In Walmsley v. Ehmann, plaintiffs obtained a judgment against a defendant that held a 50% interest in a limited liability corporation. Plaintiffs sought to pierce the corporate veil of the LLC to enforce to judgments against the defendant personally. Plaintiffs argued that the sole purpose of the LLC was to hold the stock of another corporation, as the sole shareholder. The court, however, stated that an LLC need not adhere to the same formalities as a corporation, and any lack of formalities must lead “to some serious misuse of the corporate form” to allow the corporate veil to be pierced. Since plaintiff could not prove that the LLC was established to defraud creditors or for another improper purpose, the court would not pierce the veil, and dismissed the case.
Thanks to Colleen Hayes for her contributions to this post.
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In the case of Race Tires America v. Hoosier Racing Tire, the Third Circuit was faced with the question of whether more than $365,000 in e-discovery charges were “costs” under 28 USC 1920(4). The issue, for which there is little precedent, is of some moment as, pursuant to Fed. R. Civ. P. 54(d)(1), the losing party in a federal litigation has to pay the winning side’s “costs” for, among other things, “fees for exemplification [or] the costs of making copies of any materials where the copies are necessarily obtained for use in the case.” In Race, the Third Circuit concluded that “the scanning of hard copy documents, the conversion of native files to TIFF, and the transfer of VHS tapes to DVD” were “costs”, incurred by the prevailing party, which the losing party had to pay. The balance of the e-discovery charges was not recoverable. It just goes to show that winning isn’t everything, it’s sometimes not even the only thing.
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On March 9, 2012, the Superior Court affirmed a Court of Common Pleas decision transferring the case of Wimble v. Greenwood Gaming to Bucks County from Philadelphia. The case involved an incident wherein the plaintiff slipped at fell at Parx Casino located in Bensalem, PA, which is indisputably in Bucks County. However plaintiff brought the case in Philadelphia County, ostensibly because Greenwood Gaming regularly conducts business in Philadelphia, but really because Philadelphia juries are more generous than Bucks juries. Plaintiff asserted that Greenwood conducts business in Philadelphia through its subsidiary corporations which run 3 off-track betting facilities in Philadelphia. Furthermore plaintiff claimed that Greenwood spends a significant amount of advertising dollars in Philadelphia.
However, the trial court was unconvinced by plaintiff’s argument. The trial court stated that advertising does not establish venue because “mere solicitation of business in a particular county does not amount to conducting business”. Furthermore the trial court found that the corporations Wimble described as Greenwood subsidiaries, were more like sister entities.
The Superior Court agreed, noting that the entirety of Greenwood’s corporate activities occur in Bucks county and the underlying incident occurred there. Furthermore the Superior Court explained that while a parent and a wholly-owned subsidiary share common goals, they are still recognized as separate and distinct legal entities.
Thanks to Remy Cahn for her contributions to this post.
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NJ’s highest court’s decision in Wilson v. Jersey City has now been issued. The court, in a unanimous decision, held that N.J.’s 911 immunity statute bars a plaintiff from suing a 911 operator or his or her employer for the negligent handling of an emergency call. However, the court noted that liability could still attach if the plaintiff could show that the defendants engaged in “wanton and willful disregard for the safety of persons” – a recklessness standard that is hard to prove. Good news for municipalities, but bad news for anyone trying to join them to a litigation.
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Office lotto pools are probably only second in US popularity to the NCAA basketball bracket pools. The case of Silva v. Lopes arises out of just such an office pool. Basically what happened is that 6 construction workers would pool their money to buy Mega Millions tickets when the jackpot exceeded $50,000,000; Lopes would then buy the tickets. So it was in November of 2009 –except this time one of the tickets Lopes bought was the winning $77,000,000 ticket. Lopes returned to work the day after winning the lotto. The next day he quit his job and claimed a foot injury. He then claimed the jackpot which his co-workers found out about through the grapevine. The instant lawsuit was commenced. After an 8 day trial in Union County, the jury found for the defendants and awarded them their share of the lotto winnings. What makes the award somewhat unusual is that there were no written documents that confirmed the arrangement between the plaintiffs and Lopes. But it seems clear that the jurors smelled a rat when they heard all the evidence.
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We have spent many a megabyte warning of the perils of e-discovery and, some of you have even been subjected to our e-discovery seminar. What we have found over the years, is that the concept of e-discovery can be hard to grasp, certainly for US insurers and most definitely for foreign insurers (especially those located in London…not to name names or anything).
In the case of Trueposition v. LM Ericsson, Judge Kelly of Philadelphia’s federal district court was confronted with the question of whether, as the defendant suggested, a French company could argue that it should not be subjected to onerous US discovery obligations, but rather the less onerous (in terms of scope of discovery) but more complicated (because lawyers would have to get permission to conduct certain types of discovery from the French Ministry of Justice) Hague Convention on the Taking Evidence Abroad in Civil or Commercial Matters. Judge Kelly rejected the defendant’s claim and instead ruled that US discovery rules applied. The court specifically ruled that the US had a greater interest in having its rules applied than the French government did. One doubts that French court would have reached a similar conclusion. But the important lesson to draw is – if you do business in the US, you’d better ensure that you understand the nature and scope of e-discovery.
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Jurors in every American jurisdiction of which we are aware are specifically warned not to conduct any research, visit the crime/incident scene, review news articles or otherwise talk to anyone about the case that is before them. Rather, they are warned that the only evidence they can consider is the evidence before them.
This admonition was probably much easier to heed before everything could be Googled and courts are now grappling with how to punish jurors who ignore the warning. In the case of State v. Montas, Judge Peter Doyne, a Bergen County, NJ trial court judged was faced with this very issue. In the criminal case, the jury foreman conducted internet research to determine how long the defendant’s punishment could be if he was sentenced (which is something criminal jurors are told they cannot consider). Based upon what he found out, he told his fellow jurors that he could not convict the defendant and a mistrial resulted. The other jurors turned him in to the judge who then conducted a criminal investigation (unsurprisingly the local DA’s office declined to prosecute). The judge found the defendant guilty of criminal contempt and issued a $500 fine – which is the first known result of this kind. One wonders whether other NJ judges will be interested in Judge Doyne’s lead – especially in civil cases – especially given how many Americans feel about jury duty.
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In the case of Fleischman v. New York Life, New York’s First Department was confronted with the question of what constitutes accord and satisfaction. The specific issue before the court was whether the defendant’s tender of a refund check, and the subsequent cashing of that check by the plaintiff, indicated that the plaintiff had accepted a full resolution of the disputed claim. In affirming the trial court, the First Department ruled that it did not as there was nothing on the check or in the transmittal letter enclosing the check that indicated that the check was tendered “only on the condition that it was in full payment of the disputed claim.”
The moral of the story is that the devil is in the details. If you think the issuance of a check fully resolves a claim, then you need to make that clear. Otherwise, you can be left with dangling participles that will have to be cleaned up later.
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The New Jersey Supreme Court has rejected a broad expansion of the concept of non-delegable duty which was sought to be imposed in a case involving an assault on a developmentally disabled resident of a non-profit residential home. The plaintiff, a nineteen year old with autism and other disabilities, was scalded by boiling hot water thrown on him by a counselor at the facility. The counselor was criminally prosecuted for third degree aggravated assault and second degree bias intimidation and pled guilty.
As a non-profit organization, the residential home for developmentally disabled was immune from all negligence claims under the New Jersey Charitable Immunity Act. N.J.S.A. 2A:53A-7. Thus, the plaintiff sought to expand liability on a theory of non-delegable duty to those standing in loco parentis for the acts of its employees. This expansion would have included absolute liability even for intentional and criminal acts done outside the scope of the employment authority.
The plaintiff was joined by various amici who jointly argued for this expansion of liability to settings that could include a broad range of organizations. In carefully analyzing these arguments, the Supreme Court expressed concern that such a broadened scope of duty could then be imposed on a variety of institutions such as schools, hospitals, nursing homes, assisted living facilities, day care centers, etc.
The Court found that such an expansion was unwarranted where the existing law of reasonable care adequately addresses the standard of care. The downside for imposing absolute liability for unforeseeable intentional acts of employees weighed against such a step. Ultimately the court feared such liability expansion could jeopardize the existence of such facilities and increase costs already incurred by families, residents and the State.
In Davis v. Devereux, the Court found that the residential facility had properly vetted the employee prior to hiring, that it had no indication that the employee would commit such an act, and that the act was not done in furtherance of any job responsibilities given to the employee. The Supreme Court upheld summary judgment that had been granted by the trial court since no rational factfinder could have concluded the scalding was done in the scope of employment.
For more information contact Denise Fontana Ricci at .
In Hanger v. 116 Lexington Ave., Inc., plaintiff fell on a five-inch single step transition at the entrance to a second-floor banquet room at a restaurant in midtown Manhattan. Plaintiffs’ engineering expert opined that the similarity in the flooring of the hallway and the banquet room obscured the step. However, defendants moved for, and were granted summary judgment, arguing that the step was not a latent dangerous condition, and even if it was, adequate warnings of the step were provided.
Plaintiff appealed, arguing that the motion court erred in dismissing their complaint because the conditions of the step area created “optical confusion,” rendering the step dangerous. Although a step may be dangerous where the conditions create optical confusion, certain factors need to be considered. Specifically, courts will look to the similarity in surface colors, and whether the edge of the step created the illusion of a level surface and if there were any signs warning of the step.
The Appellate Division found no “optical confusion” existed and affirmed the lower court’s ruling, as the step in question had four reflective strips positioned parallel to the step and a sign, which read “Step Down” with an arrow pointing diagonally downward toward the step.
Thanks to Joe Fusco for his contribution to this post.
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