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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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You may remember that Kentucky lawyers Melbourne Mills, Jr., Shirley A. Cunningham, Jr., and William J. Gallion, who were accused of taking an extra $65 million from the settlements of 440 clients they represented in Fen-Phen litigation, were scheduled to go on trial last year.

Last summer, a federal jury acquitted Mills, but could not reach a verdict regarding Cunningham or Gallion, after deliberating for eight days, causing U. S. District Judge William O. Bertelsman to declare a mistrial.

But earlier this month, following two days of deliberations, a jury found Gallion and Cunningham guilty of one count of conspiracy and eight counts of wire fraud.  A few days later, the jury ordered the defendants to forfeit $30 million, as well as an unspecified amount in another account, which could be as much as $20 million. They will be sentenced on July 27 and their lawyers have said they will appeal the verdicts.

As described by Andrew Wolfson in the (Louisville) Courier-Journal, this trial was different from the first one, not including the outcome.  District Judge Danny Reeves presided over this trial, after Judge Bertelsman recused himself after last year’s mistrial.  And because Judge Reeves sits in Frankfort, the trial was moved there from Covington.  But perhaps the most significant difference was that the defendants faced nine counts instead of one, following the prosecution’s decision to issue a superseding indictment after last summer’s mistrial.

According to the Kentucky Law Review, last October, the Kentucky Supreme Court permanently disbarred Gallion and Cunningham after they admitted to committing eight of the 22 ethical violations alleged against them. 

The defendants’ disbarments may have been significant to the jury.  Angela Ford, who represents the Fen-Phen clients in a civil action against Gallion, Cunningham, and Mills, said that the key difference in the retrial was that the Kentucky Bar Association’s chief counsel was permitted to testify about the Supreme Court’s disbarment order and the Bar’s investigation. 

Ford’s clients have already obtained a $42.5 million verdict in a civil action against Gallion, Cunningham, and Mills.

But still unclear is the status of some horses owned in whole or in part by Midnight Cry Stable, which is owned by Tandy LLC, a corporation in which Gallion and Cunningham are principals.  Midnight Cry still owns 20% of Curlin, a two-time Horse of the Year and, with earnings of $10,501,800, the leading North American-based money-winner of all time.  As of last November, a Thoroughbred industry expert estimated that Midnight Cry's interest was worth $4 million.  Curlin has been retired and stands at stud at Lane’s End Farm for a fee of $75,000, and is expected to cover 125 to 130 mares this season, which would generate nearly $10 million.

Midnight Cry also owns Einstein, who won the Santa Anita Handicap on March 7, and whose share of the purse, $480,000, had been garnished by Ford’s clients. Last week, Franklin County (Kentucky) Circuit Court Judge Roger Crittenden ordered that the lien be released and the money, which had been escrowed, be released to a receiver for Midnight Cry, after its lawyer claimed that the money was necessary to care for other horses owned by the stable.

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Philip Morris must have thought that April Fool's Day came one day early when the Supreme Court yesterday issued its opinion in Philip Morris USA v. Williams, (No. 07-1216) and dismissed as "improvidently granted" the appeal that was granted last June and argued in December.  Philip Morris was appealing a punitive damages verdict of $79.5 million that was returned by an Oregon jury in 1999 on behalf of the widow of a smoker who died of lung cancer in 1997.  The jury also had awarded compensatory damages of $821,485.50, which were reduced to $521,485 under a state law capping wrongful death damages.  With accrued interest, the verdict has grown to $150 million.

The business community had hoped that the Court would use the case to be more explicit about the permissible ratio of punitive damages to compensatory damages.  The Court had stated in State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003), that, "in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages will satisfy due process[,]" and with a ratio of 97-1, the case seemed to present an ideal opportunity for the Court to refine its holding in State Farm.

Here is SCOTUSBlog's analysis of the Court's decision, with a discussion of the case's procedural background: this was its third time before the Supreme Court.

Howard Bashman, who writes How Appealing, has a round-up of news articles about the decision, and Philip Thomas, who writes the MIssissippi Litigation Review and Commentary blog, weighed in yesterday with this post about the case.

Both Bashman and Thomas (in his post today) linked to an article by Bloomberg.com writer Greg Stohr about the business community's disappointing record before the Court during this term.  Stohr points to the decisions in Altria Group, Inc. v. Good, 129 S.Ct. 538 (2008) and Wyeth v. Levine, 129 S.Ct. 1187 (2009), and yesterday's decision in Philip Morris USA as demonstrating that businesses don't always prevail before a court that has pro-business tendencies.

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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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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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According to Womble Carlyle's Trade Secrets Blog, Mobile (Alabama) County Circuit Judge Robert Smith has upheld a $192 million verdict against chemical manufacturers Ineos Phenol and Ineos Americas LLC for their theft of trade secrets owned by Dr. Sven Peter Mannsfeld.

Mannsfeld  filed suit in 2006 after learning in 2004 that his idea, which recycles hazardous waste into building products for making tires and other items, had been patented by the defendants, who listed their employees as the inventors.  Mannsfeld is retired as the president of Degussa Corporation, a multinational chemical manufacturer now known as Evonik Degussa, which had a plant next to Ineos' in a Mobile-area industrial park.

The verdict, which was returned last October following a two-week trial, consisted of $25 million for "historic" damages and $167 million in future damages through 2005. 

Judge Smith entered his order last Friday, and the defendants have 42 days to appeal to the Alabama Supreme Court.  They have denied any theft of Mannsfeld's idea and will appeal.

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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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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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    Charleston Area Medical Center’s Board of Trustees has voted to pay $11.5 million to Dr. R. E. Hamrick, Jr. by September 5, and bring an end to his lawsuit against the hospital arising from the revocation of his privileges in 2004 when he attempted to self-insure his medical professional liability coverage.   Here is Eric Eyre's article in yesterday's Charleston Gazette.

    Last month, the Circuit Court of Kanawha County reduced the jury’s verdict of $5 million in compensatory damages and $20 million in punitive damages to $2 million and $8 million, respectively.  The additional $1.5 million represents interest at 8.25% that has accrued since the verdict in February.  Here are my posts regarding the trial court’s rulings and the original verdict.

    CAMC will pay at least $2 million of the settlement from its cash reserves, but is responsible for payment of the entire amount by the agreed-to deadline.  Whether CAMC's insurance coverage pays any of the settlement is far from certain, considering the declaratory judgment actions filed by two of CAMC’s insurers, which claim that they have no obligation to indemnify CAMC for any payment made to Hamrick.  If the insurance companies prevail in those actions, CAMC will end up paying the entire amount.

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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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    It turns out that Charleston Area Medical Center is facing two lawsuits over insurance coverage for Dr. R. E. Hamrick, Jr.’s $25 – now $10 – million verdict, not one, as I wrote yesterday. 

    In May, Employers Reinsurance Corporation now known as Westport Insurance Corporation filed a declaratory judgment action in federal court against CAMC and its captive insurer, Vandalia Insurance Company, to determine whether it owes any duty to CAMC.  Employers Reinsurance Corporation v. Charleston Area Medical Center, Inc., Civil Action No. 2:08-CV-0303. 

    ERC reinsures CAMC's $25 million policy with Vandalia, and its policy with Vandalia requires that it be given “prompt, written notice” of any loss, occurrence, claim, event, etc. that has a “reasonable possibility of resulting in a claim for indemnity hereunder.”

    ERC claims that CAMC did not notify it of Hamrick’s lawsuit until February 11, 2008, which was four days after the jury returned its verdict for $25 million.  ERC argues that it did not receive the notice required by its policy with Vandalia and that it is entitled to a declaratory judgment that it has no obligation to indemnify Vandalia for any payments made to CAMC nor any obligation to directly indemnify CAMC.

    Neither defendant has responded to the complaint yet.  Because this action was filed before Executive Risk Indemnity’s lawsuit and involves the same subject matter, the two suits are likely to be consolidated before United States District Court Judge Joseph R. Goodwin. 

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    In February, a Kanawha County (Charleston), West Virginia jury awarded Dr. R. E. Hamrick, Jr. $25 million in compensatory and punitive damages when it determined that Charleston Area Medical Center improperly revoked his privileges and damaged his reputation due to his efforts in 2004 to self-insure his professional liability for $1 million.  Here is my post about the verdict.

    CAMC filed post-trial motions to reduce the verdict and for a new trial, which were argued in April.  Judge Jack Alsop, who is presiding over the case after the seven Kanawha County Circuit Court judges recused themselves, ruled on the motions last week, and offered mixed relief to CAMC.

    In its order granting CAMC’s motion for remitittur of damages, the court found that the compensatory damage award of $5 million “shocks the conscience” and was not supported by the evidence because Hamrick “has invariably admitted he has suffered no pecuniary harm or financial loss as a result of CAMC’s actions.  There was no evidence adduced at trial of any type of emotional distress or physical harm. Dr. Hamrick’s reputation as one of the area’s finest surgeons was minimally reduced, if in any way.”   

    CAMC had requested that the compensatory damages award of $5 million be remitted to $1 million.  The court found that Hamrick had asserted two causes of action, invasion of privacy and defamation, and was entitled to $1 million for each cause of action, and reduced the award to $2 million. 

    The court did not engage in as much analysis of the punitive damages verdict of $20 million, but did find that:

“CAMC’s misconduct [against Hamrick] was not an isolated event as to Dr. Hamrick, but was continual over a period of three to four years. There is limited evidence of any similar misconduct as to the treatment of other physicians with privileges at CAMC. Even with this, the degree of reprehensibility, it does not warrant an award of twenty million dollars in punitive damages.”

The court decided to maintain the same 4:1 ration of punitive damages to compensatory damages, and remitted the punitive damages award to $8 million, for a total award of $10 million.

    In considering CAMC’s motion for a new trial, the court rejected CAMC’s arguments that the jury had a “mistaken view of the case,” that the court improperly allowed Hamrick’s expert to testify, that the court misapplied the law of the case doctrine, that the court allowed testimony regarding alleged profanity about Hamrick, and otherwise denied CAMC the opportunity to present evidence, and denied its motion.  Here are the order denying the motion for a new trial, and the final order, from which either or both parties can appeal.

    CAMC is also fighting another lawsuit resulting from the verdict.  In June, Executive Risk Indemnity, Inc., which reinsures Vandalia Insurance Company, CAMC’s captive insurer, filed a declaratory judgment action in United States District Court for the Southern District of West Virginia, alleging that it has no duty to defend or indemnify CAMC as a result of the verdict.  Executive Risk Indemnity, Inc. v. Charleston Area Medical Center, Inc., Civil Action No. 2:08-CV-00810. 

    Executive filed suit against CAMC, Vandalia, and Employers Reinsurance Corporation, now known as Westport Reinsurance Corporation.  Its complaint also asserts that, if the court finds that coverage is available, Vandalia and Employers Reinsurance Corporation, it is entitled to equitable contribution for all or part of the verdict.  None of the defendants has responded to the complaint yet.

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The principal issue presented in this appeal is whether Grant Thornton LLP (Grant Thornton), an accounting firm retained by First National Bank of Keystone (Keystone), in response to an investigation by the Office of the Comptroller of the Currency (OCC) into Keystone’s banking activities, owed a duty of care under the West Virginia law of negligent misrepresentation to Gary Ellis, who allegedly relied on oral statements made by Stan Quay (Quay), a Grant Thornton partner, and a Grant Thornton audit report of Keystone’s 1998 financial statements in deciding to accept the job as president of Keystone. We hold that Grant Thornton owed Ellis no such duty under West Virginia law.

Ellis v. Grant Thornton LLP, 2008 WL 2514182 (4th Cir. 2008).

    In a bench trial before Judge David A. Faber of the Southern District of West Virginia, Ellis obtained a verdict of $2,419,233, based on the court’s finding that Grant Thornton negligently misrepresented Keystone’s financial condition, knowing that Ellis would rely on such misrepresentations in deciding whether to go to work for Keystone.
   
    And bear in mind that Grant Thornton's misrepresentation was not insignificant: it failed to uncover that Keystone had overestimated the value of its loans by $515 million.  Ultimately, the FDIC paid $664 million to cover Keystone's losses after its collapse.

    In addressing Grant Thornton's appeal, the Fourth Circuit had to predict how the Supreme Court of Appeals of West Virginia would rule on Ellis’ claim of negligent misrepresentation because the Supreme Court has not addressed directly or indirectly this issue,

    Although the district court had relied on First Nat. Bank of Bluefield v. Crawford, 386 S.E.2d 310 (W.Va. 1989) in ruling for Ellis, the Fourth Circuit found that, “other than the adoption of the Restatement [(Second) of Torts § 552] approach, the Bank of Bluefield court gave no further meaningful guidance concerning under what circumstances an accountant can be liable to third parties for negligent misrepresentations under §552.”

    The Fourth Circuit found that other courts had  set forth six factors based on the Restatement's language, which emphasize the third party's reliance on the inaccurate information.  Unlike Ellis' situation, however, the application of those factors focuses on the accountant or auditor's knowledge or intention that the third party will rely on the information.

    This decision provokes – to me, at least – an obvious question: why should Ellis’ reliance on the flawed Grant Thornton audit be any different than the bank management's or the OCC’s reliance on the audit?  The audit report stated on its first page that it was for the information and use of Keystone’s management and its regulatory agencies and “should not be used by third parties for any other purpose.”  But does that absolve Grant Thornton of liability if its employees misrepresented -- in any other context, lied about -- Keystone's condition? 
   
    Apparently it does.  But there is something fundamentally wrong with this decision.  The Fourth Circuit declined to employ any type of "foreseeability" standard, even though it is reasonably foreseeable that a third party like Ellis will rely on the audit report, or the representations made to him by Grant Thornton employees, who did not preface their statements with the type of disclaimer found on the first page of the audit report. 

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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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    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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    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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    A Kanawha County (Charleston), West Virginia jury has awarded $5 million in compensatory damages and $20 million in punitive damages to a surgeon who claimed that Charleston Area Medical Center damaged his reputation and improperly revoked his privileges over a dispute about his professional liability coverage.  CAMC has promised to appeal the verdict.  Here are Eric Eyre’s article about the verdict in yesterday’s Charleston Gazette and his article from last week when the trial began.

    The trouble started in 2004 when Dr. R. E. Hamrick, Jr. decided to self-insure his professional liability coverage by placing $1 million in a trust account.  CAMC challenged his right to do so, and revoked his privileges on September 10, 2004.  Hamrick appealed the revocation, and the Supreme Court of Appeals of West Virginia issued a preliminary injunction on September 16, 2004, ordering CAMC to reinstate his privileges, and subsequently entered a standing order that enabled him to continue to care for his patients.

    Hamrick filed suit against CAMC, alleging, inter alia, that it engaged in misconduct regarding his professional liability insurance and damaged his reputation by revoking his privileges.  In 2005, the circuit court ruled that CAMC failed to show that Hamrick’s self-insurance was actuarially unsound or violated the Medical Professional Liability Act, and granted summary judgment in his favor.  The Supreme Court voted 5-0 not to hear CAMC’s appeal.

    In 2006, CAMC changed its policy to allow physicians to insure themselves, and the West Virginia Legislature enacted § 55-7B-12 of the Medical Professional Liability Act, which authorizes a physician to self-insure by establishing an irrevocable trust of not less than $1 million.

    Assuming that the judgment order is entered without too much delay, CAMC's petition for appeal will be considered during the Supreme Court's Fall Term, which starts in September. 

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   The Alabama Appellate Watch blog, which is published by Lightfoot Franklin & White, LLC, reports that earlier this week, the Supreme Court of Alabama reversed a $3.5 billion punitive verdict rendered against ExxonMobil Corporation in 2003.  Lightfoot Franklin was among the counsel for ExxonMobil in the appeal.  There is a separate post that provides news coverage of the decision. 

    The case was first tried in 1999 and resulted in a compensatory damages verdict of $87 million and a punitive damages verdict of $3.42 billion in favor of the plaintiff, the Alabama Department of Conservation and Natural Resources.  The Supreme Court reversed on the grounds that the trial court had improperly admitted a confidential letter from Exxon's in-house counsel and ordered a new trial. 

    In the retrial in 2003, which was the subject of this appeal, the jury awarded punitive damages of $11.8 billion and compensatory damages of $102.8 million for the plaintiff.  The State claimed that Exxon deliberately underpaid royalties that were due the State from natural gas wells that Exxon drilled in State-owned waters along the coast.  The trial court reduced the punitive award by $8.5 billion based on an impermissibly high ratio of compensatory to punitive damages.

     The Supreme Court held that the plaintiff had not proven that Exxon committed fraud and reversed the entire punitive damage award, which had been based on the jury's finding that Exxon defrauded the State.  The Court affirmed the award of compensatory damages for breach of contract, but reduced that verdict from $63.7 million to $51.9 million, and remanded the matter to the trial court with directions to award compensatory damages and interest consistent with the opinion, which, according to an attorney for the State, would amount to approximately $80 million.

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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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    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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    In the Saturday Gazette-Mail (Charleston, West Virginia), Tom Searls has a nice recap on Camden-Clark Memorial Hospital's appeal to the Supreme Court of Appeals from a $6.5 million verdict in a medical malpractice trial.  I wrote yesterday that the Court rejected the petition by a vote of 3-2.

    Also in the paper is an article on Marshall University's decision to start disciplining students who are accused of downloading songs illegally.  Marshall's decision was apparently prompted by the lawsuits filed by some record companies against two students, which I wrote about earlier today.  Although 20 Marshall students received pre-litigation settlement letters from the Recording Industry Association of America (RIAA) in February, and nine more received them last month, Marshall had not previously taken any disciplinary action.  According to Stephen Hensley, the dean of student affairs, who is quoted in the article, the students' use of Marshall's network to download and/or distribute the songs violates the university's code of conduct and carries the risk of disciplinary action.

    Marshall needs to be careful in how it proceeds.  It has an interest in upholding its code of conduct and giving students a disincentive from engaging in similar conduct, but it cannot and should not rely solely on the RIAA's allegations against a student as the basis for any disciplinary action.  As noted in a 2005 post in the blog, Ars Technica,

But the RIAA has been wrong before, as it was in its 2003 suit against Sarah Seabury Ward, a sixty-something sculptor who was accused of downloading gangsta rap. The suit was eventually withdrawn, but the case (and others like it, including one against a dead grandmother) does shed some doubt on the RIAA's ability to correctly identify the infringing party.   With Santangelo's case now headed for trial, a judge's ruling may provide more clarity about what the RIAA can and cannot do in its war on musical piracy.

    There is also an equal protection issue.  It isn't clear from the Gazette-Mail article whether Marshall is going to discipline only the two students who have been sued or the nine who received the RIAA's pre-litigation settlement letters.  But if it's going to act against the nine who received the letters last month, what's it going to do about the 20 students who received the letters in February?   Dean Hensley's explanation that, "We were new at it then, and we're not so new at it now," isn't very reassuring. 

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    As a follow up to yesterday's post, the Supreme Court of Appeals refused, by a vote of 3-2, Camden-Clark Memorial Hospital's petition for appeal from an adverse jury verdict of $4,834,380.00, which was rendered last year in a medical malpractice case. 

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    Yesterday on the Supreme Court of Appeals' motion docket, Camden-Clark Memorial Hospital presented its petition for appeal from a verdict in an action alleging wrongful death due to medical malpractice.  In March 2006, the Wood County jury returned a verdict of $6.5 million, which was subsequently reduced to $4,834,380.00 to reflect an offset from a settlement with another party.   Bernard Boggs, Administrator v. Camden-Clark Memorial Hospital Corp., Nos. 063408 and 070578. 

    In addition to the jury verdict's in the underlying action that was before the Court yesterday, this is the case that also resulted in an award of sanctions against the hospital and its counsel for more than $1.3 million a few months ago.

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    In January, a jury in Roane County, West Virginia determined that natural gas producers had failed to honor their leases with gas well owners, and awarded a class of more than 10,000 natural gas well owners a total of $404 million in damages.  The plaintiffs contended that Columbia Natural Resources, LLC, formerly owned by NiSource, Inc., and now owned by Chesapeake Energy Company, systematically and deliberately underpaid them in violation of their leases by withholding the production costs from the royalties paid to the plaintiffs.  The jury's verdict included compensatory damages of $134 million and punitive damages of $270 million.

    Roane County Circuit Judge Thomas C. Evans, III entered an order affirming the verdict on June 27, 2007.  Estate of Garrison G. Tawney, et al. v. Columbia Natural Resources, LLC, et al., Civil Action No. 03-C-10E (Circuit Court of Roane County, West Virginia).  Once the court enters the final order, the defendants have four months to file their petition for appeal with the Supreme Court of Appeals of West Virginia.

    In response to the outcry against the verdict by natural gas producers, West Virginia Governor Joe Manchin proposed a bill for the Legislature’s consideration during its three day special session, which ended yesterday, which, among other things, would have given the producers an implied covenant in all oil and natural gas leases that allows companies to deduct reasonable post-production costs when calculating royalties to the landowners.  (The deduction of these costs formed the basis for the plaintiffs' claims in Tawney.)

    The Legislature chose not to take any action on the bill, on the grounds that it was too complicated to be considered in such a short session.  In all likelihood, the Governor will resubmit the bill when the Legislature’s regular 60 day session begins in January 2008.  Here is The Charleston (West Virginia) Gazette’s story this morning on the bill’s fate, as well as posts from Monday and yesterday by AP Larry Messina, who blogs at Lincoln Walks At Midnight.  But it’s clear that the opposition to the bill voiced by the landowners, who include individuals and businesses, also was a consideration in the Legislature’s decision not to consider the bill.

    What is not clear is whether the bill would apply to the jury’s verdict in Tawney.  Messina posted this compilation of stories earlier in the week, including another Gazette article that said that the bill would effectively overturn the verdict because the implied covenant would be retroactive and would apply to the defendants in the action.  But the bill specifically provided that its provisions would apply only in cases where there had been no jury verdict or final decision or judgment by a court of competent jurisdiction. 

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    Brooke County (Wellsburg) Circuit Judge Martin Gaughan has affirmed the jury's verdict of $100 million in punitive damages against Massey Energy Corporation and its subsidiary, Central West Virginia Energy Company in the lawsuit filed by Wheeling-Pittsburgh Steel Corporation, according to Associated Press reporter Tim Huber.  I wrote about the verdict last month. 

    In a ruling entered last Thursday, the court entered judgment on the punitive damages verdict.  The court found that the defendants' conduct warranted punitive damages, and that the award bore a reasonable relationship to the harm caused by the defendants, as well as to the jury's award of compensatory damages.  The court also entered judgment on the compensatory damages verdict of $119.85 million, but offset the verdict by nearly $4.5 million to account for a dispute over the price of coal.  The court also found that the plaintiff was entitled to an additional $24 million in pre-judgment interest.  Here is a copy of Judge Gaughan's order, courtesy of plaintiff's counsel, David B . Fawcett, who advises that additional post-trial motions are forthcoming. 

    I noted that Massey had announced that its second quarter earnings would be affected because it had reserved only $16 million to cover any loss, and it would have to increase its reserve.  But according to Huber's article, Massey has decided not to increase its reserve over $16 million because it believes it has strong grounds for an appeal. 

    The West Virginia Rules of Appellate Procedure provide that the defendants have four months from the date of the final order to file their petition for appeal with the Supreme Court of Appeals of West Virginia.  The petition is discretionary, meaning that the court first decides whether to accept  the appeal, rather than as a matter of right, as in federal court.   With additional post-trial motions to be filed, however, the circuit court has not yet entered the final (appealable) order in the case.

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    The big news in West Virginia is Wheeling Pittsburgh Steel Corporation’s verdict on Monday for nearly $220 million against Massey Energy Corporation and one of its subsidiaries, Central West Virginia Energy Company.  Following a month long trial in Wellsburg, Brooke County, the jury awarded Wheeling Pitt $119.85 million for its compensatory claims and $100 million in punitive damages.  I wrote about the trial last month, when Massey chairman Don Blankenship testified.

    Wheeling Pitt claimed that Massey and its subsidiary breached a contract to provide Wheeling Pitt with 104,000 tons of metallurgical-grade coal per month for its coke ovens. Ken Ward, Jr.’s article in yesterday’s Charleston(WV) Gazette gives some background.

    In reaction to the verdict, Blankenship said that, "We recognized that a trial in Wheeling Pitt's backyard would be challenging, but we were still surprised at the outcome."  His comment parallels what I wrote, in questioning what effect his testimony would have on the jury.  Now we know: apparently not much, at least in Massey's favor.

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