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Showing posts with label settlement. Show all posts
Showing posts with label settlement. Show all posts

Monday, December 27, 2021

After dog bites postman, $375k jury award fits between floor and ceiling of high-low settlement agreement

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In a dog-bites-postman case in Massachusetts, the Appeals Court in late October held that the parties' "high-low" settlement agreement was a "contract like any other" and did not bar the defendants' appeal.

The plaintiff-postman in the case was covering an unfamiliar route when he was bit in the wrist and thigh by German shepherd-golden retriever mix "Chewbacca." At trial, the jury awarded the plaintiff $375,000 in damages. The defendants asked for a new trial, arguing that the jury was tainted by improper admission of information about the plaintiff's federal worker compensation benefits, in violation of the collateral source rule.

Before the jury verdict, on the last day of trial, the parties had struck a handwritten "high-low" settlement agreement.  They set a floor recovery of $150,000, if the jury verdict were anything less, and a ceiling of $1,000,000, if the jury verdict were anything more.

The plaintiff argued that the settlement agreement precluded appeal.  But it didn't say that.  Holding that the settlement agreement was to be construed as a "contract like any other," the Appeals Court found no language convincingly demonstrating defendants' waiver of appeals.  At the same time, the court held that the evidentiary admission in violation of the collateral source rule was harmless error, affirming the denial of new trial.

Regarding the high-low agreement, the court found "little law in Massachusetts."  More than 20 years ago, two New York attorneys described the agreements as "[a]n often underutilized and misunderstood litigation technique." At NYU in 2014, a research fellow examined the agreements' potential and limits in New York, Maryland, and Virginia; see also the ABA Journal in 2005.  An Illinois attorney wrote favorably about the "misunderstood" agreements in 2019, after a medmal plaintiff-baby's verdict was halved by a high-low from $101 million.  Virginia attorneys advised on drafting the agreements in 2007.

In a harder scholarly vein, research published in The Journal of Law & Economics in 2014 reported empirical research on high-low conditions and posited optimal conditions for their appearance.  Published soon thereafter, a Michigan law student argued that high-low agreements should be disclosed to juries.

The Massachusetts case is David v. Kelly, No. 20-P-706 (Mass. App. Ct. Oct. 25, 2021). Justice Mary Thomas Sullivan wrote the opinion of the court, which Justice Kenneth V. Desmond Jr. joined.  Justice Sabita Singh dissented as to the court's conclusion that the error on the collateral source rule was harmless rather than prejudicial.

Thursday, October 22, 2020

Opioids, coronavirus add up to dangerous interaction

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Purdue Pharma will plead guilty to criminal charges in the marketing of OxyContin, the Justice Department (DOJ) announced yesterday.  Meanwhile, addiction and coronavirus are dangerously interrelated, Dr. Joseph Grillo warns.

DOJ settled with Purdue Pharma in civil and criminal investigations, and with Sackler family shareholders in civil investigation.  Purdue will admit that it conspired to defraud the United States by misleading and impeding enforcement by the Drug Enforcement Administration for almost 10 years.  Purdue also will admit to conspiring to violate the Federal Anti-Kickback Statute with inducements to doctors to prescribe opioids for almost eight years.  (Purdue Plea.)

On the civil side, Purdue will settle, without admission, allegations of false claims to federal healthcare programs, of improper inducements to prescribing doctors, and of improper contracts with fulfilling pharmacies.  The government will have an unsecured claim on $2.8bn in Purdue's bankruptcy.  (Purdue Settlement Agreement.)  Purdue shareholders in the Sackler family will pay $225m in settlement of allegations that they approved an intensified opioid marketing program.  (Sackler Settlement Agreement.)

The settlements do not resolve state claims.

Opioids have taken more than 450,000 American lives since 1999, The New York Times reported yesterday, citing CDC research.  COVID-19 deaths now exceed 220,000, according to the CDC.

In 2020, the coronavirus pandemic nudged the opioid epidemic out of the number one spot for enemy of public health.  But the two are hardly mutually exclusive.  Addiction, of all types, interacts with the threat of coronavirus in a mutually exacerbating feedback loop.  Joseph Grillo, M.D., J.D., and an alum of my torts class, raised a warning flag on his blog yesterday.

"Two great epidemics of our generation are intersecting in ways that are additively deadly, and which highlight the urgent ways we must respond to some of the underlying fault lines in our society that are worsening both crises," Dr. Grillo wrote.

Read more about substance use disorders (SUD) and coronavirus at A Pandemic Within a Pandemic, Joseph Grillo, M.D. Medical Legal Consulting, Oct. 21, 2020.

Tuesday, May 5, 2020

Appeals court reviews fundamentals of multiple liabilities in remanding business tort case

A Massachusetts Appeals Court decision Friday reaffirmed the rule against double recovery, the finality of settlement, and other fundamentals in a business case of joint tortfeasors.  The case is a good refresher for law students and lawyers on multiple liabilities in tort.


A company sued its former secretary-treasurer and a tax consultant for breaches of fiduciary duty through fraudulent concealment, resulting in financial loss in excess of about $288,000.  The company president, a husband, and the former principal, a wife, were recently divorced, and the latter’s separation on both counts was settled upon a $50,000 payment.  The couple furthermore stipulated an allocation of about $40,000 for the purchase of the wife’s company shares.

The company prevailed against the tax consultant on default judgment.  However, the court determined that the terms of the settlement, and specifically the allocated share purchase, inclusively credited the company with the $288,000 of the wife’s liability.

Under widely accepted state doctrine of joint tortfeasor liability in American law, a joint tortfeasor at judgment is credited with the plaintiff’s past settlement against a departed joint tortfeasor.  The rule encourages settlement by encouraging a well bargaining defendant to settle out, while deterring needless litigation by respecting the common law maxim that “a party can have but one satisfaction for the same injury.”

In accordance with the doctrine, then, the trial court ruled that the plaintiff had been made whole, so would collect nothing more from the tax consultant, however negligent.

That was an error on the merits, the Appeals Court ruled.  “Settlements are motivated by a wide range of factors, some non-monetary, and may involve significant payments or no payment at all,” the court wrote.
Justice Desmond
[T]here are many reasons [the husband] could have agreed on behalf of [the company] to dismiss the complaint against [the wife].  To name just one, having in-depth knowledge of [her] financial status, [he] may well have concluded that [she] would be unable to pay any judgment against her.  In any event, it was clearly erroneous to conclude that the plaintiff had been made whole based on no more than (i) the mere existence of a settlement [on] multiple legal claims and (ii) hearsay assertions that a discount had been given.
The court remanded for the trial court to reassess the actual measure of credit against liability represented by the share allocation, thus the remaining liability owed to the plaintiff by the tax-consultant defendant.

The case is Custom Kits Co. v. Tessier, No. 19-P-503 (Mass. App. Ct. May 1, 2020).  Associate Justice Kenneth V. Desmond Jr. wrote for a unanimous panel with Justices Wendlandt and McDonough.