Pet Snakes Are Bad.

To this author it seems like a truism to state that pet snakes are a bad idea for a great number of reasons. A new reason has just popped up — salmonella in frozen mice. It turns out that, for over a year, frozen mice sold by MiceDirect (one of the US and UK’s leading frozen mice providers) have been contaminated with salmonella. A product recall is now underway. The danger to humans is that many snake lovers store their mice in the freezer (next to the family’s pork chops), microwave the mice (because Peter the Python wants his mice “just right”) or wash their frozen mice in the kitchen sink (because, after all, what snake wants to eat a dirty mouse). Since salmonella easily contaminates objects with which it comes into contact, the cross-contamination potential is significant. Yet another reason, not to keep a pet snake.

http://www.nytimes.com/2010/07/30/business/global/30mice.html?_r=1&scp=4&sq=snake&st=cse

If you would like more information about this post, or WCM’s product recall practice, please contact Bob Cosgrove at rcosgrove@wcmlaw.com.

Muffin Man is Toast (PA)

We have previously reported on the case of Bimbo Bakeries and Thomas’s English Muffins — http://www.wcmlaw.com/blog/Default.aspx?g=posts&t=492 and http://www.wcmlaw.com/blog/Default.aspx?g=posts&t=509.

As you may recall, Bimbo Bakeries USA, the company that owns Thomas’ English Muffins, sued former executive Chris Botticella in United States District Court for the Eastern District of Pennsylvania. Bimbo alleged that Botticella is one of few people in the world who knows the secret recipe (i.e., nooks and crannies) for Thomas’ English Muffins, and signed a confidentiality agreement in March 2009.

Botticella later accepted a position at Hostess, and Bimbo claims that Botticella “will inevitably disclose to Hostess” details of the recipes involved in the confidentiality agreement. Such disclosures would cause irreparable damage to Bimbo, and Bimbo argues that they should not have to sit around and wait to see “nooks and crannies” in Hostess products before seeking relief from the courts.

A preliminary injunction was issued, and the 3rd U.S. Circuit Court of Appeals has now upheld the District Court’s injunction barring Chris Botticella from taking a new job at rival bakery Hostess Inc.

The preliminary injunction, issued in February 2010, was set to expire in two months but Boticella’s attorneys appealed the injunction in the interim arguing it was based on an unreasonable application of the “inevitable disclosure” doctrine. The 3rd Circuit, however, found the evidence showed Botticella continued to work for Bimbo for several months after accepting his new job with Hostess and attended high level strategy meetings. In addition, Botitcella downloaded sensitive trade secret documents to an external drive just before his departure from Bimbo.

The 3rd Circuit, applying Pennsylvania law, found that in granting injunctive relief in a trade secret case, a highly fact-specific inquiry must be made. Here, the case specific facts demonstrated a substantial threat of trade secret misappropriation and therefore the Court had the authority to bar Botticelli from beginning his employment with Hostess.

http://www.ca3.uscourts.gov/opinarch/101510p.pdf

Thanks to Chris O’Leary for his contribution to this post.

If you would like further information about this post or WCM’s IP practice, please e-mail mbono@wcmlaw.com

NJ Insurer’s Bad Faith Failure to Settle Issue for Fact Finder

When a jury returns a verdict well in excess of an insured’s policy limit after an insurer refused an offer to settle within the limit, a bad faith claim is not a matter of strict liability. In fact, the determination of whether the insurer acted in bad faith is a fact sensitive question that generally will require a plenary hearing or trial.

In Wood v. New Jersey Manufacturers Ins. Co., the plaintiff postal worker alleged cervical and lumbar injuries were caused when she backed into a fence and a dog jumped up on her. She had cervical and lumbar surgeries and contemplated further surgery as the trial approached. A court appointed arbitrator had awarded the plaintiff $600,000 attributing 90% to the insured for a net award against the insured dog owner for $540,000, $40,000 above the policy limit. The defense rejected the arbitrator’s award, and at trial, the jury awarded a total of $2.4 million with an allocation of 51% to the insured (49% to the co-defendant property owner) for a net verdict of $1.4 million. Notably both the claims adjuster and the defense attorney had recommended settlement within the policy limit, but this had been rejected by the insurer’s Major Claims Committee.

In an appeal by the insurer of summary judgment on the bad faith claim, the Appellate Division reversed and ordered further proceedings that would address the insurer’s reasonableness in their evaluation of the claim. The court recognized that an insurer could disagree with its counsel and even its adjuster’s evaluation of the case. A full hearing would give the insurer an opportunity to explain why it did so and allow a fact finder to fully assess the credibility and persuasiveness of the witnesses.

Thus, an insurer is not expected to be “gifted with the powers of divination or of accurate prophecy,” and it will not automatically be held in bad faith when a jury awards an amount in excess of the policy limit. On the other hand, the insurer will need to be prepared to persuade a fact finder of the reasonableness of its actions.

If you have any questions or comments about this post, please email Denise at dricci@wcmlaw.com.

See Wood v. New Jersey Manufacturers Ins. Co. at http://www.judiciary.state.nj.us/opinions/a1768-08.pdf

NJ Fee Shifting Applies Even to Out of State Coverage Litigation

New Jersey is generally considered a pro-policyholder state. Under New Jersey Court Rule 4:42-9(a)(6), a successful claimant may recover attorneys fees “in an action upon a liability or indemnity policy of insurance.” While the courts have some discretion when considering such fee applications, the trend has been to award attorneys fees to a successful policyholder in most circumstances. See, for example, our post on Baughman v. US Liability Insurance on July 16, 2010.

How far does Rule 4:42-9(a)(6) extend? Does it apply where a piece of the declaratory judgment is litigated in another state?

According to the New Jersey Supreme Court, the reach of Rule 4:42-9(a)(6) extends beyonds the borders of New Jersey and applies to coverage litigation filed in another state. In Myron Corporation v. Atlantic Mutual, this point was significant because an Illinois court – where two actions for declaratory relief had been filed by the insurer and later dismissed—would have followed the traditional American rule and denied the policyholder’s application for attorneys fees.

Getting your coverage position right at the onset is critical when considering an insured’s request for a defense or indemnification under a liability policy. The consequences of a mistaken judgment can be significant if the insured prevails and recovers its attorneys fees in litigating the coverage dispute in addition to those associated with the underlying suit.

If you have any questions or comments about this post, please email Paul at pclark@wcmlaw.com

http://www.judiciary.state.nj.us/opinions/supreme/A5309MyronCorpvAtlanticMutual.pdf

No Horsing Around: NJ’s Equine Liabilty Act Bars Participant’s Claims

Contrary to the sometimes popular – and often misguided—view of New Jersey, the state is more than the sum of its smokestacks and landfills. In actuality, the “Garden State” is surrounded by beautiful beaches, public parks and horse farms. The central New Jersey area is the home of many equestrian centers where horse riding is a significant part of their operations and income. In 1996, the Equine Activities Liability Act was enacted to protect this important industry from questionable lawsuits that sought recovery from the inherent risks of the sport.

Just how far does the Act extend? Should the exceptions to the Act be read expansively to dilute its protections?

In much anticipated decision, the New Jersey Supreme Court recently held that injuries which arise from the unpredictable nature of horses and the dangers that are posed by the terrain over they are ridden are part of the uncontrollable risks immunized by the Act. The limited exceptions to the Act should be read narrowly so that the legislature’s choice to protect this industry is not undermined. Put another way, the immunity granted to the equine industry should not be swallowed up by the limited exceptions contained in the Act.

The Hubner case is a powerful weapon in the arsenal of defense counsel when defending equine related cases. Its language is broad and its message clear: participants voluntarily choose to ride horses at their own risk.

If you have any questions or comments about this post, please email Paul at pclark@wcmlaw.com

http://www.judiciary.state.nj.us/opinions/supreme/A52HubnervSpringValleyEquestrian.pdf

Authenticity Battles Continue to Haunt the Art World.

One of the more common disputes that art insurers end up embroiled in are disputes over authenticity. Consider for example, a loss in market value claim. If the object at issue is really an Old Master, the loss could be significant. However, if it is a later copy, the loss could be quite nominal. To assist with authenticity claims, restorers and experts vet a painting by analyzing (among other things) brushstrokes, composition, iconography and pigments. A subjective finding results.

The latest craze attempts to turn subjective opinion into an objective science through the use of fingerprints. Peter Paul Biro is among the pioneers in this field. However, according to The New Yorker, all that glitters might not be gold. In this interesting article, Biro’s techniques are called into question — http://www.newyorker.com/reporting/2010/07/12/100712fa_fact_grann?currentPage=all. Food for thought for all those who thought science could turn appraisals into a hard science.

If you would like more information about this post, or WCM’s fine art practice, please contact Bob Cosgrove at rcosgrove@wcmlaw.com.

Will the Food Safety Modernization Act Make It to a Vote?

The Food Safety Modernization Act proposes to fundamentally change the way the US handles food safety. The bill is therefore of great interest to the product recall insurance community. In the Senate, the FDA Food Safety Modernization Act http://www.govtrack.us/congress/bill.xpd?bill=s111-510 was recommended for a Senate vote in November 2009 and was expected to reach the Senate floor in mid April, but has been delayed because of more pressing financial services and healthcare reforms. See, e.g., http://www.agweek.com/event/article/id/16168/, http://www.foodsafetynews.com/2010/04/food-safety-bill-stalls-behind-financial-reform/. The House bill, HR 1332: Safe FEAST Act of 2009, has not even made it out of committee yet — http://www.govtrack.us/congress/bill.xpd?bill=h111-1332. Reading between the lines of a recent op-ed in the New York Times, the bill is unlikely to make it to a vote this year — http://www.nytimes.com/2010/07/25/opinion/25schlosser.html?_r=1&ref=opinion.

If you have any questions about this post, please contact Bob Cosgrove at rcosgrove@wcmlaw.com.

With the Well Capped, Can Gulf Business Resume?

We have previously commented on some of the long tail exposures arising out of the BP Gulf disaster. With the well now (seemingly) capped, the hope is that business can resume as usual. But, as this WaPo article makes clear, the recovery may be slow which raises the specter that business interruption claims will continue for quite a while.

If you have any questions about this post, please contact Bob Cosgrove at rcosgrove@wcmlaw.com.

http://www.washingtonpost.com/wp-dyn/content/article/2010/07/18/AR2010071801300.html

“Arising Out of Bodily Injury Sustained By An Employee Of Any Insured” Examined in NY.

In the case of Baker v. Safety Casualty, American Safety insured Point Recycling. Point Recycling was a tenant in a building owned by Baker. Robert Ruiz, a Point employee, was injured working in Baker’s building. He sued Baker. Baker tendered to Safety as it was a named additional insured under that policy. Safety disclaimed based upon an exclusion that barred from coverage all claims “arising out of bodily injury sustained by an employee of any insured.” The trial court rejected that argument, but the 2nd Dept. reversed and found for the insurer based upon the exclusion.

Please contact Bob Cosgrove at rcosgrove@wcmlaw.com for any questions about this post.

http://www.loislaw.com/advsrny/flwhitview.htp?lwhitid=9702877

Contractor’s Trucks Traversing over a Sidewalk Creates Issue of Fact that Defeats Motion to Dismiss.

In Cordova v Union Turnpike Dev. Corp., the plaintiff tripped and fell due to a hole in a sidewalk near an area where construction work was taking place. She sued the parties performing the construction work. The defendants were granted summary judgment by the trial court on the grounds that they did not create the alleged defect. In a short decision, the Appellate Division reversed. Notably, the court relied on the plaintiff’s claim that the hole could have been created when heavy machines and trucks traversed the subject sidewalk to gain access to the construction site. Since the defendant did not establish they did not create the hole with their equipment, they failed to meet their initial burden of establishing entitlement to summary judgment.

Special thanks to Bill Kirrane for his contributions to this post. If you have any questions, please contact Bob Cosgrove at rcosgrove@wcmlaw.com.

http://www.nycourts.gov/reporter/3dseries/2010/2010_06155.htm