedi’s opposition to the petition for review).

In our view, this is a bad outcome. It is hardly a stretch to speculate that charlatans who make their living exploiting the vulnerable with claims of super-powers and sham miracles might very well exploit victims behind closed doors, in intimate settings, where rock solid evidence may be most difficult to obtain. We note, incidentally, that Mr. Trivedi (or at least the website “trivedieffect.com”) claims that Mr. Trivedi has discovered the power “to harness…universal, intelligent energy…to optimiz[e] the human condition [and this energy supposedly] has the power to transform the cellular structures of all living organisms.” (If one is going to fall for that, wouldn’t one want to see what it’s like in bed?)

It almost seems like the decision is protecting journalists’ (and the public’s) ability to expose fraudsters halfway. It seems like bad policy. We agree with counsel for Mr. Lang and, in fact, the U.S. Supreme Court that: “Uncertainty as to the scope of the constitutional protection can only dissuade protected speech–the more elusive the standard, the less protection it affords.”

And isn’t the result here that journalists will be tight-lipped about allegations of sexual misconduct of public figures for fear of lawsuits and perpetrators might enjoy greater protection for some of their most serious wrong-doing?

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Flickr: https://goo.gl/k6uI0g

Flickr: https://goo.gl/k6uI0g

Update (July 28, 2107): A Minnesota lawyer and Hawaiian dance performer (along with her father) was allegedly spied on while changing costumes at a company party apparently hosted by Empire Entertainment, L.L.C., d/b/a The Pourhouse. Ew. If this person wants to bring a lawsuit in connection with this invasion of privacy, must she go forward under her own name, effectively publicizing a private and humiliating experience? Yes. So held the Minnesota Court of Appeals and the Minnesota Supreme Court recently denied “Ms. Doe’s” petition for further review (here is Ms. Doe’s petition). It seems that our legal system adds injury to injury sometimes. On the other hand, as discussed in the original post below, allowing anonymity broadly in our public dispute resolution system (that is, our court system) poses its own risk of serious injury to innocent parties.

Original post (April 25, 2016): Savor the irony of an exhibitionist seeking to bring a lawsuit anonymously. Exquisite, is it not? “Mr. P” repeatedly and compulsively exhibits his private parts but, actually, he’s otherwise a very private person. So he hopes to conceal his name when suing his former employer for firing him on account of his exhibitionism?

We call this “chutzpah.”

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Kristine KubesThere are not many Minnesota civil litigators in private practice with as specific of a focus and practice area as Kristine Kubes.

Kristine is a construction litigator and, even more focused than that, she specifically represents design and construction professionals – contractors, architects, engineers, interior designers – “one side of the table,” as she calls it.

ML: Tell our readers how you got to be where you are today.

Kristine: I am a native of Minneapolis, Minnesota. I graduated from the College of St. Catherine in Saint Paul, with a double major of English and Political Science. I use my English degree every day, because I’m in the business of communication and have become an effective communicator as well as an effective listener.

Then I got accepted to the University of Minnesota Law School, and deferred my entrance for a year so that I could work and save money to pay for my education.

ML: What did you do for that year of work?

Kristine: I worked at St. Kate’s. While in college, I had worked in the Special Services department as part of my work-study program, first as a waitress and then was promoted to an assistant conference coordinator.  I stayed on full-time for one year after I graduated, and saved all the money that I was earning so that I could pay for my law school education.

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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.