New York Noncompete, Trade Secret & School Negligence Blog

Why Playing "Gotcha" on Stupid Details is a Terrible Idea

Trying to play "gotcha" with your adversary in litigation over every small detail is an awful idea, explains NY commercial litigation lawyer Jonathan Cooper

When New York Lawyers Try To Defend The Indefensible

In a scathing decision, a federal judge recently sanctioned attorneys who effectively fostered over one year of needless litigation because they refused to disclose that the subject of the litigation had already been rendered moot. For more articles and information pertaining to commercial litigation, accident and defective product claims in New York, please visit www.JonathanCooperLaw.com.

In an "off-the-beat" case, Kassis v. Ohio Casualty Ins. Co., 12 N.Y.3d 595, 885 N.Y.S.2d 241 (2009), New York's Court of Appeals (the highest court in New York State) held in favor of a landlord - and against his tenant's liability insurer - that since the lease required the tenant to name the landlord as an additional insured on their liability policy for their "mutual benefit," the landlord was automatically deemed an additional insured under the policy, even though the landlord wasn't in fact named on the policy at all.  Consequently, by dint of the Court's holding, the insurer was obligated to not only defend the landlord in the underlying personal injury action that arose from a worker's claim that he was injured when he slipped and fell on snow fronting the landlord's property, but the insurer was also required to indemnify the landlord for any settlement or judgment up to the policy's full liability limits.

A word of caution is in order, however, and here's why: a perusal of this decision suggests that this ruling is of limited scope, and confined to the particular facts of this case. Specifically, in rendering the opinion, Chief Judge Lippman notes that the insurance policy in this case had a provision that extended coverage to the named insured as well as “any person or organization whom [the named insured is] required to name as an additional insured." 

Nevertheless, this decision serves as yet another reminder to small businesses in New York why you should never assume the validity of an insurer's disclaimer of coverage.

In a somewhat scary opinion that was issued last month, the appellate court for the D.C. Circuit affirmed a lower court's order which both sanctioned and held in contempt a non-party for failing to comply with a deadline for the completion of electronic discovery that its attorneys had previously agreed to.

In its opinion, the appellate court refused to consider the non-party's arguments that this discovery request was overly broad and undly burdensome. In particular, the non-party noted that the parties' search terms returned such a broad swath of electronic documents, that several personal e-mails between employees and their spouses (which were clearly irrelevant to the case) came up, and the sheer volume of documents that these search terms returned forced this non-party agency, The Office of Federal Housing Enterprise Oversight, to hire approximately 50 contract attorneys for this document review, and to incur roughly $6 million in expenses (approximately 10% of this agency's annual budget).

Despite this incredible burden - and by a non-litigant no less - the court remained unpersuaded that the lower court had abused its discretion because OFHEO had already extended - and subsequently disregarded - several deadlines for their compliance with these discovery demands, and their obligation to comply with the terms of their own attorney's agreement was unambiguous.

The lessons to be learned here for New York small businesses that have been called into commercial litigation are clear:

(1) Make sure you have a good estimate about the scope and expense of an anticipated electronic data or document disclosure - BEFORE  any agreements are entered into regarding the time and expense of the data production;

(2) DO NOT allow the other parties to determine what the appropriate search terms will be without an appropriate mechanism to assure that you do not end up being required to produce a voluminous amout of records that bear no relation to the case;

(3) Make sure that the manner in which the electronically stored information is to be produced is reduced to writing - this could save you a great deal of time and effort, not to mention trees; and,

(4) In appropriate circumstances, that there are systems in place to assure that the demanding party bears at least some of the expense of the production (parenthetically, this is probably one of the best ways to insure that the demands are streamlined to the relevant discovery, as it is unlikely that the demanding party will want to pay for a bunch of e-mails you had with your brother about his trip to Atlantic City).

Last week, a California appellate court which sided with Costco in its bid to prevent disclosing the names of its clothing suppliers on the grounds that this information was deserving of judicial protection as a trade secret. As we have previously noted, it is incumbent on the party asserting that certain information, such as a supplier's identity, be protected from disclosure in in a commercial, small business litigation as privileged matter or a trade secret, to demonstrate that this information was not readily obtainable from another public source, as well as what concrete steps and expense the business took to develop and protect this proprietary list. Otherwise, under New York law, the Court is obliged to compel the disclosure of the list.

Consequently, I was hoping that the California appellate court would elaborate on what specific steps Costco took to convince the Court that their clothing suppliers'  identities were privileged matter worthy of protection from disclosure as a trade secret, if only to provide a measure of comparison to New York law. Unfortunately, after reading the opinion, the Court clearly glossed over this topic, stating in cursory fashion that Costco produced some evidence that its list of suppliers had monetary value, and that it made significant strides to make sure that the names and addresses of its suppliers did not become public.

Diminishing Jury Verdicts and the Economic Recession: Do They Go Hand in Hand?

Lawyer Jonathan Cooper talks about practice areas

In an important ruling, New York’s Appellate Division, First Department recently held that, as a general rule, a trial court may not accept trial testimony that is conducted via video or teleconferencing because it violates the other party’s constitutional right to confront adverse witnesses. Although the Appellate Court acknowledged that there were limited exceptions to this rule, such as cases where testimony was sought from children that were victims of abuse, the majority of the split court still felt that a party’s right to confront adverse witnesses “face to face” outweighed other parties’ needs to adduce testimony from witnesses that could not appear in court either due to illness or inconvenience (such as where the complainants lived in Australia).

 

This ruling was rendered in the criminal law context, but apparently applies in the civil context as well, including cases dealing with small business or commercial litigation, personal injury or defective products lawsuits.  And this can have very real economic and other consequences, such as where one of the defendants to a defective products lawsuit is a foreign manufacturer or distributor, or where the “silent” partner of a small company is a venture capitalist who lives more than 6,000 miles away.

 

In the end, I am not convinced that face-to-face confrontation is uniquely able to reveal the truth, particularly given the technological advances that would render these witnesses in remote locations to view the entire courtroom – including their adversaries. To the contrary, I think that this ruling effectively dealt the search for truth a harsh blow, because it will prevent numerous important witnesses from telling their stories before juries.

Last night, I came across this "How To" article that made 3 suggestions as to how to save money when hiring a lawyer for a personal injury case. While I do not fault anyone for trying to save a few dollars, particularly in this economic climate, I think the author is terribly misguided. Simply put, if a lawyer would actually agree to abide by any of the suggestions in that article, then you can be sure that is not the lawyer you want for your case, particularly if your case has to do with your small business or commercial litigation needs in New York.

Leaving aside the issue that most personal injury attorneys work on a contingency basis rather than an hourly rate (which renders moot most of the article), the other suggestions suffer from serious flaws as well. Perhaps the best example is his notion that you can offer to file the necessary papers in Court in exchange for a reduction in fee. I cannot imagine any attorney agreeing to these terms for the very basic reason that if you (presumably a non-lawyer) make any mistake in filing the papers with the Court, the attorney has opened himself up to a legal malpractice claim.

Moreover, even assuming that the attorney were to ignore the malpractice possibility (which he clearly shouldn't), the author's thought that it would be worthwhile for the attorney to significantly reduce his fee for clerical tasks that would ordinarily cost under $100 is, for lack of a better term, absurd. (The following analogy comes to mind: you ask your doctor to reduce his fee in exchange for you beginning the medical procedure for him.

In addition, this suggestion also ignores the fact that some clerical tasks cannot be handled by the client as a matter of law, such as service of legal papers on the other parties to the litigation.

Instead, if you are interested in getting the best value for your money when hiring a lawyer, you should consider the suggestions listed here.