Tag: Litigation

Preliminary approval of class action settlement for Experian data breach exceeds $47M

Remember Experian’s massive data breach of 15 million customers in 2015?  The resulting consolidated class action is nearly resolved.  On December 3, 2018, a California federal judge granted preliminary approval to a proposed class settlement valued at over $47 Million.

Forty lawsuits against Experian were consolidated in the U.S. District Court for the Central District of California.  The class members, all T-Mobile USA customers, may have had their names, addresses, Social Security numbers, birth dates and passport numbers compromised in the breach.

Strictly speaking, this is no longer a FCRA case. In December 2016, the court granted in part Experian’s motion to dismiss, agreeing with Experian that it did not furnish a consumer report in violation of the FCRA because “[t]heft victims don’t ‘provide’ a thief with stolen goods.”

The settlement includes a $ 22 million nonreversionary settlement fund, which will be used to provide two years of credit-monitoring and insurance services to class members who submit valid claims, cash payments for out-of-pocket costs and documented time spent due to the data breach, $2,500 service awards for each class representative, as well as attorneys’ fees and costs, not to exceed $10.5 million.  In addition, $11.7 million must be set aside for remedial and enhanced security measures at Experian.

Copyright © 2018 Womble Bond Dickinson (US) LLP All Rights Reserved.

This post was written by John C. Hawk IV of Womble Bond Dickinson (US) LLP.

The National Law Review Covers Litigation News from all over the country.

U.S. Court of Appeals for the Fourth Circuit’s Decision to Vacate Mountain Valley Pipeline Nationwide Permit

On November 27, 2018, the U.S. Court of Appeals for the Fourth Circuit issued the most recent in a series of decisions from various courts affecting the federal permitting and construction of interstate pipelines. Sierra Club v. U.S. Army Corps of Engineers, No. 18-1173 (4th Cir. Nov. 27, 2018). In this instance, the Circuit held that the U.S. Army Corps of Engineers violated the Clean Water Act when it verified that construction of the Mountain Valley Pipeline project could proceed pursuant to Nationwide Permit 12 in the State of West Virginia.[1] This decision will have an impact on the flexibility of federal and state agencies when it comes to permitting projects under the Clean Water Act Nationwide Permit program.

The Mountain Valley Pipeline project is a 304-mile natural gas pipeline proposed to run through West Virginia and Virginia. Earlier this year, the Corps had reinstated its verification that the project met the requirements of Nationwide Permit 12 – a general permit that provides authorization for certain discharges associated with the construction of linear energy infrastructure. The Circuit vacated the Corps’ verification in its entirety, leaving the project with no authorization under the Clean Water Act.

Unlike many decisions where the issue is the Corps’ own process in promulgating the Nationwide Permit in the first instance or the Corps’ assessment of whether a specific project falls within the federal parameters of the Nationwide Permit, this matter turned on whether the Corps properly incorporated the State’s conditions into its verification and whether the State itself followed the required Clean Water Act process.

In order to use a Nationwide Permit promulgated by the Corps, a project proponent must provide the Federal permitting agency a Section 401 water quality certification from the State (or other permitting agency with jurisdiction over the water) in which the regulated discharge originates, unless the Federal permitting agency determines that the certification requirement has been waived. The State certification and its conditions then become part of the federal Nationwide Permit. With respect to Nationwide Permit 12, the State of West Virginia had issued a general certification that imposed, after public notice and comment, certain special conditions on projects seeking authorization under Nationwide Permit 12 beyond what the Corps required. Two of these special conditions were at issue in this case:

  • Special Condition A, which requires an individual state water quality certification for certain projects including those involving construction of pipelines equal to or greater than 36 inches in diameter or if crossing waters regulated under Section 10 of the Rivers and Harbors Act; and

  • Special Condition C, which requires that individual stream crossings be completed in a continuous manner within 72 hours in certain conditions.

Pursuant to these Special Conditions, in order to seek authorization under Nationwide Permit 12, Mountain Valley Pipeline was expected to obtain an individual water quality certification and to complete stream crossings within 72 hours. However, West Virginia purported to “waive” its requirement that the pipeline obtain an individual water quality certification following a series of challenges to West Virginia’s individual water quality certification, and the Corps replaced Special Condition C with an alternate condition that the Corps found to be more protective of water quality with the apparent concurrence of the State.

The Fourth Circuit held: (1) the Corps’ verification violated Section 401 of the Clean Water Act because Section 401 unambiguously requires the Corps to incorporate the State’s certification with its special conditions in the federal verification without modification; and (2) Section 401 does not allow a state to waive its special conditions without public notice and comment, meaning that the project proponent remained subject to the condition requiring that it apply for an individual state water quality certification and, therefore, the Corps’ own verification was invalid.

In reaching these conclusions, the Circuit noted that “the Corps’ interpretation would radically empower it to unilaterally set aside state certification conditions as well as undermine the system of cooperative federalism upon which the Clean Water Act is premised.” Sierra Club, No. 18-1173 at *22. With respect to the State’s action purporting to waive its special condition, the Circuit explained that “[a]llowing West Virginia to revoke, on a case-specific basis, conditions imposed in its certification of a nationwide permit would impermissibly allow the state to circumvent [the CWA’s] explicit requirement that state permit certifications satisfy notice requirements.” Id. at *31.

Assuming this decision stands, the upshot is that both the Corps and the States (at least within the Fourth Circuit) will have less flexibility in how projects are permitted when a State has issued a general water quality certification with specific conditions. The Corps will need to require that the terms of such certifications are strictly followed in order to make decisions that comply with the Clean Water Act.

[1] The Circuit’s November 27, 2018 decision supports and expands upon the Circuit’s October 2, 2018 decision to vacate the Corps’ verification on more limited grounds.  Sierra Club v. U.S. Army Corps of Engineers, No. 18-1173 (4th Cir. Oct. 2, 2018).

© 2018 Bracewell LLP
This post was written by Ann D. Navaro and Christine G. Wyman of Bracewell LLP.

Federal Court Allows Challenge to Government Policy of Using Detained Immigrant Children as Bait to Arrest Families

A November 15th ruling in the District Court for the Eastern District of Virginia could have a major effect on the Trump Administration’s policy, which unnecessarily detains 1000’s of immigrant children for extended periods of time and which in effect traps certain sponsor’s of the detained immigrant children who try to claim them. The Government’s motion to dismiss a lawsuit brought on behalf of detained immigrant children was denied by the court on five of the six counts of the amended complaint allowing the lawsuit to move forward. Judge Leonie Brinkema’s decision also has implications for immigration battles to come, not only in Virginia but throughout the United States. (see J.E.C.M., a minor, by and through his next friend JOSE JIMENEZ SARAVIA, et al. v. SCOTT LLOYD, Director, Office of Refugee Resettlement, et al. Case No.1:18-CV-903-LMB ).

Legal Aid Justice Center (LAJC), together with the Washington, D.C. intellectual property law firm of Sterne, Kessler, Goldstein, and Fox(Sterne Kessler), brought this first-of-its-kind class action lawsuit on behalf of four minor immigrants challenging the Trump Administration’s recent policy of sharing the sponsor information of immigration children and information about the sponsors’ household members with U.S. Immigration and Customs Enforcement (ICE). This policy has resulted in the arrest of people who come forward to help undocumented migrant children including family and friends that came forward to bring their children home.

In April 2018, the Department of Health and Human Services (DHS) and the Department Health and Human Service (HHS) entered into an agreement, which went into effect May 13, 2018, for the Office of Refugee Resettlement (ORR), the branch of HHS that is in charge of housing immigrant children, to transfer fingerprints and other information on immigrant children’s sponsors and other adult members of the sponsor’s household to ICE.

As reported by the Guardian in September:  ICE’s acting deputy director, Matthew Albence, said at a Senate committee hearing:

We’ve arrested 41 individuals thus far.  Our data that we’ve received thus far indicates close to 80% of the individuals that are either sponsors or household members of sponsors are here in the country illegally, and a large chunk of those are criminal aliens. So we will continue to pursue those individuals.

The November 15th ruling stems from a case where four children were detained and held in custody for a five-month period by the ORR in Virginia, while their relatives attempted to bring them home.

The children involved in the lawsuit claimed they were fleeing violence and neglect in their home countries of Honduras and Guatemala. Honduras, El Salvador, and Guatemala, consistently rank among the most violent countries in the world. Together these countries form a region known as the Northern Triangle, whose extreme violence stems from civil wars in the 1980s, which left a legacy of violence and fragile governmental institutions. The region remains menaced by corruption, drug trafficking, and gang violence despite tough police and judicial reforms according to the Council on Foreign Relations.

In this case, three of the four detained children were reunited with their families weeks before the court’s ruling. One of the children was reunited only one week before the court’s decision. For the three children who were released from custody first, their cases were dismissed by the court. The court allowed the case to go forward for the fourth child, who remained in custody for a six-month period and was held apart from his sister for the duration of the proceedings.

Groups including the Center for Human Rights & Constitutional Law and the LAJC’s lead attorney on the case, Becky Wolozin, say the lawsuit highlights how:

The Trump administration has been carrying out a backdoor family separation agenda, keeping immigrant children apart from their families and using children as bait to break up the very families they have traveled so far and risked so much to join.

Working alongside Sterne Kessler, Wolozin and the LAJC challenged the ICE Policy for unaccompanied children entering the country and other related issues, which has resulted in arrests of families and friends trying to bring their children home. With more than 13,000 children being held by the ORR, this case’s outcome will possibly impact all families covered under the Administration’s current detainment policies. 

Wolozin goes onto highlight the importance of this decision as being “An important victory and decision for immigrant families and children who are being detained.” Per Wolosim, Judge Brinkema acknowledged Constitutional violations in this case and the violation of the Administrative Procedure Act (APA) in administering her decision.

Stern Kessler Director, Salvador Bezos, head of the firm’s immigration pro bono practice, says, “For years, ORR has neglected its obligations under the Administrative Procedure Act.” Bezos further noted, “The APA provides essential protections against this kind of agency overreach. I am proud of my colleagues’ and LAJC’s efforts to force the government to meet its obligations to the children in its custody.”

LAJC’s Legal Director of the Immigration Advocacy Program, Simon Sandoval-Moshenberg, also weighed in on the decision, saying “ORR is supposed to protect vulnerable immigrant children. Instead, it is placing them in harm’s way under the guise of child welfare.” “[These] policies and their enforcement undermine successfully placing children with their families and the vast surveillance actions are destabilizing immigrant communities.”

Wolozin, further details the importance of the decision. She states:

The exponential increase in the number of immigrant children in government custody has not been caused by more children crossing the border, but instead by ORR’s own policies dramatically increasing the amount of time ORR holds children in its custody. In denying the motion to dismiss, Judge Brinkema recognized the failure of due process for these children and their families, the disregard for the requirements of the Administrative Procedure Act, and importantly, the tantamount importance of protecting all people’s constitutional right to family unity, even when not between a parent and a child.

The Virginia case will move forward as LAJC works to certify the class and the parties work to complete discovery.

Monday another setback for the Trump Administration was issued by Judge Jon S. Tigar of the United States District Court in San Francisco, which may at least temporarily, stall the administration’s attempt to clamp down on the rights of immigrants seeking asylum in response to the wave of Central Americans crossing the border. Judge Tigar ordered the Trump administration to resume accepting asylum claims from migrants no matter where or how they entered the United States. “Whatever the scope of the president’s authority, he may not rewrite the immigration laws to impose a condition that Congress has expressly forbidden,” Judge Tigar wrote in his order and issued a temporary restraining order that blocks the government from carrying out a new rule issued this month that denies protections to people who enter the country illegally. The order, which suspends the rule until the case is decided by the court, applies nationally.

 

Copyright ©2018 National Law Forum, LLC
This post was written by Jennifer Schaller and Alessandra de Faria of the National Law Review.

Preparing your Company for Discovery with Cloud Faxing

Discovery refers the process by which documents and other material are sought, collected and examined, usually for use as legal evidence in a civil or criminal case.

Organizations that fail to produce discoverable material can face severe penalties, so it is critical that companies have a sufficient infrastructure in place to ensure discovery obligations are met.

For most types of discoverable material — such as emails, invoices, spreadsheets — deploying a document review platform can keep the discovery process quick and inexpensive. But other documents, such as hard copy faxes, can be trickier to manage.

Potential issues with legacy fax records

Traditional desktop fax machines are still commonplace in many office environments. Although fax records in most organizations are stored as hard copies, as far as discovery obligations are concerned, all faxes — whether sent or received — could potentially be discoverable material. Therefore, it is critical that organizations treat fax documents the same as any other types of documents.

But when a discovery request is issued, having to scour through mountains of paper fax records can be time-consuming, tedious and stressful for the staff involved. So how can the process be improved? When it comes to preparing for discovery, there are three routes you can take with regard to your fax review:

1. Take the risk with legacy fax

But by sticking with your legacy fax system, when a discovery request comes in, your organization may not be prepared and could descend into panic — panic that could be avoided.

Such an unmethodical and frantic data recovery process can not only cause huge disruption to staff productivity but could also result in a late response to a discovery request which could lead to regulatory penalties for your organization.

2. Implement a paper-to-electronic fax policy

Your second option is to implement a new ‘paper-to-electronic’ fax archival policy; each time an employee sends or receives a paper fax document, they must file the hard copy in a secure filing system and then scan and save an electronic copy of the fax making sure to include any metadata.

This will create an electronic library of all client-related faxes that is readily available in the event of discovery request.

While this solution avoids the chaos of combing through paper records, it is time-consuming, and its success relies entirely on the attention and care taken by staff members.  As such, it is highly vulnerable to human error. One misfiled or incomplete document could jeopardize your discovery process.

3. Adopt a cloud-fax solution

The final option is to trade in your organization’s legacy faxing infrastructure for a fully hosted, cloud fax solution. This will allow your employees to send and receive faxes by email (or from a user-friendly platform), directly from their computers or even their mobile devices.

Many cloud fax systems will automatically save electronic records of faxes sent or received by your organization, along with metadata, in a secure storage base. Therefore, should your company receive a discovery request, you may be able to leverage a cloud fax system to quickly respond while minimizing disruption to your business operation.

Traditional paper-based fax isn’t going away anytime soon, but its days are definitely numbered. For forward-thinking organizations that value efficiency, accuracy, and privacy there’s only one fax solution that is able to offer true peace of mind, and that’s cloud fax.

 

eFax® is a registered trademark of j2 Cloud Services™, Inc. and j2 Global Holdings Ltd.
This post was written by David Hold of eFax.

“Bank For Your Buck” – The Legal Implications of Banksy’s Destruction of “Girl with Balloon”

For centuries, artists have been celebrated for pushing boundaries and shaping how society should view art. As members of the audience, we rely on artists to expose us to these unique dimensions of thought and we return the favor by placing value on their creations. For the past twenty years, one anonymous artist has continuously thrilled his audience by publicly displaying his work throughout the streets of major cities. Banksy, as the public knows him, has once again shocked his audience, this time at the Sotheby’s auction of one of his most famous graffiti pieces, “Girl with Balloon.”

However, the $1,037,000 record breaking bid price was not the cause for headlines after the sale. In pure avant-garde fashion, immediately upon the sounding of the auctioneer’s hammer, the frame securing the piece proceeded to shred the bottom half of, “Girl with Balloon.” The bidder, who remains anonymous, said that she is planning to keep the shredded piece, and “realized that [she] would end up with [her] own piece of art history.”[1] However, what if the owner had not had such an optimistic outlook on the prank, could she have legally deemed the sale void?

Under the Uniform Commercial Code (“UCC”), “a sale by auction is complete when the auctioneer so announces by the fall of the hammer or in other customary manner.”[2] While the sounding of the hammer indicates the transfer of ownership, this does not necessarily also indicate a transfer of liability. The UCC and Sotheby’s terms of sales state that the “risk of loss passes to the buyer upon her receipt of the property or on tender of delivery.”[3] In sum, liability is imposed on the party who has physical possession of the artwork. If the buyer receives the goods in a condition that does not conform to the condition the buyer reasonably believed the goods to be in at the time of the sale, under the UCC, a buyer may revoke her acceptance of the goods.[4]

As applied to, “Girl with Balloon” once the hammer struck, the ownership of the piece transferred from the hands of Banksy’s agent, Sotheby’s, to the anonymous bidder. However, since the piece immediately shred upon finalization of the sale, there was no actual physical transfer of the artwork. Between the time of the sale and the shredding, the piece was still mounted at the Sotheby’s auction house, therefore under the company’s liability. Since the art work was damaged while under the possession of Sotheby’s, under the UCC, it is likely that the anonymous buyer could have canceled the sale.

Moreover, there is also the issue of the price appraisal of the artwork. Buyers rely on auction houses like Sotheby’s to provide them with a guideline of establishing the value of pieces of art, in particular their reserve price (the minimum bid price for a piece). Sotheby’s set the reserve price for “Girl with Balloon” to reflect the piece in its original creation and it is unclear how the piece will be valuated post alteration. However, members of the art world seem to believe that this was not a destruction but rather a reincarnation of the piece. One art broker, Joey Syer, believes that Banksy’s prank contributed to art history, adding a “minimum 50% to its value.”[5]

If Syer’s estimates are true, could Sotheby’s in return bring a claim against Banksy for transforming his piece without their knowledge, thus manipulating the reserve price? Banksy admits to orchestrating the prank, and even recently revealed that his initial intention was to shred the whole work, but a mechanical error stopped the shredder at the bottom half of the piece.[6] It is unclear if, when Sotheby’s inspected the piece, they were aware of the shredder within the frame and if that was incorporated in their valuation of the piece. It is quite likely that Banksy did not disclose the shredder to Sotheby’s, who could potentially bring an action against Banksy for fraudulent concealment. Sotheby’s could make the claim that, by not disclosing the shredder, they misevaluated the piece and set the reserve price lower than its worth. Thus, had they set the reserve price higher, the piece could have sold for more, guaranteeing a greater commission for the auction house.

As of now, the parties and fans around the world view this as a positive occurrence. Sotheby’s head of contemporary art, Alex Branczik does not seem worried about the trick and views this as, “the first artwork in history to have been created live during an auction.”[7] Once again, Banksy has played with his audience’s conception of art, and the future valuation of the newly named, “Love in in the Bin,” will reveal whether the joke is actually on us.

[1] https://www.bbc.com/news/uk-england-bristol-45829853

[2] Uniform Commercial Code § 2-328

[3] Uniform Commercial Code § 2-509

[4] Uniform Commercial Code § 2-512

[5] https://www.telegraph.co.uk/news/2018/10/06/banksy-shreds-girl-balloon-p…

[6] https://www.cnn.com/style/article/banksy-video-girl-with-balloon/index.html

[7] https://www.bbc.com/news/uk-england-bristol-45829853

Copyright © 2018, Sheppard Mullin Richter & Hampton LLP.

Federal Circuit Concurring Opinion Recommends En Banc Review of Prior Ineligible Subject Matter Decision

On October 9, 2018, the United States Court of Appeals for the Federal Circuit affirmed a grant of summary judgment of invalidity due to patent-ineligible subject matter in Roche Molecular Systems, Inc. v. Cepheid, No. 2017-1690, applying its prior holding concerning claims directed to similar technology in In re BRCA1- & BRCA2-Based Hereditary Cancer Test Patent Litigation, 774 F.3d 755, 760 (Fed. Cir. 2014).  In a concurring opinion, Judge O’Malley recommended that the full court revisit the holding in BRCA1.  If the full court decides to revisit BRCA1, this could strengthen patent protection for other biotech inventions.

Background

Roche’s U.S. Pat. No. 5,643,723 includes claims directed to a method for detecting a pathogenic bacterium using a short, single-stranded nucleotide sequence known as a “primer” and other claims directed to the primers themselves.

Roche accused Cepheid of infringing the ‘723 patent and Cepheid filed a motion for summary judgment of invalidity under 35 U.S.C. § 101. The U.S. District Court for the Northern District of California granted the motion, relying on the Federal Circuit’s holding in BRCA1 relating to primers.  Specifically, the district court held that the claims were unpatentable under § 101 because “the primer claims in this case, which have genetic sequences identical to those found in nature, are indistinguishable from those held to be directed to nonpatentable subject matter in In Re BRCA1.”

Majority Opinion

The Federal Circuit affirmed the summary judgment of patent ineligibility based on its prior holding in BRCA1.  Specifically, the majority noted that the primers of the ‘723 patent have identical nucleotide sequences as naturally occurring DNA, just like the primers in BRCA1.  The majority rejected Roche’s argument that its synthetic primers differed from those in the naturally-occurring gene based on the presence of a 3-prime end and 3-prime hydroxyl group, noting that the “same argument was made in BRCA1.”

Concurring Opinion

Although Judge O’Malley agreed with the majority that BRCA1 compelled the conclusion that the claims of the ‘723 patent are not patent-eligible subject matter, she wrote separately to express her further view that the Federal Circuit should revisit en banc the holding in BRCA1 at least with respect to Roche’s primer claims.  BRCA1 involved an appeal from the denial of a preliminary injunction motion brought early in that case.  Judge O’Malley noted that the record in BRCA1 was underdeveloped and the Federal Circuit in BRCA1 did not have the benefit of certain arguments and evidence, such as those presented by Roche, which could support a finding that the primer claims are patent eligible.  For example, Roche demonstrated the ways in which the claimed primers may differ structurally from anything that occurs in nature.

Judge O’Malley also distinguished the Supreme Court’s decision in Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576 (2013).  In particular, unlike the claims in Myriad, which were neither “expressed in terms of chemical composition, nor” reliant “in any way on the chemical changes that result from the isolation of a particular section of DNA,” the primer claims in the ’723 patent are expressed in terms of chemical composition and are reliant on the presence of a 3-prime end and a 3-prime hydroxyl group at a nonnaturally occurring location.

Takeaway

Some of the alleged modifications that Judge O’Malley suggests might render Roche’s primers patent eligible and could save other patent claims directed to synthetic DNA.  If the full court agrees with Judge O’Malley’s suggestion to revisit BRCA1, this may strengthen patent protection for other biotech inventions.

 

© Copyright 2018 Brinks, Gilson & Lione

Boof!: Pro-Kavanaugh “Robo-Texts” Trigger Potentially Massive TCPA Class Action against Faith and Freedom Coalition, Inc. in Florida

Apparently the Faith and Freedom Coalition (“FFC”)–allegedly some sort of Conservative-leaning PAC– blasted Florida residents with texts urging Senator Bill Nelson to support the Kavanaugh confirmation. The text (allegedly) read as follows:

This is Ralph Reed. A good man is under attack & needs your help. Call Sen Bill Nelson TODAY & tell him to confirm Brett Kavanaugh.

Subtle.

Similar texts were allegedly blasted to a bunch of folks in the area, none of whom–according to the lawsuit–consented to receive those texts.

The complaint–filed Monday in the Southern District of Florida by an agitated citizen named Shehan Wijesinha and found here Wijensinha v FFC—  alleges a class of all persons within the United States that were sent a text message by the Defendant without prior express consent. It is brought by noted TCPA class action attorney Manuel Hiraldo of Hiraldo, P.A.

The TCPA prevents text messages–including political texts–to cellular phones without consent. If the Defendant is found liable for sending the texts under the TCPA it may face exposure as high as $1,500.00 per text. Given the number of texts allegedly at issue in the suit this may cost the FFC many millions of dollars to resolve, a fact that may prompt the FFC to need a Devil’s Triangle this afternoon to unwind. (What? Its a drinking game!)

A recent Wyoming lawsuit found a state corollary law similar to the TCPA unconstitutional as applied to political messages–and you can bet your bottom dollar that the folks at FFC will assert a First Amendment challenge here.

We’ll keep a close eye on this one for you.

 

Copyright © 2018 Womble Bond Dickinson (US) LLP All Rights Reserved.
This post was written by Eric Troutman of Womble Bond Dickinson (US) LLP.

The New Jersey Supreme Court’s Latest Decision Affecting Pharmaceutical Multicounty Litigation

On October 3, 2018, the New Jersey Supreme Court made its long-awaited decision in the Accutane Multicounty Litigation. Developed by the New Jersey-based pharmaceutical giant Hoffman-La Roche, Accutane is a prescription acne treatment that has been found to be linked to inflammatory bowel disease.

Numerous plaintiffs filed lawsuits in New Jersey, essentially claiming that, based upon the drug maker’s own internal documents, Accutane’s warnings should have been stronger in stating that Accutane has been found to directly cause inflammatory bowel disease. A Multicounty Litigation was formed, which encompassed 532 plaintiffs – of which 18 were New Jersey residents, and 514 were residents of 44 different jurisdictions other than New Jersey.

In 2015, the trial court basically ruled that NJ’s Product Liability Act governed all of the cases in the Multicounty Litigation. Unlike the law in most other states, New Jersey’s Product Liability Act contains a rebuttable presumption that basically holds that a drug maker’s warning is adequate if it was approved by the United States Food and Drug Administration. The presumption can only be overcome if the plaintiffs show deliberate nondisclosure to the Food and Drug Administration, economically driven manipulation of the regulatory process, or clear and convincing evidence that the drug maker knew or should have known of the inadequacy of the warnings in light of the relevant federal regulations. Having found that the presumption applies to all of the cases, the trial court then held that the plaintiffs could not overcome the presumption and dismissed the cases.

That decision was appealed and the Appellate Division found that New Jersey’s Product Liability Act did not govern all of the cases, and that each case was governed by the respective laws of the jurisdictions where the plaintiff used Accutane. The Appellate Division analyzed the many different legal standards and found that the cases from the vast majority of the jurisdictions involved (including New Jersey), should not be summarily dismissed based on the federal approval presumption.

The matter was then taken up by the Supreme Court, which held that New Jersey has an interest in consistent, fair, and reliable outcomes in its consolidated Multicounty Litigation cases that cannot be achieved by applying a “diverse quilt of laws.” Having found that all of cases in the Multicounty Litigation were governed by New Jersey’s Product Liability Act, the Supreme Court went on to hold that the plaintiffs had not overcome Act’s rebuttable presumption and that the drug maker’s approved warnings were adequate as a matter of law. Accordingly, the Supreme Court dismissed all 532 cases.

The ramifications of the Supreme Court’s holding are still unclear. A recent, palpable lull in New Jersey Multicounty Litigation applications and filings was followed by changes on the bench through judicial retirements and promotions. Thereafter, there was a relative flurry of designations of Multicounty Litigations for Abilify, Taxotere, Zostavax and Physiomesh, all in the late spring and summer of 2018. No doubt, this Supreme Court ruling will serve to shape the procedural structure and legal strategy of the parties in all pending and contemplated pharmaceutical Multicounty Litigations in New Jersey.

 

COPYRIGHT © 2018, Stark & Stark.

You’ve Been Sued: How to Avoid Early Missteps

Litigation doesn’t have to be catastrophic for a growing company, but it can quickly spiral out of control if not handled properly.  This article will explore issues to consider when your company is faced with a lawsuit

 

Stop All Communications

Most lawsuits don’t come out of the blue.  They usually are preceded by a back-and-forth with the other person or company, sometimes through counsel but often without.  Emerging companies understandably need to keep costs in check, so it is not uncommon for a company to try to deal with a brewing dispute on its own.  But once litigation hits, it is important to put pens down and consult counsel immediately.  Everything you write or say – internally, to the other side, or to anyone else (except your attorney) – can be obtained by the other side during the lawsuit’s discovery process.  You don’t want anyone to write or say something in the early hours of the lawsuit that unnecessarily pins the company down or hurts it later in the litigation.

Preserve Documents and Files

Although it sounds mundane, it is crucial that the company preserve all documents and files that may be relevant to the dispute.  In a nutshell, the company will need to preserve every document that relates to the issues raised in the lawsuit.  And “document” includes both hard copy documents as well as emails, text messages, voicemails, electronic files, and everything else that contains relevant information.  It encompasses more than just the important documents or communications.  It includes anything that bears on the claims asserted in the complaint and your potential defenses to those claims.

Preserving evidence includes obvious things, like not deleting emails, text messages, or electronic files, and not throwing away hardcopy files.  But it also includes less obvious steps, like turning off any settings in your email system that automatically purge messages after a set period of time or after the mailbox reaches a certain size.  It also includes preserving data and files on individual laptops, desktops, and other devices, if that data isn’t saved on a company server or other system.  There are potential landmines everywhere, and failing to preserve relevant evidence – called spoliation – can dramatically affect a case.

Gather the Facts and Understand the Law

It is important to gather and understand the underlying facts as soon as possible.  This involves not only reviewing relevant documents, but also talking to key players who were involved in the matter.  While the process doesn’t have to be exhaustive at this early step, it must be deep enough for the company to be able to make a reasonable assessment of the case.

If there are good facts, you want to know them.  If there are bad facts, you need to know them early, so you can factor them into your decision about how to proceed.  You will need to assess the facts, good and bad, in light of the relevant law and begin to assess the strengths and weaknesses of the plaintiff’s claims, as well as your likely defenses and any potential counterclaims you may have against the plaintiff.

Other things you and counsel should consider at the outset are: whether the company has insurance that may cover the lawsuit and any potential settlement or judgment that results; whether someone else has an obligation to indemnify the company in connection with the lawsuit; whether the lawsuit was filed in the right court; whether the plaintiff was required to bring the claim in arbitration rather than court; whether the plaintiff waited too long to sue such that one or more claims may be barred by a statute of limitations; and whether the company has any counterclaims it could assert against the plaintiff.

Establish a Plan

Armed with an understanding of the facts and the relevant law, you should establish a plan for how to proceed with the lawsuit.  Should you fight to the end?  Is it better to settle early?  There’s no one-size-fits-all answer to those questions.  The answer will be unique to your company, the lawsuit you’re facing, and the opposing party with whom you’re dealing.  You should weigh each potential outcome, including the cost to reach that outcome, and assess how it will impact your company.  Be wary of sacrificing business goals for the sake of litigation.

Your plan for the case does not have to be static.  It can change over time, as the litigation unfolds.  Even when you have thoroughly analyzed the available facts at the outset of a case, the landscape almost always changes as the case proceeds and additional evidence comes to light.  Your strategy can evolve with the landscape.

Prepare for the Long Haul

Litigation can be painfully slow.  Few things in litigation happen quickly, and it usually takes more than a year to get to trial, and sometimes two or three years depending on the type of case.  After the Complaint is filed and served, there typically will be motions practice, additional pleadings, and an extended period of discovery where the parties gather and produce relevant documents, depose fact witnesses, and retain expert witnesses to provide reports and give testimony.  It is a long process, and parties should be prepared for the possibility that it could take years for the case to wind its way through it and get to trial.

Settlement Considerations

Although you need to prepare your case as though it will go to trial, the reality is that almost all cases eventually settle.  Some cases are resolved through direct discussions between the parties (typically through counsel).  Others are settled through the use of a mediator, who serves as an independent third party to foster settlement discussions and attempt to resolve the dispute.  Mediation is voluntary, and the mediator cannot force either party to settle.  But an effective mediator can bring a fresh perspective to a lawsuit, giving each side an unvarnished view of how a judge and jury may see their case.  That alone can serve as a useful reality check to parties who have been living with a case for months or years and may have difficulty viewing it dispassionately.

Conclusion

No company wants to be sued.  But the odds are that your company will face at least one lawsuit in its lifetime.  By knowing what to expect and being proactive when it happens, you can avoid some of the pitfalls that strike less prepared companies.  And by approaching it with a clear plan and developed strategy, you can put your company in the best position to prevail in the lawsuit or resolve it on favorable terms.

Read more about Legal Issues for High-Growth Technology Companies: The Series.

© 1998-2018 Wiggin and Dana LLP
This post was written by Joseph C. Merschman of Wiggin and Dana LLP.

BIPA Claims Against United Airlines Must be Arbitrated Due to Collective Bargaining Agreement

Last month a federal district court dismissed a putative class action lawsuit against United Airlines challenging its use of fingerprint scanning timeclocks. The lawsuit brought by United employee David Johnson alleged that the company’s collection and use of employees’ fingerprints violated the Illinois Biometric Information Privacy Act (BIPA) because the company failed to get the requisite consent from its employees for fingerprint collection and use.

In dismissing the lawsuit, the court found it lacked federal jurisdiction to resolve the dispute on two grounds. In the first instance, the court observed that the federal Railway Labor Act (RLA) creates a mandatory and exclusive arbitration process for resolving labor disputes that require interpretation of a collective bargaining agreement (CBA). The CBA between United and its employees gave United the “sole and exclusive right to manage, operate, and maintain the efficiency” of the workplace. Therefore, any resolution of Plaintiff’s challenge under BIPA of United’s collection and use of fingerprints as part of its timekeeping technology necessarily requires interpretation of the scope of the CBA. And, thus, “[b]ecause there is no way for the Plaintiff to pursue a BIPA claim without interpreting the existing CBA,” the court concluded that its resolution of Plaintiff’s BIPA claim was preempted by the RLA’s mandatory arbitration requirement, and that the court lacked jurisdiction to decide the claim.

In the second instance, echoing two other recent federal BIPA cases, the court concluded that violation of BIPA’s notice and consent requirement alone is not adequate injury to establish standing to sue in federal court under Article III of the U.S. Constitution. The court found that a lack of consent, while a technical violation of the statute, does not itself alone increase the risk of disclosure that could result in injury or harm to the individual. Absent any actual compromise of the biometric information, or an increased risk of such compromise, there was no injury-in-fact, and thus no federal jurisdiction. While the court’s ruling in this regard continues the trend of other federal courts, it’s worth noting that standing to sue in Illinois state court is unaffected by these decisions. Whether a plaintiff or class action may succeed in state court based upon a mere technical violation of BIPA’s requirements—without more—remains an open question the Illinois Supreme Court is expected to answer in its next session.

Putting it Into Practice: Companies negotiating collective bargaining agreements should be aware that the right language may allow for resolution of many labor disputes, including disputes arising under BIPA, through mandatory arbitration rather than through the courts. When collecting and using biometric information, companies should continue to pay attention to BIPA’s requirements regarding consent, notice, and disclosure because although federal courts have dismissed suits predicated only on mere technical violations of the statute, other avenues of recourse may still be available to plaintiffs in state court and via arbitration.

Copyright © 2018, Sheppard Mullin Richter & Hampton LLP.