News

In a case involving a commercial dispute between an Indiana and German company, CCL President Robert S. Peck argued that the Indiana company’s victory in the first trial of the matter should be reinstated. Slurry Systems, Inc., which had been awarded an Army Corps of Engineers contract, to build a retaining wall in Illinois for the McCook Reservoir, had leased, with an option to own, an enormous cutter manufactured by Bauer, a German company. However, constant problems with the cutter caused the project to drag on. Moreover, even though the contract required a new cutter, the one delivered was more than two years old.

After a jury trial, Slurry won a verdict of $3 million in compensatory damages. However, the judge presiding over the case ordered a new trial on his own motion for two reasons: 1) the jury failed to specify an amount for an equitable adjustment that would have increased the amount of the verdict, and 2) the jury awarded “monstrously excessive” punitive award on a claim in which no damages were awarded. Peck argued that the trial judge had an obligation to harmonize the jury’s verdict with the evidence, or order a damages-only retrial. He added, the punitive damages should have merely been stricken. If the first trial did not count, Peck said, then the second trial was flawed because Bauer adopted a new legal theory, in violation of the rules governing new trials. Therefore, the second trial should not count either, making a third trial the only logical next step. The case is now under advisement.

CCL filed a brief Monday, challenging Nebraska’s 40-year-old cap on damages in medical malpractice cases in Schmidt v. Bellevue Med. Ctr., currently pending in federal district court in Nebraska. The underlying case involves a now nearly three-year-old girl who suffered severe brain damage during birth.  A jury determined that the hospital was liable and found damages to amount to $17 million. Under the 1976 law, which has been amended to increase the damage cap several times, the verdict would be reduced to $1.75 million.

The Cullan & Cullan law firm of Omaha, which tried the case, hired CCL to help them challenge the damage cap, which applies to all damages in the case, economic and noneconomic. In Monday’s brief, written by CCL President Robert S. Peck, the plaintiffs argue that the cap violates the federal and state right to trial by jury, arguing that the Seventh Amendment guarantee in the U.S. Constitution should be applied to the states. In addition, the brief asserts that the cap violates the right of access to the courts, constitutes a taking without just compensation, is inconsistent with equal protection, and cannot be justified on substantive due process grounds.

On September 8, CCL filed an amicus brief on behalf of the American Association for Justice in the U.S. Supreme Court urging the Supreme Court to dismiss the case of Spokeo, Inc. v. Robins, No. No. 13-1339, a putative class action with broad implications for consumers, employees and others whose federal statutory rights may have been violated, because it fails to provide a basis to answer the question presented on certiorari.

Spokeo collects publicly available information about individuals and packages it for sale to prospective employers and other customers. Thomas Robins, brought this putative class action, alleging that Spokeo’s report on him falsely indicated that he was older, better educated, employed, wealthier and married. Robins asserted that Spokeo’s failure to take reasonable measures to ensure accuracy violated the Fair Credit Reporting Act, which allows statutory damages of $100 to $1,000 per willful violation. Spokeo argued that Robins showed no “real-world” damages because the false information actually portrayed him more favorably. The Ninth Circuit held that violation of Robins’ statutory right under the FCRA was sufficient to create standing, regardless of actual injury in fact.

The Supreme Court granted review of the question whether Congress may confer Article III standing upon a plaintiff who suffers no concrete harm, based on a bare violation of a federal statute.

AAJ’s amicus brief, authored by CCL Senior Counsel Jeffrey R. White, suggested that the Court dismiss the Petition in this case as improvidently granted. The statutory violation was not the publishing of false information, but the absence of reasonable procedures for accuracy, required by 15 U.S.C. § 1681e(b). The publishing of false information was the concrete harm the FCRA was intended to prevent by imposing an accuracy requirement. Thus this case does not squarely present the Court with the issue whether Congress can confer standing on a plaintiff who has suffered no concrete injury.

Moreover, the principle that a plaintiff must demonstrate injury-in-fact in addition to violation of a statutory duty is one that the Court has fashioned for public law cases, such as the enforcement of environmental regulation. It has never been a requirement of Article III standing that a plaintiff asserting a private cause of action demonstrate injury in addition to the violation of a legal duty owed to the plaintiff.

In three decisions issued simultaneously, the U.S. Court of Appeals reversed the dismissal of lawsuits for violations of the federal Fair Housing Act brought by the city of Miami, Florida against Bank of America, Citigroup and Wells Fargo.  The Center for Constitutional Litigation represented Miami in the appeal, with CCL President Robert S. Peck and Valerie Nannery writing the bulk of the brief as part of a larger litigation team. Peck argued the case in the Eleventh Circuit.

The case stems from lawsuits brought by Miami over lending practices that steered minority borrowers to more expensive loans than they otherwise qualified for, which, according to the complaint’s allegations, disproportionately resulted in foreclosures, eroding the city’s tax base and engendering added police, fire and other expenses in the newly blighted neighborhoods. A federal district court judge had dismissed the actions, claiming that the city lacked standing to initiate the lawsuit, had failed adequately to allege that the banks’ actions were a proximate cause of the city’s injuries, and did not allege any of the predatory loans taking place within the statute of limitations. On all three conclusions, the Eleventh Circuit held that the district court was wrong. Relying on U.S. Supreme Court precedent, the Court found that the city was an appropriate plaintiff who fell within the “zone of interests” contemplated by the FHA. It further held that, because the FHA sounded in tort law, the city’s allegations were sufficient to show that the banks’ loan practices would foreseeably cause the alleged injuries. Finally, it held that the city had demonstrated that it was not futile to permit the city to file an amended complaint capable of meeting the statute of limitations.

While the case was pending in the Eleventh Circuit, other federal district court judges presiding over similar allegations filed by the City of Miami Gardens had stayed the cases. Those cases will now likely move forward.  CCL is part of the legal team in the Miami Garden cases, as well as in cases brought by the city of Los Angeles, California, where it is handling appeals from summary judgment in the Ninth Circuit.

Arguing that the First District Court of Appeals gave too narrow a reading to various state constitutional provisions in conflict with binding precedent, the Center for Constitutional Litigation filed a jurisdictional brief in the Florida Supreme Court, asking it to review the decision. The Florida law, enacted in 2013, requires prospective medical-malpractice plaintiffs to waive their privacy rights with their treating physicians and authorize the putative defendant and the defendant’s litigation allies to interview those physicians without the plaintiff or plaintiff’s lawyer present. The Florida Supreme Court has previously held that the practice was intrusive and likely to produce information unrelated to the lawsuit that remains protected information under confidentiality statutes.

The brief, written by CCL President Robert S. Peck, argues that the appellate court erroneously held that the Florida Supreme Court intended to allow the legislature to supplement the types of discovery the court itself authorized when it promulgated the rule that governs presuit discovery in medical-malpractice cases. Precedent holds that when a statute conflicts with a rule of procedure promulgated by the Supreme Court, the statute must yield. In addition, the brief argues that the First District mistakenly interpreted Florida’s constitutional guarantee of access to the courts to require a complete abolition of a cause of action before it can be violated, an argument the Florida Supreme Court expressly rejected in 1987. Finally, the brief contends that Florida’s strong constitutional right of privacy is violated a law that does not narrowly require a waiver only to the extent that can be justified in the context of a lawsuit. The defendants and the State of Florida are expected to file briefs in opposition.

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.

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!

In a complex appeal, CCL attorneys filed their opening brief, asking the U.S. Court of Appeals for the Seventh Circuit to restore a jury’s verdict from the first trial after a second trial resulted in a diametrically opposed result. The dispute revolves around competing breach of contract claims between a federal contractor and the equipment supplier for a major construction project in Illinois on bids from the Army Corps of Engineers. CCL’s client, Slurry Systems, Inc., had won the bid to build slurry walls for the Chicago Underflow Plan at McCook Reservoir. To dig the foundations for the walls, Slurry Systems rented a 40-foot tall trench cutter from Bauer, a German company that manufactures the cutters and certified that the work could be completed within nine months using its equipment. Constant problems with the trench cutter and repeated failures by Bauer to effect repairs dragged the cutter rental out for 26 months. A Bauer subsidiary, Pileco, Inc., sued Slurry Systems in federal court for unpaid rent, while Slurry Systems counterclaimed for breaches of Bauer’s obligations under the contract and its warranty of merchantability of the equipment.

The first trial resulted in a $2 million dollar award to Pileco, which was offset by an award of $25 million to Slurry Systems on its claims, including $20 million in punitive damages. On his own motion, the magistrate judge presiding over the case refused to enter judgment on the verdict and ordered a new trial, asserting that the verdict was against the weight of the evidence because Slurry Systems deserved a higher award for the time and costs of when the trench cutter was out of service. In the second trial, however, a new jury again found for Pileco on its claims, but against Slurry Systems on its claims. Pileco asked for, but was denied, attorney fees and costs. Both sides appealed.

In the brief filed today, CCL’s Robert S. Peck and Kathryn Minton, representing Slurry Systems, asked the Seventh Circuit to order the District Court to revert to the first verdict, less the punitive damages, because the judge misapplied the law by ordering a new trial. The jury awarded punitive damages on a count for which it did not find any compensatory damages. Under the applicable Illinois law, the punitive damages had to be disallowed and did not provide a reason to retry the case. In addition, the brief argued that the judge has an obligation to reconcile the jury verdict or suggest a remittitur before the option of a new trial can be pursued, which requires a miscarriage of justice as a justification. No such egregious action occurred here, the brief argued. Even if the judge could order a new trial, the new trial was tainted by Pileco’s attempt to try a different case with a new legal theory, whic the rules governing retrials prohibit. Moreover, Peck and Minton argued that the new judgment was more egregiously against the weight of the evidence. The brief suggested the alternative remedy would be for judgment in Slurry System’s favor as a matter of law or a third trial.

On Dec. 8, the Supreme Court unanimously held that evidence of juror statements in the jury room cannot be used to impeach the validity of the jury’s verdict. CCL had filed an amicus curiae brief in the case on behalf of the American Association for Justice, urging precisely that result.

In Warger v. Shauers, No. 13-517, a vehicle accident case that resulted in a verdict for the defense, the plaintiff moved for a new trial, asserting that the jury foreperson had falsely stated during voir dire that she would base her verdict solely on the evidence. Plaintiff sought to introduce the affidavit of another juror that the foreperson indicated during deliberations that she could not find the defendant liable based on her daughter’s experience in an automobile accident. The district court denied the motion and the Eighth Circuit affirmed, holding that the affidavit was inadmissible under Fed. R. Evid. 606(b), which forbids the use of juror testimony to impeach the jury’s verdict. The Supreme Court granted certiorari.

The AAJ amicus brief,  authored by CCL Senior Counsel Jeffrey R. White, argued that both the Rule’s text and strong policy reasons counsel against expanding judicial inquiry into the jury’s deliberations. Rule 606(b), like the common-law rule it incorporates, fosters open discussion in the jury room. Following the verdict, the Rule protects jurors from harassment by disappointed litigants and prevents the courts from being drawn into an unending cycle of undoing verdicts by placing jurors on trial.

The Court’s opinion, written by Justice Sotomayor, agreed and held the proffered affidavit, describing the discussion in the jury room, was barred by Rule 606(b). Although framed as an inquiry into a juror’s dishonesty during voir dire, the Court found plaintiff’s motion for a new trial motion was clearly “an inquiry into the validity of [the] verdict” prohibited by the Rule. The juror’s statements did not come within exceptions for juror testimony regarding “extraneous prejudicial information” or “outside influences,” but involved inquiry into internal jury deliberations that Congress intended to prohibit. Additionally, although the “Constitution guarantees both criminal and civil litigants a right to an impartial jury,” litigants and courts have other means to address juror bias or dishonesty, the Court stated.