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In the Courts

THANKS TO GOVERNOR RON DESANTIS’S LEADERSHIP AND STATE SUPREME COURT, FLORIDA’S LITIGATION CLIMATE CONTINUES TO IMPROVE

Although the work is far from over, Governor Ron DeSantis has turned the state of Florida around, appointing a Florida Supreme Court that is poised to correct the course set by the prior activist court and is deferential to legislative efforts to stop lawsuit abuse. It is now incumbent on the state’s legislative branch to follow the lead of the other two branches and do their part to curb lawsuit abuse in the Sunshine State.

Florida’s Judiciary Exercises Restraint

In years past, the Florida Supreme Court was known for its liability-expanding decisions and contempt for the lawmaking authority of the state legislature. But the court’s three activist members left the bench in January 2019 after reaching the mandatory retirement age. These three justices, along with the swing vote of Justice Jorge Labarga, constituted the court’s liberal majority that signed onto many of the decisions increasing liability and nullifying civil justice reform legislation in Florida.

In January 2019, newly elected Governor Ron DeSantis replaced these three retiring justices with three textualists, Barbara Lagoa, Robert Luck, and Carlos Muñiz. The three new justices joined a court dominated by conservatives Charles Canady, Ricky Polston, and Alan Lawson. In 2019, when President Trump elevated Justices Lagoa and Luck to the U.S. Court of Appeals for the Eleventh Circuit, Governor DeSantis exercised his new appointments wisely, appointing Fifth District Court of Appeal Judge Jamie Grosshans and well-respected litigator John Couriel to the state’s highest court. With these appointments, a majority of the Court is no longer prone to reaching liability-expanding decisions. Moreover, these changes will be fairly long-lasting, with a majority of the seven justices currently sitting on the Court not facing mandatory retirement for more than a decade.

Florida Now Employs The Federal Summary Judgment Standard

The new Florida Supreme Court is already returning sense to Florida’s civil justice system. As just one example, the Florida Supreme Court recently replaced the state’s summary judgment standard—a standard that favored sending weak, unsupported cases to burdensome jury trials—with the federal summary judgment standard.

Summary judgment is an important court procedure that offers a pretrial opportunity to resolve a case or an issue on the merits where there is no genuine, disputed issue of material fact for a jury to decide, avoiding a costly and lengthy jury trial. Florida’s prior summary judgment standard failed to fulfill that purpose by requiring that the movant meet an almost impossible burden: to conclusively “prov[e] a negative, i.e., the non-existence of a genuine issue of material fact.” As a result of this unworkable threshold, “[t] he cases are legion to say summary judgments should be granted rarely.” The federal summary judgment standard is far more sensible, taking into account the burden that each party must bear at trial. Under that standard, once the party moving for summary judgment has met its initial burden, the party opposing summary judgment must come forward with evidence—and may not simply point to the allegations—to support the essential elements of his claim and avoid summary judgment.

The new summary judgment standard went into effect on May 1, 2021, and applies even in pending cases.

Florida Expands The Apex Doctrine To Protect High-Level Corporate Officers And Employees The apex doctrine traditionally protects high-ranking employees and officials from burdensome and harassing discovery where they have no firsthand knowledge of the subject of the lawsuit. Before 2021, however, Florida courts had only allowed high-ranking government officials and employees to avail themselves of the protection of this doctrine. In Suzuki Motor Corp. v. Winckler, a plaintiff sought to depose the chairman of the board of directors for Suzuki Motor Corp. in Japan in a routine products liability case. Suzuki pushed back and argued that the apex doctrine should protect high-ranking corporate employees just as it protects similar governmental officials from similar discovery. The Florida Supreme Court agreed, but went further to revise the Florida Rules of Civil Procedure to ensure all corporate defendants, even in pending cases, may invoke the apex doctrine.

Through its actions in adopting the federal summary judgment standard and the corporate apex doc- trine through separate rule cases, and its adoption of a stronger standard for evaluating the reliability of expert testimony in 2019, the Court has shown a clear willingness to exercise its rulemaking authority to address the problems facing Florida’s civil justice system through broad rule changes that apply even to pending matters.

INDIANA RESTRICS FORUM SHOPPING

On April 8, 2021, the Indiana Supreme Court precluded plaintiffs from avoiding having a case involving parties from multiple states heard in a neutral federal court by including uninvolved local store managers among the named defendants. For a federal court to have what is known as diversity jurisdiction over a given case, the adverse parties must all be citizens of different states. In this case, the plaintiff was injured when he tripped and fell in Walmart’s garden department. The plaintiff and his wife not only sued Walmart, which is incorporated and headquartered outside Indiana, but also the store manager, Jim Clark, who lives in Indiana. Walmart argued that the plaintiff only named Clark to prevent the corporation from removing the case from Indiana state courts to a more neutral federal forum. According to an affidavit filed by the store manager, Clark was not even working or present in the store on the day the plaintiff was injured, and even if he were, it is Walmart, not the local manager, which sets safety policies and procedures for the store.

The U.S. District Court for the Northern District of Indiana, to which the case was transferred, asked the Indiana Supreme Court to determine “whether a store manager can be held liable for negligence when he is not directly involved in the accident at issue.” The state high court addressed the plaintiffs’ three negligence claims against Clark: failure to adequately hire, train, and supervise employees; failure to implement adequate safety protocols; and failure to maintain a safe premises. The Court concluded that all three claims necessarily failed because only employers may be sued for negligent hiring; Clark was wholly uninvolved in establishing safety protocols; and Clark was not in control of the premises. For these reasons, the Court determined that Clark could not be held liable for the plaintiff’s injury. As a result, the federal court immediately dismissed the claims against the store manager and retained jurisdiction of the case, which settled after mediation.

MARYLAND FEDERAL COURT REJECTS ‘COVID-19’ TAKE-HOME EXPOSURE

On June 23, 2021, a federal court in Maryland dismissed a take-home COVID-19 exposure case against Southwest Airlines, closing the door to similar claims by third-party plaintiffs. In this case, a Southwest flight attendant claimed that the airline’s failure to implement sufficient COVID-19 safety measures at a mandatory training session resulted in her husband’s death. According to the plaintiff, two weeks after the training, she was alerted of her exposure to the virus at the training session. By that time, the plaintiff and her husband were both experiencing severe COVID-19 symptoms and her husband passed away shortly thereafter.

The precise issue before the court was whether Southwest owed a duty of care to the plaintiff’s husband. Southwest argued that Maryland case law does not recognize a duty to beyond those who are employed by the airline and who must go through the workers’ compensation system to receive compensation for work-related injuries. The plaintiff argued, however, that Southwest owed her husband a duty because his exposure and subsequent death from COVID-19 was foreseeable.

The court adhered to traditional principles of tort law, finding that Southwest did not owe the plaintiff’s husband a duty, noting that “Maryland courts have historically been exceedingly concerned about ‘opening the floodgates’ to expansive new classes of third-party plaintiffs.”

MISSISSIPPI SUPREME COURT PROTECTS RIGHT TO FAIR TRIAL AND REJECTS JUNK SCIENCE

Mississippi High Court Finds ‘Taint of Unfairness’ in $10.5 Million Verdict, Orders New Trial

Years ago, certain areas of Mississippi were known for jackpot justice and as the lawsuit capital of the world until intervention by the Mississippi Supreme Court and legislature turned the state’s civil justice system around. When those types of tactics emerged again in two cases that resulted in multi-million-dollar verdicts against an auto manufacturer, the Mississippi Supreme Court intervened to keep the state from sinking back into a Judicial Hellhole®.

First, in March, the Mississippi Supreme Court reversed a $10.5 million Coahoma County verdict, finding “overwhelming evidence” of jury interference that deprived the defendant of a fair and impartial trial. The court found that the plaintiffs’ counsel, Dennis Sweet, worked with Carey Sparks, a preacher, to sway the jury against Hyundai in a wrongful death case stemming from a head-on collision in which a car crossed the center lane of a highway into oncoming traffic.

Sparks and Sweet initially denied knowing each other or working together in an April 2015 hearing before the trial court. Multiple witnesses testified, however, that Sparks bragged about securing a large verdict in Clarksdale and that he had a friend on the jury. Sparks also told witnesses he preached to local congregations in the weeks leading up to a jury trial so jurors would recognize him in the courtroom and have a positive association with him. After the hearing, the trial court found that the allegations of outside influence on the jury were “speculative at best.” Defendants appealed.

The case went to the Mississippi Supreme Court, which reversed the trial court decision and remanded the case for further discovery and investigation into the jury interference allegations. On remand, it was revealed that Sparks and Sweet falsely testified in April 2015. The two did know each other and evidence showed pay stubs in which Sweet paid Sparks for consulting services. Additionally, Sparks’ best friend’s aunt was a juror in the case. While the friend and aunt deny discussing the case with each other or Sparks, the conflict is apparent. The trial court found that Sweet had deceived the court and ordered him to self-report to the Mississippi Bar. Yet, the trial court still denied Hyundai a new trial.

Hyundai appealed to the Mississippi Supreme Court, which ruled in its favor. The Court concluded “that there was actual impropriety, a taint of unfairness, real and perceived, all of which is fatal to affirming the verdict” in this case. The Court held that a new trial was necessary due to “the [overwhelming] appearance of taint permeating the proceedings.”

Mississippi High Court Rejects Junk Science and Restores Integrity in Jury System

In September, the Mississippi Supreme Court intervened in another product liability case against Hyundai, which had resulted in a verdict of over $2 million for a driver and passenger in Bolivar County. That case stemmed from a single-car accident in which the plaintiff claimed that a phantom never-found object interfered with the car’s braking system and caused the driver to swerve into a median. Hyundai argued that the driver simply lost control of the car while trying to pass a truck. The Mississippi Supreme Court reversed the trial court for three reasons.

First, the trial court improperly prevented the automaker’s attorneys from cross-examining the passenger about the inconsistencies between her initial statements to police that the driver had lost control of the car and her position at trial after entering a settlement with the driver that the automaker was solely responsible for the accident. This error alone denied Hyundai a fair trial.

Second, the trial court allowed unreliable expert testimony during the trial. It permitted two of plain- tiffs’ expert witnesses to testify who were neither qualified nor reliable. The judge should have excluded both experts, the Supreme Court found, since neither had experience designing an anti-lock braking system and their theories involving a phantom object were not based on any legitimate scientific principles or methods.

Third, despite a state law that permits only judges to excuse summoned jurors for “undue or extreme physical or financial hardship,” the court administrator and deputy clerk had unilaterally excused many people from jury service. Hyundai argued that, as a result, they were left with a jury pool in which the percentage of unemployed jurors far exceeded the local community. Although it had already found reversible error, the Court instructed “all circuit clerks, judges, attorneys, and other court personnel throughout our state” to follow the jury selection process mandated by Mississippi law because “it is in the public’s interest that such [violations] should not reoccur.”

MISSOURI HIGH COURT UPHOLDS LIMITS ON NONECONOMIC DAMAGES

In July 2021, the Missouri Supreme Court upheld the legislature’s ability to place a reasonable limit on the subjective portion of medical liability awards that are intended to compensate plaintiffs for noneconomic damages.

Nine years earlier, the same court had invalidated a similar law when it concluded that the legislature could not limit damages in causes of action that existed at common law in 1829 when Missouri established its constitution. On the other hand, in a separate ruling that same year, the Court ruled that the statutory limit could constitutionally apply in wrongful death cases, which did not exist at common law. In response to these rulings, the General Assembly replaced the common law medical malpractice cause of action with a new statutory cause of action. That law generally limits noneconomic damages, such as pain and suffering, in an action against a healthcare provider to $400,000 and allows up to $700,000 in cases involving catastrophic injuries.

This year’s ruling in Velazquez v. University Physician Associates, the Missouri Supreme Court found that the General Assembly is free to establish damage caps for statutorily created causes of action. Since the General Assembly replaced the common law medical malpractice cause of action with a statutory one, the Court held that the new noneconomic damage limits are constitutional.

NORTH CAROLINA SUPREME COURT REJECTS ATTEMPT TO EXPAND LIABILITY

On December 18, 2020, the North Carolina Supreme Court adhered to traditional tort law when it declined to recognize a new type of lawsuit for “loss of chance.”

Tort law requires a plaintiff to show that a defendant’s actions caused a person’s injury. A loss of chance theory would allow a plaintiff to sue a healthcare provider, usually on the basis that he or she should have diagnosed a condition earlier, even when it is more likely than not that any delay did not change the plaintiff’s outcome.

In the North Carolina case, a patient who suffered a stroke claimed that an ER physician negligently failed to diagnose her condition early enough to administer a clot-busting drug known as a tissue plasminogen activator (tPA), which may have improved plaintiff’s chance of a more favorable neurological outcome by, at most, 40%.

The North Carolina Supreme Court rejected the invitation to award damages for the possibility that a defendant’s negligence contributed to a plaintiff’s condition because it would “require a departure from our common law on proximate causation and damages.” If liability is to be expanded in this way, the Court recognized that such a policy judgment is better suited for the legislative branch.

OKLAHOMA SUPREME COURT REJECTS EXPANSIVE VIEW OF PUBLIC NUISANCE LAW

In 2019, Judge Thad Balkman of the District Court of Cleveland County determined that Johnson & Johnson created a public nuisance through its marketing of ingredients used to make opioids and awarded

$572 million––later reduced to $465 million––to the state of Oklahoma to fund an abatement program. A decision that served as a main catalyst to the state being named a Judicial Hellhole® for the first time.

Historically, public nuisance law involved instances in which a property owner’s activities unreasonably interfered in a right that is common to the public, usually affecting land use. Typical cases include blocking a public road or waterway, or permitting illicit drug dealing or prostitution on one’s property. Judge Balkman’s decision brought Oklahoma well outside of the legal mainstream, as evidenced by a May 2019 decision in North Dakota where a judge dismissed a similar claim against Purdue Pharma.

Both parties appealed to the Oklahoma Supreme Court, J & J contending that Judge Balkman’s statutory interpretation “has no precedent in American legal history” and is based upon a “radical reimagination of Oklahoma law,” and the state contending that the award is insufficient to abate the crisis. The plaintiffs’ lawyers initially requested $17.5 billion over 30 years. Additionally, the State asked for $468,920 to cover litigation costs.

The Oklahoma Supreme Court sided with J & J, reversing the district court. J & J’s manufacture and distribution of a legal and highly regulated product did not violate a public right. The Court explained that violating a public right means interfering with the public’s access to a public good, such as water or road- ways; “a public right is more than an aggregate of private rights by a large number of injured people.” The Court warned that applying this legal theory to J & J’s conduct would open the door to a slew of products liability claims masquerading as public nuisance claims.

“The common law criminal and property-based limitations have shaped Oklahoma’s public nuisance statute. Without these limitations, businesses have no way to know whether they might face nuisance liability for manufacturing, marketing, or selling products, i.e., will a sugar manufacturer or the fast-food industry be liable for obesity, will an alcohol manufacturer be liable for psychological harms, or will a car manufacturer be liable for health hazards from lung disease to dementia or for air pollution. We follow the limitations set by this Court for the past 100 years: Oklahoma public nuisance law does not apply to J&J’s conduct in manufacturing, marketing, and selling prescription opioids.”

The typical remedy for public nuisance claims is abatement of the nuisance, a result that will not be achieved by forcing J & J to fund state public health programs because J & J has no control over its products once they are sold. J & J was only responsible for 3% of prescription opioid sales in the state, while the settling defendants were responsible for 97% of the alleged harm. The Court acknowledged the severity of the crisis created by widespread opioid misuse but maintained that there is no legal basis for holding J &J liable. “Where the law does not expressly allow, J & J should not be responsible for the harms caused by opioids that it never marketed, manufactured, or sold.”

Furthermore, the judicial branch is not equipped to reconcile large-scale social issues.

“The Court has allowed public nuisance claims to address discrete, localized problems, not policy problems. Erasing the traditional limits on nuisance liability leaves Oklahoma’s nuisance statute impermissibly vague. The district court’s expansion of public nuisance law allows courts to manage public policy matters that should be dealt with by the legislative and executive branches; the branches that are more capable than courts to balance the competing interests at play in societal problems.”

The United States constitution demands that elected officials, who are accountable to the people, create law and policy, not appointed judges. “Further, the district court stepping into the shoes of the Legislature by creating and funding government programs designed to address social and health issues goes too far. This Court defers the policy-making to the legislative and executive branches and rejects the unprecedented expansion of public nuisance law.”

“[T]he district court stepping into the shoes of the Legislature by creating and funding government programs designed to address social and health issues goes too far. This Court defers the policy-making to the legislative and executive branches and rejects the unprecedented expansion of public nuisance law.”
– Oklahoma Supreme Court

TEXAS SUPREME COURT PREVENTS ‘PHANTOM DAMAGES’

On May 7, 2021, the Texas Supreme Court held that a trial court improperly prevented an insurer from challenging the reasonableness of the medical expenses that a plaintiff sought to collect. The Court’s decision stops plaintiffs and their attorneys from receiving “phantom damages” that do not reflect actual costs.

Phantom damages occur when a court awards damages based on amounts shown on an invoice for medical treatment, rather than what may be a significantly lower amount that a healthcare provider actually accepted as full payment for its services. These inflated damages increase the costs of insurance for drivers, homeowners, and businesses.

The plaintiff was injured in an auto accident and sued her insurance provider, Allstate, for $37,000 in medical expenses. In response, Allstate filed an affidavit from a registered nurse experienced in medical billing and coding that indicated amounts that exceeded reasonable charges as well as errors. The trial court, however, would not consider the affidavit, prohibited the nurse from testifying, and even prevented Allstate from “questioning witnesses, offering evidence, or arguing to the jury the ‘reasonableness of the medical bills.’”

Not surprisingly, the Texas Supreme Court found that the trial court abused its discretion. The Court found that the nurse’s affidavit satisfied Texas’s statutory requirements and found her qualified to testify about the medical expenses. The Court ruled that the trial court abused its discretion in preventing her from testifying and Allstate from challenging the reasonableness of the medical bills.

Just a few weeks later, the Court addressed a related issue and again prevented excessive awards. On May 28, 2021, the Supreme Court conditionally granted Defendant K & L Auto Crusher’s petition for mandamus relief, an extraordinary remedy only available when the trial court clearly abused its discretion, and the petitioner cannot pursue an adequate remedy by appeal.

What occurred in this case was that four days after driving away from a car accident without reporting any injuries, the plaintiff obtained medical treatment. Rather than pay for this medical care, the plaintiff entered into letters of protection with the healthcare providers under which they agreed that the expenses would be paid out of any judgment or settlement. After undergoing multiple surgeries, the plaintiff sued the truck driver that he alleged collided with his car and the driver’s employer, K & L Auto Crushers. When the defendant attempted to obtain information from the plaintiff’s healthcare providers about the medical services that they provided, the trial court denied the request without explanation.

The Texas Supreme Court recognized that state law limits damages for medical expenses to the amount “actually paid or incurred” and requires medical expenses to be “reasonable.”

The Court found that negotiated rates for medical services and devices charged to private insurers and public payors are relevant to the reasonableness of the rate charged to a self-paying patient. The Court concluded that the trial court’s refusal to allow the defendant to obtain information on the medical charges deprived the defendant of “a reasonable opportunity to develop a defense that goes to the heart of its case.”

The Court’s decision to allow discovery into reimbursement rates charged to private insurers and public payors will allow defendants to contest excessive medical charges incurred under letters of protection. Because medical providers who treat patients pursuant to letters of protection will now be required to comply with discovery requests for rates charged to other patients and to establish that its charged rate to a plaintiff is reasonable, some providers may refrain from abusing letters of protection to charge unjustifiable amounts.

In November 2021, the Texas Supreme Court reaffirmed its position in In re ExxonMobil Corp. The Court held that “Evidence of a medical provider’s negotiated rates for private insurers and public payers is relevant, though not dispositive, when considering the reasonableness of its chargemaster rates… This is true regardless of whether a party is challenging the reasonableness of rates secured by a medical lien, as in North Cypress, or the reasonableness of rates supporting a claim for personal-injury damages.”

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