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

You may remember Paul Ratchford, the former president of The Greenbrier, who was terminated in 2007 after less than one year on the job. He filed suit against CSX Corporation, the resort’s then-owner and some individual officers, and alleged several causes of action, including a violation of the West Virginia Wage Payment and Collection Act because CSX allegedly failed to pay him his severance of $700,000 and the value of 1,200 shares of CSX stock within 72 hours of his termination, as the statute requires. I wrote about Ratchford's termination and lawsuit in this post.

Last year, the Circuit Court of Greenbrier County granted CSX’s motion to dismiss and denied Ratchford’s motion for partial summary judgment on the grounds that under the Wage Payment and Collection Act, Ratchford’s severance and stock were not “wages” or “fringe benefits” that would entitle Ratchford to treble damages.

Ratchford appealed the dismissal to the Supreme Court of Appeals of West Virginia. Here are his petition for appeal and CSX’s response in opposition. On October 30, 2008, the Supreme Court refused his petition for appeal 4-0 with Justice Brent Benjamin disqualified.

That left Ratchford’s claims for breach of contract, wrongful discharge, tortious interference with a contractual relationship, intentional infliction of emotional distress, California labor statute violations, and fraud.

Ratchford sued at least two West Virginia residents, which destroyed diversity, but CSX Hotels, Inc.’ s bankruptcy in March created federal jurisdiction under 28 U.S.C. § 1334. In April, CSX filed this notice of removal.

Due to CSX Hotels’ sale of The Greenbrier to Jim Justice, the bankruptcy court dismissed CSX’s bankruptcy petition as moot. Ratchford claimed that without the bankruptcy proceeding, the federal court was deprived of jurisdiction to adjudicate his claims.

Although United States District Court Judge Thomas E. Johnston remanded Ratchford’s civil action, his order points out that a remand in these circumstances is not automatic:

Plaintiff [Ratchford] contends that in the absence of a bankruptcy debtor as a party to the action, the Court is “divest[ed]” of jurisdiction to adjudicate the state law claims… This assertion is not necessarily accurate. It is well-established that once a court obtains jurisdiction over a matter, jurisdiction “remains … even if subsequent events eliminate the original basis for federal jurisdiction.” Chapman v. Currie Motors, 65 F.3d 78, 81 (7th Cir. 1995). The Court can continue to exercise jurisdiction over this case, but it does not necessarily follow that it should.

(Emphasis added.)

The Court explained that it had discretion to continue to exercise supplemental jurisdiction over Ratchford’s remaining claims under 28 U.S.C. § 1367(a), abstain from exercising its supplemental jurisdiction under 28 U.S.C. § 1367(c)(3), or remand the action under 28 U.S.C. § 1452(b).

The Court determined that remand under § 1452(b) was appropriate because “the equities weight heavily in favor of remand[.]” Among the factors the Court looked at were the relative lengths of time the case had been in state court versus federal court, the fact that all of Ratchford’s claims are grounded in state law, and the fact that the defendants did not oppose the remand.

So remember that just because the original basis for federal jurisdiction disappears, that does not necessarily mean that the court loses jurisdiction. And for a case where the court elected to exercise its supplemental jurisdiction, take a look at former Chief Judge Charles H. Haden, II's opinion in Greiner v. Columbia Transmission Corp., 41 F.Supp.2d 625 (S.D.W.Va. 1999), which Judge Johnston cited in his order.

 

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Apparently, I could go only one day without another post related to the Supreme Court's decision in Caperton v. A. T. Massey Coal Company. But the Supreme Court of Appeals of West Virginia yesterday resolved the question of who will replace Chief Justice Brent Benjamin when the Court hears the appeal in the fall.

In an administrative order entered yesterday by Justice Robin Jean Davis, acting as chief due to Chief Justice Benjamin's recusal, she appointed Senior Status Judge James O. Holliday, who retired from the Circuit Court of Putnam County, as Benjamin's replacement. Paul Nyden reviews Judge Holliday's prior service on the Supreme Court in the Charleston Gazette. 

Justice Davis entered a second administrative order yesterday that terminated the service of Hampshire County Circuit Court Judge Donald H. Cookman and Marion County Circuit Judge Fred L. Fox, II, who had been appointed to replace former Justices Elliott E. "Spike" Maynard and Larry V. Starcher, respectively, when the Court heard the appeal for the second time. Justices Maynard and Starcher are no longer on the Court.

According to Rule 45 of the Rules of the Supreme Court of the United States, the Court will issue its mandate 25 days after entry of the judgment, in case any party files a petition for rehearing. Assuming no petition is filed, the mandate will issue on July 3.

The appeal will be heard for the third time during the Supreme Court of Appeals' Fall Term, which begins on September 2. 

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There are a few more items I want to mention today about the Supreme Court’s decision in Caperton v. A. T. Massey Coal Company. The first is a personal statement released by Don L. Blankenship, the chairman of Massey Energy Co., and the person whose 2004 campaign contributions on behalf of Brent Benjamin created the conflict that culminated in the Court’s decision on Monday.

Blankenship’s statement is not on Massey’s website and apparently does not represent Massey’s official reaction to the decision. Massey’s statement released on Monday quotes only Shane Harvey, Massey’s general counsel and vice-president, and is far more measured than Blankenship’s.

Blankenship’s statement is his attempt to justify his substantial financial support on behalf of Justice Benjamin, even though the highest court in the country just held that his support objectively required Justice Benjamin to recuse himself from Caperton, and that Justice Benjamin's failure to due so denied Hugh Caperton and his companies due process under the United States Constitution. I guess if I were in Blankenship’s position, I’d issue a statement that was as unapologetic and arrogant as the motive behind the contributions that were at the heart of the situation.

Of more interest and, I think, far more value is this interview on The BLT: The Blog of Legal Times with Thomas R. Phillips, retired Chief Justice of the Supreme Court of Texas, and an author of an amicus brief in Caperton on behalf of the conference of chief justices in support of neither party.

I encourage you to read his entire interview, which is brief, but this is his analysis of the decision:

Caperton established a principle that is really important: There are constitutional concerns with a judge sitting in judgment of a case where a party is a significant donor. At some point, the support becomes so substantial and so overwhelming that due process requires the judge to step aside, even if neither the donor not [sic] the judge did anything illegal or even unethical.

(Emphasis added.)

He identifies six criteria in Caperton that must be satisfied in order to establish a violation of a party’s due process and contends that its holding is so narrow that, “I’m not sure Caperton will ever be direct precedent for another recusal.”

Finally, here’s a post from Daily Kos that’s getting quite a bit of traction around the Internet. Its title is a reference to John Grisham’s novel, The Appeal, which, by sheer coincidence, I finished reading about 2 a.m. Monday morning.

As you may be aware, when the book came out last year, Grisham stated that the story wasn't far-fetched and had already happened in West Virginia, which, allowing for some poetic license in the novel, is accurate.

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There has been so much reaction and commentary about the Supreme Court’s decision yesterday in Caperton v. A. T. Massey Coal Company that it is hard to know where to begin.

First, I want to discuss the dissents, which I did not do in my post yesterday  because I wanted to focus on Justice Kennedy’s opinion.

Chief Justice Roberts wrote a dissent in which Justices Scalia, Thomas, and Alito joined. He criticized the majority opinion for

enlist[ing] the Due Process Clause to overturn a judge’s failure to recuse because of a "probability of bias." Unlike the established grounds for disqualification, a "probability of bias" cannot be defined in any limited way. The Court’s new "rule" provides no guidance to judges and litigants about when recusal will be constitutionally required. This will inevitably lead to an increase in allegations that judges are biased, however groundless those charges may be. The end result will do far more to erode public confidence in judicial impartiality than an isolated failure to recuse in a particular case.

(Emphasis added.)

He also identified 40 “fundamental questions” that courts will now have to determine “with little help from the majority,” such as:

1. How much money is too much money? What level or contribution or expenditure gives rise to a ‘probability of bias’?

6. Does the analysis change depending on whether the judge whose disqualification is sought sits on a trial court, appeals court, or state supreme court?

8. What if the “disproportionately’ large expenditure is made by an industry association, trade union, physicians’ group, or the plaintiffs’ bar? Must the judge recuse in all cases that affect the association’s interests? Must the judge recuse in all cases in which a party or lawyer is a member of that group? Does it matter how much the litigant contributed to the association?

13. Must the judge’s vote be outcome determinative in order for his non-recusal to constitute a due process violation?

21. Does close personal friendship between a judge and a party or lawyer now give rise to a probability of bias?

24. Under the majority’s ‘objective’ test, do we analyze the due process issue through the lens of a reasonable person, a reasonable lawyer, or a reasonable judge?

35. What is the proper remedy? After a successful Caperton motion, must the parties start from scratch before the lower courts? Is any part of the lower court judgment retained?

Chief Justice Roberts also looked at two of the Court’s decisions in cases involving double jeopardy (United States v. Halper, 490 U.S. 435 (1989) and Hudson v. United States, 522 U.S. 93 (1997)), and drew a comparison with the Court’s holding in Caperton, saying that,

The déjà vu is enough to make one swoon. Today, the majority again departs from a clear, longstanding constitutional rule to accommodate an ‘extreme’ case involving ‘grossly disproportionate’ amounts of money. I believe we will come to regret this decision as well, when courts are forced to deal with a wide variety of Caperton motions, each proclaiming the title of "most extreme" or "most disproportionate.

(Emphasis added.)

He also pointed out that, “Justice Benjamin just might have won because the voters of West Virginia thought he would be a better judge than his opponent. Unlike the majority, I cannot say with any degree of certainty that Blankenship ‘cho[se] the judge in his own cause.' Ante, at 16. I would give the voters of West Virginia more credit than that.”

(Emphasis added.)

Justice Scalia also dissented separately, and predicted that the Court’s decision would have the effect of reinforcing the perception that “litigation is just a game, that the party with the most resourceful lawyer can play it to win, that our seemingly interminable legal proceedings are wonderfully self-perpetuating but incapable of delivering real-world justice.” He also predicted that the opinion would add to “the vast arsenal of lawyerly gambits what will come to be known as the Caperton claim.”

Yesterday, Chief Justice Benjamin issued this statement regarding the decision, which was written on his official letterhead and posted on the Supreme Court of Appeals’ website, but was described as “personal” and “not a release of the Supreme Court of Appeals of West Virginia.”

For coverage of the decision, let me start with Paul Nyden’s article in today’s Charleston Gazette, and Jake Stump’s article in today’s Daily Mail. Nyden also wrote an interesting sidebar about who will preside as chief justice when Chief Justice Benjamin recuses himself. I think it will be Justice Robin Davis, as she has the most seniority, but apparently no one from the Court is willing to go on the record at this point.

What is most interesting is that when the Court hears this appeal again, probably during its term that starts in September, Justice Davis, who wrote both of the previous majority opinions, will be the only member who has considered the appeal. Justices Margaret Workman and Menis Ketchum were elected last November and Justice Thomas McHugh was appointed to serve the remainder of Justice Albright's term through 2010. And the acting chief justice must appoint a replacement for Chief Justice Benjamin. So how the Court will rule for the third, and presumably last, time is very much open.

For a sampling of commentary and analysis, Tony Mauro has this article on The National Law Journal 's website; on The BLT ,he has this post about Chief Justice Roberts’ connection to United States v. Halper, one of the double jeopardy cases cited in his dissent.

Carolyn Elefant of Legal Blog Watch wrote this post yesterday about the decision, with links to Mauro, Lyle Dennis at SCOTUSBlog, and George Washington University Law Professor Jonathan Turley.  Also, here is some analysis from the Constitutional Prof Law Blog.

For a couple of different takes on the decision, here are Dahlia Lithwick's "The Great Caperton Caper" on Slate and a post from Balkinization. 

And from blogs that focus on appellate litigation, here are Todd Smith's post at Texas Appellate Law Blog, which questions the effect of the decision on Texas courts, whose members are elected, and a post from Alabama Appellate Watch, which is written by Lightfoot Franklin White LLC.  

Finally, I think there have been as many editorials as there have been news articles and blog posts about the decision. But for your consideration, here is The New York Times' editorial today entitled "Honest Justice" and The Wall Street Journal's editorial entitled "Judges and 'Bias.'" I'll leave it to you to figure out what each paper thought about the decision.

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The Supreme Court of the United States issued its opinion today in Caperton v. Massey and in a 5-4 decision held that the Due Process Clause of the Fourteenth Amendment required Supreme Court of Appeals of West Virginia Chief Justice Brent Benjamin to recuse himself from Caperton's appeal and reversed the Supreme Court of Appeals' decision in Massey's favor and remanded the case for further proceedings. 

The opinion by Justice Anthony Kennedy noted that the majority "do not question his [Justice Benjamin's subjective findings of impartiality and propriety. Nor do we determine whether there was actual bias."

But the Court found that the "difficulties of inquiring into actual bias ... simply underscore the need for objective rules":

Not every campaign contribution by a litigant or attorney creates a probability of bias that requires a judge's recusal, but this is an exceptional case... We conclude that there is a serious risk of actual bias -- based on objective and reasonable perceptions -- when a person with a personal stake in a particular case has had a significant and disproportionate influence in placing the judge on the case by raising funds or directing the judge's election campaign when the case was pending or imminent. The inquiry centers on the contribution's relative size in comparison to the total amount of money contributed to the campaign, the total amount spent in the election, and the apparent effect such contribution had on the outcome of the election.

(Emphasis added.)

The Court concluded, based on the application of the principle, that:

... Blankenship's campaign efforts had a significant and disproportionate influence in placing Justice Benjamin on the case. Blankenship contributed some $3 million to unseat the incumbent and replace him with Benjamin. His contributions eclipsed the total amount spent by all other Benjamin supporters and exceeded by 300% the amount spent by Benjamin's campaign committee. App. 288a. Caperton claims Blankenship spent $1 million more than the total amount spent by the campaign committees of both candidates combined. Brief for Petitioners 28.

(Emphasis added.)

The Court rejected Massey's argument that ultimately West Virginia voters elected Justice Benjamin to the Court, stating that, "[w]hether Blankenship's campaign contributions were a necessary and sufficient cause of Benjamin's victory is not the proper inquiry. Much like determining whether a judge is actually biased, proving what ultimately drives the electorate to choose a particular candidate is a difficult endeavor, not likely to lend itself to a certain conclusion."

The Court also focused on the "temporal relationship between the campaign contributions, the justice election, and the pendency of the case...", meaning the the winner of the election would be on the Court when it reviewed the $50 million verdict:

Although there is no allegation of a quid pro quo agreement, the fact remains that Blankenship's extraordinary contributions were made at a time when he had a vested stake in the outcome. Just as no man is allowed to be a judge in his own cause, similar fears of bias can arise when -- without the consent of the other parties -- a man chooses the judge in his own cause. And applying this principle to the judicial election process, there was here a serious, objective risk of actual bias that required Justice Benjamin's recusal.

(Emphasis added.)

In describing this as "an extraordinary situation where the Constitution requires recusal," the majority opinion also rejected Massey and its amici's prediction that finding a constitutional violation in this case would result in various adverse consequences, "ranging from a flood of recusal motions to unnecessary interference with judicial elections." 

The Court found that almost every state, including West Virginia, had adopted the American Bar Association's objective standard that "a judge shall avoid impropriety and the appearance of impropriety," and also noted that the West Virginia Code of Judicial Conduct required a judge's recusal in similar circumstances.

Chief Justice John Roberts wrote a dissent in which Justices Scalia, Thomas, and Alito joined, and Justice Scalia also dissented separately.

I'll write some more about the decision, but I wanted to provide the opinion right now.  For some additional reaction, here is SCOTUSBlog's initial post  and David Stout's article in The New York Times.

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 Last week the Supreme Court issued its decision in Wyeth v. Levine, 2009 WL 529172 (U.S. Vt.), which affirmed the Vermont Supreme Court’s ruling that Diana Levine’s state law claims alleging defective pharmaceutical packaging were not preempted by federal law.  Justice John Paul Stevens wrote the 6–3  majority opinion, Justices Stephen Breyer and Clarence Thomas wrote separate concurrences, and Justice Samuel Alito wrote a dissent in which Chief Justice John Roberts joined. Here is my post from when the case was argued last November.

The Court rejected Wyeth’s theories that first, it could not have modified the label placed on the drug once it was approved by the Food and Drug Administration and that Wyeth could not comply with both state laws regarding failure-to-warn and federal labeling duties and second, that requiring Wyeth to comply with a state law requiring a stronger warning than that approved by the FDA would obstruct the purposes and objectives of federal drug labeling regulations.

Here are SCOTUSBlog’s initial post about the decision and its analysis.  And here is The Wall Street Journal Law Blog's discussion, which includes an interview with the paper's Supreme Court reporter, Jess Bravin, and places Wyeth in the context of earlier federal preemption decisions.

Other blog posts include this one from the  Drug and Device Law blog, which concludes that Levine doesn't make preemption impossible, just more difficult, and this one from the Pharmaceutical Executive blog, which describes Wyeth as having "walloped" the pharmaceutical industry.

Since the case was argued, Pfizer has announced that it is acquiring Wyeth (here is Wyeth's press release about the acquisition, which has far more information than anyone could possibly want or need), so Wyeth will cease to exist as an independent company, but I tend to agree with those who have suggested that Wyeth's counsel, whether in-house or outside, made a bad decision in appealing from the Vermont Supreme Court, given the nature and circumstances of Ms. Levine's injury.  I realize it's easy to make that observation now that the Court has ruled, but all things considered, Wyeth should have settled with Ms. Levine -- her verdict was $6.7 million -- and avoided the risk of making bad law. 

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Although the Supreme Court heard arguments on Tuesday in Caperton v. A. T. Massey Coal Company, Massey wants the Court to review some additional information, namely, Chief Justice Benjamin's voting record in appeals involving Massey.

Yesterday Massey filed a motion for leave to file a supplemental brief in order to

present[] the Court with information pertinent to this matter — specifically, a press release detailing Justice Benjamin’s voting record in matters involving Massey Energy Company and its affiliates — that was issued by the West Virginia Supreme Court of Appeals after briefing was completed.  Justice Benjamin’s voting history in Massey cases bears significantly on respondents’ contention that, even if the Due Process Clause requires recusal when there is a “probability of bias,” there was no such probability here.

On Monday, Jennifer Bundy, the Supreme Court of Appeals of West Virginia's public information officer, issued a press release entitled, “Summary of Chief Justice Benjamin’s Dispositive Voting Record Regarding Massey Energy Cases from 01/01/2005 to 12/31/2008,” which was “prepared in response to press inquiries about Chief Justice Benjamin’s voting record in cases involving Massey Energy.”

According to the release, Chief Justice Benjamin voted against the interests of Massey Energy or its subsidiary 81.6% of the time, and in favor of the interests of Massey Energy or its subsidiary 18.4%. 

Caperton responded in opposition to Massey's brief yesterday and took the opportunity to remind the Court of some apparent inconsistencies in Massey’s brief, by noting the Court’s definition of “new matter”:

Such “new matter” might include a statement made by the CEO of a litigant — made after the litigant’s brief expressly denied that the CEO and a particular judge “even knew one another, before or after the election,” much less that the judge “solicited or encouraged [the CEO’s] activities” — acknowledging that the CEO and the judge had met privately before the election and discussed, specifically, “raising money.”  Compare, e.g., Resp. Br. 55–56, with Adam Liptak, Justices Hear Arguments on Money-Court Nexus, New York Times, March 4, 2009, at A18.  That would be new information “that was not available in time to be included in a brief,” S. Ct. R. 25.5, and it would tend to reinforce petitioners’ argument that the CEO had set out to pick a judge for his own case and that any reasonable observer would conclude that a judge selected under those circumstances quite probably would be biased in favor of the CEO who spent so much to elect him.

Caperton's brief also asserts that in the only Massey cases where Chief Justice Benjamin's vote was outcome-determinative, i.e., he voted with the majority in a 3-2 vote, he voted for Massey.

Here are Andrew Clevenger’s article in Tuesday’s Charleston Gazette discussing the release and his article in today’s edition discussing Massey’s brief.

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I think this comment by Justice John Paul Stevens sums up Caperton v. A. T. Massey Coal Co., which was argued today before the Supreme Court:

“The whole point of this case is it [actual bias] has not been recognized.  We have never confronted a case as extreme as this before.  This fits the standard that Potter Stewart articulated when he said ‘I know it when I see it.’”

And that is what the justices are grappling with. 

The issue is whether Hugh Caperton and his companies were denied their right to due process when Supreme Court of Appeals of West Virginia Justice Brent Benjamin refused to recuse himself from Massey’s appeal of $50 million jury verdict in Caperton's favor. 

Here are the transcript of the argument and a post from The Wall Street Journal Law Blog, which has an interview with the Journal’s Supreme Court reporter, Jess Bravin, who attended the argument and explains the significance of the justices’ questions and comments.  By the way, his discussion of Justice Stevens’ professional background may help to explain the comment referenced above.

For more analysis, here is SCOTUSBLOG’s excellent analysis of the argument, as well as an article by USA Today reporter Joan Biskupic, and the Associated Press’ story in the Charleston Gazette. 

The transcript really captures the differences between the parties’ positions.  Caperton argues that because actual bias on the part of a judge or justice is impossible to prove, the applicable standard needs to be one that focuses on the appearance of a probability of bias. 

Caperton argues that Blankenship’s $3 million contribution to a group that opposed Justice Benjamin’s opponent created the appearance of a probability of bias against Caperton in his case against Massey, which required Justice Benjamin’s recusal.

On the other hand, Massey argues that the appearance of impropriety, without any proof of actual bias, could never raise a constitutional issue, which means that Caperton’s right to due process was not violated by Justice Benjamin's refusal to recuse himself.

For what it’s worth, Justice Anthony Kennedy, who has been the critical fifth vote in several important decisions, said that it seemed to him that litigants have an entitlement to confidence in judges’ decisions under the Due Process Clause.   

Massey’s counsel, Andrew Frey, suggested that the justices ask themselves “if you were in Justice Benjamin's situation, do you really think that you would be incapable of rendering an impartial decision in a case involving Massey?  Because if the answer to that is no, if the answer to that is that you would not be incapable of rendering an unbiased decision, then there’s no justification for saying that Justice Benjamin would —”

Caperton’s counsel, former Solicitor General Theodore Olson, countered that the appropriate question for the justices was, “[i]f this was going to be the judge in your case, would you think it would be fair and would it be a fair tribunal if the judge in your case was selected with a $3 million subsidy by your opponent?”

The Court's opinion may depend on which question the justices answer.

 

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When Chesapeake Energy Corporation announced a few days ago that it was laying off 215 of the 255 employees in its Charleston, West Virginia regional office, it cited two reasons.  First, Chesapeake pointed out that the price of natural gas has declined, which is demonstrably true.  But the second reason it cited is more troublesome.  Chesapeake said that the Supreme Court of Appeals of West Virginia’s decision last year not to review the $404 million verdict in Tawney v. Columbia Natural Resources, LLC means that West Virginia is not a good place to do business.

You may recall that last year, Chesapeake blamed the Supreme Court of Appeals when it decided to cancel construction of its $40 million regional headquarters in Charleston. 

I thought that Chesapeake was being punitive when it claimed the Supreme Court was responsible for its decision not to build its headquarters,  Now I think that Chesapeake is being disingenuous in continuing to blame the Supreme Court for the layoffs,  

Because Chesapeake is represented by competent counsel who are familiar with the West Virginia Rules of Appellate Procedure, and have presumably explained them to their client, Chesapeake knows that its complaint that the Supreme Court refused to hear its appeal is simply wrong.  Chesapeake is upset that the Supreme Court did not reverse the verdict.  But Chesapeake can’t or won't come out and say that, so it claims that its appeal was not “heard.”

The fact is that the Court considered Chesapeake’s petition for appeal, but chose not to accept the appeal.  And since Chesapeake’s appeal was discretionary, the Court was not obligated to accept it. 

This February 25 post from the American Gas Association’s True Blue-Natural Gas blog sums up the shape of the current market, which, I submit, is far more responsible for Chesapeake’s problems than any decision the Supreme Court made -- or didn't make. 

But Chesapeake has other problems, too.  Here is a class-action complaint filed last week in the Southern District of New York against Chesapeake, its officers and directors, and underwriters, which alleges various securities laws violations that have caused Chesapeake’s stock to drop 80% from its offering price in July 2008.  Safron Capital Corporation v. Chesapeake Energy Corporation, Civil Action No. 1:09-CV-01826 (S.D.N.Y. February 25, 2009). 

 

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Here is the petitioners' reply brief, which they filed today. 

Also, in this order entered last Friday, the Supreme Court of the United States denied Alabama Attorney General Troy King's motion to participate in the oral argument and to divide the argument time.  King filed an amicus brief on behalf of Alabama and six other states in support of the respondents.  The Court also granted the Supreme Court of Louisiana's motion for leave to file an amicus brief out of time, which I discussed last week.

Oral argument is scheduled for next Tuesday, March 3.

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The Supreme Court of Appeals of West Virginia was scheduled to hear arguments today in The Book Exchange's appeal of the dismissal of its lawsuit against West Virginia University and Barnes & Noble, but the parties settled their dispute yesterday.  For a recap of the issues, here are the circuit court's order, the Book Exchange's brief, WVU's brief, B&N's brief, and The Book Exchange's reply brief, all courtesy of the Supreme Court's website.

According to Cheryl Caswell's article in today's (Charleston) Daily Mail, WVU will have to obtain prior authorization from a student before setting aside a portion of his or her financial aid money to purchase textbooks and other items in WVU's bookstore.  The Book Exchange had claimed that WVU's practice of withholding up to $500 per semester from a student's financial aid and requiring that the funds be spent at WVU's bookstore was unfairly competitive.  If a student does not wish to participate in the program, the funds will be distributed directly to the student.  The Book Exchange will not receive any money in the settlement.

Here is my post discussing the circuit court's dismissal of The Book Exchange's claims for state antitrust violations, unfair trade practices, and consumer protection law violations.

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As we get closer to March 3, when the United States Supreme Court will hear arguments in Caperton v. A. T. Massey Coal Company, a state appellate court has weighed in on the controversy, but it’s probably not the court or for the reason you’d expect. 

According to this article by John O’Brien in today’s LegalNewsline.com, the Louisiana Supreme Court has moved for leave to file an amicus brief in the case, in order to refute allegations contained in a Tulane Law Review article that was cited in a brief filed by several amici on behalf of Caperton.  

Here’s the backstory.  In March 2008, the Tulane Law Review published an article entitled “The Louisiana Supreme Court in Question: An Empirical and Statistical Study of the Effects of Campaign Money on the Judicial Function,” by Vernon Valentine Palmer and John Levendis.

The first paragraph of the article’s executive summary says:

This empirical and statistical study of the Louisiana Supreme Court demonstrates that the court has been significantly influenced — wittingly or unwittingly — by the campaign contributions from litigants and lawyers appearing before it.  In a statistical sense, campaign donors enjoy a favored status among parties before the court.  Facing an aggregate of $1.3 million in political donations in the cases under review, the justices did not find reason to disqualify or recuse themselves.

No wonder, then, that the amicus brief submitted by the Brennan Center for Justice at NYU School of Law, the Campaign Legal Center, and the Reform Institute cited the article as support for their position that Supreme Court of Appeals of West Virginia Chief Justice Brent Benjamin should have recused himself from the Caperton case.

The only problem is that the article has been criticized for its miscalculations and flawed methodology, which prompted Tulane Law School Dean Lawrence Ponoroff to apologize to the Louisiana Supreme Court last September. 

On February 9, the Louisiana Supreme Court moved for leave to file its amicus brief out of time, in which it described the purpose for its brief:

The Louisiana Supreme Court’s purpose in filing its amicus curiae brief is to apprise this Honorable Court that the Tulane Law Review article has been thoroughly refuted because of its flawed methodology, error-laden data selection, and faulty analysis.  See, e.g., Robert Newman, Janet Speyrer & Dek Terrell, A Methodological Critique of The Louisiana Supreme Court in Question: An Empirical and Statistical Study of the Effects of Campaign Money on the Judicial Function, 69 LA. L. REV. 307 (2009); and because of its erroneous data collection, selection and analysis, see Kevin R. Tully & E. Phelps Gay, The Louisiana Supreme Court Defended: A Rebuttal of The Louisiana Supreme Court in Question: An Empirical and Statistical Study of the Effects of Campaign Money on the Judicial Function, 69 LA. L. REV. 281 (2009).  Due to the grave errors in the article, the Dean of the Tulane Law School issued a formal written apology  to the Louisiana Supreme Court and to its Justices.  And, the Tulane Law Review posted an Erratum on its website expressing deep regret over the article’s errors.

Here’s the Erratum on the law review’s website:

The Louisiana Supreme Court in Question: An Empirical Statistical Study of the Effects of Campaign Money on the Judicial Function, published in Volume 82 of the Tulane Law Review at 1291 (2008), was based on empirical data coded by the authors, but the data contained numerous coding errors.  Tulane Law Review learned of the coding errors after the publication.  Necessarily, these errors call into question some or all of the conclusions in the study as published.  The Law Review deeply regrets the errors. 

Counsel for the Louisiana Supreme Court and the writers of its amicus brief are Kevin R. Tully and E. Phelps Gay, who also wrote one of the two rebuttals to the Tulane Law Review article published this year in the Louisiana Law Review.

On a lighter note, if such a thing exists in the case, is this front-page article from Monday’s USA Today by Joan Biskupic, entitled “At the Supreme Court, a case with the feel of a best seller.”

Also today, The Wall Street Journal Law Blog published this post about Andrew Frey and Theodore Olson, who will argue for the parties at the Supreme Court.  Frey and Olson are two of the most experienced and best known appellate lawyers in the country, which should make for an excellent argument.

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In its February issue, the ABA Journal has a feature by John Gibeaut entitled "Caperton's Coal," about, what else, Hugh Caperton and Harman Mining's lawsuit against Massey, and its aftermath.

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Five amicus briefs were filed yesterday in support of A. T. Massey Coal Company.  They are:

• Brief of Amicus Curiae Center for Competitive Politics in Support of Respondents;
• Brief of Law Professors Ronald D. Rotunda and and Michael R. Dimino as Amici Curiae in Support of Respondents;
• Brief of the States of Alabama, Colorado, Delaware, Florida, Louisiana, Michigan, and Utah as Amici Curiae in Support of Respondents;
• Brief of Ten Current and Former Chief Justices and Justices as Amici Curiae in Support of Respondents; and
• Brief of Amicus Curiae James Madison Center for Free Speech Supporting Respondents.

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I’ll get back to posting from LegalTech New York, but I want to talk about an order entered last Friday by Supreme Court of Appeals of West Virginia Chief Justice Brent Benjamin.

As most everyone knows, the United States Supreme Court will hear arguments on March 3 in Caperton v. A. T. Massey Coal Co. on the issue of the effect of Massey chairman Don Blankenship’s $3 million in contributions to an organization that ultimately benefited Chief Justice Benjamin’s 2004 campaign for the Court. 

Now, confronted with a motion to disqualify him from State ex rel. Central Energy Company v. The Honorable Ronald E. Wilson and Mountain State Carbon, LLC, No. 082333 (Central Energy Company is a Massey subsidiary), Chief Justice Benjamin has temporarily recused himself from all cases involving Massey, pending the Supreme Court’s decision in Caperton. 

Here are the recusal order and a 14-page memorandum, in which Chief Justice Benjamin explained that, although he does not believe that his disqualification is warranted “based upon the motion as presented, the facts and records of this case, these parties’ previous actual record before me, and the current law of West Virginia and the United States[,]”

It would be personally and judicially disrespectful to the United States Supreme Court and its Justices for me to proceed in this or any other matter involving Massey Energy Company while the Caperton matter is pending.  It would likewise be improper for this Court to delay matters involving Massey Energy Company, particularly matters such as this involving injunctions, while the Caperton matter is pending before that Court.

Justice Robin Davis will serve as acting Chief Justice in matters involving Massey and will appoint a replacement while Caperton is pending before the Supreme Court.

Also, on Monday, AmericanLawyer.com's Andrew Longstreth discussed the Caperton appeal and asked Andrew Frey of Mayer Brown, who will argue for Massey before the Supreme Court , about the disparity in the number of amicus briefs filed in support of Caperton and Massey.  Frey said that he anticipates “three or five” briefs in support of Massey, including the one to be filed by Alabama Attorney General Troy King on behalf of the National Association of Attorneys General, which I discussed last week.

 

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A. T. Massey Coal Company filed its merits brief yesterday, which leaves only the filing of amicus briefs in support of Massey's position, which are due by next Wednesday, February 4.

It doesn't seem likely that Massey will attract as many amici as the plaintiffs did, which I provided in this post, but one brief that will be filed on its behalf will come from Alabama Attorney General Troy King for the National Association of Attorneys General.

Dan Schweitzer, Supreme Court counsel for the NAAG, sent out this email, which enclosed a memorandum describing the proposed brief.

Here is the memorandum's description:

To be clear, Alabama will not be taking sides in the election vs. appointment vs. merit-selection debate in this brief.  Nor will Alabama be attempting to downplay the seriousness of the allegations of impropriety here.  Instead, Alabama will focus solely on the following federalism point: Once a state has chosen its preferred method of selecting judges -- whatever that method is -- states should have the ability to police judicial participation through carefully constructed state recusal policies.  In other words, making recusal a federal issue by "constitutionalizing" it is unnecessary and, as a practical matter, unwise.

The memorandum also outlines potential arguments to be raised in the brief:

• It would be extraordinarily difficult to craft a meaningful "principle" underlying a generic federal due process right to recusal.
• Federalizing the issue burdens the courts.
• Federalizing the issue is unnecessary because the States are currently handling the issue with their own rules and regulations.
• Making the failure to recuse a potential constitutional rights violation will effectively cause many judges to recuse unnecessarily.

Here is The Wall Street Journal's Law Blog's post from last week about the memorandum (with a now-outdated photograph of the Supreme Court of Appeals of West Virginia), including a link to Paul J. Nyden's article in the Charleston Gazette.

I'll post the NAAG amicus brief and any others.

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Here are the amicus briefs that have been filed thus far in Caperton v. A. T. Massey Coal Company, Inc.:

Brief of 27 Former Chief Justices and Justices in Support of Petitioners;

Brief of Public Citizen in Support of Petitioners;

Brief of Justice At Stake, the American Judicature Society, Appleseed, Common Cause, the Constitutional Accountability Center, the Institute for the Advancement of the American Legal System, the League of Women Voters, the National Ad Hoc Advisory Committee on Judicial Campaign Conduct, the Alabama Appleseed Center for Law & Justice, the Colorado Judicial Institute, Democracy North Carolina, the Fund for Modern Courts, the Illinois Campaign for Political Reform, Justice For All, the League of Women Voters of Michigan, the League of Women Voters of Wisconsin Education Fund, the Massachusetts Appleseed Center for Law & Justice, the Michigan Campaign Finance Network, Missourians for Fair and Impartial Courts, the NC Center for Voter Education, Ohio Citizen Action, Pennsylvanians for Modern Courts, Texans for Public Justice,the Washington Appellate Lawyers Association, Washington Appleseed, Wisconsin Democracy Campaign, Chicago Appleseed, and the Chicago Council of Lawyers in Support of Petitioner;

Brief of the Brennan Center for Justice at NYU School of Law, the Campaign Legal Center, and the Reform Institute in Support of Petitioners;

Brief of the American Academy of Appellate Lawyers in Support of Petitioners;

Brief of the Committee for Economic Development, Intel Corporation, the Lockheed Martin Corporation, PepsiCo, Wal-Mart Stores, Inc., the Defense Trial Counsel of Indiana, the Illinois Association of Defense Counsel, and Transparency International – USA in Support of Petitioners;

Brief of the National Association of Criminal Defense Lawyers in Support of Petitioners;

Brief of the American Bar Association in Support of Petitioners;

Brief of the American Association for Justice in Support of Petitioners;

Brief of Center for Political Accountability and the Carol and Lawrence Zicklin Center for Business Ethics Research in Support of Petitioners; and

Brief of the Conference of Chief Justices in Support of Neither Party

January 5 was the deadline for amicus briefs in support of the  petitioners.  The respondents' merits brief is due by January 28, and amicus briefs supporting their position are due by February 4.

Also, in a story by Justin Anderson in today's (Charleston, West Virginia) Daily Mail, Richard A. Brisbin, Jr., associate professor in the Political Science Department at West Virginia University, discusses the political agendas of some of the groups that have filed amicus briefs.

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It seems fitting to end the year with a post about the appeal in Caperton v. A. T. Massey Coal Company, Inc., which promises to stay in the headlines in 2009, with oral arguments scheduled for March 3. 

Here is the petitioners’ merits brief (courtesy of petitioners’ counsel Bruce Stanley), which was filed on Monday, and presents the following question for the Supreme Court’s consideration:

Justice Brent Benjamin of the Supreme Court of Appeals of West Virginia refused to recuse himself from the appeal of the $50 million jury verdict in this case, even though the CEO of the lead defendant spent $3 million supporting his campaign for a seat on the court – more than 60% of the total amount spent to support Justice Benjamin’s campaign – while preparing to appeal the verdict against his company.  After winning election to the court, Justice Benjamin cast the deciding vote in the court’s 3-2 decision overturning that verdict.  The question presented is whether Justice Benjamin’s failure to recuse himself from participation in his principal financial supporter’s case violated the Due Process Clause of the Fourteenth Amendment. 

Paul Nyden wrote about the brief and cited some other excerpts in today’s Charleston Gazette.  According to his article, amicus briefs in support of the petitioners are due by January 5, Massey’s merits brief is due by January 28, and amicus briefs supporting its position are due by February 4.  I’ll post the briefs as they are filed.

Happy New Year to everyone!

 

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In an eagerly awaited decision, the Supreme Court of the United States today granted the petition for a writ of certiorari filed by Hugh Caperton and Harman Mining from the Supreme Court of Appeals of West Virginia’s reversal of a $50 million verdict in their favor.  Here is the Court's order, which included decisions on cert petitions in several cases.

Harman and Caperton alleged that Supreme Court of Appeals Justice Brent Benjamin’s refusal to recuse himself from the case, in which A. T. Massey Coal Company was a defendant, deprived them of a fair and impartial tribunal. 

In Justice Benjamin’s 2004 campaign, Massey chairman Don Blankenship played a pivotal role by personally spending $3 million on behalf of an organization that directly or indirectly benefited Justice Benjamin.

Here are Caperton and Harman's petition for the writ, Massey's response in opposition, and amicus briefs submitted on behalf of Caperton and Harman by the American Bar Association, Public Citizen, and the Washington Appellate Lawyers Association, all courtesy of plaintiffs’ counsel Bruce Stanley.

The appeal has focused attention on the issue of contributions in judicial elections.  The New York Times published an editorial yesterday, entitled "Tainted Justice", in which in which it urged the Court to accept the petition and questioned why the Court had taken so long to make a decision.  According to the Court's docket, the petition had been considered on four prior occasions before today.

Bloomberg.com , Dow Jones Newswire, and The Charleston Gazette have written stories today on the Court's decision to accept the petition..

In the Sunday Gazette-Mail on November 9, Paul J. Nyden wrote about the Court's ongoing consideration of the petition and discussed other media outlets that had urged the Court to accept the appeal.   

Finally, here are some posts I've written about the case when Caperton hired former Solicitor General Ted Olson to prosecute the Supreme Court appeal,  the Supreme Court of Appeals reversed Caperton's verdict for a second time, and Justice Benjamin refused to recuse himself from the case.

 

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The Supreme Court of the United States heard arguments yesterday in Wyeth v. Levine, No. 06-1249, which again presents the issue of federal preemption, this time in the context of state law claims resulting from allegedly defective pharmaceutical packaging. 

Wyeth has generated an enormous amount of discussion and analysis.  Here is the transcript of the argument in Wyeth, and the two other cases argued yesterday.  For background, here are SCOTUSBLOG's post from yesterday, which had previewed the argument, and The Wall Street Journal's Law Blog's analysis of the argument.  News coverage of the case today includes Jess Bravin's article in The Wall Street Journal and David G. Savage's article in the Los Angeles Times.

Kimberly A. Krawolec, who blogs at The UCL Practitioner, posted today about the case.  And The Wall Street Journal's Health Blog questions how the outcome of the presidential election might affect the Court's decision.

The Supreme Court will decide Wyeth against the backdrop of its decision earlier this year in Riegel v. Medtronic, Inc., 128 S.Ct. 999, 169 L.Ed.2d 892 (2008), in which the Court held that state common-law claims challenging the safety or effectiveness of a medical device marketed in a form that received premarket approval from the United States Food and Drug Administration were barred by the applicable federal law’s preemption clause.

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After the Supreme Court of Appeals of West Virginia rejected Chesapeake Energy Corporation's petition for appeal from the $404 million verdict in Estate of Garrison G. Tawney v. Columbia Natural Resources, LLC, Chesapeake and NiSource, Inc. filed a petition for certiorari with the United States Supreme Court. 

But on Thursday, Judge Tom Evans of the Circuit Court of Roane County, West Virginia preliminarily approved a settlement in which the defendants will pay $380 million and drop their appeals.  Here are NiSource's press release announcing the settlement, Associated Press reporter Tim Huber's article in the Fort Worth (Texas) Star-Telegram, and Ken Ward, Jr.'s article in yesterday's Charleston Gazette. 

NiSource will pay $338.8 million of the settlement, with Chesapeake paying the balance of $41.2 million.

Class members may still object to the settlement or opt out.  Judge Evans has scheduled a final fairness hearing for November 22.

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The Supreme Court of Appeals of West Virginia voted 4-1 yesterday to grant DuPont’s petitions for appeal in Perrine v. DuPont, the medical monitoring class action that resulted in a verdict of nearly $400 million.  I reviewed the issues on appeal in this post last month.

On Wednesday, DuPont presented its appeals from the verdict and from the circuit court’s order requiring it to indemnify T. L. Diamond, a former owner of the zinc smelter site.  Ken Ward, Jr. wrote about the argument in yesterday's Charleston Gazette. 

In its argument, DuPont’s counsel questioned the adequacy of the review provided by the Supreme Court of Appeals in light of recent United States Supreme Court decisions, which was also the focus of West Virginia Governor Joe Manchin’s amicus brief.

Justice Robin Davis pointed out that Article VIII, Section 4 of the West Virginia Constitution provides that:  

A writ of error, supersedeas or appeal shall be allowed by the supreme court of appeals, or a justice thereof, only upon a petition assigning error in the judgment or proceedings of a court and then only after the court, or a justice thereof, shall have examined the record and is satisfied that there probably is error in the record, or that it presents a point proper for the consideration of the court.

She suggested that the Court's approach simply adheres to this standard, and did not seem convinced that adequate appellate review of a punitive damages award, as defined by the United States Supreme Court, required the Supreme Court of Appeals to accept a party’s appeal, as DuPont and Governor Manchin contended.

By contrast, Justice Larry Starcher announced that without making any judgment on the merits of DuPont’s appeal, he would vote to grant because of his belief that the Court automatically should review any punitive damages award.

Justice Davis was the only vote against DuPont’s appeals.  Senior Status Justice Thomas McHugh recused himself because his former firm represents DuPont and Justice Brent Benjamin recused himself because his former firm represents T. L. Diamond.  Circuit Court Judges Alan Moats and Derek Swope, respectively, were appointed to replace them.

On September 9. the plaintiffs presented their appeal from the circuit court's order granting DuPont's summary judgment motion as to class composition.  The Court granted their petition 3-1 (Justice Davis voted not to grant) and consolidated the plaintiffs’ appeal with DuPont’s.

Curt Cutting at the California Punitive Damages blog wrote about the Court's votes in this post.

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 As I wrote yesterday, here is Dr. Steven Hatfill’s motion to dismiss Toni Locy’s appeal, which was filed in the D. C. Circuit Court of Appeals last Thursday (there is an accompanying motion for leave to file out of time), courtesy of Samantha Fredrickson at the Reporters Committee for Freedom of the Press.

Hatfill wants the court to dismiss Locy’s appeal of Judge Reggie Walton’s contempt order as moot because he settled his lawsuit against the government and no longer needs to know the names of Locy’s sources.  The district court is willing to vacate the contempt order, once it regains jurisdiction of the case, which means, according to the motion, “[b]ecause Locy has not suffered and will not suffer any sanction under the order of contempt, there is no longer any need for this Court to rule on the merits of her appeal.”

But there is, as the motion calls it, an “ancillary issue [that] remains in dispute between Locy and Hatfill.”  The district court has indicated that it will award Hatfill his attorney’s fees incurred in connection with the issue, and Hatfill intends to seek them from Locy as soon as the district court regains jurisdiction.

Hatfill is concerned that, despite his settlement with the government, the court of appeals will rule on Locy’s appeal, presumably in her favor, which would eliminate the basis for his motion for attorney’s fees:

In this case, it would be the tail wagging the dog if this Court were to issue a decision addressing whether the district court properly held Locy in contempt to reach an ancillary dispute regarding fees that has not been reduced to any order (and which is therefore not yet appealable )…  On the only order now on appeal, which is the only order that has been entered against Locy [the district court’s contempt order], there is nothing remaining to adjudicate.

Assuming that the court of appeals dismisses Locy’s appeal and Hatfill files his motion for attorney’s fees, the district court appears inclined to grant the motion, which could be disastrous for Locy.  The court imposed some onerous fines against her (stayed by the court of appeals), and held that only she, as opposed to USA Today, the news organization that employed her, could pay the fines.  And I'm sure Hatfill's lawyers have not been cheap.

 

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 You may have read that Dr. Steven Hatfill settled his lawsuit against the United States in June for $5.85 million.  The government had identified Hatfill as a person of interest in the 2001 anthrax attacks -- falsely, as it turns out, which resulted in his lawsuit.

In prosecuting his lawsuit, Hatfill sought to compel Toni Locy, a former USA Today reporter, to divulge her sources for articles that had discussed the government’s interest in Hatfill.  Locy refused to give up her sources, which resulted in United States District Court Judge Reggie Walton entering a contempt order against her.  Here is my post from March about the proceedings involving Locy. 

She appealed the order, and the D. C. Circuit Court of Appeals stayed the order and heard oral argument on Locy’s appeal in May, but has not issued a decision.

I suspect most people, including me, assumed that Hatfill’s settlement would moot Judge Walton’s order, but that may not be so.  According to Scott Shane's article in yesterday’s New York Times about Bruce Ivins (whom the government has identified as the actual anthrax killer), Hatfill has asked the Court of Appeals to dismiss Locy’s appeal, which would allow Judge Walton’s order to stand. 

The Reporters Committee for Freedom of the Press' blog explains that Hatfill's motion could force Locy to pay his attorney’s fees, an amount that could dwarf what Locy would have owed under the contempt order. 

Starting this fall, Locy became the Donald W. Reynolds Professor of Legal Reporting at Washington and Lee University in Lexington, Virginia.  She formerly held the Shott Chair of Journalism at West Virginia University's P. I. Reed School of Journalism.

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On Tuesday, the Supreme Court of Appeals of West Virginia was scheduled to consider the plaintiffs’ petition for appeal in Perrine v. DuPont, but the motion docket on the Court’s website indicates that the Court deferred any decision.  Ken Ward, Jr. wrote about the plaintiffs’ argument in yesterday’s Charleston Gazette. 

The website does not identify any reason for the deferral, although I understand that there is a pending motion to consolidate the three appeals in the case (the plaintiffs’, and DuPont’s, which seek a new trial and indemnification from its co-defendant T. L. Diamond), which has not been ruled on yet, and which could affect how the appeals proceed.  My post last month provided some background for the appeals.

But the Court’s decision to defer consideration could also be related to Justice Joseph Albright’s decision to recuse himself from participating in any case during the Fall Term, as he continues to recover from surgery performed in July.  The Court issued this press release yesterday, which announces Justice Albright’s recusal and includes a link to his letter to Chief Justice Elliott E. "Spike" Maynard.

Justice Albright’s recusal resulted in the Court cancelling its afternoon argument docket on Tuesday, as well as yesterday’s motion and argument dockets, all of which are being rescheduled to dates later in the term.

Today the Court issued another press release, announcing that retired Justice Thomas E. McHugh will replace Justice Albright for the remainder of the term, and making some other changes to the Court’s docket.

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    Here is the brief filed last week by the plaintiffs in opposition to the amicus brief filed by West Virginia Governor Joe Manchin.  The plaintiffs' brief attaches as exhibits documents received from the Governor's office through a Freedom of Information Act request, which the plaintiffs contend show an inappropriate relationship between the Governor and DuPont:

In conclusion, the "Governor's filing" is, in truth, the product of an orchestrated scheme by DuPont to further argue its position on the issue of punitive damages from a respected and supposed neutral party when in reality the filing is a feigned pleading that parrots the arguments that DuPont has put forth in its petition for appeal.

    As I discussed in my post earlier today, Manchin's brief asks the Supreme Court of Appeals of West Virginia to grant DuPont's petition for appeal in order to address the question of the level of appellate review required by the Due Process Clause of the Fourteenth Amendment for a punitive damages award. 

    In other words, does DuPont receive due process if the Supreme Court of Appeals considers DuPont's petition for appeal from the award (among other issues), but rejects it, thus precluding any further appellate review in West Virginia?   Or does DuPont's appeal have to be considered on its merits, even if such review results in an affirmance?

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    I had intended to write this post a few weeks ago, and because the issues have been back in the news recently, I have another chance to discuss them.

    Last year, a Harrison County, West Virginia jury returned a verdict for $196.2 million in punitive damages against DuPont in a class action with more than 7,000 members who sought damages for medical monitoring and property damage claims, as a result of DuPont's operation of a zinc smelter that released harmful quantities of cadmium, arsenic, and lead.  The jury earlier had awarded $55.5 million for the plaintiffs’ property damage claims and found that that a medical monitoring program was appropriate, which will cost approximately $130 million.  Here is my post dealing with the trial court’s rulings on the parties’ post-trial motions.

    Since then, the parties have prosecuted appeals from the court’s rulings. I’ll discuss those appeals, but the filings that have been getting attention are two amicus briefs filed in the case.

    In June, West Virginia Governor Joe Manchin filed an amicus brief in support of DuPont’s petition for appeal from the jury’s verdict: “Because the disposition of cases involving punitive damages at the petition stage raises significant due process concerns, the Governor respectfully requests that this Court grant the petition to clarify the law regarding the constitutionally mandated appellate review of punitive damages.”  Here is the Governor’s brief, courtesy of his counsel, Carte Goodwin.

    You will note that Manchin is careful not to advocate a particular result, even as he asks the Court to accept DuPont’s appeal.  His purpose in doing so, he maintains, is that because the United States Supreme Court held in State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003), that the Fourteenth Amendment’s Due Process Clause guarantees the right to de novo appellate review of a punitive damages award, DuPont’s right to such review may be compromised, if not violated, by the Supreme Court of Appeals of West Virginia’s “mere” consideration of DuPont’s petition for appeal. 

Consequently, the Governor is interested in one of the central issues highlighted by this case and other petitions seeking review of punitive damages awards: What sort of appellate review is required by the Due Process Clause?

    It is the “this case and other petitions seeking review of punitive damages awards” that provides the context for Manchin's brief.  In May, the Supreme Court of Appeals refused petitions for appeal in two widely-publicized cases where juries had returned substantial verdicts: the natural gas royalty class action against Columbia Natural Resources, LLC and other defendants, where a jury returned a verdict for about $404 million, including $270 million in punitive damages, and a breach of contract case against Massey Energy Company, where a jury returned a verdict of $219 million, including $100 million in punitive damages.  Here is my post about the Court’s action.

    Manchin does not want DuPont’s petition for appeal to become the third one rejected by the Court without what he and DuPont regard as adequate appellate review, which they hope would result in a reversal of the jury's verdict.  The problem from their perspective, however, is Rule 7 of the West Virginia Rules of Appellate Procedure, which provides that the Court may refuse or grant a petition for appeal, and that a refusal precludes any further appellate review in West Virginia. 

    Just as Governor Manchin tries not to advocate a particular outcome – even though the relief he requests benefits DuPont more than the plaintiffs -- he is careful not to criticize the Supreme Court of Appeals too pointedly for its procedure for considering appeals.  But he does makes this observation:

More to the point, it is unclear whether this Court’s periodic practice of determining the validity of a punitive damages award solely through consideration of a petition for appeal could withstand constitutional scrutiny today.  Unfortunately, the United States Supreme Court has not explicitly addressed whether this aspect of our process provides litigants with “meaningful and adequate” appellate review.

(Emphasis in original.)

The Governor expands on the point in footnote 4:

This is understandable – and the concern especially pronounced – given the unique structure of West Virginia courts, where no civil litigant is provided an appeal as a matter of right and – lacking any intermediate appellate courts – this Court is the only appellate tribunal that can provide the level of review mandated by State Farm.  And yet, this Court may grant or refuse a petition for appeal in its sole discretion.  See Rule 7, West Virginia Rules of Appellate Procedure.  By contrast, forty-eight States offer civil litigants at least one appeal as a matter of right, either to an intermediate appellate court or to the State’s highest court….

    Not surprisingly, the plaintiffs are asking the Supreme Court to ignore Manchin's brief, according to this article by Ken Ward, Jr. in last Thursday’s Charleston Gazette.  Ward’s article referred in turn to this article by Ian Urbina in last Wednesday’s New York Times, which detailed contacts between Manchin and officials from DuPont and said that Manchin asked DuPont to provide a draft brief to his office, which would render his assertion that he is not advocating for a particular party less than credible.  Urbina quoted well-known legal ethicist and New York University law professor Stephen Gillers as saying that Manchin’s action was the first he could find where a state’s governor, as opposed to its attorney general, took such action.

    Last week, the plaintiffs filed a brief, also referred to in Ward’s article, in which they asked the Court not to consider Manchin’s brief.  I don’t have the plaintiffs’ brief yet, but as soon as I get it, I’ll upload it. 

    A second amicus brief that has created some controversy, although not as much as Governor Manchin’s, was filed by the West Virginia State Medical Association in support of DuPont’s petition for appeal.  Here is the WVSMA amicus brief.

    The WVSMA’s position is that the medical monitoring plan proposed by the plaintiffs and accepted by the trial court will cause more incidents of cancer than it will detect:

Although WVSMA is also concerned about the arbitrary nature of the large punitive damages award and other issues in this case, this brief is limited to the public health issues raised by the medical monitoring plan ordered by the Circuit Court.  WVSMA is concerned that this plan places the plaintiff class in unnecessary danger by approving biennial computed tomography (“CT”) scans that will likely cause more cancer than they will ever find.  Review is warranted because the trial court failed to appropriately weigh the health risks involved in the medical monitoring program when it considered whether the proposed testing was ‘reasonably necessary.”

Specifically, the WVSMA argues that as many as 70 class members could develop cancer if they fully participate in the screening program for 40 years, while 10 cases of cancer would have been detected by the program. 

    The WVSMA asks that the Court accept DuPont’s petition in order to determine whether all of the tests in the proposed medical monitoring program are “reasonably necessary,” meaning whether a qualified physician would prescribe them.

    Regarding the underlying issues, the plaintiffs are appealing the trial court’s grant of summary judgment in the defendants’ favor, which found that releases and easements executed in the 1920s in favor of an earlier owner of the smelter immunized it against certain plaintiffs’ claims.  Here are the plaintiffs’ petition for appeal, which is scheduled to be considered by the Supreme Court on September 9, and DuPont's response in opposition. 

    DuPont is prosecuting two appeals.  One addresses the size and nature of the jury's verdicts and rulings made by the trial court before, during, and after the trial.  Here is DuPont's petition for appeal.  

    In the other appeal, DuPont appeals the trial court's order that required it to indemnify T. L. Diamond and Company for more than $800,000 for costs and expenses that Diamond incurred in connection with the plaintiffs' medical monitoring and property damage claims, based on a contract between DuPont and Diamond.  Here are DuPont's petition on that issue, and the plaintiffs' response in opposition.   Neither of DuPont's appeals has been scheduled on a motion docket yet.

 

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    There is already one casualty from the Supreme Court of Appeals of West Virginia's rejection of Chesapeake Energy Corporation’s petition for appeal from the $404 million verdict in Estate of Garrison G. Tawney v. Columbia Natural Resources, LLC.

    Today, Chesapeake announced that it is canceling plans to build a $35 million regional headquarters in Charleston, and blamed the Supreme Court’s decision not to hear its appeal.   Here is George Hohmann's article about the decision in today's (Charleston) Daily Mail.

   Chesapeake issued this media statement today:

On Thursday May 22nd, the West Virginia State Supreme Court issued a unanimous (5-0) decision against hearing NiSource and Chesapeake's appeal in the Tawney case.  Chesapeake inherited the lawsuit when it purchased Columbia Natural Resources in 2005.

This decision was stunning, as it means we will not have the opportunity to challenge the verdict issued in Roane County in January, 2007.  While we hold a less significant amount of the liability in the verdict, we do believe it sends a profoundly negative message about the business climate in the state.  The reality of this decision is that nobody in West Virginia, similarly situated, has a guaranteed right of appeal in the judicial system.  Chesapeake plans to join NiSource in appealing the case to the U.S. Supreme Court.

As a result, Chesapeake Energy has made the decision to cancel plans to build a new regional headquarters building in Charleston, WV.

We remain committed to our people and our operations in West Virginia and the Appalachian Basin. Chesapeake's Eastern Division will continue to be managed from Charleston, but we will do it from leased space.

--Scott Rotruck, Vice President -Corporate Development

    I have no doubt that Chesapeake is frustrated by the rejection of its appeal, but that was always a possibility.  Unlike federal district court, with its right of appeal, nearly all appeals from West Virginia state courts are discretionary. 

    Chesapeake’s reaction strikes me as a case where its assessment of the success of its appeal may have been based on considerations such as the amount of the verdict, its investment in the local economy, or the prominence of the defendants, and Chesapeake is dismayed that the Supreme Court did not agree with its view.

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    Last week, the Supreme Court of Appeals of West Virginia rejected appeals in two widely-publicized cases.  In Estate of Garrison G. Tawney v. Columbia Natural Resources, LLC, No. 080482, Columbia and NiSource, Inc. appealed the jury’s verdict of $404,335,138, which included punitive damages of $ 270 million.  Here is my post about the verdict.

    In Tawney, which the Court rejected by a vote of 5-0, Justice Robin Davis recused herself because her husband is counsel for the plaintiffs, and Justice Brent Benjamin recused himself because his former firm represents some of the defendants.  Raleigh County Circuit Court Judge H. L. Kirkpatrick and Cabell County Circuit Court Judge Dan O’Hanlon were appointed in their places.

    In Wheeling-Pittsburgh Steel Corporation v. Central West Virginia Energy Company, Nos. 080182 and 080183, Central West Virginia and Massey Energy Company appealed the verdict of $219 million, resulting from the jury’s finding that the defendants breached their contract with Wheeling-Pittsburgh Steel Company and committed fraud.  That verdict included punitive damages of $100 million.  Here is my post about that verdict.

    In Wheeling-Pittsburgh, which the Court also rejected by a vote of 5-0, Chief Justice Elliott E. “Spike” Maynard recused himself because of his relationship with Massey chairman Don L. Blankenship, and retired Greenbrier County Circuit Court Judge Frank Jolliffe was appointed in his place. 

    At this point, the remedy for the defendants in both cases is to petition the Supreme Court of the United States for review.  According to Veronica Nett, writing in yesterday's Sunday Gazette-Mail, the defendants in Tawney intend to appeal on the grounds that the punitive damages were excessive.  But a two-to-one ("single digit") ratio of punitive damages to compensatory damages does not appear to be inherently excessive, according to State Farm Mut. Ins. Co. v. Campbell, 538 U.S. 408 (2003), 

    Massey is considering an appeal to the Supreme Court, according to the Associated Press' Tim Huber, but has not yet made a decision. 

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    The saga of Caperton v. A. T. Massey Coal Company, Inc. continues, following the Supreme Court of Appeals of West Virginia’s decision to reverse the jury’s verdict of $50 million against Massey.  Paul J. Nyden reported in yesterday’s Charleston Gazette that Caperton and his company, Harman Mining Corporation, have retained Theodore B. Olson of Gibson, Dunn & Crutcher, to represent them in an appeal before the Supreme Court of the United States.

    Olson served as Solicitor General from 2001 until 2004, but may be best known for arguing Bush v. Gore before the Supreme Court in 2000 on behalf of President Bush. 

    Olson will present Caperton and Harman’s petition for a writ of certiorari, which will likely focus on the make-up of the Supreme Court of Appeals and argue that Caperton and Harman did not have an impartial tribunal because of the participation of Justice Brent Benjamin, whose election in 2004 benefited from the involvement of  Massey Energy Company chairman Don Blankenship.

    Here is a quote from Olson in the Gazette article:

“A line needs to be drawn somewhere to prevent a judge from hearing cases involving a person who has made massive campaign contributions to benefit the judge. We certainly believe that, in this case, acting Chief Justice Benjamin crossed that line.”

    Justice Benjamin became acting Chief Justice when Chief Justice Elliott E. “Spike” Maynard recused himself after photographs were released in January showing him with Blankenship in Monte Carlo in the summer of 2006, while Massey’s appeal was pending before the Supreme Court of Appeals.

    Although Nyden did not mention any time frame for the presentation of the petition, Rule 13 of the Rules of the Supreme Court of the United States provides that a petition for a writ of certiorari from a judgment of a state court of last resort must be filed within 90 days after entry of the judgment.  The Supreme Court of Appeals’ decision was issued on April 3, which makes the petition due by July 2.

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    In an order entered on Monday, the Supreme Court of the United States rejected Camden-Clark Memorial Hospital’s petition for a writ of certiorari from the Supreme Court of Appeals of West Virginia’s decision not to review the jury’s verdict of $6.5 million in a medical malpractice action filed against the hospital.  Camden-Clark Memorial Hospital v. Boggs, Bernard, No. 07-812.  Here are my posts from last September about the hospital’s petition for appeal and the Supreme Court of Appeals’ refusal thereof. 

    Reporter Andrew Clevenger has an article about the case in today’s Charleston (West Virginia) Gazette, in which he mentions that a “countersuit” filed by the hospital against Bernard Boggs, alleging that Boggs’ original lawsuit was frivolous, is still pending.  It seems like a verdict for $6.5 million in the underlying action, plus sanctions in the amount of $1.3 million, would prove that Boggs' lawsuit had merit.  

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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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    CNN has picked up on the story of Debbie Shank, whose fight with Wal-Mart over reimbursement of her medical expenses was on the front page of The Wall Street Journal last November.  At that time, I wrote about her unsuccessful efforts to reach a compromise with Wal-Mart regarding its health plan’s right to be repaid for medical expenses incurred in connection with Ms. Shank’s motor vehicle accident, which left her severely brain-damaged.  In August, she lost her appeal before the Eighth Circuit Court of Appeals, and last week, the Supreme Court of the United States denied her petition for a writ of certiorari.  James A. Shank, et al. v. Administrative Committee of the Wal-Mart Stores Inc. Associates' Health and Welfare Plan, No 07-791.

    CNN focuses on the human interest aspect of her story and doesn’t try to grapple with the policy issues, but the statement from Wal-Mart’s spokesman seems inaccurate:

Wal-Mart’s plan is bound by very specific rules … We wish it could be more flexible in Mrs. Shank’s case since her circumstances are clearly extraordinary, but this is done out of fairness to all associates who contribute to, and benefit from, the plan. 

    Undeniably, Wal-Mart has the right to pursue its subrogation interest against Ms. Shank’s recovery, but nothing forces Wal-Mart to seek reimbursement of the entire amount, or an amount equal to the remaining settlement.  The implication that Wal-Mart was required to pursue the recovery of its entire claim is incorrect.  In fact, health plans routinely negotiate in these circumstances like these in order to receive some recovery, without leaving the plan participant or beneficiary in circumstances as dire as Ms. Shank's, and Wal-Mart clearly could have done that here.  

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    A few weeks ago, photographs surfaced that showed Supreme Court of Appeals of West Virginia Chief Justice Elliott E. “Spike” Maynard and Massey Energy Company Don L. Blankenship vacationing together in Monaco and, to put it mildly, created a controversy about the Supreme Court’s decision in Caperton v. A. T. Massey Coal Company, Inc., in which Chief Justice Maynard was in the majority.  On the plaintiffs’ motion, the Supreme Court agreed to reconsider its decision, and the parties argued the case again last week.  Chief Justice Maynard and Justice Larry Starcher recused themselves from the Court’s reconsideration of the appeal. 

    Apparently, the photographs have had a more profound effect, as the Federal Bureau of Investigation and the United States’ Attorney’s office for the Southern District of West Virginia are investigating the relationship between the Chief Justice and Blankenship.  The Wall Street Journal reported on the investigation last Thursday, as part of a story on the Caperton rehearing.  On Friday, in The Charleston Gazette, Paul J. Nyden reported that Court employees and at least one justice had been interviewed.  According to Nyden's article, Chief Justice Maynard has questioned the Journal’s story and discounted the existence of the investigation, although he said he would welcome an independent investigation so that he could show that he received nothing from Blankenship. 

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    I think I’m going to avoid predicting how an appellate court will rule in a particular matter, and instead focus on the issues presented.  Yesterday, I wrote that Camden-Clark Memorial Hospital’s petition for appeal from a $1.3 million sanctions award was being considered by the Supreme Court of Appeals, and that I thought that the Court would accept the petition.

    According to the Court's website today, the Court refused the petition by a vote of 5-0.

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    Last spring, the Circuit Court of Wood County, West Virginia awarded $1.3 million in sanctions against Camden-Clark Memorial Hospital and its lawyer for their alleged misconduct before and during the trial of a medical malpractice action (which itself resulted in a verdict of $6.5 million).

    The Supreme Court of Appeals today considered the hospital’s petition for appeal from the sanctions award.  The Court did not have the vote posted on its website by the end of the day, but it should be posted tomorrow.  Here are the hospital’s petition for appeal and the plaintiff’s response in opposition, courtesy of plaintiff's counsel, Chris Regan.

    Even though the Court rejected the hospital’s petition for appeal from the underlying malpractice verdict, I think the Court will accept this petition because of the amount of the award and in order to review the alleged (mis)conduct at issue in the case.  It is rare enough in West Virginia for a trial court to award sanctions, but to do so in this amount is startling.  

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    In an order entered today, the Supreme Court of the United States rejected a request by tobacco companies to get involved in a mass tort action pending in the Circuit Court of Ohio County, West Virginia.   Philip Morris USA, Inc. v. Accord, No. 07-860.

    The tobacco companies had filed a petition for a writ of certiorari from the Supreme Court of Appeals of West Virginia’s November 7, 2007 ruling that denied their request for a writ of prohibition to prohibit the circuit court from proceeding on March 18 with the first phase of a consolidated mass trial.

   The tobacco companies objected to the circuit court's case management plan, and specifically its use of  “reverse bifurcation,” whereby the jury will determine whether, as a group, the plaintiffs are entitled to punitive damages before there has been a finding that any individual plaintiff is entitled to compensation.  A different jury will then determine issues unique to each plaintiff.   Reverse bifurcation has been used in other West Virginia mass tort cases, including asbestos and Fen-Phen litigation.

    Here are The Wall Street Journal’s article on the effect of the Supreme Court’s decision and a post from earlier this month at Akin Gump’s SCOTUSBLOG, which reviewed several petitions scheduled to be reviewed by the Court on February 15, and included PDFs of the parties’ briefs and the amicus briefs.  Philip Morris USA, Inc. is the last petition listed.

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    Last month, following the recusal of Chief Justice Elliott E. “Spike” Maynard, the Supreme Court of Appeals agreed 5-0 to reconsider its reversal of the $50 million verdict against A.T. Massey Coal Company, Inc.   The appeal will be reargued on March 12.  Here are the supplemental briefs filed by Massey, Hugh Caperton, and the Harman companies, and the United Mine Workers of America’s supplemental amicus brief.

    In addition to Chief Justice Maynard, whose recusal was sought by the plaintiffs, Massey had moved to recuse Justice Larry Starcher, who dissented from the Court’s original ruling in November.  Massey’s motion was based on statements made by Justice Starcher, which it alleged demonstrated bias on his part against Massey chairman Don L. Blankenship.  Last Friday, Justice Starcher agreed to recuse himself from further participation in the case.  Here are the Supreme Court’s press release and Justice Starcher’s opinion, and Paul Nyden’s article in the Saturday Gazette-Mail. 

    Justice Starcher also made clear his belief that Justice Brent Benjamin, who last month had rejected the plaintiffs’ request to recuse himself, should still do so in order to protect the integrity of the Court:

I repeat – the pernicious effects of Mr. Blankenship’s bestowal of his personal wealth and friendship have created a cancer in the affairs of this Court.  And I have seen that cancer grow and grow, in ways that I may not fully disclose at this time.  At this point, I believe that my stepping aside in the instant case might be a step in treating that cancer – but only if others as well rise to the challenge.  If they do not, they I shudder to think of the cynicism and disgust that the lawyers, judges, and citizens of this wonderful State will feel about our justice system.

And I reiterate that unless another justice also steps aside in this case, my replacement on the Court will be selected by the justice whose campaign was supported by something close to $4,000,000 from monies that came from one side of the case.  Perhaps, a serious read of the United States Supreme Court case, Aetna Insurance Co. v. Lavoie, 475 U.S. 813, 106 S.Ct. 1580, 89 L.Ed.2d 823 (1986), is in order before such a decision is made.

    I don’t know whether Justice Benjamin read the Aetna decision, but yesterday, he rejected a request that he recuse himself from another appeal involving Massey, and by way of explanation, relied on his refusal last month to recuse himself from the Caperton case.  Here is the Associated Press’ story regarding Justice Benjamin’s refusal to recuse himself.

    Justice Benjamin’s decision not to recuse himself was made in Wheeling-Pittsburgh Steel Corp., et al. v. Central West Virginia Energy Company, et al., Nos. 080182 and 080183, which are the defendants’  appeals from the jury’s verdict of $220 million.  Here are the petitions for appeal filed by CWVEC and Massey.

    In that case, Wheeling Pitt sued Massey and one of its subsidiaries for breach of contract after they refused to deliver a set amount of metallurgical-grade coal to Wheeling-Pitt on a monthly basis.  The jury awarded $119.85 million in compensatory damages and $100 million in punitive damages.  Based on Chief Justice Maynard's feeling that his partiality could reasonably be questioned due to his friendship with Blankenship, he recused himself last month, which Paul Nyden reported in the Charleston Gazette.

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    The Supreme Court of Appeals has voted 5-0 to rehear A.T. Massey Coal Company, Inc.’s appeal of the  $50 million verdict obtained in 2002 by Hugh Caperton and companies he operated.  The Court originally ruled 3-2 in November to reverse the verdict.  The case will be reargued on March 12.

    Circuit Court Judge Donald Cookman was appointed to replace Chief Justice Elliott E. “Spike” Maynard, after the Chief Justice recused himself amid allegations that his personal friendship with Massey Energy Company chairman Don Blankenship would affect his ability to be impartial.  Justice Brent Benjamin, who appointed Judge Cookman, rejected a request by the Harman companies that he recuse himself, based on Blankenship's involvement in his 2004 campaign.

    Here is the Associated Press story, which includes Massey’s statement about the Supreme Court's decision to reconsider the verdict.

    Also, I need to correct my post last Saturday about Justice Benjamin's refusal to recuse himself.  In his statement, he said, in part, that, "Simply conclusory accusations and assumptions are plainly  insufficient to support a motion for disqualification[,]"  not "simply accusatory accusations," as I wrote.

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    A post earlier this week in Stephen D. Rosenberg’s Boston ERISA & Insurance Litigation Blog ties in nicely with an appeal argued in front of the Supreme Court of Appeals of West Virginia on Tuesday, which was the first day of the Court’s Spring Term.  Here is the Court’s calendar for the entire term.

    The post was entitled “The Three Rules of the Tripartite Relationship,” which refers to the relationship established when an insurance company’s policyholder is sued, and the insurance company provides a defense as required by the policy.  Even though the policyholder’s lawyer is retained and paid by the insurance company, he or she represents the policyholder’s interests exclusively.  But the tripartite relationship has the potential to create conflicting loyalties on the part of the policyholder’s counsel, whose obligation to represent the policyholder may be at odds with the interests of the insurance company that has retained him or her. 

    Stephen linked to an article entitled "On the Horns of a Defense Counsel Dilemma," and also proposed three rules of thumb that should govern the tripartite relationship.  Roy Harmon, who writes Health Plan Law, also wrote about the arrangement yesterday with a post entitled "Appointed Defense Counsel: The Small Print Enlarged."

    The tripartite relationship was at issue before the Supreme Court of Appeals in Jeffrey A. Horkulic, et al. v. William O. Galloway, et al., No. 33352, which involved an underlying legal malpractice claim.  Defendant Galloway’s malpractice carrier, TIG Insurance Company (“TIG”), appointed counsel for him, and he also retained his own private counsel.  A dispute developed between Galloway’s appointed counsel and TIG as to whether a settlement with Horkulic had been reached.  Galloway’s appointed counsel said the parties had reached a settlement, while TIG’s claims adjuster said they had not.

    The sticking point between Galloway and TIG was a provision that Galloway would confess judgment in the amount of $1,500,000, but that the plaintiff would accept Galloway’s policy limits of $500,000 in satisfaction of his claim, would not pursue Galloway’s personal assets, and would not record the judgment.  TIG's objection was that the plaintiff, who had also filed a third-party bad faith claim against TIG, would be able to use the confession of judgment in the bad faith case in order to establish his damages.  The Circuit Court of Ohio County entered an order approving the settlement, including Galloway's confession of judgment, and TIG appealed.

    As you can see from the circuit court’s order, as well as the parties’ briefs (here are TIG's brief, the plaintiff’s brief, and TIG's reply brief), the plaintiff’s appointed counsel clearly was at odds with TIG, the entity who retained and paid him. This conflict is what can make the tripartite relationship so problematic. 

    At the oral argument, which I watched via the Court’s webcast, TIG argued that it would be unable to challenge the confession of judgment during the prosecution of the third-party bad faith case, for the purpose of determining the plaintiff’s damages.  The plaintiff’s counsel repeatedly assured the Court that TIG could object to the judgment, but as some members of the Court observed, until the bad faith case is underway and the confession of judgment becomes an issue, TIG’s concern may be premature.

    Finally, one other issue that was consolidated for hearing on Tuesday with the underlying appeal was State ex rel. TIG Insurance Company v. The Honorable Arthur M. Recht, et al., No. 33353, which was TIG’s petition for a writ of prohibition against the circuit court’s award of attorney’s fees to Horkulic’s lawyer.  The circuit court ordered TIG to pay attorney’s fees at the rate of $500 per hour for the work involved in enforcing the plaintiff’s settlement with TIG, which amounted to $50,750.  Here are TIG’s petition, Galloway's response, and the plaintiff’s response.  (Incidentally, Galloway's position was that the circuit court did not exceed its authority in awarding attorney's fees and that the amount of the award was not excessive.)  The Supreme Court was not alarmed about the amount of the hourly rate, so I don’t anticipate that the Court will disturb the award.

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    An interesting appeal that presents an issue of first impression was argued before the Supreme Court of Appeals last week.  The case is Wetzel v. Employers Service Corporation of West Virginia, No 33337. Here are the appellant’s brief, the appellee’s brief, and the reply brief.

    The issue is whether a workers’ compensation claims administrator for a self-insured employer can be liable for unfair trade practices (or “bad faith”) for conduct that allegedly causes or hastens a claimant’s death.  Mary Wetzel, the executrix of her husband’s estate, claims that Employers Service Corporation (ESC), the claims administrator for Chemical Leaman Tank Lines, delayed or denied her husband’s physicians’ requests for medically necessary treatment, which resulted in his death at the age of 49 from the effects of occupational exposure to toluene diisocyanate.

    In response, ESC characterized its role as Chemical Leaman’s claims administrator as being the employer’s agent, and maintained that such status entitled it to immunity the same as if Chemical Leaman had been sued directly.  ESC also argued that under case law interpreting the West Virginia Unfair Trade Practices Act, an entity that does not have a contractual obligation to pay a claim, such as an insurance company, cannot be held liable for bad faith. 

    The Circuit Court of Marshall County, West Virginia granted ESC’s motion for summary judgment on the grounds that the statutory immunity afforded to Chemical Leaman, an employer covered by workers’ compensation, also extended to ESC, as its agent.  The court also ruled that ESC was not in the business of insurance and thus could not be liable under West Virginia’s Unfair Trade Practices Act.

    This case is unique because the claims administrator, not the employer, is the defendant.  The West Virginia cases cited by both parties have only addressed an employer’s conduct in determining whether a claimant may maintain a direct action against the employer. Persinger v. Peabody Coal Company, 474 S.E.2d 887 (W.Va. 1996).  Similarly, in Hawkins v. Ford Motor Co., 566 S.E.2d 624 (W.Va. 2002), which limited the applicability of the Unfair Trade Practices Act to entities which were in the business of insurance, there was no claims or third-party administrator present.

    From my reading of the parties’ briefs, if Mrs. Wetzel prevails on the issue that ESC is not entitled to immunity, her action can go forward even if the Supreme Court agrees with the Circuit Court that ESC is not in the business of insurance and therefore cannot be liable for any bad faith, as she also asserted claims for the intentional infliction of emotional distress and negligence, which would not be affected. 

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    I provided the wrong date for the Supreme Court of Appeals' argument for A. T. Massey Coal Company's appeal from the $50 million verdict in Boone County.  I wrote that the argument was set for October 3, which was incorrect.  The argument is set for tomorrow, October 10.  There is a fairly short motion docket, which will begin at 10:00, so the Massey argument, which is the first one on the argument docket, should start around 10:30 or so.  I apologize to anyone who tried to watch or listen to the argument and wondered why nothing was happening.

    Also, in an entry last week on his New York Attorney Malpractice Blog, which referenced my post about Massey's lawsuit against Wyatt, Tarrant & Combs, LLP and McGuire Woods LLP, Andrew Bluestone pointed out that one can watch a webcast of arguments before the Supreme Court.  The webcast can be accessed from several locations within the Supreme Court of Appeals' website, including the home page, opinion page, and calendar and dockets page.  The Court's proceedings can also be heard by dialing in to 304-558-1313.

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    I had intended to write about some West Virginia federal court decisions that were issued last week dealing with a class actions and commercial free speech, but an article in this morning’s Charleston Gazette caused me to put those on hold.  I'll get back to those in a day or two.

    Yesterday, I wrote that the Supreme Court of Appeals was going to hear argument in A. T. Massey Company’s appeal of a $50 million verdict rendered against it in Boone County, West Virginia in 2002.  I wasn’t able to attend the argument or watch on the Court’s webcast, so I don’t know how the argument went.

    According to the article by Gazette reporter Paul J. Nyden, Massey and two related entities have sued Wyatt, Tarrant & Combs, LLP of Lexington, Kentucky and McGuire Woods LLP of Richmond, Virginia for their alleged malpractice in representing Massey in a Virginia lawsuit filed by Hugh Caperton and his companies.  In 2001, a Virginia jury awarded the plaintiffs $6 million.  The Virginia Supreme Court refused Massey’s appeal because it was filed by a lawyer from Kentucky who wasn’t admitted to practice in Virginia.  Massey ended up paying Caperton $7.2 million, including $1.2 million in pre-judgment interest.  Here is Massey’s complaint, which was filed on July 13, 2007 in the Circuit Court of Fayette County (Lexington), Kentucky.

 

Continue Reading...

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    The Supreme Court of Appeals hears argument today in an appeal from a $50 million verdict against A. T. Massey Coal Company and several of its subsidiaries, which was rendered in 2002.  The parties’ briefs are posted on the Court's website.

    The case was brought by Hugh Caperton as an individual, and by his company, Harman Development Corporation, which owned Harman Mining Corporation, and Sovereign Coal Sales, Inc., against Massey and its affiliates.  In short, Caperton alleged that Massey put him and his companies out of business and caused him significant personal damage. 

    The Boone County, West Virginia jury awarded the Harman corporate entitles compensatory damages of $29.7 million, consequential damages of $3 million, and punitive damages of $2 million.  The jury awarded Caperton compensatory damages of $3.4 million, general damages of $7.5 million, consequential damages of $425,000, and punitive damages of $4 million.  I will write more about the case after the Court issues its decision (probably late next month), but I wanted to point out that the argument takes place today. 

     In addition to its appeal of the verdict, Massey has sought relief in the case in federal court as well, for alleged constitutional violations.  The SW Virginia Law Blog has a post from last July about Massey’s lawsuit against the court reporter at the trial for her alleged failure to provide an adequate transcript of the trial, which Massey alleged was a violation of 42 U.S.C. § 1983 because the reporter was acting under color of state law.  The case was resolved after the court reporter was able to produce a transcript that satisfied Massey. 

    Massey also sued the Supreme Court of Appeals in federal court last year, seeking to have Rule 29 of the West Virginia Rules of Appellate Procedure declared unconstitutional.  Rule 29 deals with the disqualification of justices, and Massey claimed that it was denied due process when Justice Larry Starcher refused to disqualify himself from an appeal involving Massey (and which resulted from the Caperton/Harman litigation).  Here is Massey's complaint for declaratory and injunctive relief.  The case, Massey Energy Company, et al. v. Supreme Court of Appeals of West Virginia, Civil Action No. 2:06-CV-0614, is pending before United States District Judge John T. Copenhaver, Jr.

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