Toward a unified standard for "reckless"

In which I discuss the common threads between Palin v. NYTimes and punitive damages:

Yesterday, Judge Rakoff in the Southern District of New York issued a lengthy and thoughtful opinion in which he said Sarah Palin couldn't proceed against the Times for defamation. The Times published an editorial that was wrong, incorrectly linking Palin to the shooting of Gabby Giffords. It issued a prompt correction. 

Judge Rakoff dismissed the lawsuit on a Rule 12(b)(6) motion (i.e. without the need for evidence . . . oddly, though, after he decided to hear testimony. He reasoned, and it seems clearly right, that to prove defamation against a public figure in a topic of public concern, the plaintiff must show "actual malice," which is "with knowledge the statements were false or with reckless disregard for their truth."

I try to follow First Amendment jurisprudence closely - hey, it's interesting - but don't practice in that field. To my understanding, Rakoff is clearly right here. But you can get that hot take from a thousand others. 

What's interesting to me is this: the standard to award punitive damages for denial of maintenance and cure to a Jones Act seaman, and the standard for gross negligence (either to vitiate indemnity or to afford punitive damages) is about the same as the standard for a 1st A defamation suit:

M&C: to get punitive damages: the plaintiff must prove that the employer's conduct has been "callous and recalcitrant, arbitrary and capricious, or willful, callous and persistent." 

Louisiana law: the plaintiff must prove "willful, wanton, and reckless conduct that falls between intent to do wrong and ordinary negligence." The Houston Exploration Company v. Halliburton Energy Serv's, Inc., 269 F.3d 528 (5th Cir. 2001)

Federal maritime law: "Gross negligence is substantially and appreciable higher in magnitude than ordinary negligence. Other courts have defined gross negligence as the "entire absence of care," the 'want of even slight care and diligence,' and the 'utter disregard of the dictates of prudence, amounting to complete neglect of the rights of others.' At least one Louisiana court stated that one is grossly negligent when he 'has intentionally done an act of unreasonable character in reckless disregard of the risk known to him, or so obvious that he must be taken to have been aware of it, and so great as to make it highly probable that harm would follow.' Mere inadvertence or honest mistake does not amount to gross negligence." Id. (cleaned up). 

These all sound similar! I might go so far as to say that they both use the same terms: "reckless disregard." I would love to have somebody explain to me how they're different, or under which facts a jury could find reckless disregard in a maritime law punitive damages case, but not reckless disregard in a First Amendment case. 

As a practical matter though, the two standards are miles apart. Try dismissing an allegation for gross negligence or punitive damages on Rule 12(b)(6) in the marine context. You will lose every time. Marine punitive damages cases are even - maybe often - lost on summary judgment, with the Court finding the jury should decide. But with Palin v. NYTimes, it's dismissed after a brief factual hearing.

Why? Well, one reason is that we're more protective of our press than we are of our marine defendants. If that's the case, though, we should be clear about it and use different language for the standard. If it's not the case, then we should consider recklessness to mean recklessness, regardless of where it's applied. 

Vocabulary

Can't help but pass along this bit about romanette, which is new to me: lower-case roman numerals. 

Which reminds of orthogonal, which is reasonably close to tangential. In light of Scalia's taste for the word, I put it in a brief to a judge who considered Scalia a good friend. Didn't help though; lost the motion. 

Harvey

A lot of folks in Houston, and along the Texas coast, are in a spot. It's a little wonderful to watch people respond as they have, particularly in light of Houston's reception post-Katrina. The better angels of our nature. 

In such efforts, mine and yours, it seems sensible to keep in mind a certain admonition about giving, and "let[ting] not thy left hand know what thy right hand doeth."

But I will offer: if you're going to give, give well, where it will be useful. The American Red Cross, for instance, has come in for some well-deserved censure. This article is the best I've seen about the issue. The takeaway: 

If Hurricane Harvey has spurred you to put your hand in your pocket, then, that’s great. Giving generously to people in need is always a good idea. So give today, when a disaster is dominating the news, and give next month, when the need in Texas and around the world will be less well covered. Give whenever you can! Just, please, don’t make your donation to the Red Cross.

Weekend fun

Further to recent comments about the perils of some settlements, it is with some joy I offer this new Seventh Circuit case. The plaintiff got a foot long sandwich from Subway. The sandwich was only 11 inches. Quelle horreur. A class action was filed. It turns out it wasn't Subway's fault. Subway paid north of half a million to the lawyers and put in place meaningless standards, at which point the district court approved the settlement.

Finding it to be utter nonsense, the Seventh Circuit rejected it. Good for them. The opinion is brief, and well worth a read. 

Young lawyers arguing

About a dozen years ago I read Francis Wellman's The Art of Cross Examination. Wellman, writing in 1903, explains how everything settles and as a result, lawyers don't get good trial experience. I suppose 100 years is a long time to say the trend has accelerated, but it has certainly continued. 

There are judges who are eager to try cases. Judge Fallon in the Eastern District of Louisiana, I was once memorably told, would just as soon try a case as get out of bed in the morning. Trying a case in front of Judge Berrigan was a real joy. She and her clerk sat in the jury box, not on the bench, and listened attentively to everything. Other courts would happily let you know they would rather not go forward with the trial. There are fewer arguments now, too. I was fortunate that, by dint of effort on my part and grace on my superiors', I got to stand up in court and stumble through arguments early-on, getting the kinks out. 

It is encouraging, then, to see a new project in New York and elsewhere, with rules specifically designed to encourage young lawyers to argue. I wonder if this will eventually help the judges, too - if lawyers can recognize their mistakes before they become ingrained, maybe there will be better arguments over the course of the profession. Trends aren't inevitable. Maybe trials, like coffee, will become the next object of botique expertise and fascination.  

Laundering a standard of review on summary judgment from de novo to abuse of discretion

The first case I argued in the Fifth Circuit, I had won summary judgment in a Jones Act case on unseaworthiness, negligence, and M&C. 

After I filed for summary judgment based on the plaintiff's testimony in his deposition, the plaintiff's opposition had an updated report from his expert. The expert claimed to have spoken with the plaintiff, and the plaintiff had new allegations (!!) not referenced in his deposition that created a fact question. He wasn't lifting up on one half of a heavy hatch any more; he was lifting up on the entire hatch. 

A judge on the panel, while my opponent (appellant) was speaking, said she thought there probably a fact question based on the expert's supplemental report. I swallowed hard, and I got up and argued that it was no different from a sham affidavit: the plaintiff can't change his allegations after a summary judgment motion has been filed against him. To my surprise, the entire panel agreed with me, but for a different reason: they said the expert couldn't rely on inadmissible evidence, which I thought was a close question under Fed. R. Evid. 703. 

Right around the same time, Judge Posner, sitting as a district court judge, did something at least a little clever and maybe a little cheeky. He dismissed the parties' experts as unreliable under Daubert. Then, without experts, he said neither party could prove its case and dismissed the case. The sneaky / brilliant part of this is that dismissal of a case / summary judgment are reviewed de novo, but striking experts is reviewed on an abuse of discretion standard. By striking the experts on Daubert and making that the grounds for finding summary judgment, the appellate court has to look at the abuse-of-discretion standard. 

Had my case been defeated on a fact question, my plan was to re-urge the motion to strike the plaintiff's expert, then if that would have been successful, re-urge summary judgment. 

This is all a lot of prologue for the Fifth Circuit's recent opinion in Stewart v. Capital Safety USA. The plaintiff fell off a rig, and his harness didn't stop him. He filed suit against the harness manufacturer under the LPLA (Louisiana Products Liability Act). The harness manufacturer moved to strike the plaintiff's expert, and the Court found the motion to have merit. As the Fifth Circuit explains, "The court had 'major concerns about [Killingsworth’s] ability to satisfy any of [the Daubert] requirements' because, the court found, Killingsworth 'made wide-ranging, blanket statements . . . without any data or methodology to back [them] up' and 'his theories on product defects and accident causation lack[ed] the reliability and testability that is required.'"

Then, the plaintiff's expert having been struck, the defendant moved for summary judgment. The district court agreed, and so did the Fifth Circuit. Calling the plaintiff/appellant's argument "not pellucid" (ouch), the Fifth Circuit held an expert was required. No expert, no fact question, no trial. The district court followed Posner's path, but where Posner was reversed on appeal, the district court was affirmed. 

It will be interesting to see if more courts follow this approach, and if more lawyers suggest it.  

Thoughts on the death of Gawker

When I teach maritime law to naval architects, the second and third classes are about the First Amendment, because it is a fun and interesting (at least to me) jumping-off point for judicial interpretation. Though the Gawker / Hulk Hogan case is First Amendment-heavy, this post is about a different topic: funding lawsuits. 

Terry Bollea (nee Hogan) was bankrolled by Peter Thiel, because, Mr. Thiel tells us, a single-digit millionaire just can't get effective justice. 

Well, perhaps a single-digit millionaire maybe can't bankroll a frivolous lawsuit to Thiel's standards, but a broke plaintiff who's been actually, significantly hurt through the fault of another - where the other has assets - will have a line of lawyers around the block if she or he so desires. 

Who pays for the medical treatment? The Jones Act employer or the comp. carrier, or if none, the plaintiff lawyer or a third party. Who pays for the experts? The plaintiff attorney. What's different about having Thiel bankroll it instead of the lawyer? Nothing, as far as I can see, except that a bank would presumably be a little careful with its money outlays. But it is common for firms to have a line of credit, and for that credit to be spent on cases. There's just not a major, principled difference between a bank investing in a firm and a bank investing in a case, or between a private benefactor with whatever his or her motivations may be investing in a firm or case. If that's stopped, then it becomes harder for a plaintiff attorney to hang out a shingle: unless she has a war chest and she can fund lawsuits by herself, she won't be able to take bigger cases. 

But why should that information be kept from the jury or judge? Is there a risk of prejudice if the jury knows Thiel is angry at Gawker? Absolutely. But is it unfair prejudice? Juries have to consider motivation and reasons for prejudice. Letting the jury know funding hardly seems an unfair prejudice. Allowing testimony about motivation would run the risk of turning one trial (Bollea v. Gawker) into two (Thiel v. Gawker), but that would rarely be the case - these deals are rare - and there are already plenty good evidentiary rules (FRE 401 - 403) to fight through that thicket. 

Rakoff on plea bargains

Jed Rakoff came to my attention when he refused to accept a civil settlement between the Department of Justice and a bank, saying it wasn't in the public interest. 

Why Innocent People Plead Guilty

The thesis being that people have every reason to plead guilty when the immense power of the state is behind a prosecution and the chance for a plea bargain removes risk. Folks are risk averse, after all. 

But the problem with everybody pleading guilty is twofold: first, often, individual justice isn't done. Second, justice isn't seen being done. There aren't public records of what happened and who is responsible and why. 

Not practicing criminal law, I don't have a lot to say about the propriety of plea bargains other than to say I think it's likely Rakoff has a point. Perhaps to a lesser extent, I think the same rules apply for civil trials. Settlements are often about who can pay and who will pay, not who ought to pay. There are a lot of reasons for this: clients, no different from anyone else, are risk-averse. Deliver a great result and it's "job well done;" deliver a terrible result and it's "no more work for you." Lawyers internalize this. Trials are expensive - and if the lawyers aren't expensive enough, the experts sure are. Trials are inconvenient and uncertain. 

But trials are also important. They provide guideposts to help determine settlements in similar cases. They give the world - or those who want to find it - a record of who did what and who was at fault. The outcome of a trial likely hews closer to justice than settlements often do. 

It is interesting to watch this thought process be internalized for class actions, where judges are now occasionally rejecting settlements. With regard to which judge I'd prefer, the answer is more often based on willingness to try a case than based on supposed liberal or conservative tendencies. 

The Chickenshit Club

Next in the reading pile:

The Chickenshit Club, a story about why and how the Department of Justice lost the will and ability to prosecute high-ranking white-collar folks. 

But this isn't about prosecution of white-collar criminals; this is about the chickenshit club, which, per Jesse Eisenger, comes from James Comey. (This isn't about politics either.) The story goes that when Comey takes over the head of the US Attorneys' office for the Southern District of New York, he asks who among the attorneys has never lost a case. Hands shoot up. Comey declares the hands pointing skyward to be members of the chickenshit club, never having gambled on a case they could lose. 

Only pursuing sure winners is a great strategy to get a perfect record, but it suggests a deep degree of risk aversion, and it means, on the defense side, overpaying on borderline claims. 

Which is why I'm at least a little proud of my failures. Admitting my shortcomings is part of working to improve on them. 

An expanded use

Instead of just using the blog to provide occasional updates about Louisiana and federal cases, I'm going to try to use it a little more often, with an expanded view, to point to others' worthwhile thoughts and to offer more commentary. It'll be more efforts to emphasize my philosophy. 

To start, I'm going to steal somebody else's words, which aim at the same philosophy:

Please Take My Money

Pearls:

When you consistently show who you are, what you’re interested in, what you care about, and what you stand for on a daily basis, you engender trust. 

By demonstrating your identity and providing value to others on a regular basis with no expectation of something in return, you build a trust and respect which compounds over time. 

Though the subject matter is asset management, the idea is the same, near as I can tell, as providing legal services. 

The LOIA applies to decommissioning a well

The Louisiana legislature really doesn't like indemnity contracts. First, it barred them outright for any contracts that pertain to an oil and gas well, in the Louisiana Oilfield Anti-Indemnity Act - the LOIA or LOAIA in 1981. Second, more recently, it passed La R.S. 9:2780.1, which purports to extend anti-indemnity language to construction and trucking contracts. 

Federal judges, particularly in the Fifth Circuit, really like freedom of contract. They have sought to limit the LOIA as best as able, and with great success, to the extent the LOIA now only applies to injuries on fixed production platforms (unless it's an injury on a jack-up rig or the like performing wireline services) and the indemnitee didn't pay to be named as additional insured. 

What about decommissioning a platform? Judge Engelhardt in the Eastern District of Louisiana, likely reading the tea leaves about Fifth Circuit jurisprudence on the LOIA, held decommissioning a platform isn't subject to the LOIA because the well isn't actually producing any more. In Tetra Technologies, Inc. v. Continental Ins. Co. 813 F.3d 733 (5th Cir. 2016), the Fifth Circuit disagreed. It held that the LOIA expressly covers plugging and abandonment of a well, and P&A work is a necessary part of the decommissioning process. Therefore (reluctantly, I assume), the Fifth Circuit held the LOIA applies. 

That didn't end the case though. The Fifth Circuit remanded, because it concluded it couldn't tell whether the majority of the work was going to be performed on the to-be-decommissioned platform, or whether it was going to be performed on the barge. If on the platform - ostensibly the target of the effort - then the LOIA would apply, but if on the barge, potentially not. 

The case is nominally a win for democracy - after all, Louisiana voters elected the legislature that passed the LOIA, and the case stops it from eroding further. But it is one of many cases that will make litigation difficult and convoluted. What's more, parties entering into contracts will not know ahead of time whether the contracts are wholly valid, or whether they might fall entirely or partially into the LOIA. 

McBride v. Estis - the back door to punitive damages and loss of consortium?

More ink has been spilled on McBride v. Estis than any other maritime case out of the Fifth Circuit in recent years. Less noticed, after the Fifth Circuit en banc found punitive damages were not available for wanton unseaworthiness as a matter of law, the case proceeded to trial. 

According to the defendant, Mr. McBride did not have a material relationship with his son. He died almost instantaneously in the accident. As a Jones Act seaman, Mr. McBride's (via his estate) is only able to recover his pre-death pain and suffering. His dependent survivors, by class, can recover their pecuniary damages. Despite a seemingly thin history of support, Judge Hanna found Mr. McBride would have given his minor child in excess of $500,000 over his lifetime. Judge Hanna also found Mr. McBride would have provided his minor child with $180,000 in loss of nurture - that is, the pecuniary value of life skills provided, but expressly not the loss of emotional support or the pain caused to Mr. McBride's child from Mr. McBride's passing. 

The survival award (pre-death pain and suffering) was $400,000, which is an extraordinary number if the defendants' allegations are to be believed. In Randall v. Chevron, back in 1994, the Fifth Circuit held that in a drowning case under extreme, and awful, circumstances, the highest allowable award was $20,000 per minute of pain and suffering. Mr. McBride seems to have exceeded that significantly. 

The case is up on appeal with briefs expected toward the end of 2016. The case bears watching. If affirmed, it indicates the value of a Jones Act wrongful death claim, in certain courts, is much higher than most attorneys would have anticipated. 

New M&C decision provides biggest punitives award from federal court

Watson v. Weeks Marine - 

On May 27, 2016, Judge Barbier issued his order and reasons in Watson v. Weeks Marine. The claim is an ordinary Jones Act personal injury case but it has two significant aspects, both involving maintenance and cure. 

Watson, a good, long-term employee of Weeks, was injured on September 24, 2014 on a Weeks vessel when, during heavy seas, a table hit him. He began treating in South Carolina, then continued treating home in Louisiana, complaining of substantial leg, knee, and foot pain, including numbness. Weeks sent him to an IME in November. The IME physician found there were no objective indicia of injury and declared Watson at MMI. When Watson didn't show up for work, he was fired. His maintenance and cure were terminated. 

He began treating with another physician in Houston, who said he had severe back and leg issues requiring surgery. Watson attended a follow-up IME with Weeks's physician in June 2015, which echoed the first complaints. Watson continued treating, at his expense, with his physician in Houston. That physician recommended a cervical fusion and continued treatment for the knee. 

Judge Barbier found Weeks's conduct merited punitive damages. Unlike recent cases in federal court - notably Jefferson v. Baywater, where the defendant's conduct was arguably worse and Judge Morgan found only $10,000 in punitive damages, Judge Barbier hit Weeks for $100,000 in punitive damages and $50,000 for attorneys' fees to prove entitlement to M&C. 

Few punitive damages claims have been appealed. Of those that have - notably, Meche v. Key Energy - the Fifth Circuit has reversed. Punitive damages, it has held, are only appropriate for the worst offenses. It is likely Watson will be appealed on whether a defendant's reliance on an IME is grounds to terminate M&C. 

Second Circuit affirms: pollution policies are maritime in nature; uberrimae fidei has teeth

Signal International owned a dry dock in Port Arthur, Texas. When the dry dock sank, Signal tendered it to its pollution underwriter, Great American, and to its GL underwriters and excess underwriters. The Great American pollution policy called for the application of New York law. Contending Signal had not told Great American about the condition of the dry dock and in so failing, Signal had made material misrepresentations, failing to report that the dry dock had been surveyed and found to have a negative value. Though the Second Circuit makes much of Signal’s failure to disclose problems with the dry dock, the surveys are more equivocal. Some surveys contended the dry dock was in ‘fair to good’ condition; others indicated it had deeper problems. Signal used doublers where there were wastage holes and ABS does not approve of the use of doublers. The ABS survey of the dry dock, nine years before the loss, was therefore harshest. In 2007 and 2009, two surveys of the dry dock called it essentially fair to good.

When the dry dock sank, removal costs exceeded $12,000,000.

Signal maintained a pollution policy through Great American between 2004 and the loss in 2009. Signal did not disclose the surveys of the barge to Great American, and at depositions Great American representatives testified - understandably - they would want to know about the surveys.

The Second Circuit first addressed whether the pollution policy was maritime in nature and therefore subject to uberrimae fidei, the duty of ‘utmost good faith’ on the insured to disclose risks. The Second Circuit said “yes.” This is a little surprising because a dry dock is not a vessel and ordinarily not subject to maritime jurisdiction. But the Second Circuit held that the purpose of a pollution policy is to prevent the actual or imminent threat of discharge onto a navigable waterway, which implicates marine commerce under Norfolk Southern Railway v. Kirby, the Supreme Court’s famous 2004 maritime case involving a railroad.

Having determined maritime law applies, the Second Circuit found Signal had failed to disclose material facts the underwriter would have wanted to know. Even though Signal filled out the application fully and accurately, it failed to take the extra step of disclosing more than the underwriter had requested. Therefore the policy was voided.

Uberrimae Fidei is undergoing a renaissance everywhere but the Fifth Circuit, it seems. In the Fifth Circuit, it is probable this claim would have come out the other way. The Fifth Circuit has held uberrimae fidei is not entrenched federal law, so it can be supplemented by state law. In that case, the burden is typically on the insurer to learn more about the risks it is undertaking; it is not on the insured to disclose risks.