Claims and Bad Faith Law Blog

GOODBYE 2020, WELCOME IN 2021!

Have a Happy New Year every day of the year to come!

P.S.

We've earned it!

 

POSTSCRIPT TO JURISDICTION.

(Sun Sentinel photograph)

In a postscript to yesterday's article on Jurisdiction, we now have further reports that clarify some of the earlier confusing reporting.  Apparently three lawsuits have been filed by the losing candidate's campaign so far, as previously reported.

           Two of those lawsuits were filed in State Court, not Federal Court, however.  One was filed in Georgia and the other was filed in Michigan.  Both have already been rejected by State Court Judges.

           The third and remaining lawsuit at this time was filed in Federal Court in Pennsylvania.  The announced purpose was to stop the counting of votes already cast.  The Federal Judge presiding over that case rejected that one, as well.  No word yet on the Federal Court's claim to jurisdiction, if any, over State Election Law.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

ARE PLAINTIFFS IN ELECTION CASES DEMANDING FEDERAL ACTIVISM, PREEMPTIVE JURISDICTION?

This article arises from the same common nucleus of operative facts, so to speak, out of which an earlier article published today also arises.

Recently filed elections cases have also caused me to wonder about Federal jurisdiction.

Are the plaintiffs in these elections cases asking Federal Judges to be activists and preempt the jurisdiction of State Courts over State Election Laws?  That seems to be the gist of the lawsuits I have seen reported to date.

There was a lawsuit filed in U.S. District Court in Texas, in which the same person or group of people reportedly filed the same lawsuit they had already lost in the Texas Supreme Court.  Each time the lawsuit challenged the legality of drive-through voting in Harris County (Houston).

Isn't the issue of legality of drive-through voting a matter for the Texas State Courts to decide?

Parenthetically, I understand that the same person or group of people who lost their case in the Texas Supreme Court also lost their case in the U.S. District Court and then they lost again in the Federal Appellate Court.

Different people have filed their own lawsuits which are basically one lawsuit as well, but these people have filed in different States, all in Federal Court.  They have so far filed their lawsuit in Georgia, Pennsylvania, and Wisconsin.

The same losing candidate's campaign organization has reportedly filed three times, once in each of three Federal Courts.  It is confusing.  Apparently two of these same lawsuits were filed to stop counting votes and the third was filed for a re-count.

Isn't the issue of applying State Election Law an issue for State Court Judges to decide? 

I am going to look into the jurisdictional basis if any for asking Federal Courts to preemptively and actively exercise jurisdiction so as to impose their own views of local Election Law in these States.  As I wrote today in the earlier article also arising out of these developments, let's all of us keep an eye on the lawsuits being filed, and on who files them and who pays for them.

Assessing "bad faith" attorney's fees and sanctions, along with many situations requiring good faith and fair dealing, are discussed in § 2:7 in 1 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith (3d ed. and 2020 Supps. Thomson Reuters West).  Attorney's fees awarded in a variety of cases are the subject of §§ 13:12 -13:14 in Volume 2, id.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

"BAD FAITH" ATTORNEY'S FEES EXPOSURE: LITIGIOUS PLAINTIFFS IN ELECTION CASES?

(Photograph Brennan Linsley / Associated Press)

Recently filed litigation has caused me to wonder about "bad faith" attorney's fees liability.  First, let me describe the lawsuits that have caused the wondering.

In Texas, the same person or group of people reportedly filed the same lawsuit more than once challenging the legality of drive-through voting in Harris County (Houston).  They filed in Texas State Court to begin with, ultimately losing at every level all the way to the Supreme Court of Texas, according to the confusing reporting.  Then they filed in a U.S. District Court in Texas and they lost there.  Then they filed an appeal to the Fifth Circuit Court of Appeals.  My understanding is that they lost again there.

Other people have also filed their own "one-note" lawsuit but in different States, all in Federal Court.  In Georgia, Pennsylvania, and Wisconsin there is a lawsuit filed in a Federal District Court in each state by the losing candidate.   The same losing candidate filed in each.  It is confusing, at least before looking more closely at each of these lawsuits, but apparently two are to stop counting votes and the third is for a re-count.  Presumably the votes have already been counted once before the recount litigation was filed, or else there could not be a "recount" yet, but as I say, the reports are confusing.

I want to temporarily put aside the question of Federal jurisdiction to adjudicate State election matters, and concentrate here on the issue of exposure to "bad faith" attorney's fees in Federal Court.

Having laid out the facts for the moment, here now is the law.  My understanding has long been that there can be exposure under Federal Rule of Civil Procedure 11, under Federal Appellate Rules and under State Court equivalents for parties and their lawyers for bad faith in litigation.

Did the defendants and their lawyers even request attorney's fees in any of these cases for having to go through a "Groundhog Day" kind of litigation?

Parenthetically, if they did not request attorney's fees, did they request some kind of sanctions for this conduct?  I am not asking why the Courts did not assess attorney's fees or sanctions; I wonder if the defendants and their lawyers even asked for them.  Why should the defendants have to bear the full burden of their attorney's fees for repeatedly having to defend the same losing propositions?

I am going to look into this exposure in more detail.  In the interim, let's all of us keep an eye on the lawsuits being filed, and on who files them and who pays for them.

Assessing "bad faith" attorney's fees and sanctions, along with many situations requiring good faith and fair dealing, are discussed in § 2:7 in 1 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith (3d ed. and 2020 Supps. Thomson Reuters West).  Attorney's fees awarded in a variety of cases are the subject of §§ 13:12 -13:14 in Volume 2, id.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

THANK YOU FOR VOTING!

Many people never got the chance we have to vote.  But without them, our votes would not be possible.  We remember them and honor them every time we vote.

Thank you for being a voter.

 

Photo courtesy of Common Ground.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

 

MORE RESOURCES, MORE VOLUNTEER OPPORTUNITIES FOR PROTECTING THE VOTE!

And now a message from the Common Ground Project in Florida:  More resources, more volunteer opportunities for protecting the vote!

(Common Ground Project)

Defend Democracy:

Poll monitors needed!

Can we count on you?

The Common Ground Project is looking for volunteers to assist in our Poll Monitoring and Election Protection Program. This is a large statewide initiative led by our coalition partners: Common Cause, State Voices, and Florida for All. The Common Ground Project is committed to ensuring that all voters have safe and accessible access to casting their ballots and having their voices heard on November 3rd. We are in need of volunteers!

Please join us for this critical work to protect our election. We look forward to working with you as a leader in your community!

Please register to be a poll worker and sign up for one of the following upcoming training opportunities:

• Friday, October 30th at 6 PM
• Saturday, October 31st at 12 PM

As always, please do not hesitate to reach out if you have any questions!

Regards,

Lisa Perry

REGISTER

‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ 

Please read the disclaimer.  This blog article ©2020 Dennis J. Wall.  All rights reserved.

TRUST THE VOTE.

And now, a message from Election Protection.  Trust the Vote.

We care about the integrity of our elections and love when election officials quickly fix errors. Some politicians use these errors to make us feel that our votes won’t count. Do not let this affect our confidence in our system or our willingness to vote. #VoteReady.

Please read the disclaimer.  This blog article ©2020 Dennis J. Wall.  All rights reserved.

AMERICAN BAR ASSOCIATION ANNOUNCES FINANCIAL INCENTIVE FOR LAWYERS ASSISTING VOTERS.

(American Bar Association)

In an email received this morning, the American Bar Association announced it is offering a financial incentive to lawyers who assist voters at this time.  Here is the ABA's announcement:

Volunteering at the polls is an important civic duty that lawyers are especially suited for given the profession's long tradition of civil service. This November, the ABA and MyCase are partnering to give ABA members who volunteer during the general election a $50 credit to ShopABA for their service. Whether you have already volunteered at your local polling place, or plan to volunteer on election day, November 3, you can earn a $50 credit towards books, webinars, CLE and other purchases in ShopABA.*

Register your service by November 6, 2020.

Please read the disclaimer.  This blog article ©2020 Dennis J. Wall.  All rights reserved.

DON'T BE AFRAID, VOTE!

(Photo by Ilene Vegazo.  Used with permission of the artist.)

MEMO TO LAWYERS:  As a lawyer, your clients look to you as a leader. When they ask you about voting, your clients are interested in how they can vote. Be a leader. Familiarize yourself with Florida's voting laws, enough at least to guide your clients on how to engage the voting process.

Which is not the same as telling your clients how they should vote! Everyone has their own opinions about that & respectfully, your clients do not think your opinions are special that way. But clients do look to you for help negotiating the process. Thank you for being a voter.

MEMO TO EVERYONE:

Early Voting began in Florida October 19. Early Voting continues through Saturday, October 31. The Election as you know is on Tuesday, November 3.

Remember to vote!

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

RESOURCES TO PROTECT THE VOTE THIS YEAR.

 

(Brynn Anderson / Associated Press)

Want to help protect the vote this year, but unsure of where to go or what to do?  Here is a list of contacts for places and sources that can help answer your questions.

ELECTION PROTECTION.  This is an umbrella of many different organizations that all have different pieces of election protection, such as Poll Monitors, Social Media Monitors, Legal Volunteers, and On-Call Legal Support, among others.  Telephone 1-866-OUR-VOTE or email grassroots@commoncause.org.

POSTCARDS TO VOTERS.  Just like it sounds, volunteers write postcards with messages provided by campaigns that have signed up with PTV, to addresses that are anonymous as far as names; only mailing addresses are provided.  Volunteers mail postcards on their own dime, so to speak.  For more information, visit www.postcardstovoters.org.

FLORIDA RESTORATION OF RIGHTS COALITION.  You may have heard about this group which works with registering returning citizens to vote.  To find out about their current activities, email them at info@floridarrc.com.

ADOPT A STATE - VOTE SAVE AMERICA.  This group offers ways to contact voters especially in 6 targeted States in which voters will likely affect the outcome of the Election.  Their Email Address is votesaveamerica@crooked.com.

Best of luck and use your best judgment in evaluating these groups, what they have to offer, and your place in it all.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

Voting in a Pandemic of Misinformation, i.e., Lies.

A WORD ABOUT VOTING DISINFORMATION FROM ELECTION PROTECTION:

If you see disinformation about voting in an online post or ad, do your part to stop the spread. Don’t engage, react or comment — that only means more people will see it! Do take a screenshot to submit it to ReportDisinfo.org. Then share official voting information, like your local election official or Secretary of State. Do your part to keep voters safe from disinformation! Need help voting or need to report a problem? Call or text 1-866-OUR-VOTE.

Please read the disclaimer.  Blog article ©2020 Dennis J. Wall.  All rights reserved.

VOTE, LAWYERS AND PEOPLE, VOTE!

Here for ease of reference is another article from Election Protection:

A politician is suggesting people vote twice to “test the system.” This is to create confusion and is against the law. You MUST choose 1 way to vote and should make a plan to vote now. Vote by mail is a safe, secure, and trackable way to vote. #ProtectOurVote #VeYVota #YallaVote

 

The telephone number on the image may be a little hard to read.  It is 1-866-OUR-VOTE.

Please read the disclaimer.  Blog article ©2020 Dennis J. Wall.  All rights reserved.

PARTICIPATE IN DEMOCRACY:  VOTE!

Between now and Election Day (one week from today) Claims and Bad Faith will concentrate on the upcoming Election and voting.  For starters, here is an article which we post from the Election Protection coalition:

Vote by Mail is Safe and Secure

Certain politicians want you to think vote-by-mail will lead to ballot manipulation. The truth is they don’t want people to vote-by-mail because they think it will hurt their chances at the polls. In the states that have transitioned to all mail-in ballots, there has been no evidence of a partisan advantage for either side. Having the option to vote-by-mail is critical to ensuring the health and safety of every eligible voter. Read more here: https://www.nytimes.com/2020/04/10/us/politics/vote-by-mail.html Call or text 866-OUR-VOTE for nonpartisan help if you have questions.   

Please read the disclaimer.  Blog article ©2020 Dennis J. Wall.  All rights reserved.

WILL THE AFFORDABLE CARE ACT SURVIVE THE S. CT?

(Judge Amy Coney Barrett / University of Notre Dame)

The continued existence of a federal health care system is in the hands of the unelected judges on the U.S. Supreme Court.  They have voted to defer oral arguments on the Affordable Care Act until after the election in November.

    Judge Amy Coney Barrett has been declared "the front runner" by the media to be nominated for the present U.S. Supreme Court vacancy.  That would make her the seventh self-identified "Catholic" on the Supreme Court by my count.

    Parenthetically, the media has also labelled several of these people "devout Catholic" and "faithful Catholic" based largely on their self-descriptions.

    In the particular case of Amy Coney Barrett, there is a question regarding the Affordable Care Act that arises from her self-identification with Catholicism.  Ordinarily (if that word still applies in 2020), a person's religion is not a proper subject for questions.   But this person is a judge who wants to be a Justice and because she advertises herself or allows herself to be advertised as a "conservative Catholic," she is also the declared "front runner," so in this case it is perfectly proper to ask what it means to her to say she is a Catholic.  It is not only proper, it is relevant.  It is material.

    Take it from the Executive Editor of THE NATIONAL CATHOLIC REPORTER in this interview broadcast on Wed., September 23, 2020:

And the Catholic Church in the United States has long supported the Affordable Care Act, especially after the accommodations were made for Catholic employers that didn’t want to provide contraceptive coverage. So, it will be interesting to see if she sides with church leaders on that one or not. 

"Interesting," certainly.  Determinative, possibly.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

BAD FAITH IN ARMED OCCUPATION.

"NEVER, EVER BE AFRAID TO MAKE SOME NOISE AND GET IN GOOD TROUBLE, NECESSARY TROUBLE."*

 

AN OPEN MEMORANDUM:

TO:  THE HONORABLE ELLEN ROSENBLUM, ATTORNEY GENERAL OF THE STATE OF OREGON.

FROM:           DENNIS J. WALL.

DATE:            SUNDAY, JULY 19, 2020.

RE:  WHETHER FEDERAL CUSTOMS AND BORDER PROTECTION ("CBP"), A UNIT OF THE DEPARTMENT OF HOMELAND SECURITY, HAS THE POWER OF ARREST ON THE STREETS OF PORTLAND, OREGON.

Unless and until determined to the contrary by a court of competent jurisdiction, the answer to the question posed above almost certainly seems to be "no," the CBP simply does not have the power of arrest on the streets of Portland, Oregon.  No federal statute has ever conferred the power of arrest on the CBP other than to enforce the customs laws of the federal government.

            It is settled in the Federal Circuit that includes Oregon, that customs agents are "not, like local or state police, general guardians of the public peace."  Customs agents have "duties and powers" authorized by statutes:  In the course of enforcing customs law, they are statutorily authorized to stop vehicles and board vessels, examine them, and make arrests.  United States v. Jackson, 423 F.2d 506, 508 (9th Cir.), cert. denied, 400 U.S. 823, 91 S. Ct. 44 (1970).

            The recent actions of federal agents on the streets of Portland, Oregon, as reported in the newspapers and other media, do not appear to fall within any of the statutory provisions under which the CBP has been given the power of arrest.

            It is noteworthy, moreover, that even when customs agents are acting within their  statutory authority, for example to in effect seize statutorily prohibited contraband, the only  immunity conferred by statute from civil damages that has been found is when "as a result of such search if the officer or employee performed the search in good faith and used reasonable means while effectuating such search."  19 U.S.C.A. § 482(b).

            This memorandum is concise and to the point, and the answer is not complicated.  To say it again:  Unless and until determined to the contrary by a court of competent jurisdiction, the answer to the question posed above almost certainly seems to be "no," the CBP simply does not have the power of arrest on the streets of Portland, Oregon.

            No research into Oregon laws or into ordinances of Multnomah County or the City of Portland has been included in this research.  This is a question of federal law only.  Therefore, it has been addressed as such in this Memorandum, i.e., only federal law has been consulted in the preparation of this Memorandum.

            Moreover, there is no charge for the preparation of this Memorandum.  Use this research as you may be advised.  "When you see something that is not right, not just, not fair, you have a moral obligation to say something.  To do something."*Rep. John Lewis

 

LENDER FORCE-PLACED INSURANCE: THE FLORIDA BAR NEWS LETTERS EDITION.

In the middle of writing the 2020 Supplements to my book, LITIGATION AND PREVENTION OF INSURER BAD FAITH (3d Edition published by Thomson Reuters West), I also wrote a Letter to the Editor of The Florida Bar News about the consequences of the last stimulus bill on insurance premiums force-placed on homeowners.  So proud that The Florida Bar News published my letter, accessible here (it's the second one down on this link).

Please read the disclaimer. ©2020 Dennis J. Wall.  All rights reserved.

JUDGE AMY BERMAN JACKSON, WHAT IS YOUR SENTENCE NOW?

This post is updated and changed here from Claims and Issues Blog, where it originally appeared on Wednesday, February 12, 2020.

William Barr's Justice Department has withdrawn its own prosecutors' sentence recommendations for convicted felon Roger Stone. Instead of 7 to 9 years behind bars, Mr. Barr objects. He leaves the substituted recommendation open-ended without committing to anything beyond leaving the sentencing decision to the judge, who will have the final say in any event.

That happened on Tuesday.  On Wednesday, the federal judge presiding over Roger Stone's case was reportedly attacked on Twitter.  As one commentator observed, 'The Marshal's Service will be very busy now, protecting Judge Amy Berman Jackson from physical harm.'  Here is the report in the Washington Post.

This was not an ambiguous criminal case. It was clear from the start to everyone involved. The jury in Mr. Stone's case deliberated for only seven hours before they returned convictions on every count, every charge against Mr. Stone.

"In their initial sentencing memorandum federal prosecutors said that Mr. Stone should serve up to nine years because he threated a witness with bodily harm, deceived congressional investigators and carried out an extensive, deliberate, illegal scheme that included repeatedly lying under oath and forging documents." Katie Benner, Sharon LaFraniere, and Adam Goldman, Justice Dept. Acts to Ease Sentence ... / 4 U.S. Prosecutors Quit Stone Case After Bosses Step In to Overrule Them, NEW YORK TIMES, Wed., Feb. 12, 2020, at A1.

After his indictment and before he was tried, Mr. Stone reportedly also violated the Court's gag orders against speaking out and threatened Judge Amy Berman Jackson, the judge presiding over his criminal case. She is also the judge who will sentence him following his convictions.

One of Mr. Stone's defenses to all this is that Mr. Stone was once riddled with anxiety but that he is much better now, the New York Times reports.

So, Judge Amy Berman Jackson, what sentence if any will you impose for these crimes? "Our nation turns its lonely eyes to you."

Please read the disclaimer. ©2020 Dennis J. Wall. All rights reserved.

RULES FOR A "NO-SHOW" TRIAL.

This is a special edition of Claims and Bad Faith Law. This article is about bad faith without a system of justice.

The U.S. Constitution requires a "Trial" once the president is impeached. The Constitution does not say how to conduct that Trial.

The leaders in charge of the U.S. Senate have stepped into the vacuum and supplied rules. They use the word "Trial," and it will not be like a "show trial" under Stalin. It will be a "no-show trial" under McConnell.

The leaders proposed their Trial rules at 6:00 on the evening of a national holiday before the "Trial" would begin the next day. They have known for weeks that they would have to define rules for the Trial. The leaders have talked about using the Clinton Impeachment Rules as a model. If they had wanted, they could have done a Global Find and Replace "Clinton." With that, you're pretty much done, so it's on to the Trial from there.

That is not what the leaders did, though. Their proposed marathon rules allow opening statements to begin today, Tuesday, January 21, 2020 and to wrap up the opening statements long before the week is over. They require opening statements to be delivered in marathon sessions of 12 hours a side over 2 days. In redefining a Trial to mean a no-show Trial, they have also redefined what a "day" means.

The Senate will stay in session each day until the next day to complete that day, so a "day" means that they will complete the opening statements within 12 consecutive hours even if they begin at say 1:00 PM and they end after Midnight and go into the following calendar day.

Their proposed rules do not call for anything but opening statements. They do not commit to considering evidence. They require a separate vote to consider even the evidence from the House impeachment proceedings, i.e., to consider the reasons that we are even in the Senate for a constitutionally required Trial.

That takes care of the old evidence. The proposed rules do not provide for any new evidence at all.

The proposed rules do not even address consideration of new witness testimony or documentary evidence. Under these rules, U.S. Senators would not have to listen to any testimony or read any documents.

The leaders propose that their no-show Trial will not show up to be seen or heard by the American people, either. The press in particular will be required to do their reporting from a pen away from whatever is going on in the Senate. Have you ever attended a political rally and seen the press in pens? It will be like that.

Television coverage if any will be like C-Span is now. The camera will be rigid and focused on the speaker. It will not show what else is going on in the chamber. (The Senate Chamber is mostly empty during proceedings now, and the C-Span cameras are certainly not allowed to show that, for example.) The single television camera that the leaders allow will be focused on what the powerful want you to see of their power.

The leaders have called for a fast acquittal. They want to wrap up the whole thing before the State of the Union, which is scheduled for February 4th. Parenthetically, can they arrange things such that the no-show Trial actually wraps everything up that day so that the leaders can declare an "exoneration" that night?

These arrangements look like reverse engineering. Someone perhaps started with the idea of a no-show Trial and worked backwards from there on how to achieve it. Again, these rules are proposed for the opposite of a show trial under Stalin. They propose instead a no-show Trial.

I had thought about writing this article that way. That is, I would break down the no-show Trial, deconstruct it. But I recognized that you are capable of delivering your own verdict, of reaching your own judgment, once you are presented with the evidence.

Unlike the person or persons who wrote these proposed rules for a no-show Trial.

Mitch, today is the day in January that you lost your majority in November.

Please Read The Disclaimer. ©2020 Dennis J. Wall. All Rights Reserved.

 

"THOSE WHO HAVE EARS TO HEAR, LET THEM HEAR."

In answer to two certified questions, the Supreme Court of Washington has unanimously given us enough material to fill books. This will be the second of two posted articles addressing these answers. The first article was posted here on Tuesday, December 3, 2019.

    In Peoples v. Utd. Serv's Auto. Ass'n, ___ Wash. 2d ___, ___ P.3d ___, No. 96931-1, 2019 WL 6336407 (Wash. Nov. 27, 2019), the Supreme Court of Washington was confronted with two questions. Both were certified by a U.S. District Court for answers under Washington State law.

    The two questions arose out of the claims of two of the plaintiffs in the District Court, one Krista Peoples and one Joel Stedman. Both of them were physically injured in a motor vehicle accident. Both claimed Personal Injury Protection or PIP benefits to pay for the bills of their medical providers. Both of them were denied PIP benefits.

    Besides this common core of facts, their claims presented the same broad question of whether the plaintiffs were injured in their business or property so that they could claim standing to sue under Washington State's Consumer Protection Act.

    That is where the questions posed by their separate claims diverged.  The first question, the one posed by the claims of Krista Peoples' class, were discussed here on Tuesday, December 3, 2019.

    Joel Stedman presented the second question.  He alleged that his insurance carrier, Progressive, impermissibly interjected a condition into the statutorily required availability of Personal Injury Protection (PIP) benefits.  This issue has reverberations beyond the boundaries of the State of Washington.

    In Washington State, as in most States, PIP benefits are required to be provided in policies like Stedman's.  The condition challenged in Stedman's action was Progressive's termination of required benefits whenever a claimant reached "Maximum Medical Improvement," or MMI, which it determined.  MMI is not a limitation authorized by the PIP Statute on the receipt or payment of PIP benefits.

    In Stedman's case, filed as a class action, Stedman alleged "that by terminating benefits on the basis of 'Maximum Medical Improvement,' Progressive routinely fails to pay all reasonable medical expenses for treating an insured’s injuries arising from a covered event, in violation of" Washington State Statutes.  Peoples, 2019 WL 6336407, at *1, ¶ 4.

    The Federal judge certified the question whether Progressive's reliance on MMI to terminate PIP benefits satisfied the Consumer Protection Act requirement of an injury to business or property, where an insured like Mr. Stedman was physically injured in a motor vehicle accident and whose PIP benefits were terminated.

    The Washington Supreme Court's short answer is "yes," such claims satisfy the requirement of an injury to business or property.  The Court's reasoning was applied both to the Joel Stedman class claims and to the Krista Peoples class claims discussed in this space on Tuesday, December 3, 2019:

[T]he plaintiffs here do not allege the defendants caused their personal injuries. Their CPA suits do not seek to vindicate their right to be free of bodily harm but, rather, their property interest in the benefits they bargained for in their insurance contracts. When parties enter an insurance contract, the insured obtains a legal right to benefits upon the happening of a particular event. [Citation omitted.]  An insurance contract also gives rise to a quasi-fiduciary relationship between the parties, which requires them to deal in good faith. [Citation omitted.]  An insured, therefore, has a legally protected property interest in benefits due under the contract and a related right to insurance dealings free from bad faith. Claims mishandling and wrongful denial of benefits invade this property interest, regardless of the type of event that triggers coverage.

Peoples, 2019 WL 6336407, at *4, ¶ 12.

    After placing its reasoning in a place where causation of the alleged Consumer Protection Act damages is not a part of the equation at hand, i.e., "regardless of the type of event that triggers coverage," the Court turned its attention to the question of recoverable damages for the alleged injury in fact.

    Stedman and his class sought "to recover excess premiums paid for the PIP coverage," together with "the costs of investigating the unfair acts, and/or the time lost complying with the insurer's unauthorized demands[.]"  Peoples, 2019 WL 6336407, at *2, ¶ 5.  The Washington Supreme Court unanimously spent very little time on the issue of damages recoverable by the Stedman class.

    To begin with, the Supreme Court declined to reach "the portion of the question that asks about excess premiums."  The Court devoted a footnote to Peoples' -- not Stedman's -- use of the phrase as "an alternative way of characterizing unpaid benefits."  Accordingly, in the Court's view, "it is unnecessary to address Peoples' alternative theory about 'excess premiums.'"  Peoples, 2019 WL 6336407, at *4, n.2.  What was good for the Peoples was good for Stedman, too, as the Court declined to address the issue of recovery of any "excess premiums" for unpaid PIP coverage.

    With respect to Stedman's remaining alleged damages, "the costs of investigating the unfair acts" and "the time lost complying with the insurer's unauthorized demands," the Supreme Court answered succinctly that "when a CPA claim is predicated on an insurer’s mishandling of a PIP claim, ordinary CPA principles govern whether investigation costs or time lost are injuries to business or property."   Peoples, 2019 WL 6336407, at *4, ¶ 14.  In answering the questions certified by the Federal court, the Washington State Supreme Court felt no compulsion to hold further whether the actual damages alleged by the Stedman class would if proven be recoverable under the Consumer Protection Act, but it did offer guidance from Washington State case law.

    The Court pointed to its own precedents to note that "we have we have continued to recognize that expenses incurred to investigate a deceptive act or practice are cognizable injuries and damages under the CPA."  Peoples, 2019 WL 6336407, at *4, ¶ 14.

    The Court then turned to precedent from the Washington lower courts concerning the allegation of lost time as a recoverable item of damage under the CPA.  "The Court of Appeals has also held that taking time away from business to respond to unfair practices may satisfy the injury requirement." Peoples, 2019 WL 6336407, at *4, ¶ 14.

    The Court was satisfied that this was all the guidance that litigants would need in cases like the present one:  "The principles articulated in these cases apply when a CPA claim is predicated on an insurer’s mishandling of a PIP claim." Peoples, 2019 WL 6336407, at *4, ¶ 14.

    To summarize what was summarized before, the key issue in the Peoples case was standing to sue.  The key to resolving the standing issue, in turn, was that the alleged 'injury to business or property' in both the Peoples' claims and the Stedman claims was "the deprivation of contracted-for insurance benefits." That was their injury. That conferred their standing to sue.

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THE McGAHN DECISION: WHAT THE JUDGE ACTUALLY RULED.

    Stated simply, the primary takeaway from the past 250 years of recorded American history is that Presidents are not kings. See The Federalist No. 51 (James Madison); The Federalist No. 69 (Alexander Hamilton); 1 Alexis de Tocqueville, Democracy in America 115–18 (Harvey C. Mansfield & Delba Winthrop eds. & trans., Univ. of Chicago Press 2000) (1835). This means that they do not have subjects, bound by loyalty or blood, whose destiny they are entitled to control. Rather, in this land of liberty, it is indisputable that current and former employees of the White House work for the People of the United States, and that they take an oath to protect and defend the Constitution of the United States.

COMMITTEE ON THE JUDICIARY, UNITED STATES HOUSE OF REPRESENTATIVES, Plaintiff, v. DONALD F. MCGAHN II, Defendant, ___ F. Supp. 3d ___, 2019 WL 6312011, at *44 (DCDC Nov. 25, 2019).

    To make the point as plain as possible, it is clear to this Court for the reasons explained above that, with respect to senior-level presidential aides, absolute immunity from compelled congressional process simply does not exist. Indeed, absolute testimonial immunity for senior-level White House aides appears to be a fiction that has been fastidiously maintained over time through the force of sheer repetition in OLC opinions, and through accommodations that have permitted its proponents to avoid having the proposition tested in the crucible of litigation.

McGahn, 2019 WL 6312011, at *45.

    Thus, for the myriad reasons laid out above as well as those that are articulated plainly in the prior precedents of the Supreme Court, the D.C. Circuit, and the U.S. District Court for the District of Columbia, this Court holds that individuals who have been subpoenaed for testimony by an authorized committee of Congress must appear for testimony in response to that subpoena—i.e., they cannot ignore or defy congressional compulsory process, by order of the President or otherwise. Notably, however, in the context of that appearance, such individuals are free to assert any legally applicable privilege in response to the questions asked of them, where appropriate.

McGahn, 2019 WL 6312011, at *45.

So, this is the law.  It has been the law.  It continues to be the law.

Until this case reaches the Supreme Court.  But until then, and at least for now, this continues to be the law.

And this is what the judge actually ruled.  Check out the newspaper accounts and see what the reporters got right.  See, e.g., David G. Savage, In Major Win for Congress, Judge Rules Trump Aides Must Testify, LOS ANGELES TIMES ONLINE (posted Nov. 25, 2019); Spencer S. Hsu and Ann E. Marimow, Former White House Counsel Donald McGahn Must Comply With House Subpoena, Judge Rules, WASHINGTON POST ONLINE (posted Nov. 26, 2019).

HAVE A JOYFUL AND HAPPY THANKSGIVING!  In the midst of it all, there is a lot to give thanks for!

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When Judges Say "Afraid of Being Fired" For Their Rulings.

When people involved in lawsuits, including large corporations and individuals and children, cannot depend on getting a fair shake because the judge is afraid of ruling in their favor, that is the essence of bad faith.

There are reports right now that this is exactly what is happening in the current administration's immigration courts.

More than Sad. 

Bad Faith.

See Some Immigration Judges Say They Rule a Certain Way to Avoid Firing, by Mark Pattison, posted on CatholicPhilly.com on Monday, September 30, 2019.

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REPORTS OF THE DEATH OF CALIFORNIA EMISSIONS STANDARDS ARE PREMATURE.

Newspaper reporters write that the people currently in charge of the federal government are also in charge of California, at least when it comes to automobile pollution. Newspaper headlines blare that the current regime is going to "scrap" or "revoke" (New York Times, which may charge for online access) or "pull" or "end" (Associated Press) California's regulations related to car emissions.

This did not seem right. So I checked it out. I originally began with the concept that perhaps granting waivers from federal pollution standards might be discretionary with the EPA Administrator.

That could have explained these stories and these headlines. Discretion must ordinarily be exercised in good faith so it seemed that this issue may be a good fit with this blog which is about bad faith and good faith. What I found in 45 minutes of research was enlightening. And reassuring.

The Federal Clean Air Act is a statute. Statutes can be changed only by Congress.

So that puts the idea to rest right away of any federal government agencies trying to "scrap" and "pull" any State's laws or regulations. To my knowledge, Congress has not acted to change the Clean Air Act to bar California or any other State from writing regulations that require more protections on automobile emission levels than those who currently occupy the federal government would require.

The Administrator of the Federal Environmental Agency cannot act on her or his own to "scrap" or "pull" California laws or regulations. The EPA Administrator is statutorily authorized to prescribe regulations and standards for automobile emissions. 42 USCA § 7521(a)(2). But the statute allows for differences in regulations and standards. For example, even a motor vehicle manufacturer -- not just a State -- can certify that changes to vehicles will not result in failure to comply with standards promulgated by the EPA Administrator. 42 USCA § 7541(a)(2).

More important, the Administrator "shall" grant a waiver of the federal standards "if the State determines" that the State standards will be "at least as protective of public health and welfare as applicable federal standards." 42 USCA § 7543(b)(1) (emphasis added).

This is mandatory language. It directs the EPA Administrator when and where to grant waivers under the Clean Air Act. It leaves it to the States to determine whether State standards comply and, once that determination is made by the State then the federal official -- the EPA Administrator -- has no discretion but to grant the waiver. The Administrator shall grant a waiver of the federal standards if the State determines that the State standards comply with the Clean Air Act. If the EPA Administrator has no discretion to deny waivers, then the EPA Administrator has no discretion to rescind waivers that have already been given.

Case closed as they say.

Yet there's more. Other States that adopt emissions standards that follow California emissions standards for which a waiver has been granted are automatically qualified for waiver status under the Clean Air Act. 42 USCA § 7507.

Moreover, any person can file a civil action against the Administrator "where there is alleged a failure of the Administrator to perform any act or duty under this chapter which is not discretionary," 42 USCA § 7604(a)(2) (emphasis added), so that it seems clear that not only does the EPA Administrator not have any discretion to decline -- or rescind -- any waivers but anyone in America can sue if the Administrator fails to grant or uphold waivers for State standards that are at least as stringent as the Clean Air Act would require.

To rephrase a quote from Mark Twain, the reports of the death of California's emission standards are premature.

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THE SHAME OF THE UNBALANCED BUDGET.

Trump Administration Will Divert Disaster Relief Funds to U.S.-Mexico Border Enforcement, Prompting Outcry From Democrats, WASHINGTON POST online Tuesday, August 27, 2019.

This is what comes of not putting limitations on your budget vote.

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KATE BAILEY, YOU JUST LEARNED A HARSH LESSON: CLIENT CONTROL.

In hindsight, you should have seen it coming.

They left it to Kate Bailey, Trial Attorney in the Civil Division of the current justice department, to represent to the Court in Washington, D.C. that the current federal government had backed down. She represented to the judge in the citizenship case pending in the District that the federal government had abandoned its position in the litigation. From now on, she wrote, the federal government would not seek to add a citizenship question to the 2020 Census.

Kate Bailey wrote that down. In a letter to the lawyers in the case. And she represented that to the judge in the case.

And that was the current federal government's new position, that they would no longer defend contest that litigation with its previous position that they wanted to add a citizenship question to the 2020 census. That was their new position.

Until it wasn't.

See Noah Bierman and David G. Savage, Citizen Question May Be Back On 2020 Census As Trump Administration Reverses Course Again, Los Angeles Times online Wednesday, July 3, 2019 (the Los Angeles Times may charge for online access).

By tweet, the department of justice pulled the rug out from under Kate Bailey. They shredded her reputation with the Court. They took away her credibility as a lawyer.

They changed their new position, which became their old position, and in their new-new position they told the judge at a telephone hearing the day before the Fourth of July that they 'might' change their position back to their original position. They were "looking into it," they told the judge.

Then they asked for more time until Monday to think it over.

The judge said "no." One word in response to that request: "No."

He set a hearing for today at 2:00 P.M. for the current federal government to make its mind up and, one way or the other, litigate the case or withdraw its defense of the case. Either present a plan to litigate or stipulate that the citizenship question is withdrawn and will not be printed on the 2020 Census forms.

Do you think Kate Bailey will be in attendance at today's hearing?

Don't hold your breath if you don't like the color blue, as the saying goes.

Ms. Bailey, you don't have to work for these people who humiliate you. You can enter private practice. At least then you could file a motion for leave to withdraw. The judge may not let you out of the case, but at least then you would have a chance.

Not like now, when they won't give you a chance. Instead they will pull the rug out from underneath your credibility whenever it suits their purpose. If you did not know beforehand that these are the kind of people you chose to work for, you know now.

Talk about bad faith.

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Postscript on Saturday, July 6, 2019:

I checked out the case on PACER (Public Access to [Federal] Court Electronic Records) yesterday.  The case is Kravitz v. U.S. Department of Commerce, (D. Md. Case No. 8:18-cv-01041).  Kate Bailey, Esquire is not a counsel of record in that case.  So why was it left to her to make an announcement that the current federal government was no longer defending the case?  The justice department filed a new pleading yesterday with a "Plan A" and a "Plan B."  The government's Plan A was convoluted and it is best if you try to read it for yourself.  The case information for PACER is provided above.  The government's Plan B is that it agreed with the plaintiffs' proposed order for discovery deadlines in the case if the judge was going to proceed.  The judge is going to proceed.  The judge  entered the scheduling order proposed by the plaintiffs  -- and joined as noted by the government -- to set discovery deadlines in the case.

SO THIS IS HOW YOU CELEBRATE THE FOURTH OF JULY.

See Ledyard King, Sarah Elbeshbishi, and Jason Lalljee, What to Expect at the Washington DC 4th of July: Army Tanks, A Burning Flag and Baby Trump, USA TODAY online July 2, 2019 (USA Today may charge for online access).

   Photo - Getty Images.

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LESSONS ON SECRET SETTLEMENT NEGOTIATIONS FROM A PRO SE CASE.

A pro se Fair Labor Standards Act case may have some lessons for keeping settlement offers secret in insurance bad faith cases.

In Chenault v. Randstad USA Mfg. & Logistics,[1] Mr. Chenault, representing himself without a lawyer, filed a "Motion to Facilitate Settlement."  He attached "the settlement offer" or, alternatively, "the settlement letter" that he got from the defendants, using the judge's descriptions of the letter.

The defendants asked the judge to seal the letter and so keep the public from viewing the letter in the Court file. 

The reason that the judge gave for sealing the "settlement letter" in this case reveals a lot about how the law treats the secrecy of settlement negotiations.  She ruled:

Because “[t]here exists a strong public interest in favor of secrecy of matters discussed by parties during settlement negotiations,” the Court will Order the Clerk of the Court to place the settlement letter under seal in order to preserve the record. Goodyear Tire & Rubber Co. v. Chiles Power Supply, Inc., 332 F.3d 976, 980 (6th Cir. 2003). The Court will not consider the settlement letter for any purpose.[2]

Substitute an insurance company accused of bad faith in the place of the defendants in this case, and the lessons of secret settlement negotiations is clear:  Settlement negotiations of the case at bar are a secret.  Period.

The author is currently at work on 2019 Supplements to both volumes of his Book, Litigation and Prevention of Insurer Bad Faith (Third Edition, Thomson Reuters West), including sections on secrecy and settlements. 

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[1] Chenault v. Randstad USA Mfg. & Logistics, No. 5:18-CV-276-KKC, 2018 WL 3964811 (E.D. Ky. August 17, 2018).

[2] Chenault v. Randstad USA Mfg. & Logistics, No. 5:18-CV-276-KKC, 2018 WL 3964811, at *2 (E.D. Ky. August 17, 2018) (emphasis added).

 

JPMORGAN, NIGERIA'S MONEY, LONDON LAWSUIT. BAD FAITH? NOT APRIL FOOL'S!

A British case raises an intriguing question for American insurance bad faith litigation.

Under British law, a bank has a duty to act in the best interests of its customers.  The Nigerian government is suing JPMorgan Chase on the ground that the bank allegedly obeyed the instructions of corrupt former officials to transfer some $900 Million to them from a Nigerian government bank account maintained at JPMorgan Chase in London.  The Nigerian government is of the opinion that this was against the best interests of the bank's customers, the people of Nigeria.

JPMorgan Chase is defending this complicated case on many grounds.  One of its defenses raises the intriguing question that may have some resonance in American insurance bad faith lawsuits:  JPMorgan Chase is defending on the basis that its contract setting up the Nigerian government account provided that JPMorgan Chase could act against the best interests of the bank's customers, the people of Nigeria.

Does this mean that an insurance carrier in the United States could insert a provision in its insurance policy that, effectively, it could act in bad faith and deal unfairly with its insureds?

Well, returning to the lawsuit in the U.K. for a moment, the British judge so far is allowing the Nigerian government's lawsuit to proceed against JPMorgan Chase.  Its contract provision has not prevented that, at least so far.  See Emily Flitter, Nigeria Sues JPMorgan to Recoup $900 Billion, New York Times, Monday, April 1, 2019, p. B1 (no online version found; when posted online the New York Times may charge for online access to this article).

As for the question of an American insurance carrier inserting a provision in its insurance policy to disavow any duty of good faith and fair dealing, there is some authority on that.  We will take a look in future articles posted here.

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GENERICS FORCIBLY REPLACING BRAND PRESCRIPTIONS, LIKE IT OR NOT.

Another agency of the current Federal Government is taking actions to dismantle consumer protections with a new Administrative State.  This time it is the Centers for Medicare and Medicaid Services (CMS), located in the Department of Health and Human Services (HHS).  They propose to substitute generic drugs for brand drugs when consumers fill their doctors' prescriptions.  Their proposal was only posted on January 24, 2019 and, in a relatively short period for Comments, the deadline for leaving a Comment including in opposition to these new-Federal Government proposals, is Tuesday, February 19, 2019.

Here are the complete Comments I left on https://www.regulations.gov on Sunday, February 17, 2019 in opposition to these particular proposals.

February 17, 2019

To:       The Centers for Medicare and Medicaid Services (CMS),

          Department of Health and Human Services (HHS).

          https://www.regulations.gov

 

Re:    Proposed Changes to ACA Benefits and Payments Parameters for 2020.

          CMS-9926-P

To CMS, HHS:

These Comments are regarding your proposed addition to Regulations in 45 CFR, new proposed §§ 147.106(e)(5) and 148.122(g)(5), and wherever else the same proposed changes discussed in these Comments may be found in your proposals.  Your proposed new regulations §§ 147.106(e)(5) and 148.122(g)(5) are published in 84 F.R. at pp. 313-314.

You advise in 84 F.R. at p. 234 that your proposed new § 147.106(e)(5), for example, would allow issuers of drug plans in all three markets -- individual, small group, and large group -- to allow changes to a formulary.  (Although you do not define the term in your proposals, I understand from general usage by CMS/HHS that "formulary" in this context means a list of prescription drugs covered by a plan, a/k/a a drug list.)

The new additions you propose to existing law would be to allow issuers of plans covering prescription drugs to remove the equivalent of brand drugs from the formulary, i.e., from the plan of prescription drugs that are covered by the issuer.  See, e.g., 84 F.R. at 234.

There are at least three obstacles to implementing these proposed new regulations as law.  The three I would like to address in these Comments are (1) that the proposed new regulations are not a reasonable approach to the availability of prescription drugs to consumers who pay for prescription drug plans, or formularies; (2) that the proposed new regulations are a windfall to the issuers of plans covering prescription drugs, at the expense of consumer choice, and (3) that the term, "generic equivalent," is new and undefined, without so much as a reference I can find to the Federal Food and Drug Administration's process of testing and approving generic drugs for use by consumers.

First, the proposed new regulations are not a reasonable approach to the availability of prescription drugs to consumers who pay for prescription drug plans, or formularies.  The goal of adding generic medical equivalents to prescription drug plans, or drug lists, could reasonably be accomplished without mentioning the removal of brand drugs from the formulary at all.

The real effect of proposed new regulations like §§ 147.106(e)(5) and 148.122(g)(5) is not to permit the addition of generic equivalent drugs to an issuer's list of covered drugs, but rather to permit the issuer to remove brand drugs from the issuer's list.

That in itself is an unreasonable change to the law and, moreover, it is not authorized by the enabling Congressional legislation in the first place.  The clear purpose of the enabling statute was to foster consumer choice, not to limit consumer options, especially when it comes to prescription drugs.

That ties in to the second objection addressed in these Comments.  The proposed new regulations, such as for example §§ 147.106(e)(5) and 148.122(g)(5), are an undeserved windfall for the makers of generic drugs, and at the expense of consumer choice.  Lists of covered drugs are of course lists contained in plans for coverage of drugs.  These plans are paid for by consumers in whole or in part including by the payment of deductibles and co-pays, and often paid for as well by a share of the premiums charged for coverage under these plans.  Consumers have paid for the right to have their physicians and medicalcare providers prescribe drugs and to fill these prescriptions with brand drugs at the option or choice of the consumer, and not by the choice either of the pharmaceutical manufacturer or the issuer.  For this reason as well, the proposed new regulations, including §§ 147.106(e)(5) and 148.122(g)(5), should not and cannot be adopted.

The third and final objection to proposed new regulations §§ 147.106(e)(5) and 148.122(g)(5) which will be addressed in these Comments is the undefined use of the phrase, "generic equivalent."  This phrase is found in the proposed new authority to be conferred upon issuers to "add a generic equivalent to a formulary[.]"  See, e.g., proposed new regulation § 147.106(e)(5), 84 F.R. at p. 314, and proposed new regulation § 148.122(g)(5), also in 84 F.R. at p. 314.

The phrase used in this new proposed regulation is not limited to "medically equivalent."  (Emphasis added.)  Nor is it limited by reference, so far as I can find, to FDA-generic-approved medicines.  Without such limitations, the proposed new authority to replace brand drugs on drug lists with "a generic equivalent" is overly broad and so it is meaningless.  It would, for example, allow issuers and generic drug manufacturers to buy their way onto drug lists to add drugs that their own proprietary  'research' and support has 'determined' to be "a generic equivalent," without limitation to generic medicines already approved by the FDA.   For this reason as well, the proposed new regulations, including §§ 147.106(e)(5) and 148.122(g)(5), provide no limiting guidelines and so are void and of no effect.  They cannot validly be promulgated.

For each and all of these reasons, whether taken separately or together, the proposed new regulations, including §§ 147.106(e)(5) and 148.122(g)(5), cannot validly be promulgated as administrative regulations and, moreover, they are void and of no effect as new law.

Sincerely,

Dennis J. Wall

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LAST IN THE SERIES: "USE RESTRICTION" AND SUMMARIZING THE SERIES.

This is the last of our continuing series of articles taking a look at the presumption of public access to Court files.  In recent articles we have been looking at the examples of secrecy on display, as it were, in recent Multi-District Litigation lawsuits (MDLs) involving General Motors and Volkswagen.  In this final article, we will bring the series to a close with our look at the Volkswagen "pollution defeat device" MDL.  Our special focus will be trained on the secrecy involved in this huge lawsuit, secrecy that is built into multi-district litigation and similar huge lawsuits.  To a great extent secrecy is a major reason such lawsuits exist in the first place.

 

"Use Restriction":  In other cases, standard blanket secrecy orders purport to prohibit disclosure to others, who may be identified, by category but never by name, or maybe not at all.  The use restriction in the VW order was written to go one step further.  It is a "Restriction on Disclosure in Actions Outside U.S." and in particular to "legal counsel[.]"^[1]

By way of contrast, in many other cases, a stipulated protective order will specifically say who will never be given concealed material.  When material is designated as not subject to public disclosure in a given case, the agreed order may be written so as to single out in particular lawyers representing other plaintiffs in other cases against the same or similar defendants.

Here, in the stipulated protective order in the VW MDL, we get to see the flip side of that coin.  In the VW MDL order, the approach was taken to list every kind of person who can see the otherwise publicly undisclosed information.  That list in the stipulated secrecy order in the VW MDL simply does not include lawyers involved in the representation of other clients in other cases.  Parenthetically, it also does not include requests for public information under the Freedom of Information Act, or "FOIA."^[2]

These more or less unique provisions may reflect the international marketing of Volkswagens.  Describing the set of people who can see the concealed information is infinitely simpler than trying to describe all the different proceedings and the people involved in them all over the world who cannot see the information.  Denying access under the Freedom of Information Act, if valid, will prevent or at least slow down the availability of that information for other proceedings of any type across the planet.

Sealing the materials a judge uses to make a ruling.  The VW order clearly provides that any "Protected Material" under the agreed order that "is used in any court proceeding ... shall not lose its protected status through such use."^[3]  Once again, as we have already seen in earlier sections, in particular in section 2:20 regarding insurance companies, many courts treat materials used by a judge to make her ruling as presumptively open to the public by the very fact that the judge based her ruling on it, so that the public should see it too.

The Crucial Feature of agreed Umbrella Secrecy Orders:  Agreed blanket secrecy orders prevent disclosure of the evidence without the requirement that a judge determines whether there is good cause for the nondisclosure.  The VW order shares this feature with standard Umbrella Orders, unlike it must be said, the GM order which does require proof of good cause for the "Confidential" or "Highly Confidential" marking.^[4]  

The VW order is the same as the GM order, however, with respect to what the lawyers mark as "Confidential" or "Highly Confidential."  What the lawyers mark with those designations will be "Confidential" or "Highly Confidential," even after the particular case is over.  The lawyers only need to do their marking "in good faith" of all the evidence they "reasonably believe to be" either Confidential or Highly Confidential.

What the lawyers may choose to mark "Confidential" in the VW MDL seems anchored on things "that qualify for protection under Federal Rule of Civil Procedure 26(c)."  So far, so good, but the permissions to the lawyers and parties to designate things "Confidential" and so withhold them from the public do not end there.

The VW stipulated secrecy order changes the Rules by adding that nothing in this agreed order precludes any party from "seeking additional protections not currently contemplated by this Order to be applied to any particular document or category of documents," which of course includes Confidential Information.^[5]

Exactly what are the "additional protections"?  The order does not say, and it does not offer a clue.  What the "additional protections" to keep evidence Confidential may be, remains to be determined by the lawyers and their clients in that case.

Both the GM stipulated secrecy order in New York and the VW agreed secrecy order in California provide that if the lawyers were wrong in concealing evidence from the public as Confidential or Highly Confidential, that is no problem once again -- even if a Court declares that the evidence in question should be opened to the public, it will still be protected so long as the lawyers marked the evidence with the words, "Confidential" or "Highly Confidential."^[6]

An old standby:  "Non-public information."   Similar words and phrases are used throughout the secrecy documents in many cases and in a lot of situations.  The VW MDL secrecy order refers, for example, to concealing information simply because someone claims that it is "non-public information"^[7] as in the Wells Fargo settlements of cross-selling accusations that we encountered in section 2:21.  These agreed secrecy orders are not alone in using the term.  That same term, "non-public information," is also used and is also not defined, in the Nondisclosure Agreements apparently introduced to employees in the White House since on or about January 20, 2017.^[8]

Summary of the effects of stipulated umbrella protective orders on litigation of catastrophe claims and of insurance coverage claims for natural and man-made disasters.  State court actions may provide more transparent lawsuits than federal courts.  The United States Constitution provides the presumption followed by many federal courts to allow the public access to court files, yet federal procedures not only authorize but encourage concealed evidence and secret settlements.

            Some of the procedures followed in federal courts that encourage concealed evidence and secret settlements include judicial approval of secret class action settlements, and multi-district litigations or MDLs.  Judicial certification of classes for the purpose of settlement, and MDLs by their very nature, are designed and constructed to encourage settlements.  Both class action settlements and MDLs are by their nature large cases which put tremendous pressures on individual plaintiffs by a few very large, usually corporate defendants.

            We have discussed numerous examples in the immediately preceding sections of this Chapter of how the judicial system, and particularly the federal judicial system, encourages and approves concealed evidence and secret settlements, including the GM ignition defect MDL and the VW defeat-device MDL.

            The intention behind the recent previous sections of this Chapter has been to illustrate the difference between concealing evidence and making the evidence publicly available for the public to see.  In order to achieve this result uniformly throughout federal courts and state courts alike, it is now clear that changes are necessary.  First and foremost, the behavior of judges needs changing.  No new rules are needed.  What is needed instead is to enforce the rules that exist, particularly the requirement that protective orders and sealing orders depend on a showing of good cause from the party or parties requesting the secrecy.

 

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[1] This is § 7.5, at page 11 in Pretrial Order No. 12:  Stipulated Protective Order, Doc. No. 1255, filed on February 25, 2016 in In re:  Volkswagen "Clean Diesel" case.

[2] The distribution list' simply does not include lawyers involved in the representation of other clients in other cases:  §§ 7.2 and 7.3, on pp. 9-11, in id., titled, respectively, "Restrictions on Use of Confidential Information" and "Restrictions on Use of Highly Confidential Information."

            The concealed information cannot be obtained with FOIA requests:  § 12.4, p. 16, in id.

 

[3] § 13.4.2, at p. 18, in id.

 

[4]See  GM Order No. 10, filed 09.10.14, ¶ 4, at p. 6.

 

[5] VW Pretrial Order No. 12:  Stipulated Protective Order, § 2.9, filed on February 25, 2016,  pp. 3-4.

 

[6] Designating evidence as "Confidential" or "Highly Confidential," which the lawyer "reasonably believes," in "good faith":  It is enough to quote one of the two secrecy orders, because in substance they are identical.  To quote the VW secrecy order, VW Pretrial Order No. 12:  Stipulated Protective Order, §§ 2.3, 2.6, 2.9, 2.18, and ¶ 5, at pp. 3-4, and 5-8, filed on February 25, 2016:

If counsel for the Producing Party agrees or if the Court orders that Discovery Material initially redacted shall not be subject to redaction or shall receive alternative treatment, and the Discovery Material is subsequently produced in unredacted form, then that unredacted Discovery Material shall continue to receive the protections and treatment afforded to documents bearing the confidentiality designation assigned to it by the Producing Party.

The quotation is from  id., § 11.1, p. 14, in a paragraph titled, "11. REDACTIONS ALLOWED."  (Underlining in original.)  The corresponding GM secrecy order's provision is in ¶ 3(d) at page 5, GM Order No. 10, filed 09.10.14.  Although the wording is slightly different when the two provisions are compared side-by-side, the substance is virtually identical.  Clearly whoever wrote the VW order filed in February 2016 in a Court in California read the GM order that was filed in a Court in New York a year-and-a-half earlier in September 2014, and changed the words in order "to protect the innocent," you might say..

 

[7] VW Pretrial Order No. 12:  Stipulated Protective Order, § 12.7, at p. 13, filed on February 25, 2016.

 

[8] Cf. Ruth Marcus, "Trump Had Senior Staff Sign Nondisclosure Agreements.  They're Supposed to Last Beyond His Presidency" (Washington Post Online, posted March 18, 2018) (quoting from a reported draft nondisclosure agreement implemented by the current Administration at the White House, as to "'confidential' information, defined as 'all nonpublic information ....'" (emphasis added).)  The author was clear that she was in possession of only a draft nondisclosure agreement, and so she was not quoting any other version of the document, if any.

 

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THE VW MDL: ANOTHER STIPULATED PROTECTIVE ORDER.

This is the second of three articles that will end our continuing series taking a look at the recent Multi-District Litigation lawsuits (MDLs) involving General Motors and Volkswagen.  In this installment and in the next article, which will be the concluding article in this series, we will bring the series to a close by taking a look at the Volkswagen "pollution defeat device" MDL.  Our special focus will be trained on the secrecy involved in this huge lawsuit, secrecy that is built into multi-district litigation and similar huge lawsuits.  To a great extent secrecy is a major reason such lawsuits exist in the first place.

 

THE VW MDL:  ANOTHER STIPULATED PROTECTIVE ORDER.

Compared to the time it took for the lawyers to propose and the Judge to sign the stipulated secrecy order in the GM MDL, which was filed within 3 months after the lawsuit was filed, the stipulated secrecy order in the VW MDL was proposed and signed by the Judge within 3 days after the finalized Complaint was filed.  The finalized Complaint was filed on a Monday.  The stipulated secrecy order was signed and filed the Thursday after that.^[1]

In contrast to the umbrella secrecy order in the GM MDL, there is no mention in the VW order that the U.S. Constitution raises a presumption that the public shall have access to court files.  But comparing the two orders shows that they clearly share the same motivation in avoiding expense at the time the orders were entered.  In both cases, they could see the storm coming unless they mutually agreed to avoid it.^[2]  The VW blanket secrecy order also borrows many of the same words found in previous agreements for Umbrella Orders.

Shifting the burden of proof to the party requesting disclosure and away from the party trying to keep the evidence a secret.  Like the standard blanket protective orders that we have seen previously, the VW secrecy order shifts the burden of proving that evidence should be disclosed completely to the party seeking disclosure of information, and away from the party trying to conceal it.  In further departures from the Manual for Complex Litigation, Fourth, and in particular from the model Confidentiality Order published in it by the Federal Judicial Center for the benefit of judges and lawyers, the things that must be proven are also changed significantly.  While the model Confidentiality Order does not use the words, "good cause," it does provide instead that any application to the Court for additional materials to be kept confidential besides those marked by the lawyers, "shall only be granted for reasons shown and for extraordinary grounds."^[3]  A side-by-side comparison reveals that the GM order does not follow the model Confidentiality Order.^[4]  However, the order in the GM MDL mentions a seeming requirement of "good cause" to keep the evidence concealed.^[5]  The VW order does not follow the Federal Judicial Center's model Confidentiality Order, either, nor does the VW order even mention the words, "good cause."

The party challenging the designation of certain evidence in the VW case as Confidential or Highly Confidential had to ask the Court "for an order withdrawing the designation."  But the agreement itself gives little or no incentive to most parties who might challenge the designation.

There are two main uses of evidence in any case before trial:  at hearings and in depositions where witnesses give testimony.  The VW MDL agreement covers both uses with respect to "Protected Material" (evidence marked "Confidential" or "Highly Confidential" by the lawyers, in sum and in substance).

With respect to Protected Material evidence that might be used at a hearing before trial, the parties agreed to give each other notice of their intent to use that evidence at the upcoming hearing and that the use of that evidence at the hearing would be regulated by their agreement or by Order of the Court.^[6]  Basically, as long as a party agreed to jump these hurdles it could use the Protected Material evidence at a hearing in the VW MDL before trial.  Parenthetically, the secrecy agreement did not apply to use of this evidence at trial, but the lawyers and their clients reserved the right to make more agreements.

The lawyers also included the express possibility that, to continue to protect the evidence at hearings that they had previously designated as Protected, they might have to agree to ban the public from the court hearings; they agreed that they might even have to ask the Court "to close the courtroom."^[7]

With respect to the use of Protected Material evidence during the testimony of witnesses before trial, including during depositions, the parties in the VW MDL agreed that the Protected Material could be shown to a witness who either signed a Nondisclosure Agreement that the lawyers wrote, or who refused to sign an NDA but who would not be allowed to "retain" copies of the evidence.  (Most witnesses are not given copies of the evidence to keep after their depositions are over anyway.)

Deposition transcripts involving testimony about Protected Material evidence are effectively sealed in the VW MDL.  They "may not be disclosed to anyone" as to the Protected Material " except as permitted under this secrecy agreement-order.^[8]

Since the agreement that resulted in the secrecy order basically allows all parties to use the evidence in that case in any event, the chances that any of them will become a "challenging party" are very small.   This once again shows clearly the intent behind the concealment:  Other people involved in other lawsuits besides this one must not be shown the same evidence that the limited number of people involved in this lawsuit can see.

Here are the makings of another man-made disaster.  The question is not really about whether the parties and their lawyers involved in the case can see the evidence.  The question is about keeping evidence concealed and settlements secret with respect to everyone else, including the public.

As a result, agreed secrecy orders like the one used in the VW MDL cloak concealment with a presumption of confidentiality.  Everything marked confidential will remain confidential unless and until anyone asking for disclosure including the judge all follow the steps outlined in this agreed order.

In addition, the facts to be proven are unstated as to what would be enough to draw the curtain of concealment away from evidence that lawyers have marked Confidential or Highly Confidential.  Although the facts to be proven in order to convince the Court to withdraw the designation are not stated in the stipulation, one set of facts is not mentioned at all.  As in many if not all such stipulated secrecy orders, there is no requirement to show "good cause," as would be required by the Rules of Civil Procedure that would apply in any other case.

TOMORROW:  THE "Use Restriction."

Please Read The Disclaimer.  ©2019 Dennis J. Wall.  All Rights Reserved.

 

[1] By "finalized" Complaint, I mean the Complaint which was the last one filed, so far.  It happens to be called a CCCA Complaint, which the plaintiffs' lead attorneys wrote to identify the plaintiffs' Consolidated Consumer Class Action Complaint.

            It took only from Monday when the finalized Complaint was filed until the next Thursday before the stipulated umbrella secrecy order was signed and filed: Plaintiffs' Notice of Motion, Motion, and Memorandum in Support of Final Approval of the 2.0-Liter TDI Consumer and Reseller Dealer Class Action Complaint, at 6-7, Doc. No. 1784, filed August 26, 2016, in In re:  Volkswagen "Clean Diesel" Marketing, Sales Practices, and Products Liability Litigation (N.D. Cal. Case No. MDL 2672 CRB (JSC)); Pretrial Order No. 12:  Stipulated Protective Order, Doc. No. 1255, filed February 25, 2016 in id.

 

[2] See Plaintiffs' Notice at 7, Doc. No. 1784, filed August 26, 2016  in In re:  Volkswagen "Clean Diesel" Marketing, Sales Practices, and Products Liability Litigation (N.D. Cal. Case No. MDL 2672 CRB (JSC)).

 

[3] Section 40.27, ¶ (d), at page 752 in Manual for Complex Litigation, Fourth.  The Manual contains a lengthy discussion in Section 11.432 of "Limited Disclosure/Protective Orders," at pp. 64-69.

 

[4] Compare Order No. 10, titled in brackets,  "[Protecting Confidentiality and Privileged Materials]," Doc. No. 294, filed September 10, 2014, in In re:  General Motors LLC Ignition Switch Litigation (S.D.N.Y. Case Nos. 14-MD-2543 and 14-MC-2543) with Section 40.27, titled "Confidentiality Order," page 752 in Manual for Complex Litigation, Fourth. 

 

[5] ¶ 4, "Challenges to Confidentiality Designations," at page 6, in Order No. 10, Doc. No. 294, filed September 10, 2014, in In re:  General Motors LLC Ignition Switch Litigation (S.D.N.Y. Case Nos. 14-MD-2543 and 14-MC-2543).

 

[6] See § 13.4.1, at p. 17 in Pretrial Order No. 12:  Stipulated Protective Order, Doc. No. 1255, filed on February 25, 2016 in In re:  Volkswagen "Clean Diesel" case.

 

[7] See § 13.4.2, at page 18 in Pretrial Order No. 12:  Stipulated Protective Order, Doc. No. 1255, filed on February 25, 2016 in In re:  Volkswagen "Clean Diesel" case.

 

[8] See § 7.2.8, at page 10 in Pretrial Order No. 12:  Stipulated Protective Order, Doc. No. 1255, filed on February 25, 2016 in In re:  Volkswagen "Clean Diesel" case.

 

TOMORROW THIS SERIES CONCLUDES WITH:  THE "Use Restriction."

Please Read The Disclaimer.  ©2019 Dennis J. Wall.  All Rights Reserved.