Fair Isaac Corporation (“FICO”) is a Delaware corporation with its HQ now in California (and, before that, with its HQ in Minneapolis (2004-2013)).

Callcredit Information Group Limited is an English company with its headquarters in the United Kingdom and offices in Japan, Lithuania, China, and Dubai.

Michael Gordon left FICO to become Callcredit’s CEO and, allegedly, misappropriated FICO confidential and proprietary information and allegedly did other things that violated his obligations to FICO. So FICO sued Callcredit and Michael Gordon in Minnesota. Mr. Gordon, in his agreements with FICO, had agreed that he could and would be subject to jurisdiction in Minnesota in the event of litigation.

In response to FICO’s complaint, Callcredit filed a motion to dismiss for lack of personal jurisdiction. The Hennepin County district court (Judge Daniel H. Mabley) denied Callcredit’s motion to dismiss, concluding that, even though it was not a party to the FICO/Gordon agreements that specified Minnesota as a forum for litigation, Callcredit had consented to personal jurisdiction in Minnesota pursuant to the “closely related” doctrine.

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“A Tough Knot to Crack” (photo by Jay Fanelli)

The previous post touched on the challenge of setting a dollar amount for sanctions. This week, we also note a six-year long civil lawsuit (and counting), which has been up to the U.S. Court of Appeals for the Eighth Circuit not once, but twice.

Maybe the fight about the appropriate measure of damages will result in the extraordinarily rare trifecta, a thrice-appealed case?

Here, linked, is one side’s argument for why the other side’s expert damages opinion fails.

Here, linked, is the other side’s argument.

The fight is over whether one can use a “reasonable royalty rate” as a measure of damages for breach of a non-disclosure agreement. The misappropriation and exploitation of someone else’s confidential information is one of many wrongs where the harm — the damages — defy our ability to measure accurately.

 

As anyone who likes to think about words and the English language will agree, “sanction” is an odd word.

It can mean its opposite as in “The N.F.L. sanctioned the Make-a-Wish Foundation event” vs. “The judge sanctioned the N.F.L. lawyers.”

One sentence uses “sanction” to mean “officially permit” or “approve.” The other means a “penalize,” “punish,” or “deter.” (Word nerds call such words “Janus words,” “contronyms,” or “auto antonyms.” Another example is “screen,” which can mean “to show,” “to examine,” or “to conceal”.)

The word “sanction” standing by itself is confusing enough. Now the U.S. Supreme Court tells lawyers that a sanction, as it thinks of the word, at least, is not “punitive in nature.” A court sanction, they say, is compensatory according to Goodyear Tire & Rubber Co. v. Haeger, a unanimous decision of the U.S. Supreme Court last week.

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Scott Richardson, a third-generation Austin, Minnesota lawyer, is turning 70 years old this year and he’s retiring from the practice of law. He wrote about the experience in the April issue of Bench and Bar, the Minnesota State Bar Association magazine and gave his fellow solo/small firm lawyers valuable and practical information, difficult if not impossible to find anywhere else.

But it might be difficult reading for a solo or small firm lawyer. Mr. Richardson’s article goes through the tedious, time-consuming, expensive, and risky process of “winding up,” the return of client files, the transfer of client matters, the things that solo and small firm lawyers have to deal with (more or less by themselves) and large law firm (or in-house lawyers) don’t. Mr. Richardson describes the postal expense, the shredding expense, the storage expense, and the issue of malpractice insurance coverage in years following retirement…

All work and no pay. No retirement party. No gold watch.

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Boxing Boxers

George Bellows, Dempsey v. Firpo, 1924

It must have been a pretty challenging 2017 Tax Day for Mr. Lapidus, an accountant. Tax Day and the days leading up to it are a bear for all accountants. But, along with the crunch of filings, Mr. Lapidus was also socked with multi-million dollar liability on 4/14, in a lawsuit brought against him by his former partners at the Lurie accounting firm.

Mr. Lapidus was represented at trial by famed Minnesota trial lawyer, Mike Ciresi (so that undoubtedly did not come cheaply). On the other side, highly respected Maslon lawyers, Bill Pentelovitch and Martin Fallon, represented Lurie.

Hennepin County Judge M. Jacqueline Regis tagged Mr. Lapidus with over $2 million in liability, ordered his Lurie retirement benefits be cut off, ordered that he pay back some retirement benefits already received, and  ordered him to cough up 25% of money that Mr. Lapidus had been paid by Lurie clients, allegedly in violation of a non-competition agreement he had entered into.

Mr. Lapidus (and a number of his clients) were apparently victims of the Bernie Madoff Ponzi scheme. It seems possible that Mr. Lapidus has taken at least a few significant risks, in the vain hope of high returns, with disastrous results. On the other hand, as Minnesota Litigator readers know well, appeals can lead to reversals. This should temper both sides’ celebration and humiliation.

 

 

Update (April 12, 2017): Below is a string of posts stretching over the past four years in which Minnesota Litigator emphasizes that “valuation is an inexact science” but that does not mean that valuations or appraisals are entirely manipulable and worthless. Sometimes, though, we wonder.

Last week, the Minnesota Supreme Court issued an opinion on an appeal from a tax court decision in which the Minneapolis Assessor’s Office determined a valuation for a particular property of $22,700,000 for 2008, $19,500,000 for 2009, and $17,700,000 for 2010.

The property owner’s qualified appraiser had advocated a valuation of $12,800,000 for 2008, $10,000,000 for 2009, and $9,800,000 for 2010 for the same property.

The City’s qualified appraiser had advocated a valuation of $25,000,000 for 2008, $16,000,000 for 2009, and $17,000,000 for 2010.

The “delta” of these valuations is extreme.

The disconnect between the parties’ valuations arose from three “key points”: (1) use of the “income approach” vs. the “market approach,” (2) “the date on which it would have been economically feasible to begin the development of a new downtown office tower,” and (3) “the choice of comparable sales under the market approach.”

It seems that neither side’s appraiser did anything “wrong” in his analysis — neither side’s valuation is “wrong” — but, paradoxically, it is impossible that both valuations are “right.”

When a discipline’s methodology is complex and includes multiple flexible variables, there will never be a “right” answer. Therefore, once the decision-maker reaches a decision (in this case, the tax court) based on experts in these complex contexts, it will be the party that has to establish the decision-maker was “wrong” that faces an almost unwinnable battle… (in this case, Macy’s Retail Holdings, Inc.)

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Update (April 10, 2017): In the original post below, we pondered the idea of computers replacing civil litigators, suggesting it might be at least a decade or two away.

To be more precise, the complete replacement of civil litigators by computers is at least a decade or two away.

As for the partial replacement, you are out of the loop if you don’t recognize that this has already happened.

One example: about twenty years ago, in preparing for a deposition in almost any case, lawyers, associates, and paralegals might spend several hours if not days poring through boxes of documents to find particular documents they already KNOW are “in there somewhere.” Now a single lawyer can run a database search and find any document in a data-set of millions of documents in less than one second.

This is one of many examples of the dramatic and irreversible disruption of the livelihoods of U.S. law firms, lawyers, and their decimated support staff.

Recently, a task force of lawyers with the Minnesota Bar Association has been studying the important and complex issue of “alternative legal models.” The task force focused on human alternatives. Do we really need licensed lawyers to do some of the routine and relatively simple tasks that now require law degrees (and, thus, are expensive)? Is this restriction the reason why our civil justice system is only good for big business and rich people, or as former Chief Judge James M. Rosenbaum (D. Minn.) has quoted former U.S. President Jimmy Carter, “Rich people drive Cadillacs and poor people don’t”? (Judge Rosenbaum pointed out that our criminal justice system, in contrast, can be very good for the poor, who get “free” public defenders, who can provide them excellent services.)

But one Minnesota lawyer on the task force, Angela E. Sipila, had a different perspective: “[A] computer can deliver the knowledge of a law degree,” she pointed out and how do we ensure that these systems are tracking basic ethical requirements that apply to lawyers?

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Photo thanks to tipstimes.com/pregnancy via flickr

Photo thanks to tipstimes.com/pregnancy via flickr

Update (April 7, 2017): “Discrimination” has become a pejorative term even though it is not necessarily pejorative. Few would object to discrimination that is, “distinguishing between” or “differentiating”, a Granny Smith and a Honeycrisp apple. Someone who has “discriminating taste” in tea (or wine or music or whatever) certainly is not considered “guilty” of discrimination.

So, for unlawful discrimination, must one be “differentiating” or “distinguishing between people” with some kind of hostility or animus? Could there be “innocent” discrimination based on sex, gender, race, etc.?

This week, the Minnesota Supreme Court decision in the LaPoint case (covered below) was introduced in the Rumble case (previously covered here). LaPoint involved a claim of discrimination based on pregnancy. Rumble involves a claim of discrimination based on transgender status. Apparently, there is are questions of whether “animus” or hostility is a required showing under the Human Rights Act. Also apparently at issue in Rumble: social science expert evidence on the somewhat controversial concept of implicit bias. As we’ve previously noted, Rumble is cutting edge litigation getting national attention. We’re lucky to have the likes of U.S. District Court Judge Susan R. Nelson (D. Minn.) grappling with these difficult issues.

[Ed. note (post-publication update): Here is a defendant’s response to Plaintiff Rumble’s points about the applicability of holding in LaPoint to the Rumble case.]

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It seems that being branded an “intellectual” is widely regarded as an insult in the United States. U.S. Politicians fear being labeled “egg-heads.” We seem to revere the doers and sneer at the thinkers (as if one can succeed without the other).

There seems to be a deep conviction among many Americans that “intellectuals” (1) think they are smarter than the rest of us are, (2) are pretentious, and (3) are more worthy of our contempt than our respect. This explains the success of so many U.S. politicians, who are so obviously unintelligent and so actively anti-intellectual.

Not all of us think this way. A few of us think “intellectuals” are the most learned, intelligent, and maybe even admirable among us. And, for these people, “intellectual property” law seems inherently attractive, distinguished, impressive, and fascinating. The notion of inventions, of the commodification of ideas, the monetization of human thought!

The very words, the very notion, of “intellectual property” (“IP”) hints at the complexity of this area of the law and IP lawyers are among the most highly credentialed and highly paid lawyers. But, with the greater complexity and the higher pay, comes some higher risk.

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The Minnesota Litigator blog, “News and Commentary About Minnesota Civil Litigation,” has now officially posted more than 2,000 entries over its 9-year life. Thanks to our many contributors, editors, commenters, critics, and, above all, to our faithful and voracious readers.

As we have said time and again, Minnesota Litigator is only good when it benefits from (and hears from) active, thoughtful readers. Otherwise, we fear it is merely solipsistic whinging, exhibitionistic wordplay, or some unsavory combination of the two.

So please keep the tips, criticisms, clarifications, comments, and feedback of all forms coming and thanks for all the contributions to date!