Utah Supreme Court Upholds Constitutionality of Products Liability Statute

The Utah Supreme Court issued Egbert v. Nissan (”Egbert II”) in which it has expressly held:

1) The rebuttable presumption of non-defectiveness in product liability cases is constitutional and has been effective in Utah for more than 20 years; and

2) Restatement (Third) Torts section 16(b-d) regarding enhanced injury claims is rejected.  An “enhanced injury occurs when an injury caused by some other event is increased or enhanced due to a defective product.”  The Court found an inherent conflict between the restatement and Utah’s long-standing abolishment of joint and several liability and adoption of apportionment of fault.

Settling Personal Injury Claims in Utah – an Update on Medicare Liens

No doubt you have heard about Medicare’s new reporting requirements.  If Medicare has paid for any of a personal injury claimant’s medical care, Medicare is entitled to be repaid whenever the case is settled—regardless of any provision in the settlement documentation disputing any liability or otherwise attempting to allocate the settlement funds to a non-medical care purpose.  The new requirements appear to have a dual purpose: 1) reimburse Medicare and 2) deter non-reporting.  Failure to comply with the reporting requirements can result in double recovery and $1,000 per day fines.  The ABA published an article (by Caroline Powell of Cranfill Sumner & Hartzog LLP) that provides a good summary of the new reporting requirements here.

Failure to Issue “Litigation Hold” Could Result in Sanctions and Attorney’s Fees

The recent S.D.N.Y. decision in Pension Committee of the Univ. of Montreal Pension Plan v. Banc of America Securities, 05 Civ. 9016, 2010 U.S. Dist. LEXIS 1839, *1 (S.D.N.Y. Jan. 11, 2010, and amended, Jan. 15, 2010), highlights that litigation requires more than simply responding to discovery once it is initiated by a formal request.  In this case, the plaintiffs failed to anticipate and issue within its company a litigation hold to preserve and collect all reasonably relevant documents.  The plaintiffs waited nearly two years before initiating a written litigation hold.

The court was clear that “the failure to issue a written litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information.”  The court found that a litigation hold should “direct employees to preserve all relevant documents —both paper and electronic” and “create a mechanism for collecting the preserved records so that they can be searched by someone other than the employee . . . .”  The court also found that collection efforts do not “require hands-on supervision from an attorney. However, attorney oversight of the
process, including the ability to review, sample, or spot-check the collection efforts is important. The adequacy of each search must be evaluated on a case by case basis.”

Here are some practice pointers offered by Orrick:

*  “[O]nce a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.”

*  Employers should consider whether they have an obligation to preserve, search and collect information on an employee’s home computer or mobile personal device.

*  Once the duty to preserve is triggered: 1) suspend auto-deletion of ESI; 2) ensure preservation efforts account for departed employees; and 3) take steps to ensure preservation of relevant information under the litigating party’s control but in the custody of third parties.

*  Custodian self-collection can be defensible with the appropriate supervision by counsel. To ensure defensibility, it is important to understand the technology and process used for collection, document actions and decisions, and sample custodian self-collection.

*  Collection instructions should be in writing and technical support should be available to the custodian.

*  If relying on custodian self-collection, instructions to individual employees should include a broad description of “relevant documents.” As much as possible, avoid asking the employee to make relevancy determinations.

*  Any proffer of eDiscovery evidence should be specific and accurate. Whether arguing for cost shifting or presenting evidence of the reasonableness of preservation or collection, it is essential that the statements have specificity. Cursory summaries of IT infrastructure, scope of collection and preservation or cost will inevitably lead to problems. To support these detailed evidentiary offerings, it is important to document decisions and actions throughout the eDiscovery process. When identifying an appropriate witness on these issues, ensure the witness understands the company’s IT infrastructure and can explain, in detail, the preservation and collection protocol at issue. The average IT employee or paralegal is unlikely to have the knowledge and skill to be an effective witness.

*  The Pension Committee Court pointed out that all of the declarations in this case stated that “all documents” had been collected.  With today’s proliferation of information, even the most comprehensive and well-run searches cannot locate “all documents.” “Courts cannot and do not expect that any party can meet a standard of perfection.” Rather, when offering evidence or certifications regarding preservation and collection, describe these efforts in accordance with the “reasonable inquiry” standard of Fed. R. Civ. P. 26(g).

*  Where the value of the case justifies the expense, there are distinct advantages to collections performed by expert vendors. These vendors are well versed in collection and search techniques and generate detailed documentation regarding the who, what, where, and when of the collection. They can also serve as the declarant or 30(b)(6) witness on issues of eDiscovery. This can spare the party’s legal or IT department from serving as the witness.

*  Preserve backup tapes when they are the sole source of relevant information. If, on the other hand, they contain duplicate copies of information available on servers, hard drives or other accessible sources, preservation is not necessary.

Good luck.

Remember to Post All legal Notices in Print and Online Beginning January 1, 2010

If you need to post a legal notice in a local publication, remember that the Utah Legislature modified the law somewhat and, beginning January 1, 2010, many legal notices in Utah must appear in a local newspaper and online.  The Utah Press Association, an association of most, if not all, of Utah’s major newspapers, has established UtahLegals.com, as site on which all legal notices published in print will automatically be posted online.

Prosecutors Be Forewarned: Intimidating and Improperly Influencing Witnesses Could Lead to Acquittal.

Honorable Cormac J. Carney, a judge in the Central District of California, Southern Division, entered a judgment of acquittal in favor of the defendant based on a lack of evidence. There was trial testimony, however, the judge struck the testimony based on the prosecutor’s misconduct in intimidating and improperly influencing witnesses.  Here are some of the highlights of the misconduct found by the court as to one of the witnesses:

Among other wrongful acts the government, one, unreasonably demanded that Dr. Samueli submit to as many as 30 grueling interrogations by the lead prosecutor.

Two, falsely stated and improperly leaked to the media that Dr. Samueli was not cooperating in the government’s investigation.

Three, improperly pressured Broadcom to terminate Dr. Samueli’s employment and remove him from the board.

Four, misled Dr. Samueli into believing that the lead prosecutor would be replaced because of misconduct.

Five, obtained an inflammatory indictment that referred to Dr. Samueli 72 times and accused him of being an unindicted coconspirator when the government knew, or should have known, that he did nothing wrong.

And seven, crafted an unconscionable plea agreement pursuant to which Dr. Samueli would plead guilty to a crime he did not commit and pay a ridiculous sum of $12 million to the United States Treasury.

Google Challenges Westlaw and Lexis With “Google Scholar”

Google continues to expand the universe around it—this time it has rolled out “Scholar” a free search engine for case law and articles.  Scholar has the ability to search for specific cases or by topic.  Once a case is identified, you can then explore “cited by” and “related articles” links.  You can also explore articles or opinions related to your case or topic.  Scholar exposes the profit foundation for Westlaw and Lexis and threatens to relegate these companies into nothing more than a way to make sure case is current (a la Shepard’s or Keycite).  That day may be years away while Scholar is fine-tuned to produce results to compete with these services, however, it certainly appears that day is at least on the horizon.  The only question now is how long will it take to get here.

Congratulations to Allan Larson and Heather White

Congratulations! to my partners, Al Larson and Heather White obtained a defense verdict in a widely covered case involving a car accident following a terminated high speed police chase in Ogden, Utah.  The case involved police pursuit in December 2005 by Ogden City Police of Eddie Bustos, a man wanted for multiple traffic violations and suspected DUI.  The pursuit occurred around 3:00 a.m. but lasted less than a minute when the police terminated pursuit a block and a half before Bustos continued on running a red light at 24^th and Grant in Ogden and hit a car instantly killing its driver, Jessica Nelson, and its passenger, Philemon Ellis.

The wrongful death lawsuit asserted that “the officer was negligent in initiating, continuing, and terminating the pursuit”.  Al and Heather successfully argued that the City was not at fault and the accident was caused by the fleeing driver, who is currently serving a prison term for the accident.  The jury agreed.  Although I was not present, I hear Al was great as usual and Heather did a fine job crossing the plaintiff’s evasive expert.  She also crossed the grieving family members, and fielded untold motions from plaintiff’s counsel, Bob Sykes.  Scott Young, an associate, did a great deal of briefing as well.  A great team effort.  Again, Congratulations!

If you know of some good lawyering that should be publicly recognized, send me an email and we’ll get it posted.

Your Private Medical Records May Be Publicly Available

Medical record vendors who manage electronic health records may be selling the information found in your medical records albeit in a “scrubbed” form.  The private health information, however, appears be traceable to the patient through, among other things, public voter registration information.  No doubt HIPAA concerns abound.  What about your doctor, is s/he selling your information or keeping it private?  Also, although it appears possible to trace the health information to a particular individual, what is the likelihood?  Moreover, is or should likelihood of disclosure even a part of the equation?

“What these three cases now present to us is a tangled, nearly indecipherable mess of repeated and convoluted contentions engulfed in more smoke than a Friday boys-night-out poker jamboree.”

See Log Furniture, Inc. v. Call, 180 Fed.Appx. 785 (10th Cir. (Utah) 2006), an otherwise unremarkable case about the lack of standing of anyone other than a Chapter 7 bankruptcy trustee to bring claims on behalf of a debtor.

Tax Planning for Small Business Owners

Wells Fargo Small Business Roundup, a newsletter service provided by Wells Fargo Bank, sent me a newsletter I thought was helpful in terms of tax planning together with audit avoidance or at least audit success.  (There were also a number of other helpful articles on the site).  Here’s the good stuff about what the IRS is interested in:

• Does your lifestyle square with your reported income? “An auditor sizes you up for dress, jewelry, car and furnishings in your home or office, if given a chance to make these observations. Someone who looks like a Vegas high roller, with the tax return of a missionary, will cause any auditor to dig deeper,” Daily says.
• Does your business handle a lot of cash? If your business handles a lot of cash, expect the auditor to suspect skimming, or diverting income into your own pocket, without declaring it.
• Did you write off auto expenses for your only car? Personal use of your business-deducted set of wheels is so common that auditors expect to find it. That doesn’t mean they’ll accept it, however. Auditors don’t believe you use your one-and-only auto 100% for business and never to run to the grocery store or the dentist. If you operate your car for both business and pleasure and claim a high percentage of business usage, keep good records (preferably a mileage log).
• Did you claim personal entertainment, meals or vacation costs as business expenses? Travel and entertainment business expenses are another area where the IRS knows it can strike gold. Document all travel and entertainment deductions. Taking buddies to the ball game and calling it business won’t fly if you can’t explain the business relationship in a credible fashion.
• Did you “forget” to report all of your business sales or receipts? If you failed to report significant business income—$10,000 or more—strongly consider hiring a tax pro to handle the audit. Remove yourself from the process altogether.
• If the auditor finds evidence of large amounts of unreported income, and it looks intentional, he may call in the IRS criminal investigation team.
• If you have employees, are you filing payroll tax returns and making tax payments? Employment taxes are a routine part of every audit of a small enterprise.
• And last but not least, if you hire people you call “independent contractors,” are they really employees? The IRS routinely conducts audits of businesses that hire independent contractors, because of the tax savings associated with hiring contractors instead of employees.

* * *

If you have questions about your taxes and successfully avoiding or managing a tax audit, get help from a professional.  It will be money well-spent.  Good luck.