It seems to me that the auto manufacturers have decided the overall cost is simply lower when the recall is voluntary than when the alleged problem comes down to a forced recall.  By "cost", I'm not talking about simply the cost of recalling the cars, which of course is not insignificant.  I just think the overall bottom line is simply helped when it is done voluntarily.  It looks better all the way around - to consumers who see what looks like a proactive company (and thus may become repeat customers), and even ultimately to jurors who see the same thing should it get that far.  It tends to soften the company's image a bit in my estimation - to humanize the image of the "faceless corporation".   I'm sure they also save on attorney fees and the costs of fighting the recalls.  Ultimately companies (especially those that are publicly-traded entities) have to focus on the bottom line, and what's good for the company.  Here, it just sounds like the general consensus is that this path helps the company more.  Plus they get more control over the voluntary recalls (scope, time, etc.), so there's that element as well. 
 
I'm not saying there isn't any degree of altruism involved, because I know these companies are made up of people who do care.  I'm just saying that this brand of altruism happens to coincide with what is judged as best for the bottom line.  Maybe it's just the modern brand of capitalism?

For those with children, a reference to “the Mouse” may sound familiar.  “The Mouse,” more formally known as The Walt Disney Company, employs some 140,000 employees and is perhaps the world’s largest media conglomerate.  Disney is extremely successful, in part due to its efficient and uniform operations. 

This week it was reported that a female Muslim restaurant hostess at Disney’s Grand Californian Hotel claimed she is being subjected to religious discrimination because Disney is refusing to allow her to wear a hijab (head scarf) while on duty in a public position. 

According to press reports, Disney has attempted to accommodate the employee’s religious beliefs by offering to allow her to wear a hat and bonnet in lieu of the hijab, to wear alternative costumes that meet Disney costume guidelines, and to place her in alternative positions that would allow her to wear her hijab. 

The federal EEOC has issued guidance on an employer’s obligation to reasonably accommodate an employee’s sincerely-held religious belief, practice or observation unless it would constitute an “undue hardship” for the employer.  Has “the Mouse” done enough to satisfy its obligation to reasonably accommodate?  Any suggested alternatives?  Does the employee’s request/demand constitute an undue hardship for a tightly-run ship like Disney that, in many respects, operates like the military?   

This is a great example of why Court's dockets are so backed up.  Smallwood v. NCSoft Corp., No 1:09-cv-00497 (D. HI, Aug. 4, 2010) Plaintiff sued an online game manufacturer on the grounds that he suffered emotional distress because he is now blocked from playing the game (after spending over 20,000 hours at it over the course of a few years).  The plaintiff appeared pro se (despite actually having a lawyer assist him) and twice had his complaint dismissed for failure to state a claim on jurisdictional grounds because he didn't adequately plead jurisdiction and the elements of fraud.  The Court (U.S. District Court, HI) has now issued its third opinion and only now dismissed some of the claims with prejudice.  And this was no small opinion-- in it, the Court discussed the pleading standards for fraud, completed a conflict of law analysis between Texas and Hawaii law, analyzed the extent to which claims could be waived by contract, and then proceeded to look at the specific allegations the plaintiff made to see if they could reach the gross negligence standard needed to get around the limitations in the user agreement and therefore meet the jurisdictional requirement.  The Court also included a discussion of the leniency afforded pro se litigants and then why, under the facts of this case, it was no longer affording the plaintiff that leniency.
 
Now the other claims (defamation/libel/slander, negligence, gross negligence, and negligent infliction of emotional distress) will proceed yet again.  Interestingly, he really isn't claiming that the manufacturer should have warned against the addictive nature of the game, it seems more that he is arguing that the Company should have warned that he might not have access to the game forever.  All his damages stem from his alleged "withdrawal" after no longer being able to play.  I guess that means it is time for yet another warning in the user agreement.
 
Here is a link to the opinion.  
 
And here is a link to the Above the Law commentary on the frivolous nature of Mr. Smallwood's claim. 

The impact on law practice of the evolving internet is an increasing challenge for law firm managers who are responsible for training and supervising lawyers and staff.  The web permits researching facts and law, marketing our practices, and keeping in touch with colleagues and clients.  Yet whether marketing information about a law firm is circulated traditionally through printed brochures and directory listings, or electronically on a web page or in emails, the information must be accurate and not contain misrepresentations.  When communications about clients’ cases occur electronically, they must be secure and preserve confidences.  Statements made in personal conversations about adversaries, their clients, or judicial officers can result in embarrassment or even discipline if disseminated through web postings or email traffic that is republished to others.  Obtaining information about an adverse party represented by counsel may be inappropriate where an attorney or staff member of a law firm obtains information through use of a pretext, or by assuming an identify that is not accurate in order to induce the adverse party to disclose information.  These are new considerations which managers must consider and make known to law firm colleagues. 

Have you begun engagement strategies through the use of social media in your firm? What platforms (Facebook, LinkedIn, Twitter) have you found to be most successful?  DRI addresses social media issues in the current issue of For the Defense and in the upcoming Webcast on September 16, Twitter and Facebook and MySpace, Oh My: New Rules for New Technology, presented by DRI’s Public Policy, Technology and Law Practice Management Committees.

It is interesting to check outside the legal profession from time-to-time how other cash-strapped entrepreneurs (and we lawyers in private practice like to think of ourselves as such, don't we?) are handling marketing with fewer dollars in a down economy.

In an August 18, 2010 Wall Street Journal piece entitled "On a Tight Budget? How to Land a Client", Emily Maltby points to a number of techniques that could provide useful.

Creativity is key, Maltby writes. She points to techniques such as aiming to reach a particular targeted, "specific demographic" for new clients, and "focusing more on niches or specialties" within a particular industry. Offering free services, "learning more about search engine optimization," creating a more powerful on-line presence, and making better use of social media are also things to consider. 

On August 10th, the Judicial Panel on Multidistrict Litigation entered an order consolidating the Deepwater Horizon litigation, involving over 300 cases, to the Eastern District of Louisiana before Judge Carl Barbier, who has been asked to serve as transferee judge.  Although BP supported centralization of the cases, it proposed the Southern District of Texas as the transferee court.  The  JPML's opinion can be found at the following link:

http://www.jpml.uscourts.gov/Panel_Orders/Recent_Orders/MDL-2179-Transfer_Order.pdf

Interestingly, the person appointed by the Obama Administration to administer oil spill claims, Kenneth Feinberg, endorsed the current claims process over litigation: “If you have a claim, you would be well advised to file it with this new process.  You will get quicker more generous treatment than if you file a lawsuit.” 

What do you think will be the most effective way of resolving claims arising out of the Deepwater Horizon incident: the claims process or litigation?  Maybe more importantly, what should be the government's role, if any, in encouraging resolution of Deepwater Horizon claims?

In Howard v. American National Fire Ins. Co., Cal.App.4th; 10 C.D.O.S. 10399, the California Court of Appeal, First District, recently affirmed a judgment entered in the San Francisco Superior Court against an insurer after a bench trial finding bad faith and punitive damages.  In a wide ranging decision, one of the central coverage issues was the timing of injury.  The insurer claimed there was no evidence of injury during the policy period introduced in the underlying case, but the Court of Appeal found that evidence of timing could be introduced in the coverage action because timing was not adjudicated in the underlying action.  The Court of Appeal also held that the genuine dispute doctrine is inapplicable in third party, refusal to settle contexts.

James Howard (“James”) and his brother Joh Howard sued Father Oliver O'Grady (“O’Grady”) for damages suffered from molestation. The named defendants included the head of the diocese, the Roman Catholic Bishop of Stockton (“Bishop”).  In his complaint, James alleged that O'Grady repeatedly molested him "[b]eginning in approximately 1979.”

American Fire National Insurance Company (“American”) insured the Bishop from November 1, 1978 to November 1, 1979, under a comprehensive general liability policy for sums he became legally obligated to pay as damages up to a limit of $500,000 per occurrence.  When the Bishop was sued for negligent retention, the Bishop sought a defense from American. American denied the tender, maintaining that the molestation was not covered because it occurred after the expiration of American's policy in November 1979. 

The Howards made several pretrial settlement demands.  Their final pretrial settlement offer was $1.85 million.  American did not contribute to any settlement offer made by the Bishop.  The case did not settle.  The final judgment awarded compensatory damages of $2.5 million to James Howard and $2.75 million to Joh Howard. The Howards' punitive damages were $3 million each.  Subsequently, the Bishop settled the underlying litigation with assistance from its other insurers. 

The Howards filed a complaint against American as judgment creditors seeking to collect on their judgment.  The Bishop filed a separate complaint against American for breach of contract and bad faith breach in failing to defend, settle, and indemnify the Howards' claims against him. The complaints were consolidated in the trial court.  The trial court found that coverage under the policy was triggered, and that American acted in bad faith. 

During the coverage action, evidence was introduced that O’Grady had stayed in the Howard home during the American policy period.  American argued that this evidence was inadmissible because it was not introduced in the underlying litigation.  The Court of Appeal rejected that argument, explaining that the underlying litigation only addressed whether molestation occurred – not the timing of any alleged molestation.  Accordingly, the evidence in the underlying litigation did not dictate the scope of evidence in the coverage action. 

American also cited to deposition testimony in which James stated that his “first memories” of molestation were at age five.  This testimony did not impact the coverage issues because it concerned James’ “memories” of the molestation and not the actual dates of molestations.  Accordingly, the Court of Appeal held that American did have a duty to indemnify the Bishop in the underlying litigation. 

The Court of Appeal likewise held that American breached its duty to defend by relying on James’ deposition testimony to deny a defense to the Bishop.

The trial court found that American breached its duty to settle the underlying litigation supporting a finding of bad faith.  American argued that its failure to settle the underlying litigation was not unreasonable because it was never presented a settlement offer within its policy limits.  The Court of Appeal held that in actions involving a single insurer, a settlement offer within policy limits is necessary to support a finding of bad faith.  However, where multiple insurers are on the risk, an insurer can be held liable for failure to settle if the settlement offer is less than the total limits of the policies insuring the risk.  Here, although American’s policy limit was $500,000, there was a settlement demand for $1.85 million that was well within the primary insurance policy limits of the multiple insurers which totaled $4.3 million. 

In addition, American argued that its refusal to settle was prompted by a genuine dispute concerning coverage which precludes a finding of bad faith.  The Court of Appeal held that the genuine dispute doctrine does not apply in all bad faith insurance contexts.  Pertinently, an insurer in a third party case may not rely on a genuine dispute over coverage to refuse settlement.  Moreover, even if the genuine dispute standard was applied, the Court of Appeal found that American’s no-coverage position was based on an unreasonable interpretation of James’ deposition testimony.

Interesting story involving Chevron in Equador and potential remedies you may have as a defense attorney to combat U.S. plaintiff's attorneys partaking in "sharp" practice in foreign, corrupt judicial systems. This case appears to be similar to that of Dole in Nicarugua.

The defense attorneys for Chevron in this case had an alien tort claim removed from U.S. courts on forum non conveniens grounds. The U.S. plaintiff's attorneys then sought an astronomical amount of damages in Equadorian court. Chevron's attorneys sought to discredit the Latin American court by returning to U.S. courts and alleging fraud.

Chevron's attorneys were aided by an American film maker who was producing a documentary about the case. Portions of the film that were initially released to the public captured the Equadorian judge handling the case on film discussing damages with an outside party. Further footage that was ordered to be turned over by a U.S. court suggested that the "independent" damages expert appointed by the Equadorian Court was colluding with the plaintiff's attorneys in drafting his report wherein he recommended approximately $27 billion in damages.

Are these cases establishing precedent by which defendants use U.S. courts to monitor litigation in foreign courts, even after they have removed the case from U.S. courts on forum non conveniens grounds? Will cases such as these begin to alter the way U.S. courts decide applications to remove cases from U.S. courts based upon forum non conveniens?

Arturo Fonseca, 47; Isis Torres, 37; Francisco Portillo, 41; Eduardo Romero, 44; and William Madrigal, 56, five South Floridians pleaded guilty in Miami federal court to their roles in a massive Medicare fraud scheme.

Fonseca, Torres, Portillo, Romero and were among 26 suspects in three states indicted in December 2009 on charges of running the scheme that totaled $61 million, according to the U.S. Department of Justice. At the plea hearing, Fonseca admitted to being an owner and operator of Courtesy Medical Group Inc., a purported medical clinic in Miami. According to court documents, Courtesy provided medical documents so that the home health agencies could bill the Medicare program for expensive home health services and therapy for beneficiaries that did not need and in some cases did not receive the treatments. According to the indictment, approximately 344 prescriptions were issued through Courtesy and signed by Fonseca’s co-defendant, Dr. Fred Dweck. As a result, the Medicare program was fraudulently billed approximately $16.6 million for home health services.

According to plea documents, Romero admitted to being a patient recruiter for ABC Home Health Care Inc., and Florida Home Health Care Providers Inc., two Miami-area home health care agencies. Romero admitted that in his role as a patient recruiter, he would solicit and receive kickbacks and bribes from the owners of ABC and Florida Home Health in return for providing Medicare beneficiaries that the home health agencies could use to bill the Medicare program for unnecessary home health care services. Romero also admitted to paying kickbacks and bribes to the owners and operators of Courtesy in return for the prescriptions for unnecessary home health care services.

Medicare was billed approximately $391,593 for home health care services that were not medically necessary or were not rendered for the patients recruited by Romero and one of his co-defendants. The owners and operators of ABC and Florida Home Health pleaded guilty in a separate case and are awaiting sentencing.

According to plea documents, Portillo and Torres were nurses and falsified patient files for ABC and Florida Home Health to make it appear that the patients qualified for home health care services, when they did not and in some instances never received any treatments. According to court documents, Portillo was responsible for approximately $142,000 in fraudulent Medicare billing and Torres was responsible for approximately $528,400 in fraudulent Medicare billing. According to plea documents, Madrigal, a Medicare beneficiary, admitted that he solicited and received kickbacks and bribes in return for allowing ABC and Florida Home Health to bill Medicare for home health care services for which he did not qualify. Madrigal admitted that as a result of his role in the scheme, approximately $68,760 was fraudulently billed to Medicare for unnecessary home health care and therapy.

Why are these people allowed to plea to obtain smaller sentences and keep a good chunk of their ill-gotten gains? Is it time for the anti-fraud effort to go nationwide instead of just a few states?

From Zalma’s Insurance Fraud Letter, available free at http://www.zalma.com/ZIFL-CURRENT.htm

In Young v. Verizon's Bell Atlantic Cash Balance Plan, the Seventh Circuit held that ERISA permits a plan sponsor to correct a serious scrivener's error.   A few observations:  First, my heart goes out to the in-house lawyer who made the error.  It could happen to anyone.  I hope plaintiff's counsel made the right call by putting the screws to him even after it became apparent that this was a mistake. All good lawyers would seriously consider letting the guy off the hook.  Second, this case reminds plan drafters how critical it is to get the whole plan right, especially the money payment provisions.  We need to slow down and get a skilled, fresh pair of eyes involved.  Always.  We need to understand what the plan says and make sure that what we write accurately reflects our understanding.   Finally, the court made the right decision.    I understand the argument that plan participants should be able to rely on the plan as written, but it is simple common sense to not hold a plan sponsor liable for something it never intended to offer.  I think it is unecessarily harsh to hold any other way.