The Lawletter Vol 46 No 6

Lee Dunham—Senior Attorney, National Legal Research Group

     Your motion for summary judgment was denied. Not long thereafter, the judge in your case retires and is replaced by a new judge who seems much more sympathetic to your client’s arguments. The deadline to file a motion to reconsider has expired. Can you simply refile your motion and try your luck again with Judge #2? Sometimes, but caveats apply.

     Within a single action, consistency and efficiency are achieved by a doctrine known as the “law of the case.” See Watkins v. Elmore, 745 F. App’x 100, 102 (11th Cir. 2018); In re Justice Oaks II, Ltd., 898 F.2d 1544, 1549 n.3 (11th Cir. 1990). It is broadly similar to res judicata in that under the law-of-the-case doctrine, as a general rule, “an issue decided at one stage of a case is binding at later stages of the same case.” United States v. Escobar-Urrego, 110 F.3d 1556, 1560-61 (11th Cir. 1997); see also Hallahan v. Courier-Journal, 138 S.W.3d 699, 705 n.4 (Ky. Ct. App. 2004) (“The doctrine of law of the case establishes a presumption that a ruling made at one stage of a lawsuit will be adhered to throughout the lawsuit.”).

     Unlike res judicata, however, the law of the case is “not jurisdictional in nature, and the court's power is not limited thereby” but, rather, is “a rule of practice ‘self-imposed by the courts.’” United States v. Anderson, 772 F.3d 662, 668 (11th Cir. 2014). While res judicata is a rule of law, the law of the case merely “directs a court's discretion.” Arizona v. California, 460 U.S. 605, 618 (1983), decision supplemented, 466 U.S. 144 (1984).

     Notwithstanding the law-of-the-case doctrine, a court's previous rulings may be reconsidered as long as the case remains within the jurisdiction of the court.

The Lawletter Vol 46 No 6

Charlene Hicks—Senior Attorney, National Legal Research Group

            Prior to bringing a shareholder derivative action, the complaining shareholders must normally make a detailed presuit demand on the corporation’s board of directors or show the court that such a demand would be futile. In United Food & Commercial Workers Union v. Zuckerberg, No. 404, 2020, 2021 WL 4344361 (Del. Sept. 23, 2021), the Delaware Supreme Court announced a new “universal test” for determining whether a shareholder demand should be excused as futile. This new test imposes more stringent pleading requirements on the derivative plaintiffs to show futility.

            In United Food, the complaining shareholders alleged that the members of Facebook, Inc.’s (now “Meta Platforms Inc.”) board of directors violated their fiduciary duties when they voted in favor of a stock reclassification that would have allowed Mark Zuckerberg, Facebook’s CEO, to sell most of his Facebook stock while still maintaining voting control. The Board’s vote eventually led to the company spending approximately $90 million to defend against a class action lawsuit. The complaining shareholders filed the derivative action in an attempt to recoup those litigation expenses.

The Lawletter Vol 46 No 6

Fred Shackelford—Senior Attorney, National Legal Research Group

     In a case of first impression, New York’s highest court has expanded the scope of “bystander recovery” for the negligent infliction of emotional distress. A cause of action for negligent infliction of emotional distress compensates a witness for experiencing shock and emotional distress as a result of observing harm to another person. In many states, recovery for the negligent infliction of emotional distress is limited to persons who are in the zone of danger and who witness injury to someone who is a member of their family.

     In Greene v. Esplanade Venture Partnership, 36 N.Y.3d 513, 2021 WL 623832 (2021), the plaintiff and her two-year-old granddaughter were in front of a building when they were struck by debris that fell from its façade. The child died the next day, and the grandmother sued various defendants for emotional distress that she experienced as a result of witnessing injury to her granddaughter.

The Lawletter Vol 46 No 6

Alistair Edwards—Senior Attorney, National Legal Research Group

            As a result of the COVID-19 public health emergency, various states and municipalities around the country have imposed moratoriums on evictions and prohibited landlords for a certain period of time from filing eviction complaints for possession of real property. For example, on March 17, 2020, the Council of the District of Columbia enacted a variety of measures to prevent the spread of COVID-19 and protect District residents. Included among these measures was a moratorium on evictions "during a period of time for which the Mayor has declared a public health emergency."

            In District of Columbia v. Towers, 21-CV-34, 2021 WL 4617981 (D.C. Oct. 7, 2021), the District of Colombia's highest court considered whether this moratorium violated the landlords' due process right to access the courts. The case came to the appellate court after the District's lower court (the Superior Court) held that the moratorium on eviction filings for the duration of the public health emergency was unconstitutional. Specifically, the lower court held that the moratorium infringed on property owners' fundamental right of access to the courts because "[a] landlord's interest in summary resolution of its claims against a tenant has a constitutional basis." The District of Columbia appealed the lower court’s decision.

The Lawletter Vol 46 No 6

Anne Hemenway—Senior Attorney, National Legal Research Group

            Facing tens of thousands of claims against Johnson & Johnson's ("J&J's") baby powder and other talc products, alleging that the baby powder contains asbestos and causes cancer, J&J put the talc claims into a separate entity called LTL Management LLC, which then filed for Chapter 11 bankruptcy in mid-October 2021 in the U.S. Bankruptcy Court for the Western District of North Carolina. In re LTL Mgmt., LLC, No. 21-30589 (Bankr. W.D.N.C. Oct. 14, 2021). J&J itself is not part of the bankruptcy filing.

            The pharmaceutical company's corporate shuffling and bankruptcy maneuver is known as a "Texas two-step" bankruptcy, whereby J&J split its business through a divisional merger under Texas law and created a new entity to carry the talc liabilities. The Texas law allowed J&J to avoid accountability for the over 40,000 talc powder claims. The State's divisive merger statute, Tex. Bus. Orgs. Code Ann. § 1.002(55)(A), allows a company to divide into two separate entities. Because a divisive merger is not treated as an assignment of assets or liabilities, it is used as a strategic alternative to a traditional spin off or asset sale.

The Lawletter Vol 46 No 5

Amy Gore—Senior Attorney, National Legal Research Group

            Recently, the Appellate Division of the New York Supreme Court suspended the law license of Rudy Giuliani, pending a fuller hearing in In re Giuliani, 197 A.D.3d 1, 146 N.Y.S.3d 266 (2021). Without getting mired in any of the political ramifications the suspension of Giuliani may trigger, this ruling provides a useful procedural and substantive framework for evaluating the limits of advocacy by attorneys, both inside and outside of a courtroom.

            In this case, multiple complaints were filed before the New York Attorney Grievance Committee ("AGC") based primarily on alleged false statements made by Giuliani in various filings before multiple courts as well as statements made to the press and before other groups during the course of his representation of Donald Trump and the Trump Campaign. The AGC is the administrative entity charged with investigating allegations of attorney misconduct in violation of the New York Rule of Professional Conduct, 22 NYCRR 1240.7, upon receipt of a written complaint. One of the procedural mechanisms available to the AGC is to motion to the Appellate Division a request for interim suspension when "uncontroverted evidence of professional misconduct" has been demonstrated. 22 NYCRR 1240.9(a)(5). While the result in Giuliani was an immediate suspension, attorneys retain the right to a complete investigation and hearing. 22 NYCRR 1240.9(c); see Annotation, Validity and Construction of Procedures to Temporarily Suspend Attorney from Practice, or Place Attorney on Inactive Status, Pending Investigation of, and Action upon, Disciplinary Charges, 80 A.L.R.4th 136 (1990 & Supp.).

The Lawletter Vol 46 No 5

Mark Rieber—Senior Attorney, National Legal Research Group

            In Andrus v. Texas, 140 S. Ct. 1875 (2020), the Supreme Court vacated the opinion of the Texas Court of Criminal Appeals denying habeas relief to the petitioner challenging his death sentence and claiming that his counsel was ineffective in failing to investigate and present mitigating evidence at the penalty phase of trial. At the guilty phase of defendant's capital murder trial, defense counsel essentially conceded guilt and indicated he would "be fighting" at the punishment phase. Counsel, however, presented limited evidence at sentencing and failed to investigate and overlooked "vast tranches of mitigating evidence." Id. at 1881. Counsel also failed to investigate the State's aggravating evidence. At the habeas hearing, counsel offered no tactical rationale for such failure, which was "all the more alarming given that counsel's purported strategy was to concede guilt and focus on mitigation." Id. at 1883. The Court easily found that counsel was ineffective at the penalty phase, despite the Texas state court's summary dismissal of such claim.

The Lawletter Vol 46 No 5

Nadine Roddy—Senior Attorney, National Legal Research Group

            In a closely watched case, California v. Texas, 141 S. Ct. 2104 (2021), the Supreme Court recently turned back a third challenge to the federal Patient Protection and Affordable Care Act ("ACA" or "Act")—the extensive health-care reform law enacted in 2010 that includes, among other things, a requirement for all individuals (known as the "individual mandate") to obtain a minimum level of health insurance coverage (known as "minimum essential coverage" or "MEC") or to pay a tax penalty to the Internal Revenue Service ("IRS"). In subsequent legislation, Congress reduced the penalty from $695 to $0. At that point, the State of Texas, joined by several other states and two individual plaintiffs, filed a challenge to the amended Act in a federal district court sitting in Texas. The court held that Congress's effective elimination of the tax penalty had rendered unconstitutional the individual mandate to obtain MEC, as it could no longer be justified as a tax. Further, because the unconstitutional provision could not be severed from the rest of the ACA, the entire Act was invalid. In its June 2021 decision, the Supreme Court did not reach these substantive issues, instead ruling 7-2 that neither the states nor the individual plaintiffs had Article III standing to bring the suit, as none had shown a past or future injury "fairly traceable" to the officials' conduct.

The Lawletter Vol 46 No 5

Fred Shackelford—Senior Attorney, National Legal Research Group

     The concept of bystander liability was first recognized by American courts in the landmark California case of Dillon v. Legg, 68 Cal. 2d 728, 441 P.2d 912 (1968). Today, most courts allow recovery under this doctrine, also known as negligent infliction of emotional distress ("NIED"). Under this theory of liability, a tortfeasor can sometimes be held liable to a bystander who experiences emotional distress from observing a direct injury to another person. Under Dillon, bystander liability was limited by foreseeability, and courts would take into account such factors as (1) whether the plaintiff was located near the scene of the accident as opposed to a distance away from it; (2) whether the shock resulted from a direct emotional impact upon the plaintiff from the sensory and contemporaneous observance of the accident rather than learning of the accident from others after its occurrence; and (3) whether the plaintiff and the victim were closely related, as contrasted with an absence of any relationship or only a distant relationship.

The Lawletter Vol 46 No 5

Jim Witt—Senior Attorney, National Legal Research Group

            In addition to the direct health issues caused by the COVID-19 pandemic, given the economic disruption the pandemic has caused, it is obvious that the pandemic will indirectly be giving rise to countless legal issues (for instance, in the construction/real estate field alone, with government mandates halting some projects and granting waivers as to others, and with issues related to supply chain, employee safety, construction disputes, defaults, loans, and leases, there will be important questions up for decision for a long time to come). As exemplified by the case of McLean v. Big Lots Inc., No. 2:20-CV-02000-MJH, 2021 WL 2317417 (W.D. Pa. June 7, 2021), however, there will also be COVID-19-related cases concerning far less momentous topics.