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.

Daniels v. Gamma: a Basketful of Medical Malpractice Rulings

In Daniels, the Utah Supreme Court addressed a number of medical malpractice issues together with general trial issues.  Here is the gist:

1. The statute of limitations in a medical malpractice action does not begin to run until the patient discovers the legal cause of his/her injury.  “Legal cause” includes the fact that the patient has been injured, that the injury was caused by negligence, and the precise causal event leading to the injury.

2.  Evidence that two defendant doctors were insured by the same company is not relevant evidence and should be excluded at trial unless there exists a “substantial connection between the witness and the insurance company,” such as where the defendants have an employment or control relationship with the insurance provider.

3. A claim for punitive damages under a gross negligence cause of action may only succeed if the gross negligence is both “knowing” and “reckless.”  The latter element is part of the gross negligence cause of action while “knowing” is a separate element that must be plead and proven in addition to the recklessness.

4. Physicians owe their patients fiduciary duties, however, those duties may be abrogated or modified by statute.  In this case, the duties of disclosure are, in part, abrogated by Utah’s informed consent statute.  A noted exception is the “Nixdorf” disclosure requirement in which a physician has a duty “to disclose to his patient any material information concerning the patient’s physical condition.”

The Court’s clarification regarding breach of fiduciary duty is a potential landmine.  Breach of fiduciary duty often carries by implication the threat of punitive damages.  As noted, there must be proof of knowing and reckless disregard of the patient.  Such allegations, however, may be perceived as easier to make when fiduciary duties are applied instead of the usual professional malpractice or negligence claim.  I suspect that there is more fruit on this tree that this Court is willing to pick in the right case (i.e., the Court declined to rule on Daniels’ assertion of duties of good faith and loyalty because the claims were not adequately briefed).  Good luck.

The New Pleading Standard in Federal Court Requires Greater Factual Content

The United States Supreme Court is your new friend in seeking dismissal in federal district court.  Its Iqbal v. Ashcroft has been heralded as the “most significant Supreme Court decision in a decade for day-to-day litigation in the federal courts.”  Senator Arlen Specter (D-PA) has filed legislation to force a reversal of Iqbal.  The uproar among some counsel is in full swing.

What’s the big deal, you ask?  Well, the Court reiterated and extended in Iqbal its holding from Bell Atlantic Corp. v. Twombly, the shift in the pleading standard from simple “notice pleading” to “facial plausibility,” which provides that in order to “survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”

The Iqbal Court disclosed that a “claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”  The plausibility standard “asks for more than a sheer possibility that a defendant has acted unlawfully.”  Moreover, “[w]here a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and plausibility of ‘entitlement to relief.’”

One question that remained following Twombly was whether the ruling was intended to apply beyond the antitrust arena.  The Court expressly rejected this argument.  The Court applied Twombly and identified the two “working principles” found in Twombly: 1) “that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”  And 2) only a complaint that states a plausible claim for relief survives a motion to dismiss.  To determine facial plausibility, the district court judge must “draw on its judicial experience and common sense,” however, “where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not “show[n]”—“that the pleader is entitled to relief.”

The Court rejected an assertion that under Rule 9, Federal Rules of Civil Procedure, “general allegations,” i.e., conclusory allegations, are sufficient to assert a claim of discriminatory intent.  The Court held that “the Federal Rules do not require courts to credit a complaint’s conclusory statements without reference to its factual context.”  Moreover, the Court found that “Rule 8 does not empower respondent to plead the bare elements of his cause of action,affix the label ‘general allegation,’ and expect his complaint to survive a motion to dismiss.”

There has been no Utah state court appellate decision to cite either Twombly or Iqbal, however, you should take advantage of them state court because “[i]nterpretations of the Federal Rules of Civil Procedure are persuasive where the Utah Rules of Civil Procedure are ‘substantially similar’ to the federal rules.”  Tucker v. State Farm Mut. Auto. Ins. Co., 2002 UT 54, ¶ 7 n. 2, 53 P.3d 947 (citation omitted).  Moreover, the compiler’s notes to Utah’s Rule 8 admits that the Federal and State Rule 8 are “substantially the same” and the courts, therefore, “freely refer to authorities which have interpreted the federal rule.”  Gold Standard, Inc. v. American Barrick Res. Corp., 805 P.2d 164, 168 (Utah 1990).

Let us know if you have any success applying the Iqbal “facial plausibility” standard in state court.

Your Motion to Dismiss in Utah Is Not Limited to the Allegations in the Complaint

Normally, in considering a motion made under Rule 12(b)(6), the court accepts the plaintiff’s allegations as true, drawing all reasonable inferences in plaintiff’s favor. See Russell v. Standard Corp., 898 P.2d 263, 264 (Utah 1995). Utah courts, however, insist that facts be plead– not conjecture, or speculation.  “[T]he sufficiency of [plaintiffs’] pleadings ‘must be determined by the facts pleaded rather than the conclusions stated.’” Bennett v. Jones, Waldo, Holbrook & McDonough, 2003 UT 9, ¶60, 70 P.3d 17 (quotations omitted).

It is also clear that in considering a motion made under Rule 12(b)(6), “[t]he court is not bound by a complaint’s legal conclusions, deductions and opinions couched as facts.” In re FX Energy, Inc. Securities Litigation, 2009 WL 1812828 (D. Utah) (slip copy) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007)).  Moreover, the court is not “required to accept as true conclusory allegations that are contradicted by documents referred to in the complaint, and [the Court does] not necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations.” Paulsen v. CNF Inc., 559 F.3d 1061, 1071 (9^th Cir. 2009); see In re FX Energy, 2009 WL 1812828 at *6 (same); Rapoport v. Asia Electronics Holding Co., 88 F.Supp.2d 179, 184 (S.D.N.Y. 2000) (same).

If you find that the plaintiff’s complaint does not include all of the facts necessary to support your motion to dismiss, there are circumstances which allow you to attach the supporting documents and still retain the motion under 12(b)(6).  If “a plaintiff does not incorporate by reference or attach a document to its complaint, but the document is referred to in the complaint and is central to the plaintiff’s claim, a defendant may submit an indisputably authentic copy to the court to be considered on a motion to dismiss.”  Oakwood Village LLC v. Albertsons, Inc., 2004 UT 101, ¶13, 104 P.3d 1226 (citation omitted).  Also, “[a] court shall take judicial notice if requested by a party and supplied with the necessary information.”  Rule 201(d), Utah Rules of Evidence.  Moreover, “[t]he rules are clear that documents attached to a complaint are incorporated into the pleadings for purposes of judicial notice and are fair game for [the]court to consider in addition to the complaint’s averments.” Id. at ¶10.

Feel free to think outside of the complaint to find the facts necessary to make a motion to dismiss.