Christmas in Minnesota

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

Updated post (December 18, 2017): We knew that the case discussed below, St. Jude v. Muddy Waters, would be a hard-fought lawsuit given the personalities of the litigants and their lawyers. We have not covered the lawsuit’s first year because, really, it’s just getting started. The lawsuit is brought by a medical device maker against a “short-seller,” that is, an investor who makes money by predicting company failures (or, at least, a company’s drop in share value). In sum, short-sellers make money by “betting against” particular companies.

Sometimes, short-sellers are accused of fraud and market manipulation. They are accused of disseminating false and harmful information about a company, causing the stock price to fall, and taking advantage of the stock-drop.

Roughly, this is the claim against Muddy Waters.

In recent months, the parties have been negotiating settlement and, in that context, St. Jude Medical disclosed information in settlement “subject to Rule 408” about which Muddy Water’s founder, Carson Block, tweeted.

All experienced U.S. litigators know that “Rule 408” refers to a rule of evidence that provides that “settlement communications” may be excluded from evidence under certain circumstances. In our experience, courts often read this exclusion from evidence quite broadly; that is, they are quite reluctant to let a counter-party introduce another party’s settlement communication into evidence. But Rule 408 has nothing to do with whether a communication must be kept confidential and non-public.

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Communication is the foundation of all agreements. Miscommunication lurks at the foundation of most contract disputes.

When a person or a business (say, a business owner) hires intermediaries to help negotiate a complex agreement (say, a commercial lease) and, in the end, a material term failed to make its way into the final agreement, who’s to blame? Who should bear (or share in) the loss?

One argument that we have heard in many cases come from the intermediary accused of dropping the ball who argues, “Well, you, the client, signed the final deal. It’s on you if you signed it when it lacked a material term….”

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It is infrequent that we use the Minnesota Litigator blog for downright self-promotion because (1) attorney-client confidentiality concerns often prohibit it; (2) we assume our readers are not interested; or (3) “other reasons” (for example, the “win” is too complicated to explain, publication is inconsistent with our business/marketing strategy, etc.).

On the other hand, from time to time, we make exceptions and we do today.

Mr. Nathan C. McGuire, a now-former Woodbury High School (“WHS”) girls basketball coach, sued several parents of students on the WHS j.v. and varsity girls basketball team for defamation and alleged knowing or reckless false reports of maltreatment of minors under Minn. Stat. 626.556, Subd. 5. (He also sued the school district unsuccessfully.)

He lost — that is, unless and until he elects to appeal and then prevails on appeal.

We represented a defendant in Mr. McGuire’s lawsuit and we recently won a motion for summary judgment on the threshold of trial.

LEVENTHAL pllc attorney Brandon Meshbesher did the heavy-lifting and deserves the credit.

The case highlights a point that retired Magistrate Judge Keyes made in his recent Minnesota Litigator profile:

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We celebrate the attached contempt order, issuing a sanction of over $89,000 in attorneys’ fees for misconduct in discovery, and here’s why:

Some years ago, we were preparing for a trial when, in the intense few weeks before the start of the trial, the other side brought a motion to amend to add a claim for punitive damages against our client. As all experienced Minnesota civil litigators know, such motions are required by statute before any claim for punitive damages is allowed and it is rare that such motions are granted. The motion for punitive damages was completely inappropriate in the case headed for trial.

We were incensed that our trial preparation had to be interrupted to fight the baseless punitive damages motion and we asked the Court not only to deny the motion but to sanction (i.e., punish) the other side for bringing the baseless motion.

The Court agreed with us and, in a written order, provided that sanctions would be applied at a later date.

It is now years later. The case was resolved. The trial court backed away from the discipline that it had said it would impose.

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In Minnesota Litigator’s experience of former U.S. Magistrate Judge Jeffrey Keyes, he seems to embody kindness, humility, and professionalism. He has had a long and distinguished career in Minnesota civil litigation and, unsurprisingly, has some important insights as to how our system is succeeding and how it is failing. (In critical ways, it seems to be doing plenty of both.)

ML: Judge Keyes, let’s start with your bio.

Keyes: All right. I’ll give you the deep background. I was born in New York City in 1946, and grew up there, in Manhattan, the Lower East Side of New York City.

My family moved to south Florida in 1957. I went to high school down there and then went to college at Notre Dame. I graduated from Notre Dame in 1968, did a one year stint in graduate school at Georgetown, and then went to Michigan to law school.

ML: What kind of graduate school?

Keyes: Government, foreign service at Georgetown, but then I decided right away that it was law school that I really wanted. So then I went to Ann Arbor for law school and graduated in ’72.

Then I faced the issue of where to go to work. I had summer clerked in Chicago at Sidley Austin, an excellent firm, and I really thought seriously about going back to Chicago. Then I had heard great things about the city of Minneapolis. I had never been to Minneapolis, but it sounded like the kind of place that I thought that I might be looking for. Came out here and interviewed with several of the firms, and then we decided that, “Well, let’s take a shot at this beautiful city in the Midwest….” And it was a great decision. I came here in 1972 and went to work for what was then the Haverstock Gray Plant Firm, now known as Gray Plant Mooty. I worked at Gray Plant, which is just a wonderful, wonderful place, from 1972 to 1986, and then I moved over to Briggs and Morgan.

ML: Why did you move?

Keyes: Well, at that time, there were a lot of changes going on in Gray Plant firm. A large group of lawyers had left, Dick Bowman had left. Initially, I was going to go work with Dick, because I had done a fair amount of work with Dick. You know Dick Bowman, who recently passed away. Such a wonderful lawyer. So there were a large group that left at that time, and I got itchy about doing something else. Then, shortly thereafter, the opportunity at Briggs and Morgan arose. So I decided to move there. But it was a situation where I maintained a long and wonderful relationship with Gray Plant. In those days, though, it was very difficult leaving law firms. Today, everybody moves around so much. But at that time, when you joined a law firm, I always said it like joining a monastic order. You didn’t just move around. It was a difficult decision, but one that was right for me at the time. I always say that I had the opportunity to work for two excellent firms, and great people, during that whole period of time. It was a good decision. And I worked at Briggs until I went on the bench in 2008. So 22 years at Briggs.

ML: What prompted you to make the move to become a United States Magistrate Judge?

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While we have enjoyed significant success over the years in predicting the outcomes of particular motions, lawsuits, or appeals, Minnesota Litigator has tried to predict big waves in civil litigation but our track record there has been poor. Our “big wave” predictions have not run aground with spectacular thundering crashes. Just barely audible tinkles.

And we did not see this one coming.

The linked 133-page complaint tells the harrowing tale of how Ramsey County (and every other county across the country, really) has had to deal with the tsunami of opiates over the past 15 years (see p. 18). (Similar complaints were also filed for Washington and Mower Counties.)

Ramsey County’s claims against the “legal drug dealers” (basically the entire market for prescription opiates) are: (1) public nuisance, (2) negligence and negligent misrepresentation, (3) negligence per se, (4) unjust enrichment, (5) common law fraud, (6) unlawful trade practices, (7) deceptive trade practices, (8) false statements in advertising, (8) consumer fraud act, and (9) the federal trademark law (the Lanham Act).

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Update (December 1, 2017): When a federal agency refuses to share information with a civil litigant who claims a need for the information to defend a lawsuit by another non-government litigant, what is a court to do? Let’s say the agency invokes the “the investigatory files privilege”? Is that the end of the inquiry? Can the private litigant drag a federal agency into court? Into which court? Under which law? Does the agency have to substantiate that confidentiality claim? With what kind of evidence? And how much evidence?

What degree of deference does the court owe to the agency’s confidentiality decision?

Surprisingly, courts across our federal system answer these questions inconsistently and the U.S. Court of Appeals for the Eighth Circuit has yet to weigh in.

In the case described below, U.S. Mag. Judge Hildy Bowbeer (D. Minn.) sided with those courts that gave greater deference to the government agency resisting production of information designated confidential. She therefore denied the defendant Fifth Third Bank’s motion to compel production by the FBI related to its investigation of the internet fraud scheme described below.

The decision seems correct in analysis and outcome. In particular, the defendant bank, Fifth Third, wants federal investigator notes of the duped bank employee’s interview but Fifth Third appears not to have bothered to seek out and depose the employee. The bank suggests that the witness might not remember things as she did in her initial interview and Judge Bowbeer fairly points out that this requires some speculation. Furthermore,

Upsher-Smith alleges, among other things, that Fifth Third Bank violated its contractual obligations by executing the foreign currency wire transfers at the direction of a single employee at the company and thus breached its duty to obtain approval from at least two employees prior to executing such trades.

If, in fact, the bank agreed by contract to have “double approval” of foreign currency transfers, presumably (1) it has a record of this contractual obligation; and (2) it has a record of whether it met this obligation.

Also, though we cannot read the confidential sealed portions of the Court’s order, it does not require much of a stretch of the imagination to see how the government’s investigation of this multi-million dollar scam might reflect information where the “public has an interest in ‘minimizing disclosure of documents that would tend to reveal law enforcement investigative techniques or sources.’

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BedUpdate (November 29, 2017): One thing about trials: they seem so momentous, so dramatic, so climactic, but sometimes they’re just a blip, just one chapter of an excruciating saga. Linked here is an order from the U.S. District Court (D. Minn.) (Frank, J.) vacating the judgment that we linked to below (and again link to here) (and, lest you forget, there was a court notice of judgment for the defendant though there was a money judgment against the defendant). So, who won this case anyway?

Update (November 21, 2017): Here is Defendants’ joint fee petition seeking attorneys’ fees (and not costs, apparently) of $8,994,614.79 (about $4.5 million a piece for the two defendants). Here is Plaintiff’s motion for fees of $4.6 million and costs of $950,000. It would seem neither side can argue the othe side’s fees are excessive (since they are roughly the same).

Update (November 7, 2017): The linked document clarifies that defendants in the Select Comfort bed battle were not entirely victorious but, still, they basically won. We note that the judgment is the 599th docket entry in the case. We do not know the legal fees and costs spent by Select Comfort but 10x the recovery or more seems likely.

Update (October 19, 2017): The linked document is a little puzzling but it looks like a total victory for the defendants.

Update (October 17, 2017): The extraordinarily hard-fought and long-standing civil litigation (trademark litigation, to be specific) between Minnesota bed behemoth, Select Comfort, and a smaller on-line bed-selling competitor, Personal Touch Beds and Personal Comfort Beds (et al.), finally went to trial before U.S. District Court Judge Donovan W. Frank (D. Minn.) over the past couple of weeks. The jury is deliberating…

Here-linked is the defendants’ motion for judgment as a matter of law filed this past week.

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Congratulations to the Minnetonka law firm of Johnson & Johnson for their win against the county of Anoka in connection with their clients’ road-kill bill.

The city of Anoka entered into a contract with Rick Johnson’s Deer & Beaver, Inc. (“D&B”). D&B agreed to collect “all” of the county’s deer and beaver road kill on a negotiated payment schedule. Then, while under contract with D&B, Anoka decided to use prison labor for the same task.

Anoka raised many defenses, each more putrid than the other, and the rankest of all being that “all,” in the expression, “all deer carcasses located on or near Anoka County highways” did not mean “‘all’ as in….’all.'”

The county argued that “the parties intended the word ‘all’ in the contracts to mean something other than ‘all.'”

The Court of Appeals opinion does not elaborate on this audacious argument, which might make the County Attorneys’ office look worse (or better) than it would if we heard the detail.

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