Kang Haggerty NewsContinuing off our earlier blog post that had raised questions regarding attorney-expert communications in Barrick, et al. v. Holy Spirit Hospital, et al. (read here!), on July 10, 2014 the Pennsylvania Supreme Court made official a rule change barring attorney-expert communications during discovery. Following its decision in Barrick, the Supreme Court approved an amendment to the Pennsylvania Rule of Civil Procedure 4003.5 concerning attorney-expert communication during discovery. This amendment to the Pennsylvania Rules of Civil Procedure created a bright-line rule, and creates a difficult arena for attorneys to maneuver during the discovery process.
Point Five Percent (0.5%) of the Real Thing
With lawsuits directed at the marketing campaigns of trendy products becoming as trendy as the products themselves,1 the United States Supreme Court recently gave POM Wonderful its blessing to bring a Lanham Act claim against Coca-Cola for a potentially misleading label that is compliant with the Food, Drug, and Cosmetic Act (FDCA).
Insurance Bad Faith Practice leads to $18 million Punitive Damage Award
A Pennsylvania state court has found Nationwide Insurance Co. engaged in bad faith in handling its insured’s first party auto insurance claim and in its litigation tactics when the dispute led to a lawsuit. The court’s forty page opinion catalogues the types of specific conduct that evidences bad faith in violation of Pennsylvania Insurance Bad Faith Statute ( 42 Pa. C. S. A. § 8371), which warrants an imposition of punitive damages to deter insurers from engaging in such conduct.
SEC Flexes Dodd-Frank Muscles for the First Time Against Employer Retaliation
The SEC has flexed its (new…ish) muscles for the first time, penalizing Paradigm Capital Management Inc. in an enforcement action for retaliation against a whistleblower.
The Dodd-Frank Act prohibits retaliation against whistleblowers, specifically providing that “No employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against, a whistleblower” because of certain whistleblowing activities. 15 U.S.C. §78u-6(h)(1). The regulations (specifically, 17 C.F.R. §240.21F-2(b)(2)) provide for enforcement in an action brought by the SEC.
Third Circuit Adopts Liberal Notice Pleading Standard for False Claims Act Cases
Refusing to adopt the heightened pleading standard under Rule 9(b), the US Court of Appeals for the Third Circuit reversed the U.S. District Court for New Jersey’s order, which held that Plaintiff Foglia failed to meet the pleading requirements under Rule 9(b) for pleading a false claims act case. U.S. ex rel. Foglia v. Renal Ventures Mgmt., LLC, 2014 WL 2535339 (3d Cir. June 6, 2014). In contrast to the District Court, the Third Circuit agreed to a more liberal standard for pleading cases under the federal False Claims Act and concluded that Foglia’s factually false claim against Renal proved sufficient to satisfy Rule 9(b). The circuits are split over whether a whistleblower must allege specific examples of false claims to survive a Rule 12(b)(6) motion, and the Third Circuit held that the whistleblower need not provide such specific examples.
5 Ways to Transition Your Business to Next Generation
1. Define your goals. What is your ultimate goal in transitioning your business? Do you plan on funding your retirement through this transition? Is it to leave a legacy? The reason behind your desire to transition will determine how you proceed.
2. Plan & Implement Your Strategies. Create a clear plan as you move forward with the transition. Always be sure you have this plan set before you start so you do not run into confusion while transitioning. Consider the following to include in your strategy as you prepare:
a. Financial. If your goal is towards retirement, how will you be funding it? What will be your compensation as you leave the company? Be sure you highlight financial issues clearly and consult with the appropriate experts to make sure these issues are handled well.
You Need to Make a Demand First Before Filing a Derivative Claim
United States Court of Appeals for the Third Circuit. Robert FREEDMAN, Appellant v. Sumner M. REDSTONE; Philippe P. Dauman; Thomas E. Dooley; George S. Abrams; Alan C. Greenberg; Shari Redstone; Frederic V. Salerno; Blythe J. McGarvie; Charles E. Phillips, Jr.; William Schwartz; Robert K. Kraft; Viacom, Inc. No. 13–3372. Decided: May 30, 2014
The United States Court of Appeals for the Third Circuit affirmed the Delaware District Court’s July 16, 2013 decision by further solidifying the most basic requirements for filing a derivative and direct claim. The plaintiff, Robert Freedman, as a stockholder, failed to make a pre-suit demand to Viacom’s Board of Directors in his derivative claim. Also, the plaintiff failed to state a cause of action in his direct claim against the defendant. As such, the District Court dismissed the case, which the Third Circuit affirmed.
Court Gives Yelp Zero Stars
Anonymous internet reviewers beware – particularly if what you post is harmful to a business’s reputation; and more importantly, untrue. The Virginia Supreme Court is currently considering a case that could have major implications with regard to unmasking the identity of anonymous internet reviewers who post false and defamatory comments about businesses.
In Yelp, Inc. v. Hadeed Carpet Cleaning, Inc., the Virginia Court of Appeals affirmed the trial court’s decision to enforce a subpoena directed to Yelp, Inc. (“Yelp”) that requested the identification of the authors of certain reviews that the plaintiff claimed were false and defamatory toward his carpet cleaning business.
Superior Court Clarifies Pennsylvania Law on Non-Compete Agreements
On May 13, 2014, the Superior Court of Pennsylvania, in Socko v. Mid-Atlantic Systems, clarified the requirement of new consideration when an employer and employee enter into an employment agreement containing a non-competition restrictive covenant after commencement of employment. As an appellate decision, this new clarification leaves a lasting and binding effect on the trial courts.
When Mid-Atlantic hired Socko as a salesman in March 2007, Socko signed an employment agreement with a two-year covenant not to compete. He resigned in February 2009, but was rehired in June 2009 and signed a new employment agreement with a similar two-year covenant not to compete. Subsequently, he signed a third employment agreement on December 28, 2010 containing a two year non-compete covering eight named states, including Pennsylvania, and anywhere else that Mid-Atlantic did business. In January 2012, Socko resigned and took a position with a competitor basement waterproofing company located in Camp Hill, Pennsylvania. Mid-Atlantic wrote the new employer enclosing the third employment letter and threatening litigation. The new employer terminated Socko, who sued for declaratory judgment seeking a determination that the non-compete provision of the employment agreement was unenforceable for lack of sufficient consideration.
Follow the Bright-Line Road!
In the Supreme Court of Pennsylvania
No. 76 MAP 2012
On Appeal from Superior Court 11/23/2011 Docket
Carl J. Barrick and Brenda L. Barrick v. Holy Spirit Hospital of the Sisters of Christian Charity Individually and d/b/a Holy Spirit Hospital, Sodexho Management, Inc., Sodexho Operations, LLC and Linda J. Lawrence
Affirming the en banc decision of the Superior Court, the Pennsylvania Supreme Court created a bright-line rule denying discovery of communications between attorneys and expert witnesses.
It is well known the attorney-client privilege afforded to attorney-client communications gives an attorney the ability to develop theories and legal strategies with the aid of information given to him from his client. Equally as important to the ability for an attorney to strategize includes communication between the attorney and an expert witness. Pa.R.C.P. 4003 provides clear directives on what is covered as “privileged” between an attorney and her clients and witness to ensure attorneys have every ability to strategize and devise legal strategies without fear of compromising confidential information or of exposure.