Claims And Issues

WHAT THE JURIES DID NOT SEE: THE FORD PINTO CASES.

It is pretty much forgotten now.  There was a criminal case that resulted from a Pinto gas tank explosion in addition to the much more famous civil case that resulted in over $6.5 million in damages upheld on appeal in California.  The civil case was discussed in a post yesterday on Claims and Bad Faith Law Blog.

The criminal case grew out of an indictment in Indiana that was issued three days after the appellate court denied rehearing in the civil case in California.

Like the California civil case, the Indiana criminal case went to a jury.  The jury acquitted Ford.

Like the California trial judge, the Indiana trial judge refused to admit Ford's report and table into evidence.

The juries in California and in Indiana never saw the table which Ford itself

prepared.  Ford submitted the table to the National Highway Traffic Safety Administration (NHTSA) in opposition to a proposed NHTSA regulation related to rollovers.  Neither the Pinto gas tank explosion in California nor the explosion in Indiana involved a rollover, but the table Ford prepared was explosive.

To say again, the trial judges in California and in Indiana refused to admit the table into evidence.

The juries did not see it.

Here is a version of Ford's table which the juries did not see.  The following version was prepared by FEMA for use in a course on handling burn injuries:

Source:  Slide 8 of FEMA Burn Crisis and Continuity Management Powerpoint, Class Session 17, accessible online at https://training.fema.gov/hiedu/docs/bccm/bccm%20-%20session%2017%20-%20power%20point.ppt.

"$11 Cost vs. A Burn Death

Benefits and costs relating to fuel leakage associated with the static rollover test portion of FMVSS 208

Benefits

Savings: 180 burn deaths, 180 serious burn injuries, 2,100 burned vehicles.

Unit Cost:  $200,000 per death, $67,000 per injury, $700 per vehicle.

Total Benefit:  180 X ($200,000) + 180 X ($67,000) + 2,100 X ($700) = $49.5 Million.

Costs

Sales:  11 Million cars and 1.5 Million light trucks.

Unit Cost :  $11 per car and $11 per light truck.

Total Cost : 12.5 Million X ($11) = $137 Million.

Ford Motor Company Internal Memorandum - 'Fatalities Associated with Crash-Induced Fuel Leakage and Fires'[.]"

It was a long time ago, now.  The jury trials in Indiana and in California, that is.

There was no need for a blanket secrecy order.  The juries did not see this table.

Ford was not prejudiced by this evidence.  It was not admitted into evidence.

The judges refused to allow this table into evidence.

The jury system worked.

That should have actually inspired confidence in the justice system in the years since then.

But that is not the point.  Not really.  Blanket secrecy orders, umbrella protective orders, are really about concealing the evidence, not about the integrity of the justice system. 

But maybe, in the final analysis, it is all about the integrity of the justice system.  You cannot trust judges and juries to protect you from public awareness of huge problems.  Besides, judges and juries are likely to do the right things in the long run  -- and as they did in the exploding Pinto gas tank cases, they often do the right things in the short run as well.

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SETTLEMENT NEGOTIATIONS UNDER SEAL.

In Chenault v. Randstad USA Mfg. & Logistics, No. 5:18-CV-276-KKC, 2018 WL 3964811 (E.D. Ky. August 17, 2018), Mr. Chenault represented himself in an action he brought under the Fair Labor Standards Act, successfully as it turned out.  Mr. Chenault made other claims, not so successfully as it turned out, all of which were dismissed.

Chenault also filed what he called a "Motion to Facilitate Settlement."  He attached what the judge described as "the settlement offer" and as "the settlement letter."  This letter apparently contained a settlement offer from the defendants.

The defendants were, in turn, apparently agitated by the filing of their settlement offer in open Court.  They asked the judge to seal the letter which, as noted, Mr. Chenault had attached as an exhibit to his settlement motion.

The judge did so, and ordered the parties to contact the Magistrate Judge for a settlement conference.

The reason that the judge gave for sealing the "settlement letter" in this case was not so pedestrian as it may appear at first glance.  In truth, it was revealing of how the law treats settlement negotiations as something only slightly short of sacrosanct.  She ruled:

Because “[t]here exists a strong public interest in favor of secrecy of matters discussed by parties during settlement negotiations,” the Court will Order the Clerk of the Court to place the settlement letter under seal in order to preserve the record. Goodyear Tire & Rubber Co. v. Chiles Power Supply, Inc., 332 F.3d 976, 980 (6th Cir. 2003). The Court will not consider the settlement letter for any purpose.

Chenault v. Randstad USA Mfg. & Logistics, No. 5:18-CV-276-KKC, 2018 WL 3964811, at *2 (E.D. Ky. August 17, 2018) (emphasis added).

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QUIET IN THE COURTS! GOOD FAITH ON DISPLAY.

Virtually all insurance bad-faith cases in litigation include fights over production of claims files.  If you are the claims representative for the insurance company who handled the underlying case against the policyholder, or who handled the claim of the policyholder for coverage, then it is your file that supposedly show your company's risk of bad-faith exposure.

Some cases are likely to lead to large verdicts against your company for bad faith.  Most are probably not so likely.  Consider an alternative.

Your claims handling shows your good faith.

Consider an alternative to concealing evidence and making secret settlements.

When you have handled this claim like so many other claims in good faith, your claim handling shows your good faith.

Consider putting good faith on display.

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BAD FAITH ISN'T ENOUGH? INJURY IN FACT AND STATUTES.

As promised, here and also on Claims and Bad Faith Law Blog, FROM THE 2018 SUPPLEMENT:

 

Litig. & Prev. Ins. Bad Faith § 9:14.50 (3rd ed.)

Litigation and Prevention of Insurer Bad Faith, Third Edition

A pdf of this new section can be accessed here or on my website at www.dennisjwall.com.

  

July 2018 Update

Dennis J. Wall

Part III. First-Party Claims

Chapter 9. Standards of Insurer Conduct

[NOTE:  FROM THIS POINT THROUGH THE END OF THE PIECE, THE FOLLOWING HYPERLINKS ARE PROVIDED VIA THOMSON REUTERS AND REQUIRE A WESTLAW ACCOUNT TO ACCESS THEM.]

• 9:14.50. “Injury in Fact”: What happens to bad faith statutes?

Claims handling and penalties statutes regulating the business of insurance may not any longer provide causes of action to many policyholders and claimants.

In 2016, the Roberts Court grafted a requirement onto the U.S. Constitution which is not found in it—standing — but which is instead found in the Court's cases. Cases decided in lower courts since the Roberts Court raised standing to a constitutional prerogative are divided over whether Congress and State Legislatures can provide standing by providing remedies for statutory violations.

In Spokeo, Inc. v. Robins,¹ the Court raised the judge-made doctrine of standing to constitutional status. “Standing to sue,” the Court recognized, “is a doctrine rooted in the traditional understanding of a case or controversy. The doctrine developed in our case law,” said the Court in Spokeo, Inc. v. Robins.²

One of the elements of standing is “injury in fact,” which the Spokeo Court raised to “a constitutional requirement” which bars legislatures from conferring standing on people and organizations in most cases. To establish injury in fact, a person invoking a statutory remedy now must meet a newly-found constitutional requirement that she or he had a legally protected interest that is concrete and individualized to her or him, and that the harm is “actual” or “imminent,” not “conjectural” or “hypothetical.”³The Spokeo case itself was presented when Mr. Thomas Robins filed a lawsuit claiming an alleged violation of the Fair Credit Reporting Act by an internet search engine service which incorrectly provided information to the world about him. The Roberts Court remanded for a determination of whether Robins adequately alleged an injury in fact in his complaint.

As it has done by replacing “ultimate facts” pleading with “plausibility” pleading, in which allegations of fact in a complaint must be weighed by each individual judge who must dismiss the complaints that he or she does not think are “plausible,” the Roberts Court has laid down another obstacle to filing lawsuits in Federal Courts.⁴ It is fundamental to its process to note how many times the Court would have people believe that its work has consisted for several years now of finding procedural and constitutional limitations which other Courts somehow must have overlooked.

In an interesting application of the Spokeo “standing-means-injury—in-fact” requirement, the District Court in Stromberg v. Ocwen Loan Servicing, LLC^4.10 was confronted with a lawsuit filed as an alleged class action by “Plaintiff Bonnie Lynne Stromberg [who] asserts a California state law claim against two mortgage lenders and a mortgage loan servicing company for failing to reconvey a deed of trust on real property within thirty days after repayment of her home loan.”^4.20 The Court rejected the mortgage lenders' and mortgage servicer's challenges to Ms. Stromberg's standing to sue them by ruling that she had sufficiently alleged “injury in fact” through these “conclusory” allegations (which she handily supported with an affidavit and which the Court considered together with the allegations in her complaint):

The Court does not need to decide whether a bare procedural violation of California's analogous prompt-recording statute constitutes a concrete injury-in-fact for standing purposes because Stromberg has not alleged “a bare procedural violation, divorced from any concrete harm.” Spokeo, 136 S. Ct. at 1549. To the contrary, she has alleged “additional harm beyond the one [the legislature] has identified.” Spokeo, at 1549–50 (emphasis in original). In her complaint, Stromberg alleges that she “suffered injury in the form of slander of title, incurred costs, impaired credit and incomplete and inaccurate public records respecting her financial obligations and credit worthiness.” Compl. ECF No. 58 ¶ 43. Even if this allegation regarding injury is, as Defendants contend, too conclusory by itself to establish an injury-in-fact, Stromberg has also submitted an affidavit that includes further factual support for her standing. ECF No. 101-1, Ex. A.^4.30

Other Courts have found Spokeo standing to assert Fair Debt Collection Practices Act claims,^4.40 Telephone Consumer Protection Act claims,^4.50 Fair Credit Reporting Act claims alleged by a pro se plaintiff,^4.60 and products liability claims in multi-district litigation which include allegations of noncompliance with standards set under regulations issued by the federal Environmental Protection Agency and by the California Air Resources Board.^4.70

As an example of lower federal courts actively seeking situations in which people simply cannot sue for alleged violations of State statutes, even though States have provided the statutory remedies alleged in the given case, the Eleventh Circuit Court of Appeals held after Spokeo that a borrower-mortgagor in New York State could not bring that particular lawsuit for an alleged violation of New York Real Property Law because now the United States Constitution forbids such a suit.⁵ The Eleventh Circuit's decision in this case has been rejected by name in other Circuits,⁶ and it has been distinguished in the Eleventh Circuit based, perhaps ironically, on other Eleventh Circuit case law.⁷

However, this decision is by no means alone.⁸ In Spokeo itself, the Court deciding that case remanded for a determination of “plausibility,” in effect, of whether Thomas Robins and persons like him had alleged injury in fact as the U.S. Constitution now apparently requires.

The following case did not directly involve the Spokeo “injury in fact” directive, but it does illustrate the relative probabilities of success of any statutory action under a “Consumer Protection Act” by whatever name. In Fat Bullies Farm, LLC v. Devenport,⁹ potential sellers of real property brought a New Hampshire Consumer Protection Act (“CPA”) claim against prospective purchasers on account of the alleged conduct of the prospective purchasers. To describe the attitude of the New Hampshire Supreme Court in rejecting a New Hampshire CPA claim in this case as hostile, is to put it mildly. It is nonetheless instructive:

Viewing Fat Bullies and Simmons's [the prospective purchasers'] misrepresentation in conjunction with the remainder of their course of conduct does not alter our determination. Even taken together, the acts of showing up unannounced with an attorney and an option agreement, not recommending that the Devenports [the potential sellers of the real property] obtain legal counsel, attempting to negotiate price, not explaining the meaning of the language contained in the draft agreement, threatening and attempting to enforce an option agreement, and pursuing a contentious litigation strategy would not “raise an eyebrow of someone inured to the rough and tumble of the world of commerce.” (Citations omitted.) We cannot conclude that the subject conduct offends established public policy, is immoral, unethical, oppressive, or unscrupulous, or causes substantial injury. (Citation omitted.)

For these reasons, we reverse the trial court's ruling on the Devenports' CPA claim and its award of attorney's fees to the Devenports as damages under the CPA.¹⁰

If the idea of “injury in fact” has been elevated surreptitiously from standing to the U.S. Constitution, it can certainly have an effect on claims based on State statutes providing remedies to ‘private attorneys general’ that the States rely on to enforce the laws. Time will tell whether State Unfair Claim Handling Practices Acts and Penalties Statutes governing the business of insurance will feel the effects and, if so, how.

Westlaw. © 2018 Thomson Reuters. No Claim to Orig. U.S. Govt. Works.

Footnotes

1

Spokeo, Inc. v. Robins,  U.S. , 136 S. Ct. 1540 (2016).

2

Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).

3

Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547-48 (2016).

4

See, e.g., Klika v. Capital One Bank, N.A., No. C15-0107RSL, 2016 WL 4544373 at *1 (W.D. Wash. June 30, 2016), and “PLAUSIBILITY AS A STANDARD? DON'T BELIEVE IT,” published on Insurance Claims and Issues Blog on Monday, May 1, 2017, at http://insuranceclaimsissues.typepad.com/insurance_claims_and_issu/2017/05/plausibility-as-a-standard-dont-believe-it-its-just-another-way-of-saying-theres-nothing-left-to-lose-with-apologies-to-m.html.

4.10

Stromberg v. Ocwen Loan Servicing, LLC, No.15-cv-04719-JST, 2017 WL 2686540 (N.D. Cal. June 22, 2017).

4.20

Stromberg v. Ocwen Loan Servicing, LLC, No.15-cv-04719-JST, 2017 WL 2686540at*1 (N.D. Cal. June 22, 2017).

4.30

Stromberg v. Ocwen Loan Servicing, LLC, No.15-cv-04719-JST, 2017 WL 2686540at*6 (N.D. Cal. June 22, 2017).

4.40

E.g., Ferrell v. HSI Fin. Serv's, LLC, No. 1:16-cv-04624-RWS-AJB, 2017 WL 8186795 at *4 (N.D. Ga. December 22, 2017) (“After careful consideration of the pleadings and the rapidly expanding catalogue of case law interpreting and applying Spokeo, the undersigned is persuaded that Plaintiff's pleadings are sufficient to establish standing. The Court finds Defendant's motion unavailing on several grounds.”); Abraham v. Ocwen Loan Servicing, LLC, 321 F.R.D. 125, 166 (E.D. Pa. 2017) (“Numerous courts have applying Spokeo found a sufficient ‘injury in fact’ to support a FDCPA claim from allegations that a plaintiff suffered an ‘informational injury’ because the character of a debt had been misrepresented.”).

4.50

Progressive Health & Rehab Corp. v. Strategy Anesthesia, LLC, 271 F. Supp. 3d 941 (S.D. Ohio 2017) (“Indeed, as Plaintiff points out, the overwhelming number of courts that have addressed standing in a TCPA case subsequent to Spokeo have found standing.”) (pinpoint page references not available in April 2018).

4.60

Lovess v. Embrace Home Loans, Inc., No. JKB-17-2212, 2017 WL 4745452 at *2 (D. Md. October 20, 2017) (“This case is very close to Spokeo, but not quite there. Plaintiff is similarly alleging a procedural violation of FCRA and claiming that she is harmed by potential future consequences. But she has also alleged actual damages in the amount of $100,000 stemming from emotional distress and mental anguish, and therefore this is not a ‘bare’ procedural violation of the type at issue in Spokeo.”).

4.70

In re Chrysler-Dodge-Jeep Ecodiesel Marketing, Sales Practices, & Prod's Liab. Lit., No. 17-md-02777-EMC, 2018 WL 1335901 at *6 (N.D. Cal. March 15, 2018)(“Because Plaintiffs allege a financial injury, Spokeo does not support dismissal of their case.”).

5

Nicklaw v. Citimortgage, Inc., 839 F.3d 998, 1002-03 (11th Cir. 2016).

6

See, e.g., Weldon v. MTAG Services, LL, No. 3:16-cv-783 (JCH), 2017 WL 776648 at *6 (D. Conn. Feb. 28, 2017).

7

See Tillman v. Ally Fin. Inc., No. 2:16-cv-313-FtM-99CM, 2016 WL 6996113 at *4 n.7 (M.D. Fla. Nov. 30, 2016).

8

See also Michael G. McLellan, “Finding a Leg to Stand On: Spokeo, Inc. v. Robins and Statutory Standing in Consumer Litigation,” 31 Antitrust 49 (Summer 2017).

9

Fat Bullies Farm, LLC v. Devenport, 170 N.H. 17, 28, 164 A.3d 990 (2017).

10

Fat Bullies Farm, LLC v. Devenport, 170 N.H. 17, 164 A.3d 990, 998–99 (2017).

End of Document	© 2018 Thomson Reuters. No claim to original U.S. Government Works.

Reprinted from Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith, Third Edition (Thomson Reuters). Further reproduction of this article without the express consent of the publisher is prohibited.

IF THE ECONOMY IS DOING SO GOOD, WADDABOUT WAGES?

"In U.S., Wage Growth is Being Wiped Out Entirely by Inflation."  This is the title of a newspaper report by Heather Long published in The Washington Post on Friday, August 10, 2018.

For workers who are paid wages, just because investors are paid more income from their stock investments does not make it a good economy unless the workers' wages are also going up.

If the workers' wages are not moving or are going down while the investors are paid more from their stocks, which is the case now and has been for a while, the economy is not so good.

President Ronald Reagan famously said that for one thing, it depends on your point of view.  From the point of view of a person who has just been laid off, the unemployment rate is 100%.  We also need to be realistic about the real measure of our economy.

The economy is doing good when wages are going up.  When people take home the same as or less than they did in the past, like now, it is not reality to say that the economy is somehow doing good -- even when, compared to the millions of people who rely on their jobs for income, the much smaller number of people who receive income from stocks are taking in much more money than they did in the past.

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COW PEN? NO SHOCK WHEN YOU'RE TREATED LIKE AN ANIMAL.

When I attended political rallies in 2016, I was surprised at first to see how times had changed.  In the 2016 campaign, reporters were held in pens fenced off from the rest of the people.

This has persisted down through today.  It has actually persisted since sometime before the 2016 campaign, for that matter.  Long ago the press agreed to be put into a pen apparently so as to be guaranteed a place at the rallies.

When I was a younger person, back in the day, say 1968, reporters attended political rallies by standing among the other people who attended the same rallies.  There were no distinctions.  And certainly no reporters thought it was a good deal to be put in a pen like an animal.  (No wonder that inmates at a penitentiary call it a "pen," too.)

If reporters voluntarily enter pens, is it really true that they are genuinely shocked when they are treated like animals?  No human being should ever be treated like an animal.  And no human being who agrees to be put in a pen should ever expect anyone else to believe that they were surprised when the people that make the pens available treat the inhabitants like, well, like they are in pens.  See the video here.  And here too.  

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Webinars Continue for Florida Bar Consumer and Tenant Lawyers!

The second webinar is coming up soon in the Public Interest Law Section's (soon to be the Equal Justice Law Section) Consumer and Tenant Working Group’s 2018 Webinar Series. This second training in four is Mobile Home Park Law 101 - Affordable Housing Advocacy in Florida on Wednesday, August 29, 2018 from noon to 1:00 p.m. EST.  These webinars are intended for consumer and tenant attorneys.  Register here.

Thanks for your interest!

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