News

In an amicus curiae brief on behalf of the American Association for Justice, CCL urged the Supreme Court to reject a broad expansion of an ERISA plan’s authority to demand that its insured repay health benefits after obtaining a tort recovery. The case is Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, Docket No. 14-723.

Robert Montanile was injured in a car crash by a drunk driver. He was a participant in the Elevator Industry multi-employer ERISA health plan, which paid his initial medical expenses of $121,044. The plan required participants and beneficiaries to reimburse the plan out of any third-party recovery, regardless of whether the victim was made whole by the tort recovery and without any plan contribution to fees owed the attorney who obtained the recovery. Montanile retained a trial lawyer who obtained a financial settlement of his claims against the other driver. He also retained an experienced ERISA attorney to reach an accommodation with the plan. When negotiations reached an impasse, the attorney released the funds, after payment of the attorneys’ fees, to the client. The plan later sued for reimbursement. By that time, however, Montanile had spent most of the funds on other bills and living expenses.

The district court found that the plan could hold Montanile personally liable to repay the entire $121,044 out of any other assets he might have. The Eleventh Circuit affirmed, agreeing with the majority of circuits that, after the participant has received a tort recovery, dissipation of the funds does not erase the contractual obligation to reimburse the plan. The Ninth Circuit has held to the contrary, as has the Eighth Circuit, in a case in which CCL successfully represented a participant’s attorney sued by an ERISA plan for reimbursement. Treasurer, Trustees of Drury Indus., Inc. Health Care Plan & Trust v. Goding, 692 F.3d 888, 896-97 (8th Cir. 2012). The Supreme Court granted certiorari to resolve the conflict.

The AAJ amicus brief, authored by CCL Senior Counsel Jeffrey R. White, urged reversal. A basic tenet of the Court’s jurisprudence is that ERISA limits fiduciaries suing for “appropriate equitable relief” to those remedies typically available from equity courts. The Court made clear in Sereboff v. Mid Atlantic Medical Services, Inc. in 2006 that a plan could impose an equitable lien by agreement on the specific fund obtained from the tortfeasor, but the legal remedy of personal liability for breach of contract was not available. The majority rule allowing reimbursement from the participant’s general assets is based on a misreading of a statement in Sereboff that a plaintiff relying on a lien by agreement need not “trace” the property back to the plaintiff. At common law, an equitable lien survived only as long as the property remained intact. If the debtor dissipated the specified fund, the creditor was left with only a legal claim for breach of contract. AAJ’s brief also anticipated the argument often advanced by ERISA administrators and insurers that reimbursement is essential to keeping premiums low. In fact, there is no indication that reimbursements are factored into ratesetting by plans. Moreover, reimbursements amount to a vanishingly small percentage of ERISA plan premiums. To the contrary, broad expansion of ERISA reimbursement will likely increase plan costs by removing the financial incentive for many injured victims to hold tortfeasors accountable.

Responding to a letter sent to the U.S. Court of Appeals for the Eleventh Circuit by Wells Fargo Bank about last week’s U.S. Supreme Court decision in Texas Dep’t of Housing and Commun. Affairs v. The Inclusive Commun. Proj., Inc., No. 13-1371, 576 U. S. ____ (2015), CCL President Robert S. Peck advised the Court that rather than prop up arguments made by the bank the decision fully supported CCL’s client, the City of Miami. In Inclusive Communities, the Supreme Court held that the Fair Housing Act (FHA) authorizes disparate impact claims, and thereby rejected the bank’s argument that disparate impact claims may not be made under the FHA. Under the high court’s decision, valid disparate impact claims challenge practices that have a “‘disproportionately adverse effect on minorities’ and are otherwise unjustified by a legitimate rationale.”

Wells Fargo’s June 29^th letter focused on dicta in the decision that reminded litigants that reliance on statistical disparity alone was insufficient. Instead, it said that a “robust causality requirement” requires pleadings to connect a defendant’s “policy and a disparate impact.” Peck pointed out that Miami’s Complaint did precisely that with extensive allegations of bank policies that produced the statistical disparities.

Peck argued the case before the Eleventh Circuit on May 19, while also arguing similar lawsuits on appeal that day on behalf of Miami against Bank of America and Citigroup. The three cases remain under advisement.

CCL today asked the Minnesota Supreme Court to review the decision of the Minnesota Court of Appeals in Angeles, et al. v. Medtronic, Inc., a group of six consolidated appeals of suits brought by persons injured as a result of their surgeon’s use of Infuse Bone Graft, a recombinant DNA protein, in their spinal surgeries. The FDA never approved Infuse for use in spinal surgery, except in a limited number of anterior procedures when used in conjunction with the LT-CAGE, a capped device designed to keep the Infuse protein from leaking into the spinal cavity and causing catastrophic bony overgrowth. Medtronic nevertheless aggressively promoted the use of Infuse in other spinal surgeries, without the LT-CAGE leading directly to plaintiffs’ injuries. The Minnesota Court of Appeals dismissed most of plaintiffs’ products liability claims against Medtronic on grounds of preemption and also dismissed plaintiffs’ fraud claims as inadequately pled, because plaintiffs could not identify the precise Medtronic misrepresentations that induced their surgeons to use Infuse in their surgeries.

CCL has now asked the Minnesota Supreme Court to review both of those rulings. CCL argues that plaintiffs’ products liability claims are not preempted both because there are no federal requirements applicable to Infuse when used in spinal surgery without the LT-CAGE, and also because plaintiffs’ state-law claims parallel federal requirements prohibiting the promotion and sale of misbranded and adulterated products. As for plaintiffs’ fraud claims, CCL argues that the Court of Appeals applied a stricter pleading standard than the one that the Minnesota Supreme Court itself adopted in Hardin County Savings Bank v. Housing & Redevelopment Authority of Brainerd, where the Court held that plaintiffs pleading fraud need only “plead facts underlying each element” of their fraud claims. CCL Chief Litigation Counsel Louis Bograd represents plaintiffs, along with GoldenbergLaw PLLC and the Fluegel Law Office, both of Minneapolis, and the Branch Law Firm in Albuquerque, New Mexico.

In response to a request from the U.S. District Court for the Northern District of Florida, CCL today submitted a legal memorandum in Pye v. Fifth Generation, Inc. distinguishing misrepresentation claims brought against the manufacturers of Tito’s Handmade Vodka, based on the product’s claim to be “Handmade,” from similar claims against the makers of Maker’s Mark Bourbon. District Court Judge Robert Hinkle had recently dismissed such claims against Maker’s Mark and asked plaintiffs to explain why the same reasoning shouldn’t lead to dismissal of their claims. In its memorandum, CCL Chief Litigation Counsel Louis Bograd explained that there were important factual distinctions between the two cases, which have already led at least one other court to uphold misrepresentation claims against Tito’s Vodka. In particular, the Maker’s Mark bottle gives content to its claim to be “Handmade” by explaining that it was distilled in small batches under close supervision, assertions that plaintiffs in the Maker’s Mark case had not disputed. By contrast, the Tito’s Vodka label claims suggests that it is “Handmade” because it is “Crafted in an Old Fashioned Pot Still,” but plaintiffs allege that that representation is also false and misleading. Thus, a reasonable consumer may be misled by the claim on Tito’s label to be handmade, even if a consumer of Maker’s Mark cannot be.

This week, the Supreme Court denied a petition for writ of certiorari in Teva Pharmaceuticals, USA v. Hassett, the last in a series of petitions by generic drug companies seeking Supreme Court review of lower court decisions permitting plaintiffs to pursue products liability claims against manufacturers of generic metoclopramide, on the grounds that such claims were preempted under Pliva, Inc. v. Mensing. CCL Chief Litigation Counsel Louis Bograd opposed each of these petitions, asserting that the lower courts properly held that plaintiffs’ claims fell into exceptions from Mensing preemption because, under the facts in each case, it would not have been impossible for the generic manufacturer to have provided stronger warnings about the risks of long-term use of metoclopramide to plaintiffs and their prescribing physicians at the time metoclopramide was prescribed to the plaintiffs. Hassett is the fourth and final pending petition for certiorari in such circumstances that the Supreme Court has declined to hear. In each of these cases, plaintiffs may now proceed with their claims before state courts.

CCL President Robert S. Peck participated in deliberations of a task force appointed by the Conference of Chief Justices to examine issues with rules governing civil cases in state courts, when the task force met May 15 in Denver, CO. The task force is examining issues of cost and delay in the system, as well as best practices and rules proposals that will address these problems. It is pursuing a tracking system that assigns cases to simplified, typical and complex tracks, providing judicial resources to each case in line with its complexity.

CCL’s Robert S. Peck represented the plaintiff’s perspective in committee and other meetings during the American Bar Association’s spring meeting of the Tort Trial and Insurance Law Section (TIPS) in Philadelphia. Peck is a member of the TIPS Plaintiffs Policy Task Force, where issues affecting the plaintiffs’ bar were discussed. In addition, he attended various meetings of the governing Council of TIPS, on which he serves, co-chaired the ABA/TIPS Committee meeting, and joined the discussions at the Judicial Division/TIPS meeting.

CCL’s Robert S. Peck represented the plaintiff’s perspective in committee and other meetings during the American Bar Association’s spring meeting of the Tort Trial and Insurance Law Section (TIPS) in Philadelphia. Peck is a member of the TIPS Plaintiffs Policy Task Force, where issues affecting the plaintiffs’ bar were discussed. In addition, he attended various meetings of the governing Council of TIPS, on which he serves, co-chaired the ABA/TIPS Committee meeting, and joined the discussions at the Judicial Division/TIPS meeting.

Representing the American Association for Justice at the Advisory Committee on Civil Rules meeting in Washington, D.C. April 9, CCL Senior Litigation Counsel Valerie M. Nannery observed reports on the progress of last year’s civil rules proposals and plans for new rules governing class actions.

Judge Jeffrey Sutton of the U.S. Court of Appeals for the Sixth Circuit, and chair of the Committee on Rules of Practice and Procedure reported that the Supreme Court of the United States had approved the most recent set of rules proposals emanating from the committee, but requested a couple of changes to the Committee Notes that accompany the pending amendments to the Civil Rules. As is reflected in the Court’s transmittal to Congress, the Committee Notes to Rules 4 and 84 were changed from the last draft submitted for approval to the Judicial Conference.

The new Committee Note to Rule 4 makes clear that the reduction of the time for service from 120 days to 90 days “will increase the frequency of occasions to extend the time.” The original Committee Note stated that “Shortening the presumptive time for service will increase the frequency of occasions to extend the time for good cause.” This change ensures that district courts have the discretion to extend the time for service even when good cause for delay has not been shown.

The Committee Note on the abrogation of Rule 84 now says: “The abrogation of Rule 84 does not alter existing pleading standards or otherwise change the requirements of Civil Rule 8.” This additional language appears to address the concerns of the overwhelming majority of those who commented on the abrogation of Rule 84 and most of the official Forms previously in the Rules.

The Advisory Committee also discussed plans for an unprecedented educational campaign to members of the bench and bar to encourage attorneys and judges to use and apply the amended rules, should they go into effect on December 1, 2015, which will occur unless Congress unexpectedly acts to stop them.

There was some discussion about the potential for “requester pays” discovery rules further down the line, although the Committee members appeared to agree to wait and see how the pending rule amendments change the landscape before further changes are considered. In response to the cost-shifting in discovery discussion, there was a suggestion that the Committee revisit mandatory disclosures under Rule 26(a)(1).

Finally, there was an extended discussion on the Rule 23 Subcommittee’s report and “conceptual sketches,” which can be found in the Agenda Book for the meeting. Many of the “conceptual sketches” are based on portions of ALI’s Principles of the Law of Aggregate Litigation. The members of the Advisory Committee gave a mixed response to several of the “sketches,” while other “sketches” did not garner much of a response. The Rule 23 Subcommittee is currently on a “listening tour,” discussing ideas for amendments to Rule 23 with groups of attorneys, academics and judges. They will be holding a “mini-conference” in Dallas-Fort Worth on September 11^th, by invitation only.

After 10 years as a key attorney at CCL, Senior Litigation Counsel Andre M. Mura has left CCL to become a partner at Gibbs Law Group LLP in Oakland, California.

While at CCL, Andre briefed and argued cases in numerous state supreme courts and federal appellate courts, and he authored briefs filed in the U.S. Supreme Court, at both the petition and merits stages. Andre also handled complex litigation and dispositive motions in state trial and federal district courts. Among his accomplishments, he was the architect of a series of constitutional challenges to laws in Missouri that restricted access to courts. This litigation, most importantly, resulted in a favorable decision by the Missouri Supreme Court in overruling of a 20-year-old precedent that had diminished the constitutional right of jury trial and struck the state’s cap on non-economic damages. Andre was counsel of record in the case, Watts v. Lester E. Cox Medical Centers.  The Missouri Supreme Court subsequently relied on Watts in unanimously striking  a punitive damage cap.

Andre originally came to CCL as an intern, while a student at George Washington University Law School. Upon graduation, he became an associate at CCL, then a counsel, and later a senior litigation counsel. As he departed CCL, he enjoyed one last victory as a member of the firm, defeating a motion for summary judgment on an issue of preemption.

CCL wishes Andre all the best and much success as he takes on new challenges at his new law firm!