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Archive for the ‘Torts’ Category

In 1988, BNSF Railway and Union Pacific Railroad sold their interest in a parcel of land in Stockton, California, to the city’s redevelopment agency. That agency then sold a portion to a commercial developer who discovered that the soil and groundwater had long been contaminated. Officials determined that (1) a nearby petroleum facility was source of the pollutants and (2) several spills in the 1970s had sent petroleum onto the property through an underground drain. Under its agreement with the developer, Stockton’s redevelopment agency spent nearly $2 million cleaning the site.

In 2005, the agency sued the railroads for reimbursement, claiming they were liable for the contamination under common-nuisance law and California’s Polanco Redevelopment Act, which governs the rehabilitation of former industrial sites throughout the state. The trial court agreed and awarded the agency more than $800,000 in damages and an injunction, holding that the railroads were liable for the contamination because they installed the underground drain through which the contaminants migrated onto the property. The trial court found that, had the railroads not installed the drain, the land would not have been damaged.

On appeal, the Ninth Circuit Court of Appeals rejected the trial court’s decision, noting that no precedent allowed but-for causation to establish nuisance liability:

We cannot agree that such passive but-for causation is sufficient for nuisance liability to attach. Under California law, conduct cannot be said to “create” a nuisance unless it more actively or knowingly generates or permits the specific nuisance condition.

The court then remanded the case back to the trial court for entry of summary judgment for the railroads.

For the full story, click here.

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In April 2005, Alicia Gonzales ended up with a blood alcohol content level that was twice the legal limit after drinking at an all-day business luncheon, which began at a Chili’s restaurant and concluded in a pair of bars eight hours later. Four pharmaceutical representatives—two from Schering Corp., one from Abbott Laboratories, and one from Merck & Co—had taken Gonzales and her colleagues out for food and drinks that day. After leaving a bar, Gonzales was speeding and crashed her car into another car driven by Gina Delfino, who was seriously hurt along with her passengers. Delfino’s son did not survive.

Delfino sued the bars and restaurant that had served Gonzales, as well as the pharmaceutical representatives and their employers. The trial court dismissed the pharmaceutical defendants from the case, however, finding that they did not owe Delfino any duty under New Mexico’s Liquor Liability Act. On appeal, the New Mexico Supreme Court reversed the trial court, noting that Delfino had “properly characterized [the] pharmaceutical defendants as social hosts under the Liquor Liability Act."

For the full story, click here.

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Kerry Christensen drove a truck that hit John Boyle in the crosswalk of a grocery story parking lot. Boyle, a former professional golfer, underwent back surgery after the accident and lost his job at a golf shop because he cannot carry two buckets of golf balls at a time. Christensen admitted liability, and the case went to trial to determine damages. In closing arguments, Christensen’s lawyer said the following:

Ladies and gentlemen, they want a lot of money for this. A lot of money. . . . How many days has it been since the accident? How many days for the rest of his life? And how much per day is that worth? That’s what’s been done here. That’s how we get verdicts like in the McDonald’s case with the cup of coffee.

In that case, Liebeck v. McDonald’s, a jury awarded $2.7 million in punitive damages to a woman who was scalded by hot coffee. Boyle’s attorney objected to the reference, but the trial court allowed it.

On appeal, Boyle argued that the cultural reference unduly prejudiced the jury, which subsequently awarded him $62,500 – far short of the $458,724 he sought for pain and suffering. The Utah Supreme Court and reversed and remanded the case for a new trial:

We reverse and remand for a new trial because under the circumstances, the reference had a reasonable likelihood of influencing the jury verdict to Mr. Boyle’s detriment.

The court noted that a new trial is an “extreme remedy,” but stated that, without the reference, there was a reasonable likelihood of a more favorable outcome for Boyle.

For the full story, click here.

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Ester Salinas spent a decade researching the area surrounding the Hayes-Sammons pesticide plant in Mission, Texas. She found that hundreds of children in the area were stillborn, while many others were born with birth defects. Pat Townsend was city manager in 2000, and he ordered the site to be tested by a toxicologist Ester Salinas recommended. He then obtained permission to have a second expert do additional testing, which angered Ester Salinas. At a 2003 Mission city council meeting, Ester Salinas said Townsend "was instrumental in inflicting human suffer[ing] and severe property damage." Two years later at another council meeting, Ester Salinas said, "Justice Day will come and some of you will be judged for the way you have stolen and lied and killed." In a televised interview in 2008, Ester Salinas said, "So we have to go to court to fight because even the mayor in La Joya told me that Norberto Salinas [the current mayor of Mission] went to talk to him to say that they were going to kill me." Mission residents also testified that Ester Salinas called Norberto Salinas a drug dealer and politically corrupt.

Norberto Salinas and Townsend sued Ester Salinas for slander, and the trial court ruled in their favor, awarding $10,000 to Townsend and $30,000 to Norberto Salinas. On appeal, the Texas Court of Appeals found that the statements about Townsend were not slanderous:

Public officials, particularly those in policymaking positions such as mayor, are prone to receiving hyperbolic criticism precisely because of the power they wield. Our only concern is whether her remarks would be reasonably understood by an ordinary listener as having charged Townsend with criminal behavior. They would not.

After dismissing the $10,000 award to Townsend, the court affirmed the remaining slander claims.

For the full story, click here.

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Bradshaw v. Alpha Packaging, Inc., No. CA09-1141.

Facts

Alpha Packaging, Inc. (“Alpha Packaging”), manufactures and sells packing and shipping supplies. In January 2006, Alpha Packaging formed Edge Marketing division (“Edge Marketing”), which was devoted to point-of-purchase (“POP”) design and sales. Luke Bradshaw was hired as division president, and Bill Davis, Andrew Powviriya, and Ed Wonnacott were hired as at-will employees. Each of the four employees signed a “Confidentiality and Proprietary Information Agreement” that precluded the employees from using or disclosing the company’s trade secrets, confidential information, or other proprietary data to benefit themselves or others. The agreement’s definition of “trade secrets” included customer lists and pricing data.

Edge Marketing generated appreciable revenue in 2006 and was forecasted to do well in 2007. In April or May 2007, however, the four employees began planning to leave Edge Marketing and form their own POP marketing and design firm, A.W. Bravis Agency (“Bravis”). The employees submitted their resignation letters in May. Once the employees had left, Alpha Packaging learned that (1) there were no invoices for ongoing jobs in May, even though there had been considerable billing for the previous months; (2) the employees had enlisted an Edge Marketing client, Novus Products, LLC (“Novus Products”), as the financial backer for their new firm; (3) the employees obtained new computers and cell phones for their new firm, courtesy of Novus Products, while on Edge Marketing time; (4) one of the employees forwarded all Edge Marketing cell phones to the new firm’s cell phones; and (5) the employees had deleted all information from their Edge Marketing computers including customer artwork, invoices, and price quotes. Alpha Packaging attempted to bring in new personnel to continue the business at Edge Marketing. However, the plan was not feasible, in part, because of the loss of computer data.

Later, Alpha Packaging retrieved from one of the hard drives a business plan that Bradshaw had prepared for the new venture in early May 2007. The plan included an eighteen-month history of Edge Marketing sales, as well as client names, projects, project dates, sales invoice amounts, and net profits for each project. By June 2007, Bravis began invoicing clients. The company’s projects included some that had begun at Edge Marketing in April or May 2007.

On August 1, 2007, Alpha Packaging sued Bravis, Novus Products, and the four employees for misappropriation of trade secrets, conversion, breach of the confidentiality agreement, violation of the Arkansas Deceptive Trade Practices Act, fraud, and unjust enrichment. At trial, the jury awarded Alpha Packaging $185,000 in compensatory damages and $7,500 in punitive damages.

Appeal

Bravis, Novus Products, and the four employees argued on appeal that customer lists and account information were not trade secrets. The Arkansas Court of Appeals listed the six factors for determining whether information qualifies as a trade secret: (1) the extent the information is known outside the business; (2) the extent the information is known by employees involved in the business; (3) the extent of measures taken to guard the secrecy of the information; (4) the value of the information to the business and its competitors; (5) the amount of effort or money expended in developing the information; and (6) the ease or difficulty with which the information could properly be obtained by others. The court noted that the customer lists and account information at issue qualified as trade secrets and stated the following:

[T]he economic advantage to Bravis acquiring Edge’s pricing and profit data is apparent. The new company was able to get up to speed in a matter of weeks on the shoulders of that knowledge, virtually closing down a competitor in the process.

The court held that the jury has substantial evidence on which to find Bravis, Novus Products, and the four employees liable for theft of trade secrets and, consequently, affirmed the decision.

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Brooks v. First State Bank, N.A., No. CA 09-767.

In December 2005, Ressie Lee Brooks was notified by a bogus company that she had won a $50,000 sweepstakes. She was told that a check representing partial payment of $2,270 would be sent to her and that she should cash the check and return the funds for payment of fees and taxes due on her prize money. Once Brooks received the $2,270 check drawn on an out-of-state bank, she deposited the same into her savings account at First State Bank on December 20, 2005. The bank informed her that the funds would not be available for withdrawal for five business days. On December 28, 2005, Brooks returned to the bank, withdrew the funds, and wired them to the bogus company.

On January 1, 2006, the bank received the returned check, which was counterfeit. On January 3, 2006, the bank informed Brooks that the check was counterfeit and sought to recover the funds from her. Detective Brian Williams of the Conway Police Department was present during the meeting and also insisted that Brooks owed the money to the bank. When Brooks refused to repay the money by January 30, 2006, the bank reported the same to Williams. He consulted with the prosecuting attorney, an arrest warrant was issued, and Brooks was arrested for theft. After spending the night in jail, Brooks bonded out. On September 7, 2006, the charges were nol prossed, and Brooks was ordered to pay $41 in restitution to the bank.

Brooks then filed a civil lawsuit against the bank, alleging malicious prosecution and abuse of process. She argued that the bank controlled the criminal prosecution and used it to coerce her to pay for the bank’s error of presentation and payment of the check. The bank denied her allegations and asserted it had immunity from suit under a safe-harbor provision of federal law regarding the reporting responsibilities of financial institutions. The bank then filed a motion for summary judgment, arguing that the prosecutor acted independently and that the bank was immune because of its duty to report suspicious financial activity. The trial court agreed that the evidence indicated only a routine investigation and dismissed the case.

On appeal, the Arkansas Court of Appeals noted that a claim for malicious prosecution requires proof of (1) a proceeding instituted or continued by the defendant against the plaintiff, (2) termination of the proceeding in favor of the plaintiff, (3) absence of probable cause for the proceeding, (4) malice on the part of the defendant, and (5) damages. The court then stated that a defense to malicious prosecution is making a full, fair, and truthful disclosure of all facts known to competent counsel (or the prosecuting attorney) and acting upon advice received from the attorney. Here, the bank informed the prosecuting attorney about the facts of this case, and the prosecutor brought charges against Brooks for theft. Accordingly, summary judgment was proper.

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In 2005, Illinois adopted a law that limited jury awards for pain and suffering to $500,000 against doctors and $1 million against hospitals. Illinois medical and business industries supported the cap, claiming jury awards against medical providers had led to astronomical malpractice insurance rates, which in turn, had driven doctors out of the state. Trial lawyers and patient-rights groups argued that the real factor behind medical malpractice insurance rate hikes is the insurance industry. The Illinois Supreme Court called the law a legislative branch infringement on an issue that should be decided by the courts:

The separation of powers clause prohibits one branch of government from exercising ‘powers properly belonging to another. Thus, the inquiry under the separation of powers clause is not whether the damages cap is rationally related to a legitimate government interest but, rather, whether the legislature, through its adoption of the damages cap, is exercising powers properly belonging to the judiciary.

For the full story, click here.

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