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

    The Supreme Court of Appeals of West Virginia issued a decision on June 13 dealing with dissenting shareholders’ rights, an aspect of corporate law that the Court does not often address. 

    In Dodd v. Potomac Riverside Farm, Inc., 2008 WL 2390159 (June 13, 2008), the Court, in a per curiam opinion, considered rulings from the Circuit Court of Berkeley County, West Virginia, which established the fair value of the appellants’ shares in a corporation that owned a family farm and the rate of interest to which the appellants were entitled, and addressed the appellees’ motion for attorney’s fees.   

    The statute under which the appellants dissented from the proposed corporate action, West Virginia Code § 31-1-123, has since been repealed, but applied to the action because it was in effect when the appellants filed their lawsuit. 

    The Court’s rulings are specific to the facts of the appeal and do not represent any new pronouncements of law.  All but one of the Court’s syllabus points address the standard of review to be applied to a circuit court’s rulings, and the other one holds that prejudgment interest is simple in nature, unless a statute or regulation provides otherwise. 

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    In The New York Times yesterday, Mary Williams Walsh wrote about the situation faced by thousands of employees of U.S. Sugar, who participated in an ESOP (employee stock ownership plan) in 1983, which traded their participation in a pension plan for ownership of the company’s stock.  But as more employees reach retirement, they have discovered that their shares are not as valuable as they expected. 

    U.S. Sugar's shares are not traded publicly, so their value is determined by what the company is willing to pay to redeem them.  Then, once an employee cashes in his or her shares, the shares are retired, which critics of the plan allege makes it easier for insider groups to maintain control, because the pool of shares is getting smaller.

    According to the article, the company’s board turned down two offers by the Lawrence Group, a large agribusiness concern from Sikeston, Missouri,  to buy the shares for $293 each, even though the company was paying employees from $194 to $205 per share at the time.  The employees claim that they were not told about the offers or given the chance to sell their shares at the higher price. 

    To make matters worse, U.S. Sugar hired an outside appraisal firm to evaluate the Lawrence Group’s second offer, which was made in early 2007.  The appraiser determined that U.S. Sugar’s break-up value was $2.5 billion, or $1,273 per share.  Based on that estimate, U.S. Sugar rejected the Lawrence Group’s bid as inadequate, but did not increase the purchase price offered to employees.

    The employees have filed a class action, Johnson v. White, Civil Action No. 08-CV-80101 (M.D. Fla.), which is described on this Website set up by their counsel, Colson Hicks Eidson. The site has most of the court filings from PACER in PDF format. 

    The most recent filing is an amended complaint filed on May 2, 2008, which alleges claims for breach of fiduciary duty against the company’s directors and officers and for violations of ERISA and equitable relief under ERISA Section 502(a)(3).  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Order Denying Motion for New Trial

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

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

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

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

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

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

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

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

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

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

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

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

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

Emphasis in original.

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

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

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

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

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

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

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    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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    Some Dairy Queen franchise owners, including those in West Virginia, have filed suit against International Dairy Queen, Inc. as a result of its alleged effort to force them to make changes to their restaurants and their operations.  (I will resist the temptation, as Associated Press reporter Tim Huber did not, to describe Dairy Queen’s as a dilly of a problem.)  The Michigan Dairy Queen Operators’ Association, et al. v. International Dairy Queen, Inc., et al., Civil Action No. 1:08-CV-0036.

    Dairy Queen International, Inc., which is owned by Berkshire Hathaway Inc., wants its franchisees to increase the size of their restaurants and make other changes, such as adding table service.  But the franchisees claim that the changes would cost each owner between $275,000 and $450,000 to remodel its store, and require other expenses, such as the cost of updated equipment to conform to new menu specifications, additional labor and training costs, and the loss of revenue when the conversion to the new restaurant format takes place.   

    According to the plaintiffs’ amended complaint for declaratory judgment and injunctive relief,

    On behalf of their members (hereinafter “Member Franchisees” or individually “Member Franchisee”) whose franchise agreements do not contain arbitration clauses, the Plaintiffs seek declaratory and injunctive relief to prohibit Defendants from forcing their Member Franchisees to make an expensive conversion to a DQ Grill & Chill or a DQ/Orange Julius Treat Center on terms that are commercially unreasonable in view of the expense, on the one hand, and the lack of a reasonable rate of return, on the other hand.  Defendants’ attempts at forced conversion constitute a material breach of the existing franchise agreements and the duty of good faith and fair dealing that is implied as a matter of law in every contract.  Without the relief being requested in this action, the Member Franchisees are suffering, and will continue to suffer, irreparable damage through the actual or threatened losses of: (i) their coerced investments in the brand conversions; (ii) the business and goodwill that they have developed and nurtured as Dairy Queen franchisees; and (iii) the opportunity to realize the equity in their Dairy Queen franchises by sale.

    West Virginia Dairy Queen franchisees are members of North Eastern Store Owners, Inc., which also includes store owners from Virginia, Pennsylvania, Ohio and Kentucky.  Here is Jenni Vincent's story from the Martinsburg Journal, which provides some additional information on the West Virginia owners' involvement in the lawsuit.

    The lawsuit has just gotten started and so it's too early to predict the outcome,  but according to consultant Richard Adams, who is quoted in Huber's article, "Very seldom do the franchisees win an outright victory," [he]  says.  "It's usually something that's settled out of court."

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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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    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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    The situation regarding the composition of the Supreme Court of Appeals when it takes up the plaintiffs’ motions for reconsideration in Caperton v. A.T. Massey Coal Company, Inc. has been clarified by Justice Brent Benjamin’s decision yesterday afternoon not to recuse himself from the case, as the Harman companies had requested.  I do not have the text of Justice Benjamin’s statement or any order from the Supreme Court, but Paul Nyden’s  article in today’s Saturday Gazette-Mail quotes from the statement. 

    Here is the statement as quoted in the Nyden article:

The motion seeking disqualification comes over three years after the 2004 election and focuses entirely on that election. It contains nothing about this justice’s record on the court. There are no allegations that this justice has, or has had, any relationship with Mr. Blankenship or any Massey company in his 20-plus years of private practice. Simply accusatory accusations and assumptions are plainly insufficient to support a motion for disqualification.

    The plaintiffs, Harman Development Corporation, Harman Mining Corporation, and Sovereign Coal Sales, Inc., renewed their motion to disqualify Justice Benjamin based on the involvement of Massey Energy Company chairman Don Blankenship in the 2004 election in which Justice Benjamin defeated incumbent Justice Warren McGraw.  Blankenship provided significant support to Justice Benjamin’s campaign.  Here is the companies' motion to disqualify Justice Benjamin filed in October 2005. 

    Also yesterday, Justice Benjamin, who is acting chief justice in this case due to Chief Justice Maynard’s recusal, appointed Circuit Court Judge Donald H. Cookman to serve as the fifth justice when the Court holds its rehearing conference on January 24.

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    Supreme Court of Appeals of West Virginia Chief Justice Elliott E. "Spike" Maynard has recused himself from further participation in Caperton v. A.T. Massey Coal Company, Inc., et al., in which the Supreme Court reversed the plaintiffs' $50 million verdict   The plaintiffs have filed motions for reconsideration, which the Court will take up on January 24.  Here is the order entered by the Clerk and Chief Justice Maynard's memorandum to the Clerk.  

    Here is the text of the memorandum:

It is not enough to do Justice--Justice also must satisfy the appearance of Justice.  I have decided to voluntarily recuse myself from this case.  I will recuse myself despite the fact I have no doubt in my own mind and firmly believe I have been and would be fair and impartial in this case.  I know that of a certainty.

The issue, because of the controversy surrounding this case, is no longer an issue of whether I can be fair and impartial.  Rather it has now become an issue of public perception and public confidence in the courts.  Above all else, I am very concerned about how the public views this court.

Without question, the Judicial Branch of state government should always be held in the highest public confidence and trust.  The mere appearance of impropriety, regardless of whether it is supported by fact, can compromise the public confidence in the courts.  For that reason -- and that reason alone -- I will recuse myself from this case.

    The issue of the Chief Justice's friendship with Massey Energy Company chairman Don Blankenship and his continued participation in the case has attracted a lot of attention, as reflected by Adam Liptak's article today in The New York Times  and this entry on The Wall Street Journal Law Blog.   Here is Associated Press reporter Lawrence Messina's article today. 

    In another development, Harman Mining Development Corporation, Harman Mining Corporation, and Sovereign Coal Sales, Inc. yesterday renewed their motion to disqualify Justice Brent Benjamin from participation in the case.  The plaintiffs first made the motion in October 2005, at which time Justice Benjamin declined to recuse himself.  The renewed motion focuses on the role played by Blankenship in Justice Benjamin's election in 2004, when "Blankenship invested more than $3 million in direct or indirect support of Justice Benjamin -- more than any person, other than a person seeking his own election, had ever spent to effect the outcome of a state judicial race, certainly in West Virginia and perhaps in the United States."   Here is the renewed motion, which had also sought the Chief Justice's disqualification.  As of today, Justice Benjamin has not indicated whether he will recuse himself.

    As Adam Liptak noted, Chief Justice Maynard did not indicate whether he was withdrawing his vote or making his disqualification retroactive, as the plaintiffs had requested.  Furthermore, when a Supreme Court justice recuses himself or herself, the chief justice appoints the substitute justice.  But here, where the chief justice has recused himself, I don't know whether the justice with the most seniority (Robin Davis) or the one next in line for chief justice (Brent Benjamin) makes the appointment.   Of course, that issue is complicated by the motion pending against Justice Benjamin.

    I think Chief Justice Maynard is going to have to address the remainder of the plaintiffs' motion, i.e., advise whether his recusal is retroactive to the oral argument in September, which would require the parties to start over, or whether he intends his recusal to apply only to the plaintiffs' motions for reconsideration.

    These are my posts from earlier this week about the Maynard disqualification issue and the plaintiffs' motions for reconsideration of the Court's decision.

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    Hugh Caperton, whose verdict against A.T. Massey Coal Company, Inc. for $50 million was reversed by the Supreme Court of Appeals of West Virginia by a vote of 3-2, yesterday filed an amended motion to disqualify Chief Justice Elliott E. “Spike” Maynard from participating in the plaintiffs’ petitions for reconsideration of the Court’s decision and seeking the withdrawal of his vote in Massey’s favor.

    The basis for the amended motion is that Caperton “has become aware of the existence of thirty-four (34) photographs which depict Chief Justice Maynard and Mr. Blankenship vacationing together in the Kingdom of Monaco during the time period of July 3-5, 2006.  Copies of twenty-four of these photographs are attached hereto as Exhibit A.”  The motion also states that, “[t]en (10) of the photographs also depict, in addition to Chief Justice Maynard and/or Mr. Blankenship, two females apparently traveling with them as companions.”  Those photographs have been filed under seal.   

    The motion and the underlying relationship between Chief Justice Maynard and Blankenship are the subject of a story today in The New York Times by Adam Liptak, entitled “Motion Ties W. Virginia Justice to Coal Executive.”   For more local coverage, here are stories by Paul J. Nyden in today’s Charleston Gazette and by Associated Press reporter Lawrence Messina. 

    Yesterday I wrote about the petitions for reconsideration filed by Caperton and his companies, as well as Caperton’s motion to disqualify Chief Justice Maynard, which was filed earlier this month, which alleged that less than two weeks before the Court issued its decision in Caperton’s appeal, Chief Justice Maynard and Blankenship had been seen having dinner together.

    The standard for disqualification of a Supreme Court justice is governed by Rule 29 of the West Virginia Rules of Appellate Procedure, which provides that, “[a] justice shall disqualify himself or herself, upon proper motion or sua sponte, in accordance with the provisions of Canon 3(E)(1) of the Code of Judicial Conduct or, when sua sponte, for any other reason the justice deems appropriate.”  Canon 3(E)(1) provides that, “[a] judge shall disqualify himself or herself in a proceeding in which the judge’s impartiality might reasonably be questioned ….” 

    Caperton’s amended motion alleges that:

It is beyond the realm of human comprehension that any judge could claim any semblance of impartiality when, before casting the deciding vote in a $76 million case, he accompanies the CEO of the litigant on the hook for that judgment on a luxurious trip to the French Riviera.  As if that were not enough, he then consciously chooses not to disclose the very fact of the trip.  Apparently unsatisfied, he then casts the deciding vote in support of a “majority” opinion which was not only expressly intended to deprive Mr. Caperton, by reason of a dismissal “with prejudice” of any further opportunity to obtain justice, but also to bestow a $76 million windfall upon Massey and good friend Don Blankenship.

    Rule 29 provides that the justice whose disqualification is sought “shall promptly notify the Clerk of the Supreme Court of his or her decision on the motion for disqualification and the Clerk of the Supreme Court shall promptly notify the other justices and the parties of such decision.”  As soon as Chief Justice Maynard makes his decision, which most likely will be in the form of an order, I’ll post it here.   

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    On January 24, the Supreme Court of Appeals will consider the petitions for rehearing filed by Hugh Caperton and Harman Mining Compan, which ask the Court to reconsider its November 21, 2007 decision, which reversed their 2002 verdict for $50 million against A. T. Massey Coal Company, Inc. and several of its subsidiaries.  Caperton v. A. T. Massey Coal Company, Inc., 2007 WL 4150960.  Here are Caperton's petition and Harman Mining's petition, courtesy of Harman's counsel, David Fawcett.  The Clerk's office has not yet posted the dockets for the Court's conferences on January 24, but should do so this week. 

    Caperton and Harman challenge as procedurally and substantively improper the Supreme Court's retroactive application of its forum selection clause test, which it announced for the first time in its decision.  The Court determined that the Circuit Court of Boone County erred in denying Massey's motion to dismiss, based on the existence of a forum selection clause in a 1997 coal supply agreement entered into by Harman, Sovereign Sales, and Massey subsidiary Wellmore Coal Company (which was not involved in the litigation), which required all litigation to be brought in and adjudicated by the Circuit Court of Buchanan County, Virginia. 

    Caperton and Harman also challenge the Supreme Court's finding that their West Virginia lawsuit was barred by the doctrine of res judicata, based on the plaintiffs' 1998 lawsuit against Wellmore in the Circuit Court of Buchanan County, Virginia for breach of contract and breach of the duty of good faith faith and fair dealing, which resulted in a $6 million verdict for the plaintiffs.  They maintain that they were permitted to assert their tort claims against the Massey defendants separately from the Virginia breach of contract action. 

    The United Mine Workers of America moved for leave to file an amicus brief in support of the plaintiffs, which the Court denied on Thursday as premature, pending its decision on the petitions for rehearing.  The UMWA's interest in the action stems from the $15 million that its members and retirees are owed in benefits and compensation by Harman Mining, Sovereign Coal Sales, and Harman Development Company, all of which are in bankruptcy.  Here is the UMWA's motion and amicus brief.

    Still pending before the Court is Caperton's motion to disqualify Chief Justice Elliott E. Maynard based on his association with Massey chairman Don Blankenship.  The motion alleges that Maynard and Blankenship were seen having dinner on November 8, 2007, which was about two weeks before the Court issued its decision.  The motion asks that Maynard

disclose the nature of any meetings or discussions with Appellants, including Mr. Don L. Blankenship, during the pendency of this appeal, and, if such meetings or discussions occurred, to disqualify himself from participating in any consideration of Appellee Caperton's Petition for Rehearing, and further requests that Justice Maynard withdraw his earlier vote in favor of the Court's majority opinion in this matter ....

   Here is my post about the Supreme Court's decision, and Paul Nyden's article in The Charleston Gazette last week about the litigation. 

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    For the second time in about two weeks, drug manufacturer AstraZeneca Pharmaceuticals LP has sued Mylan Pharmaceuticals Inc., alleging infringement by Mylan on its patent for cholesterol drug Crestor.  Here is the complaint, which was filed in United States District Court for the Northern District of West Virginia on December 28, 2007, and assigned to Chief Judge Irene M. Keeley. AstraZeneca Pharmaceuticals LP, et al. v. Mylan Laboratories, Inc., Civil Action No. 1:07-CV-00177.

    In the action, AstraZeneca alleges that Mylan has infringed on its patent for Crestor, which is used to treat high cholesterol, by seeking FDA approval for rosuvastatin calcium tablets, which is the generic version of Crestor.  According to the complaint, Mylan’s position before the FDA is that AstraZeneca’s patent for Crestor is invalid and unenforceable.  Among other relief, AstraZeneca asks that “the effective date of any FDA approval of the Mylan Rosuvastatin Calcium Tablets shall be no earlier than the expiration date of the ‘314 patent….”

    On December 11, AstraZeneca had filed suit against seven generic drug manufacturers, including Mylan, in United States District Court in Delaware, alleging their infringement of its Crestor patent.  AstraZeneca’s complaint against Mylan is virtually identical to its West Virginia filing.  AstraZeneca Pharmaceuticals LP, et al. v. Mylan Pharmaceuticals Inc., Civil Action No. 1:07-CV-00805.  The other generics manufacturers named (in separate complaints) are Sun Pharmaceuticals Industries, Ltd., Sandoz Inc., Par Pharmaceutical Inc., Apotex Inc., Aurobindo Pharma Ltd., and Cobalt Pharmaceuticals Inc.

    In other Mylan litigation, Judge Keeley has denied the motion to dismiss filed by Eliot Disner in Mylan's legal malpractice lawsuit against him.  Here is Judge Keeley's order, which was entered on December 21, 2007.  On the same day, she also entered an order staying the case, based on a pending arbitration that may affect its outcome.  She has given the parties until March 3, 2008 to report on the status of the arbitration.  For some background on Mylan's claims against Disner, here is my post from last  August.

    Finally, one more item of interest about Mylan, which does not involve litigation (yet).  Mylan's chief operating officer, Heather Bresch, is accused of receiving an MBA from West Virginia University without satisfying the degree requirements when she was in the program nearly a decade ago.  Bresch, who is the daughter of West Virginia Governor Joe Manchin, was named COO in October, at which point the Pittsburgh Post-Gazette called WVU to verify her academic credentials.  According to the Post Gazette, which first reported on the situation on December 21, WVU initially said that Bresch did not have an MBA, then reversed its position a few days later, and explained that the discrepancy in its records was caused by the College of Business and Economics’ failure to transfer records for almost half her course work to the Office of Admissions and Records.

    As reported by the Post-Gazette, earlier this week, WVU Provost Gerald Lang named a three person panel to determine whether he did anything wrong in determining that Bresch had earned an MBA.  And today, the Post-Gazette published this editorial, which questions whether an out-of-state panel may have more credibility in investigating the allegations about Bresch's degree.

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    Yesterday was the last day of the Supreme Court of Appeals of West Virginia’s Fall Term, and the Court released several opinions, including its decision in Caperton v. A.T. Massey Coal Company, Inc., No 33350. (The Westlaw opinion is not available yet, so the link is to the PDF version on the Court’s website.)

    At stake was the $50 million verdict in the plaintiffs’ favor, based on the jury’s finding that A.T. Massey Coal Company, Inc. and several of its subsidiaries intentionally interfered with and destroyed Hugh Caperton’s business.  With accrued interest since the verdict in 2002, the plaintiffs’ judgment had grown to approximately $76 million. Here’s my post from last month when the case was argued. 

    In a 3-2 decision written by Chief Justice Robin Davis, the Supreme Court reversed the verdict and remanded the case to the Circuit Court of Lincoln County with directions to enter an order dismissing with prejudice the plaintiffs’ claims against the defendants.  The Court identified two grounds for the reversal.  First, the circuit court should have granted the defendants’ motion to dismiss based on a forum selection clause contained in “a contract directly related to the conflict giving rise to the instant lawsuit.”  Second, assuming that the circuit court’s ruling on the forum selection clause was not erroneous, the Supreme Court found that the doctrine of res judicata based on an action that had been litigated in Virginia.

    The Virginia litigation to which the Court refers is the plaintiffs’ 1998 suit against a Massey subsidiary in the Circuit Court of Buchanan County, Virginia, which alleged breach of contract and breach of the duty of good faith and fair dealing.  Only the breach of contract claim was considered by the jury, which returned a verdict in the plaintiffs’ favor for $6 million.  That verdict resulted in Massey suing its Virginia counsel for malpractice, on the grounds that they failed to sign the notice of appeal, which resulted in the dismissal of the appeal and the affirmance of the verdict, which I also wrote about last month. 

    The first paragraph of the Court’s discussion will not provide any comfort to the plaintiffs: “At the outset we wish to make perfectly clear that the facts of this case demonstrate that Massey’s conduct warranted the type of judgment rendered in this case.  However, no matter how sympathetic the facts are, or how egregious the conduct, we simply cannot compromise the law in order to reach a result that clearly appears to be justified.  As we will demonstrate below, the law simply did not permit this case to be filed in West Virginia.”  So, if the Court had not reversed based on the forum selection clause and the doctrine of res judicata, it would have affirmed the verdict.

    Interestingly, the Court acknowledged that while the circuit court was correct in denying the defendants’ motion for summary judgment based on the doctrine of res judicata because the Virginia judgment was pending when the motion was filed, the Court concluded that it “may address the issue anew because a final judgment was rendered in the Virginia case by the time this appeal was prosecuted.” 

    Justices Larry Starcher and Joseph Albright filed separate dissenting opinions, which are here and here, both of which quote from the Court’s initial paragraph of its discussion, in which it affirms the factual basis for the jury’s verdict.  The Albright dissent points out that the majority opinion created seven new syllabus points having to do with forum selection clauses “applied to the facts of this case so as to relieve the defendants in excess of a verdict in excess of $50 million, plus interest and costs, which would have resulted in a judgment calculated to be in excess of $75 million.”

    The Starcher dissent focuses on jury’s assessment of the conduct of Don Blankenship, Massey Energy Company’s chairman, in bringing Hugh Caperton and his businesses to financial ruin.

    This opinion will generate a lot of discussion, particularly because the Court agreed that the plaintiffs were entitled to the verdict returned by the jury, but reversed on relatively narrow grounds. Paul J. Nyden wrote about the decision in this morning’s Charleston Gazette. 

   At this point, I will conclude this post and turn my attention to dinner, which is nearly ready.  Happy Thanksgiving to everyone. 

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    A story on the front-page of yesterday’s Wall Street Journal focuses attention on an important legal issue, but one that I suspect a lot of people may not appreciate: a health plan’s right of subrogation.  The article, entitled "Accident Victims Face Grab for Legal Winnings" discusses an employer health plan’s successful effort to obtain reimbursement for health care costs paid on behalf of an employee who was severely injured in a motor vehicle accident. 

    The employee, Deborah Shank, who was injured seven years ago, obtained a $700,000 settlement from the trucking company whose tractor trailer crashed into her car.  After attorney’s fees and expenses were deducted, she was left with $417,000, which was put in a special needs trust for her future care.  But her employer, Wal-Mart, Inc., pursued a lawsuit against her, seeking reimbursement for nearly $470,000 in medical expenses that its health plan had paid on her behalf. 

    A district court ruled in Wal-Mart’s favor, and that ruling was affirmed by the Eighth Circuit Court of Appeals in August.  Administrative Committee of Wal-Mart Stores, Inc. Associates' Health and Welfare Plan v. Shank, 500 F.3d 834 (8th Cir. 2007).  Mrs. Shank’s motion for en banc reconsideration of the decision was rejected last week, which leaves an appeal to the Supreme Court of the United States as her last hope.

    Roy Harmon, in his Health Plan Law blog, described the article as “provocative,” and he’s right.  Having Wal-Mart as the employer in this situation invites more scrutiny of its actions than another employer might receive. But I have found that entities, like corporations, that receive more attention for their actions than others receive often deserve the extra attention, and this is one of those situations.

    Assuming that a health plan, like Wal-Mart’s, has language that entitles it to reimbursement of expenses paid on behalf of plan participants who receive compensation from an accident settlement or other third-party, the plan should be reimbursed.  But as Roy also pointed out, most plan administrators try to work out settlements of claims such as Mrs. Shank’s for a couple of reasons, including the legal expenses that the plan might incur in pursuing a recovery and a plan’s natural reluctance to sue its own employee to recover the costs.  Not surprisingly, neither of these factors was of concern to Wal-Mart.  In fact, Mrs. Shank’s lawyer said he approached Wal-Mart about settling its claim, “but was told the health plan wanted to proceed with the lawsuit.”

    There is one point mentioned in the article that I would like to have known more about.  The author, Vanessa Furhmans, writes that after Mrs. Shank’s lawyer informed Wal-Mart that the settlement funds had been placed in a special needs trust, Wal-Mart waited three years to sue Mrs. Shank for the money.  Why did Wal-Mart wait so long?  After three years, isn’t Mrs. Shank entitled to conclude that Wal-Mart isn’t going to pursue any right of subrogation against her?

    The Healthcare Neutral ADR Blog, written by Richard J. Webb, also has a post about the article, which highlights the need to “get all players at the table,” i.e., involve everyone who has or may have an interest in the settlement at a point when that involvement is meaningful.  If you represent plaintiffs or defendants in personal injury litigation, sooner or later, you will confront a situation like this.  The facts may not be outrageous as Mrs. Shank’s, but the scenario will be the same or very similar, and you need to be prepared.  Likewise, if you do work for health plans, you need to be prepared to deal with situations like this one.  Hopefully, an outcome like Deborah Shank’s will be the exception rather than the rule.   

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    An article in the November issue of Litigation News, published by the American Bar Association Section of Litigation, caught my eye, for obvious reasons.  The article, written by Ruth E. Piller and entitled “Bigger Isn’t Always Better When It Comes to Outside Counsel,” reports that increasingly, corporate clients are relying on small firms and solo practitioners for representation. 

    According to the article, small firms offer flexibility on billing arrangements and an opportunity for a corporate client to be “big fish in a small pond,” which may not be the case when the client is being represented by a large firm, which has neither the ability nor the desire to be flexible about billing, and, because of its roster of clients, can’t give the client the attention that the client may want or expect.  Plus, ever-improving technology means that small firms can enjoy advantages that previously were available only to larger firms.

    Although large firms are in no danger of being replaced by small ones, they no longer represent the only option for corporations seeking representation.  Consequently, as I've written previously, large firms compete not only with each other for business, but with much smaller firms, which is an unfamiliar position for many of them.  Legal marketing guru Larry Bodine has written extensively about the changing climate for legal services, including this post about how to get business from corporate clients.

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    Wal-Mart is known for its willingness to use its buying power and market share as leverage when it negotiates.  And now apparently, Wal-Mart is extending its approach to its relationships with outside counsel.

    As reported in The Wall Street Journal Law Blog today, Miguel R. Rivera, Jr., Wal-Mart's associate general counsel for outside counsel management, issued a memo yesterday to "relationship partners" in Wal-Mart's outside counsel network, in which he announced that Wal-Mart was declaring a moratorium on across-the-board rate increases by its outside counsel, due to its belief that those rate increases are being driven by the "steady, nationwide increases in junior associate salaries."  Of course, in the memo's preceding paragraph, Rivera had asserted that, "[t]he salaries that law firms choose to pay their junior associates are none of our concern," which seems to be inconsistent with linking the associates' salaries to the need to freeze rates.

    All is not lost for Wal-Mart's outside counsel, however.  Although the moratorium will continue "until further notice," Wal-Mart will consider "reasonable, individual requests for rate increases for those attorneys in your firm who are performing at an exceptional level and whose experience and knowledge is adding substantial value toward meeting Wal-Mart's legal objectives."  Those requests must be submitted to Rivera  on or before December 15.

    But I think the most telling part of the memo is at the end.  Remember, Rivera stated in the memo's second paragraph that associates' salaries are none of Wal-Mart's concern.  In the memo's last couple of paragraphs, Rivera asks outside counsel to provide information for their  associates, from the class of 2004 through the class of 2007, who have worked on Wal-Mart matters, and then for the associates in each class, their names, their locations, the Wal-Mart matters they worked on, their billing rates, and the number of hours they billed for each year.  This information is due in spreadsheet format by November 30.  

    For any firm that objects to providing the information, Rivera  wants, by November 12, the specific reasons for the objection.  And if a firm needs more time?   Also by November 12, Rivera wants to know the steps the firm is taking "to gather and provided the requested information in a timely fashion as well as a commitment to provide the information on a date certain."
   
    Should Wal-Mart (or any client) treat legal services the same as any other commodity, such as appliances or tires?  I would like to think the nature of the attorney-client relationship is inherently different than Wal-Mart's relationship with any one of a thousand vendors, but maybe it's not.  In any event, I would view the memo as being less heavy-handed if it had not included the seemingly gratuitous language about associates' salaries being none of Wal-Mart's concern, but then imposing the rate freeze precisely because of the effect of increasing associates' salaries.

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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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    When a law firm uses a company’s trademark and logo in its advertisements, has the law firm infringed or misappropriated the company’s intellectual property?   That is the issue, among others, raised in a lawsuit filed by Genesis HealthCare, which operates skilled nursing centers and assisted living facilities in several states, including West Virginia, against McHugh Fuller Law Group, a law firm with offices in Hattiesburg, Mississippi and Charleston, West Virginia.  The case was filed in the Southern District of West Virginia on August 3, 2007, and has been assigned to the Honorable Joseph R. Goodwin.  Genesis HealthCare Corporation v. McHugh Fuller Law Group, Civil Action No. 2:07-CV-00481.

    The basis for Genesis' claims is that McHugh Fuller operates a website entitled www.genesisconcerns.com, which discusses nursing home abuse cases and points out that several Genesis facilities have a history of substandard care, as shown by various state inspections.  The site also describes various injuries sustained by nursing home abuse victims.

    Genesis moved for a preliminary injunction against McHugh Fuller in order to have the website taken down, but failed to include a verified complaint with its motion, which caused the Court to deny Genesis' request for an injunction.  Genesis then refiled its motion for a preliminary injunction with a verified complaint. 

    Genesis' more recent filings allege violations of the Federal Trademark Act ("the Lanham Act") and the federal Anticybersquatting Consumer Protection Act, and a state law claim for statutory dilution.   McHugh Fuller has responded in opposition to the motion and has answered the complaint.  The Court has not rescheduled a hearing on the motion for a preliminary injunction.

    I would like to hear from others with experience in intellectual property litigation as to whether Genesis is likely to prevail in its claims against McHugh Fuller. 

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    You may not recognize Julie Roehm’s name, but chances are you know about her employment and termination by Wal-Mart, and the litigation that has revealed Wal-Mart’s aggressive surveillance practices.

    In January 2006, Wal-Mart hired Roehm, a highly-regarded advertising executive, from Daimler Chryler Corporation, as its senior vice-president of marketing communications. By all accounts, she was shaking things up at a company that understood that it needed to move past its 1950s mo