West Virginia Business Litigation Lawyer & Attorney : Law Office of Jeffrey V. Mehalic : Charleston, Huntington, Parkersburg

    Subrogation and reimbursement issues, including Medicare and Medicaid liens, arise in an increasing number of cases, and if not handled correctly, can derail a settlement and/or have disastrous consequences for an unwary lawyer.  If you have a personal injury or employee benefits practice, you should consider attending "Liens, Liens & More Liens," a seminar sponsored by the South Carolina Bar on Friday, May 2, 2008, which will be broadcast live over the Internet starting at 8:55 a.m. EST.  Here is the seminar information.  You can attend a webcast from literally anywhere with an established Internet connection, so it doesn’t get much easier than that.

    I know faculty members Roy Harmon and Rob Hoskins (Roy blogs at www.healthplanlaw.com and Rob was co-counsel for LaRue in LaRue v. DeWolff, Boberg & Associates, Inc., 128 S.Ct. 1020 (2008)), and both are well-known and well-respected in the ERISA/employee benefits litigation field. 

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    Although John Beilein’s resignation last April as West Virginia University's head basketball coach did not attract nearly the attention (or outrage) that Rich Rodriguez’s resignation has, that could change.

    When Beilein left for the same position at the University of Michigan, he was able to negotiate a reduction in the amount of his buyout with WVU from $2.5 million to $1.5 million, payable in five annual installments to the West Virginia University Foundation, Inc.  (Incidentally, Beilein’s attorney in those negotiations now represents WVU in its lawsuit against Rodriguez.) 

    Sports writer Mike Casazza reports in today’s (Charleston) Daily Mail that on April 1, Beilein paid the first installment of $300,000, less a deduction of $10,000 to reflect incentives he was owed for achieving team GPA and graduation rate levels, to WVU President Mike Garrison.  Here is Beilein’s letter, which also has a copy of the check.  The Daily Mail obtained the letter through a FOIA request, which seems to be the only way to get information from WVU.

    Here are some excerpts from Beilein’s letter:

It is my belief that the [Resolution and Termination] Agreement’s provision requiring payment of $1.5 million over five years is void and unenforceable because it is a penalty premised on an unenforceable and illegal liquidated damages provision contained in the Employment Agreement.  The liquidated damages provision in the Employment Agreement is grossly disproportionate to any actual damages that might have been incurred by the University and is void as a matter of public policy.

At that time, I have chosen not to initiate legal proceedings to declare the Agreement and the related liquidated damages provision in the Employment Agreement void but reserve my right to seek future action.  I urge the University to stop using the liquidated damages provision in its employment contracts because such provisions are illegal, onerous, and violate public policy.

    Obviously Beilein doesn’t want to be a defendant in a breach of contract action, so he made the payment as agreed.  But judging from his statements, he may not mind being the plaintiff in a declaratory judgment action aimed at invalidating his buyout.  He may also be waiting to see how WVU does in its lawsuit against Rodriguez.  Their situations are so different factually, though, that whatever happens with Rodriguez would not be an accurate barometer of what Beilein could expect. 

    Beilein also says that he’s making his payment “[w]ithout waiving any rights and under protest[.]”  But even if he raised his concerns with WVU before entering into the agreement, he signed the agreement, which would seem to undermine his implied threat that he may not abide by its terms.    

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    Sometimes even the most efficient, sophisticated corporation makes a basic mistake, as illustrated by “Candid Camera: Trove of Videos Vexes Wal-Mart”, a story in The Wall Street Journal earlier this month. 

    From the 1970s until 2006, Wal-Mart employed Flagler Productions Inc. to help produce and film its yearly events for managers and shareholders, which also included entertainment for its annual meeting and sales meetings.  Then, in late 2006, Wal-Mart stopped using Flagler.  The decision came a few days after founder Mike Flagler sold his business to two employees.  Not surprisingly, the loss of Wal-Mart’s business, which was 90% of Flagler’s revenues, decimated the small business, which had to downsize from a 20,000 square foot production facility to an 800 square foot office. 

    Flagler Productions offered to sell its video library of 15,000 tapes to Wal-Mart for several million dollars.  Wal-Mart responded with an offer of $500,000, claiming that the footage would not be of interest to anyone else.  Wal-Mart could not have been more wrong.

    Either Wal-Mart forgot that it didn’t have a contract with Flagler Productions or it genuinely but naively believed that no one else would be interested in the footage.  But no contract equals no control, so nothing prohibits Flagler from selling the tapes to those who may be interested in Wal-Mart’s activities, which includes, in the words of Journal reporter Gary McWilliams, “everyone from business historians and documentary filmmakers to plaintiffs lawyers and union organizers.”

    As an example, McWilliams reports that in 2005, Diane M. Breneman filed suit on behalf of a 12-year-old boy against Wal-Mart and the manufacturer of plastic gasoline can sold in its stores.  The boy was injured when he poured gasoline from the can onto some wet wood he was trying to light, and the can exploded.  The lawsuit alleged that the can was defective because it didn’t have a device that prevented flames from traveling through its spout and exploding.  In court, Wal-Mart’s lawyers denied that the gas can “presented any reasonable foreseeable risk … in the normal and expected use.” 

Ms. Breneman says Flagler Productions located videos of product presentations to Wal-Mart managers in which executives gave parody testimonials about the same brand of gasoline can.  In an apparent coincidence, one manager joked about setting fire to wet wood: "I torched it.  Boom!  Fired right up."  In a separate skit, an employee is seen driving a riding lawn mower into a display of empty gasoline cans.  A Wal-Mart executive vice president observing the collision jokes: "A great gas can.  It didn’t explode."  The tapes were made before the lawsuit was filed.

Breneman will ask the federal court to admit the footage as evidence of the foreseeability of the risk that the cans could catch fire and explode.

    Ordinarily, Wal-Mart controls its corporate records, such as the videotapes, through contracts that restrict their access and use.  But with no contract with Flagler Productions, Wal-Mart’s options are limited, at best.  One of Wal-Mart’s lawyers sent a letter to Flagler Productions in January asserting its “claims to rights in the video library” and film transcripts, but that strikes me as too little, too late. 

    I was going to conclude by asking (rhetorically) how much Wal-Mart would be willing to pay today for Flagler Productions' video library, but it may be easier to figure out how much Wal-Mart isn't willing to pay.  The day after the story appeared in the Journal, Wal-Mart released this letter from Flagler Productions' lawyer, in which he confirmed that in response to Flagler's demand for $150 million for the video library, Wal-Mart had offered $500,000, after which Flagler reduced its demand to $145 million and threatened to look elsewhere to sell the library if Wal-Mart wasn't interested in negotiating.  According to ABC News investigative reporter Brian Ross' blog, Wal-Mart released the letter in order to show that Flagler wanted a more substantial amount for the tapes than media references to "several million dollars" might indicate. 

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    The panel appointed by West Virginia University Provost Gerald Lang to investigate the circumstances surrounding Mylan COO Heather Bresch’s MBA has concluded unanimously that Bresch did not earn her degree and that actions taken by WVU administrators to determine whether she had done so and then to modify her transcript were “seriously flawed and reflected poor judgment.”   Here is the panel’s 95 page report, which was released on Wednesday.

Earlier this week, I wrote about a lawsuit filed by the Pittsburgh Post-Gazette against WVU to compel its compliance with the West Virginia Freedom of Information Act regarding requests made by the Post-Gazette for certain records pertaining to the Bresch affair.  Those records could be particularly embarrassing (or worse) to WVU, in view of the panel's conclusions.

    The media coverage of the report’s conclusions has been extremely critical of WVU and its leadership (that word should be in quotation marks).  Len Boselovic and Patricia Sabatini, who have been on top of the story for the Post-Gazette, have this article in today's edition.  Also, on the Post-Gazette's website, there is a link to the press conference held by WVU administrators on Wednesday to discuss the report. 

    Here are Ian Urbina's article in today’s The New York Times and the Associated Press story by Vicki Smith that appeared yesterday.  Also, Ed Silverman, who writes the Pharmalot blog, posted about the story yesterday (as an aside, the frequency of his posts, given their subject matter, is pretty impressive). 

    Because Bresch’s position as Mylan COO does not require an MBA, her job is not in jeopardy.  But there is speculation that the SEC may take action against Mylan on the grounds that Bresch misrepresented her credentials. 

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    Aubrey McClendon is the CEO of Oklahoma City-based Chesapeake Energy Company, which was hit with a verdict for $404 million last year when a jury determined that it had systematically and deliberately underpaid natural gas well owners in violation of their leases by withholding production costs from the royalties paid to them. 

    But what is more relevant here is that McClendon is also a member of The Professional Basketball Club, LLC, which purchased the NBA’s Seattle SuperSonics and the WNBA’s Seattle Storm from Starbucks founder and CEO Howard Schultz in 2006.  Last week, the NBA Board of Governors approved the Sonics' move from Seattle to Oklahoma City in time for the 2010 season, if not sooner.

    The team's move did not sit well with Schultz, who, in his capacity as the sole member of Canarsie Holdings, LLC, filed a derivative lawsuit in federal court on behalf of The Basketball Club of Seattle, LLC, which formerly owned the teams.  Schultz’s claim is that McClendon’s group always intended to move the Sonics franchise to Oklahoma City even as they promised to keep the team in Seattle.  The Basketball Club of Seattle, LLC v. The Professional Basketball Club, LLC, (W. D. Wash., April 22, 2008).

    The introduction to Schultz’s complaint explains that

In early 2006, when The Basketball Club of Seattle (“BCOS”) offered the Seattle SuperSonics for sale, it was critical to BCOS that any potential buyer be  committed to keeping the team in Seattle. Defendant, a group of Oklahoma City businessmen, knew that BCOS would only sell it the team if defendant persuaded BCOS that it wanted to keep the Sonics in Seattle. For that reason, the Oklahoma City group told BCOS at the time it purchased the team that “it is our desire to have the Sonics and the Storm continue their existence in the Greater Seattle Area and it is not our intention to move or relocate the team.” That statement was false from the moment it was made. The Oklahoma City group’s true intention, as later described candidly by one of its principal owners, was to move the team to Oklahoma City at the earliest possible time: “We didn’t buy the team to keep it in Seattle, we hoped to come here [to Oklahoma City].”

Defendant fraudulently induced BCOS to sell the Sonics to it, and actively concealed that deception. These Oklahoma City businessmen wanted a team that would play in Oklahoma City – not in Seattle. They were willing to lie, and did lie, to complete the deal. Under these circumstances, principles of law and equity do not permit defendant to continue to own property it fraudulently obtained.

The principal owner referred to above was McClendon, who was fined $250,000 by NBA Commissioner David Stern for making that statement (because it was contrary to Stern's stated hope of keeping the Sonics in Seattle). 

    The complaint seeks various relief, including:

• a declaratory judgment that the purchase agreement was induced by fraud and therefore is voidable at BCOS’ option;

• the imposition of a constructive trust from which McClendon’s group “can be ordered to convey the Sonics to an honest buyer who desires to keep the Sonics in Seattle;”

• the appointment of a receiver to manage the assets at issue in the litigation for the benefit of the constructive trust;

• an accounting of the Sonics’ financial condition;

• a preliminary injunction that prohibits McClendon’s group from taking any action that would compromise the Sonics’ value or interfere with the court’s ability to render the relief sought by BCOS; and

• attorney’s fees and costs.

    For more information, here is The Seattle Times'  story, which has links to various documents, including some e-mails that allegedly show the McClendon group's intent to move the team, and earlier coverage of the sale.  

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    Earlier this year, I mentioned the situation at West Virginia University regarding an MBA awarded to Heather Bresch, the COO of Mylan and daughter of West Virginia Governor Joe Manchin, which had caused quite a bit of controversy.  Following an inquiry on October 11, 2007 by the Pittsburgh Post-Gazette to WVU in order to verify Bresch’s credentials after she was named COO, WVU was unable to prove that she had satisfied the degree requirements.  A few days later, WVU reversed itself and confirmed that Bresch had completed all the requirements for an MBA.  In January 2008, Provost Gerald Lang appointed a five-member panel in order to determine whether Bresch appropriately received the degree. 

    In yesterday’s Post-Gazette, Patricia Sabatini and Len Boselovic, whose December 21, 2007 story brought the issue to the public’s attention, reported that the panel has concluded unanimously that Bresch did not earn her MBA and that WVU administrators “acted improperly” in granting her the degree retroactively in October. 

    Last week, the Post Gazette filed a complaint for declaratory and injunctive relief against WVU in the Circuit Court of Monongalia County, West Virginia in order to obtain WVU’s compliance with the West Virginia Freedom of Information Act.  The Post-Gazette alleges that:

 [WVU] has repeatedly failed to respond timely to a series of FOIA requests submitted to it by the plaintiff, has withheld public records that are responsive to the Post-Gazette’s requests and that are not privileged or otherwise exempted from disclosure, has failed to permit inspection of responsive documents by knowingly and intentionally misapplying statutory exemptions, and has otherwise failed to comply with its obligations under the Act and the governing law.

    According to the complaint, the Post-Gazette has submitted three series of FOIA requests to WVU for:

• “copies of all e-mails sent or received by [WVU] President [Michael] Garrison, Provost Lang, and [College of Business and Economics] Dean [R. Stephen] Sears that relate in any way to the subject of whether Bresch fulfilled the requirements for an MBA”;

•  “copies of all records relating to the subject of whether Bresch fulfilled the requirements for an MBA. This request identified a non-exhaustive number of individuals whose records fall within the request”; and

• “copies of all records relating to the use of land-line and cell-phone telephones by President Garrison and Chief of Staff Craig Walker for the month of October 2007, and copies of Garrison’s and Walker’s appointment books from October 2007 through the date of the request.”

    The problem for WVU is the Post-Gazette has been reporting on this story since last fall, and has accumulated an enormous amount of information from its sources, many of whom have not been identified (such as whoever leaked the panel’s report yesterday), which means that the Post-Gazette may not know what information is being withheld, but it knows that someone is holding out.  

    In Sunday’s Post-Gazette, Sabatini and Boselovic reported that Bresch has advised WVU that, pursuant to the Family Educational Rights and Privacy Act, she will not consent to the public disclosure of the panel’s report.  Although there is some dispute as to whether FERPA even applies to this situation, it appears that disclosure of the report to WVU’s Faculty Senate would not violate FERPA. 

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    One of the rulings made by Monongalia County Circuit Judge Robert Stone in West Virginia University’s lawsuit against its former football coach, Rich Rodriguez, dismissed the third-party complaint filed by Rodriguez against the West Virginia University Foundation, Inc., WVU’s fundraising arm.

    As a result of its dismissal, the Foundation has asked, pursuant to Rule 11 of the West Virginia Rules of Civil Procedure, that Rodriguez be made to pay its attorney’s fees of $29,461.00 and costs of $826.44.  Here is its motion filed on April 16, which quotes Rodriguez’s counsel as suggesting that the purpose of naming the Foundation was to obtain a tactical advantage in the litigation against WVU. 

    Rodriguez had alleged in his third-party complaint that he needed the records maintained by the Foundation in order to prove that contributions to WVU had not been affected by his resignation: 

The only way for Richard Rodriguez to obtain a fair trial and to see if damages actually have been incurred by West Virginia University is to review the books and records of the Foundation, along with donations that have been made since his departure, compared with donations prior to his departure from the West Virginia University.

Rodriguez also alleged that the Foundation was WVU's alter ego and was a necessary party to the litigation because it would receive any payments made by Rodriguez as part of his buyout.  

    The Foundation’s position is that its counsel asked Rodriguez to voluntarily dismiss the action, and when he would not do so, it had “to fully participate in the litigation.”  The affidavit attached to the motion establishes that the Foundation’s counsel expended 125.8 hours in its representation.  The motion also notes that “[a]dditional detail [regarding the billing entries] will be supplied to opposing counsel and the Court for review after agreement regarding confidentiality and the attorney client privilege.” 

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    Largely overlooked in the discussion about the recusal, actual or possible, of various members of the Supreme Court of Appeals of West Virginia in Caperton v. A. T. Massey Coal Company, Inc.  is the lawsuit filed by Massey Energy Company and its subsidiary, Marfork Coal Company, against the Supreme Court of Appeals in the United States District Court for the Southern District of West Virginia in August 2006, which was assigned to Judge John T. Copenhaver, Jr.  Massey Energy Company v. Supreme Court of Appeals of West Virginia, 2:06-CV-00614. 

    Here is how the plaintiffs described their action in their complaint:

This is a civil action to challenge the constitutionality of a West Virginia rule of appellate procedure. Plaintiff Massey Energy and its subsidiary, Plaintiff Marfork Coal, seek declaratory and injunctive relief under 42 U.S.C. § 1983 and 28 U.S.C. §§ 2201 and 2202 on the grounds that Rule 29 of the West Virginia Rules of Appellate Procedure (“Rule 29”) violates Plaintiffs’ Fourteenth Amendment due process right to a fair hearing before an impartial tribunal and to the appearance of justice insofar as the rule, as promulgated and applied, permits a single justice of the West Virginia Supreme Court of Appeals [sic] (“West Virginia Supreme Court”) who is the subject of a disqualification motion exclusively to determine the merits of that motion and does not provide for review or determination of such motion by an impartial judicial officer.

    Although the complaint purports to challenge the recusal procedure applicable to all members of the Supreme Court, specific allegations that refer to Justice Larry Starcher, who has criticized Massey and its chairman, Don Blankenship, suggest that he is its focus. 

    The emphasis on Justice Starcher's participation in cases involving Massey is reinforced by the fact that this case was filed while the Caperton appeal was before the Supreme Court.  As it turns out, Justice Starcher recused himself from the case, as did Chief Justice Elliott "Spike" Maynard.  Only Justice Brent Benjamin, whose recusal was sought by the plaintiffs in Caperton, did not recuse himself. 

    The Supreme Court moved to dismiss the complaint, which the district court denied.  Thereafter, the Supreme Court moved to strike certain paragraphs of the complaint that deal with Justice Starcher, and also moved to appeal the district court’s denial of its motion to dismiss.  Here are the memorandum in support of the motion to strike and the motion for certification. 

    The district court denied the motions to strike and for certification in this order.  The Supreme Court filed an interlocutory appeal of the order denying its motion to dismiss and also prosecuted a petition for a writ of mandamus that would require the district court to dismiss the complaint.

    Last month, the Fourth Circuit Court of Appeals denied the Supreme Court’s petition for a writ of mandamus. Then, two weeks ago, the Fourth Circuit dismissed the appeal of the denial of the motion to dismiss.

    The (Charleston) Daily Mail wrote about the Fourth Circuit’s rulings, and also reported that the court’s legal fees have already reached nearly $250,000.  The district court had stayed discovery in the case pending the outcome of the appeal, but the plaintiffs asked the court to lift the stay shortly after the Fourth Circuit issued its decision. 

    In a scheduling order entered last November, the district court had allotted about four months for discovery, if deemed necessary by the parties, followed by briefing of the plaintiff’s motion for summary judgment.  The delay created by the appeal to the Fourth Circuit has caused several of those dates to pass, however, which will require the issuance of a new order. 

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    Last year, a jury returned a verdict for $196.2 million in punitive damages against DuPont in the final phase of a trial in which 7,000 Harrison County, West Virginia residents claimed that DuPont injured them and contaminated their property by releasing substances including cadmium, arsenic, and lead at its zinc smelting site.  The jury also awarded $55.5 million for the plaintiffs’ property damage claims and approved a medical monitoring program.

    DuPont’s efforts to overturn the jury’s determinations through post-trial motions have not been successful.  Here are the relevant orders entered by the Circuit Court of Harrison County on February 25:

Final Order Regarding the Scope, Duration and Cost of the Medical Monitoring Plan

Order Regarding Plaintiffs’ Counsels’ Fees and Litigation Expenses and Class Representatives Award and Incentive Payments

Order Denying Dupont’s Motion for Judgment as a Matter of Law, or, in the Alternative, to Decertify the Class

Order Denying Motion for New Trial

Order Denying Dupont’s Motion to Vacate or Reduce Punitive Damages Award under Garnes v. Fleming Landfill

    The plaintiffs presented evidence regarding the medical monitoring plan at a hearing in January, and offered the testimony of a specialist in occupational and environmental medicine, a certified life care planner, and a forensic economist.  DuPont offered the testimony of a certified public accountant, who had expertise in projecting future medical costs.  But as the following footnote in the medical monitoring order makes painfully clear, DuPont would have been better off without any expert testimony:

Of the plethera [sic] of witnesses that testified at the scores of hearings and trial in this matter, the Court finds Mr. Meneberg [DuPont’s expert] to be the least credible of all. It is clear that if one has the money, Mr. Meneberg will provide an opinion whether it is within his field of expertise or not and whether there is any factual or professional basis for the opinion or not. In the sixteen years as a sitting trial judge, Mr. Meneberg is the biggest ‘hack’ to have testified before this Court. 

    The order approving the medical monitoring plan provides that the plan will be reviewed every five years, will have a duration of 40 years (during which the circuit court will retain jurisdiction), will cost $129,625,819.00, and will be funded on a “pay as you go” approach, which had been advocated by DuPont, rather than on the fully-funded basis that the plaintiffs had wanted.  Under the “pay as you go” approach, DuPont will make payments, which will be escrowed, then disbursed and replenished, as the plan proceeds, depending upon such factors as participation and cost, rather than pay for the entire cost of the plan at the outset.

    The circuit court also awarded the plaintiffs attorneys’ fees of $127,108,410.64 and expenses of $7,904,646.65 from the common fund of $381,363,341.25 (which consists of the total of the cost of the medical monitoring plan, the punitive damages award, and the property damage award).  Also, in its order, the circuit court denied the class representatives’ motion for incentive payments to each one (there are 10) of $75,000.00 for their “cooperation and assistance,” which would have come from the common fund.  However, the Associated Press reported earlier this month that, at the plaintiffs' counsel's request, the circuit court reconsidered and approved an incentive payment of $50,000 to each class representative, with the funds to be paid from the attorneys’ fees rather than the common fund.

    DuPont is appealing the verdicts and the post-trial rulings, according to this statement from its general counsel, Stacey J. Mobley.  I will confirm the status of DuPont’s petition for appeal, and post the petition and the plaintiffs’ response as soon as they are forwarded to the Supreme Court of Appeals.  The Supreme Court’s Spring Term ends on June 26, which means that the appeal, if granted, will not be argued and decided until the Fall Term.

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    I’m late with this, but the uproar over the Supreme Court’s decision in Caperton v. A. T. Massey Coal Company, Inc. diverted my attention from the hearing last week in West Virginia University Board of Governors v. Rodriguez.  As far as I can tell from media accounts (I did not attend the hearing), the hearing was something of a draw.  

    According to the Associated Press story in last Friday's Charleston Gazette, Monongalia County Circuit Judge Robert Stone ruled that Rodriguez can present evidence that he was fraudulently induced to sign the contract that contained the $4 million buyout requirement, and granted WVU’s request to compel the production of documents related to Rodriguez’s hiring and contract negotiations with the University of Michigan.  

    Judge Stone also dismissed the West Virginia University Foundation, Inc. as a third-party defendant, although the basis for the dismissal is not clear.  Rodriguez had claimed that the only way to determine whether WVU had actually been harmed by his departure was to look at the Foundation’s books.  Rodriguez also claimed that the Foundation was a necessary party because it was “always the parties’ intent” that the Foundation would receive any payments pursuant to the buyout. I’m not sure that makes the Foundation a necessary party, but Rodriguez may be trying to get the same deal as John Beilein, who makes his buyout payments to the Foundation (and presumably receives a tax benefit as a result).  

    Judge Stone also declined to rule on the motion to expedite the trial schedule, and cautioned the parties that their hopes for a mid-summer trial were not realistic.  The parties were supposed to confer earlier this week to talk about a schedule, but apparently that didn’t happen.  The deposition of Ed Pastilong, WVU’s Athletic Director, is scheduled for April 18, while Rodriguez’s is scheduled for April 21.  Interestingly, WVU wants an agreement  to maintain the confidentiality of the videotape and written transcript, but Rodriguez has not signed on yet. 

    Finally, an Associated Press story by John Raby in today’s Gazette reports that neither Bob Huggins, WVU’s basketball coach who was hired last April to replace John Beilein, not Bill Stewart, the football coach who replaced Rodriguez, has signed a contract for his position, although each has signed a term sheet.  Here are summaries of the term sheets, which the AP received through a Freedom of Information Act request. 

    I would think that WVU’s experience would make it eager to have the coaches sign the contracts (which seems to be the attitude of other universities and professional franchises), but according to Raby’s article, handshake agreements are good enough for Athletic Director Pastilong.

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    For the second time, the Supreme Court of Appeals of West Virginia has reversed the $50 million verdict awarded to Hugh Caperton and his companies against A. T. Massey Coal Company, Inc. and its subsidiaries.  Caperton v. A. T. Massey Coal Company, Inc., No. 33350 (The Westlaw opinion is not available yet, so the link is to the PDF version of the opinion, which was released yesterday afternoon, from the Court’s website). 

    The majority opinion for the 3-2 decision was written by Justice Robin Davis, who also wrote the majority opinion in the first appeal, which was vacated when the Court granted the plaintiffs' motion for rehearing.  Justice Brent Benjamin, who refused to recuse himself, and became acting Chief Justice in the case when Chief Justice Elliott E. "Spike" Maynard recused himself, was also in the majority, as was Marion County Circuit Judge Fred L. Fox, II, who was appointed to replace Justice Larry Starcher, who recused himself.  

    Justice Joseph Albright dissented, as he did in the first appeal, and was joined by Hampshire County Circuit Judge Donald H. Cookman, who was appointed to replace Chief Justice Maynard.   Here is their dissent, which is the PDF version from the Court's website.

    I have not had an opportunity to study either opinion very closely, but here are a couple of  preliminary observations.  The majority opinion is substantially longer than in the first appeal, which may be attributable to the Court's elaboration on the two grounds for reversal that it identified in the first appeal: first, that the circuit court should have granted the defendants' motion to dismiss based on a forum selection clause in a contract entered into in Virginia, and second,, assuming that the ruling on the motion was not erroneous, the doctrine of res judicata barred the West Virginia action based on an action that had been litigated in Virginia.  (Even though the earlier opinion had been vacated, the parties addressed the grounds for reversal set forth in that opinion.)

    In the first appeal, the Court wrote that, “At the outset we wish to make perfectly clear that the facts of this case demonstrate that Massey’s conduct warranted the type of judgment rendered in this case."  That statement seemed out of place, considering that the Court reversed the verdict against Massey, notwithstanding its conduct.  

    That statement is missing from the majority opinion this time, which is not lost on the dissent:

Today's "new" opinion of the Court rests on the same indefensible legal grounds as the original opinion -- supplemented by even more extended discussion of some of the points -- but, strangely, omitting the clearly correct assertion in the original majority opinion that "Massey's conduct warranted the type of judgment rendered in this case."  Id.  This time the majority stands silent regarding any disdain of Massey's conduct.   Once again, it bends the law to deny Plaintiffs the proper "result that clearly appears to be justified."  Id.

Emphasis in original.

    I think that this decision will generate an enormous amount of attention, both for the merits of the opinion, but particularly because Chief Justice Maynard and Justice Starcher recused themselves, and Justice Benjamin, who was in the majority in both appeals, did not. 

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    Apparently, the negative publicity surrounding Wal-Mart’s decision to pursue reimbursement for Debbie Shank’s medical expenses from the remainder of her personal injury settlement made it rethink its position, as Wal-Mart announced yesterday that it would not attempt to collect any funds from Shank.

    Here is the letter from Pat Curran, Wal-Mart’s Executive Vice President ? People (yes, that’s really her title), to Jim Shank, in which she explained that, “Occasionally others help us step back and look at a situation in a different way.  This is one of those times.”   I imagine that’s true, particularly when the “others” are CNN, MSNBC, The Wall Street Journal, and the websites and blogs that are devoted to following and scrutinizing Wal-Mart’s activities. 

    For more background, here is the Associated Press story in yesterday's Wall Street Journal, which quoted Roger Baron, who teaches at the University of South Dakota School of Law and specializes in reimbursement and subrogation issues.  Professor Baron points out that since the United States Supreme Court’s decision in 2006 in Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (2006), health plans have become “very aggressive” about subrogation.  The Wall Street Journal Law Blog also weighs in today on Wal-Mart’s change of heart.

    Wal-Mart did the right thing by realizing that in this situation, its position was inequitable.  But I have no doubt that if Wal-Mart had not been subjected to so much criticism, it would have continued to pursue its subrogation claim against whatever remains of Debbie Shank's personal injury settlement. 

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    In addition to Paul Ratchford’s lawsuit claiming that he was forced out of his job as president of The Greenbrier, CSX Transportation, Inc. is also defending an action filed on March 25, 2008 by Archer Daniels Midland Company, which alleges that CSX and four other railroads violated federal and state antitrust laws.  The other defendants are Union Pacific Railroad Company, BNSF Railway Company, Norfolk Southern Railway Company, and Kansas City Southern Railway Company.   Archer-Daniels-Midland Company v. Union Pacific Railroad Company, et al., Civil Action No. 08-CV-00857 (D.Minn.).

    Here is the complaint, which was filed in United States District Court in Minnesota, and which alleges that the railroads engaged in “a conspiracy to fix prices of rail fuel surcharges” in violation of the Sherman Act, the Clayton Act, and Minnesota antitrust law, and “imposed upon ADM rail fuel surcharges that constitute unreasonable ‘practices’” because they did not correspond with actual fuel costs and were in excess of actual fuel costs. 

    ADM is not alleging that the rail fuel surcharges are illegal; according to the complaint, the surcharges are "itemized charges for transportation services assessed by railroads to shippers -- including ADM -- that are designated for the sole purpose of recovering unanticipated costs associated with sharp increases in fuel prices."   Rather, ADM's allegation is that the railroads improperly conspired to fix the rail fuel surcharge prices and agreed not to compete against each other with their prices:

Defendants used the rail fuel surcharges as a means of extracting profit, rather than for their designated purpose of recovering unexpected costs from fuel... ADM has paid over a quarter of a billion dollars in rail fuel surcharges to Defendants since 2003.

CSX has denied that its fuel surcharge practices violate any laws or regulations.  Todd Sullivan wrote about the lawsuit at the stock investing blog, Seeking Alpha, and suggests that ADM's lawsuit may serve as a model for smaller shippers who are affected by high fuel costs more acutely than large corporations like ADM.  The Sherman and Clayton Acts provide for treble damages if a plaintiff prevails under those statutes.

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