How Nobel Prize-winning economist Joseph Stiglitz was precluded from testifying as his own damages expert

I previously noted the legal malpractice claim that Joseph Stiglitz, the famous economist, brought in D.C. against his divorce lawyer.  The outcome of the trial was covered by the Legal Times, among others.

That trial was a good case study of how to hamstring a professional plaintiff from testifying as an expert on his own behalf.  Here, the defense, represented by Richard A. Simpson, Esq., was able to obtain a ruling that Joseph Stiglitz, a nobel prize winning economist, could not testify on his own behalf concerning his own damages, where his damages were among other things his own stream of royalty income and the value of his own time.  This turned out not to matter so much, as the jury verdict for the defendant on liability meant that the jury never even had to reach the damages issues. 

In his expert witness disclosures, Stiglitz included himself among his designated experts, albeit without much specificity.  Rather, his counsel simply incorporated Stiglitz's deposition testimony and discovery responses.  However, the expert witness disclosures were vulnerable to attack.

First, the defense moved to strike the testimony of Stiglitz's retained damages expert, Michael Cragg.  The main line of argument was that Cragg's Rule 26(a)(2) report was not submitted until a week before the close of discovery, and more than a year after the deadline for such reports. Cragg's untimely report included a discussion of the value of Stiglitz's lost time and the value of his book royalties, among other things.  The Court granted the motion to strike Cragg as an expert on January 7, 2008.  (In hindsight, given that the trial ultimately took place more than two years later, this ruling seems a bit harsh.)

Subsequently, the defense moved to strike Stiglitz as his own damages expert, arguing that the plaintiff would be attempting to circumvent the Court's prior order if he were allowed to testify as his own expert on the very elements of damages that Cragg would have covered, and that in any event, Stiglitz was not qualified to be an expert on the specific damages issues to be considered by the jury, such as royalties.  

The Court on August 25, 2010, entered a minute order granting the defense motion in limine to preclude Stiglitz's purported damages evidence.






Superior Court Motor Vehicle Tracks V1, V1 fast, V2, and V2 fast

The Superior Court for the District of Columbia has adopted special tracks for motor vehicle cases, called Track V1, Track V1fast, Track V2, and TrackV2 fast.  However, the Court doesn't seem to have posted any differentiated case management order on its website describing the tracks.  The best I could find is a description of the various Track V's which is an attachment to Form CA 113.

D.C. Court of Appeals creates a new basis for recovery for emotional distress

In Hedgepath v. Whitman Walker Clinic, No. 07-CV-158 (D.C. June 30, 2011), the D.C. Court of Appeals, sitting en banc, held that the plaintiff, who was negligently informed by a doctor at the Whitman Walker Clinic that he was HIV positive, when in fact he was not, could sue for negligent infliction of emotional distress, even though the alleged negligence did not place the plaintiff within a "zone of physical danger."  The Court reversed the trial court's summary judgment in favor of the defendants, and remanded the case for further proceedings.

The Court recognized a duty to avoid negligent infliction of serious emotional distress will be recognized only where the defendant has an obligation to care for the plaintiff's emotional well-being or the plaintiff's emotional well-being is necessarily implicated by the nature of the defendant's undertaking to or relationship with the plaintiff, and serious emotional distress is especially likely to be caused by the defendant's negligence.  

The Court concluded that in this case, the defendants, in the context of a doctor-patient relationship, undertook to test and treat the plaintiff for HIV, an undertaking that would necessarily implicate the patient's emotional well-being and entailed a specially likely risk of serious emotional distress.  The plaintiff did not find out that he was misdiagnosed as being HIV positive for five years, and presented evidence of serious emotional distress as a result of the misdiagnosis.

The new rule does not replace the prior "zone of danger" rule, but is a supplement to it.  The Court quoted Restatement (Third) of Torts, sec. 46, with approval:

§ 46 Negligent Conduct Directly Inflicting Emotional Disturbance on Another
An actor whose negligent conduct causes serious emotional
disturbance to another is subject to liability to the other if the

(a) places the other in immediate danger of bodily harm and the
emotional disturbance results from the danger; or

(b) occurs in the course of specified categories of activities,
undertakings, or relationships in which negligent conduct is
especially likely to cause serious emotional disturbance.

 To sum up, emotional distress damages can be recovered in a variety of cases.

  • District of Columbia courts routinely allow recovery for pain and suffering as parasitic damages when the plaintiff's emotional distress is caused by the defendant's invasion of a legally-protected interest, such as freedom from physical injury.
  • Damages for emotion distress are also awarded as part of compensation for violation of statutory and common law rights that result in foreseeable emotional distress.
  • A plaintiff may recover for loss of consortium that results from negligent conduct toward his or her spouse, even where the spouse was not physically injured and the plaintiff's injuries are purely emotional.
  • The "zone of physical danger" rule allows a plaintiff to recover for mental distress if the defendant's actions caused the plaintiff to be "in danger of physical injury", and if, as a result, the plaintiff "feared for his own safety."
  • Under the new rule, a plaintiff can recover for emotional distress from a defendant who has breached a duty to avoid negligent infliction of serious emotional distress based on an obligation to care for the plaintiff's emotional well-being or where the plaintiff's emotional well-being is necessarily implicated by the nature of the defendant's undertaking to or relationship with the plaintiff, and serious emotional distress is likely to be caused by the defendant's negligence.
  • A plaintiff can also recover damages for emotional distress that results from a defendant's intentional or reckless conduct that is "extreme and outrageous."

The adverse impact of this decision will fall most directly on physicians who diagnose dread diseases, on psychiatrists and psychologists, and on funeral homes.  However, the ramifications of this decision will not end there, and it can be expected that the limits of this decision will be tested in the courts for the next decade. 



D.C. Court of Appeals formally adopts Iqbal and Twombly

In Mazza v. Housecraft LLC, No. 09-CV-1068 (D.C. April 28, 2011), the D.C. Court of Appeals held that the recent Supreme Court decisions articulating the requirements that a complaint must meet in order to survive a motion to dismiss, i.e. Ashcrof v. Iqbal and Bell Atlantic Corp. v. Twombly, apply in the District of Columbia.

In pertinent part, the Court stated:

The Supreme Court has recently articulated two prongs in determining whether acomplaint is sufficient to survive a motion to dismiss: whether the complaint includes well pleaded factual allegations as an initial matter, and whether such allegations plausibly give rise to an entitlement for relief. In Ashcroft v. Iqbal, — U.S. —, 129 S.Ct. 1937, 173 L.Ed.2d868 (2009), the Court elaborated on Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct.1955, 167 L.Ed.2d 929 (2007). In Iqbal, the Court noted that as an initial matter, Fed. R.Civ. P. 8 (a) “does not require ‘detailed factual allegations [in a pleading],’ but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” 129 S.Ct. at1949 (quoting Twombly, supra, 550 U.S. at 555, 127 S.Ct. 1955). . . . While only the first prong is relevant to our analysis here, we hold that both requirements apply in our jurisdiction. We have not heretofore expressly adopted both of the requirements articulated in Twombly and Iqbal. . . . However, we take this opportunity to recognize thatTwombly and Iqbal apply in our jurisdiction.

 7/5/2011:  The D.C. Court of Appeals issued an order dated June 30, 2011, vacating the Mazza opinion, on the grounds that the case had settled and therefore was moot.  Therefore, the Mazza opinion is no longer binding precedent in the District.  At the same time, the opinion hasn't been "disappeared":  it is still available.

D.C. Court of Appeals reverses dismissal of $6.37 million tax malpractice claim

In Hillbroom v. PricewaterhouseCoopers LLP, No. 10-CV-92 (D.C. April 7, 2011), the D.C. Court of Appeals reversed the dismissal of a lawsuit against a tax attorney and an accounting firm for professional negligence, breach of contract and breach of fiduciary duty. The alleged negligence was the failure to timely file a formal claim for refunds for federal estate taxes paid on an estate worth approximately $353 million. The trial court granted the defendant's motion to dismiss under Rule 12(b)(6) based on statute of limitations grounds. The D.C. Court of Appeals reversed.

The defendants moved to dismiss based on the three year statute of limitations under D.C. Code sec. 12-301, arguing that the period of limitations began to run at the latest by Dec. 10, 2002, when plaintiffs retained new counsel and admittedly were aware that the defendants had missed the tax refun filing deadlines. The trial court agreed with that, and further found that the plaintiffs suffered a separate injury at the same time when they incurred additional litigation expenses.

The Court of Appeals reversed, noting that D.C. precedent contemplates a flexible, case-by-case approach to determining when the period of limitations began to run. Here, the statutory deadlines for filing formal claims for federal estate tax refunds are subject to various exceptions. The Estate had utilized an informal refund claim, for which there is legal authority. The Court therefore reasoned that without reviewing the Refund Claim Memorandum and an expert opinion -- neither of which were in the record -- it could not say "whether the parties might reasonably have regarded the memorandum as comprehensive enough, specific enough, and clear enough to preserve all the claims at issue."

The Court concluded that neither from the face of the Complaint nor from the undeveloped record can it fairly be said that, for statute of limitations purposes, plaintiffs must be charged with knowledge of their injury when the deadlines for filing of the formal refund claims passed.

The Court, however, disagreed with the plaintiffs' argument that their cause of action did not accrue until they settled the refund claim with the IRS. Rather, the Court held that at the latest, the plaintiffs knew or should have known of their injury -- and their cause of action accrued -- when they learned of the IRS's definitive position disputing the allowability of the refund claims not filed by the statutory deadline. However, the appellate record did not show when the IRS asserted its position. That determination must be based on a fuller record.

The Court also found that the retention of new counsel did not necessarily mean that the plaintiffs sustained injury at that time based on the alleged negligence, because it was possible that the new lawyers were charged with completing work that the defendants had not yet performed. The Court found that the record was insufficient on this point as well.

Thus, the end result of the motion to dismiss in this case was that the defendants incurred all the litigation expenses of the motion and the appeal, and now find themselves remanded to the trial court for further proceedings. In the process, plaintiffs' counsel have acquired a blueprint of the intricacies of the statute of limitations defense prior to discovery. This is not to be critical in the least of the defendants or the defense attorneys for choosing to file the motion to dismiss, which after all was initially successful and resolved a multi-million dollar claim.

Rather, this case illustrates the difficult tactical decisions that must be made by the defense as to how and when to file a dispositive motion. One lesson is that in very technical areas of the law, such as tax or patent law, the question of when a cause of action for legal malpractice accrued for limitations purposes should be the subject of early review by an expert in the field, even when there seems to be strong grounds for a motion to dismiss. There is also a risk/benefit analysis that must be made in each case, weighing the liability exposure of the claim, the chances of success of the motion, and in some instances the possibility that disclosure of the defense will lead to a reasonable settlement, against the costs of the motion and subsequent appeal, and the risk that by fully disclosing the theory of defense, if the motion is denied it might make any subsequent depositions less productive for the defense.

Lack of diversity jurisdiction can be raised at any time

A recent D.C. Circuit opinionreminds us that the lack of diversity jurisdiction can be raised at any time, even on appeal. IN RE: LORAZEPAM & CLORAZEPATE ANTITRUST LITIGATION was an appeal of a $77 million judgment in an antitrust suit.  On appeal, the defendants moved to dismiss for lack of diversity jurisdiction. 

Plaintiffs were four health insurers who brought suit against two drug manufacturers.  Plaintiff brought suit for themselves and as claim administrators for self-funded customers, which are corporations which pay their employees health benefits out of their own funds.  On appeal, a motion was filed for the first time to dismiss due to lack of diversity jurisdiction, on the bases that one or more of the self-funded customers destroyed complete diversity:

After the parties had filed their briefs, and a few days before oral argument, defendants filed a motion to dismiss, arguing for the first time that the district court lacked jurisdiction because at least one (Minnesota Mining and Manufacturing Corporation (3M))—and potentially more—of plaintiffs' self-funded customers were from the same state as at least one of the defendants. The existence of these customers, defendants argued, destroyed "complete diversity" and stripped the court of power to hear the case.

The Court decided the appeal based on long-standing principles of diversity jurisdiction:

  • The absence of jurisdiction can be raised for the first time on appeal even by the party who invoked federal jurisdiction.
  • Parties cannot confer jurisdiction by consent. A corollary, long established, is that a party does not waive a jurisdictional objection by failing to raise it, at least so long as the jurisdictional defect appears on the face of the record.
  • Under the diversity statute (now 28 U.S.C. § 1332), "diversity jurisdiction does not exist unless each defendant is a citizen of a different state from each plaintiff." Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373 (1978). Thus the presence of just one nondiverse plaintiff destroys diversity jurisdiction under § 1332.
  •  Mollan v. Torrance, 22 U.S. (9 Wheat.) 537, 539 (1824), holds that the court's jurisdiction "depends upon the state of things at the time of the action brought . . .."
  • Ordinarily a finding that the district court lacked jurisdiction would lead the appellate court to vacate the court's judgment and remand for dismissal. See, e.g., LoBue v. Christopher, 82 F.3d 1081, 1082 (D.C. Cir. 1996).

Rather then dismiss the appeal, the Court invoked Rule 21, and remanded to the district court for consideration of whether the jurisdictional spoilers could be dismissed:

Rule 21 of the Federal Rules of Civil Procedure provides that "[o]n motion or on its own, the court may at any time, on just terms, add or drop a party." Fed. R. Civ. P. 21. This Rule allows the district court to dismiss so-called "jurisdictional spoilers"—parties whose presence in the litigation destroys jurisdiction—if those parties are not indispensable and if there would be no prejudice to the parties. Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 830-32 (1989).

Hit tip to Barry Bennett's Blawgletter and to Litigation World for pointing to this case.

En banc decision from D.C. Court of Appeals in Grayson v. AT&T requires injury-in-fact for CPPA action

The Court today issued a 92 page decision.  See page 49: "Thus, without a clear expression of an intent by the Council to eliminate our constitutional standing requirement, we conclude that a lawsuit under the CPPA does not relieve a plaintiff of the requirement to show a concrete injury-in-fact to himself." 

That answers a troubling question about the D.C. Consumer Protection Procedures Act.

Another interesting thing in the opinion is in footnote 16, where the Court says, "this court has not yet decided whether it will follow the facial plausibility standard enunciated in Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009)." 

A more detailed analysis of the Grayson case is available here.


Hot topics in arbitration

The FDCC Quarterly in its most recent issue has an article on the allowable standards for the review of arbitral awards.  Manifest disregard of the law may no longer be one of the standards.

Meanwhile, the D.C. Court of Appeals has nixed the immediate appeal of an order compelling arbitration, and the U.S. District Court for the District of Maryland has joined other circuits in requiring a surety to arbitrate if the performance bond incorporated by reference a construction contract that contains a mandatory arbitration clause.