The hospital corporation argued to the Kentucky Supreme Court that it had not "ratified the conduct of the emergency room personnel underlying the punitive damages award," since KRS 411.184(3) prohibits punitive damages against an employer based on an employee's conduct unless the employer (1) authorized the conduct, (2) anticipated the conduct, or (3) ratified the conduct. The Court rejected the corporation's argument but gave an extended analysis of ratification law including the following:
an employer cannot be regarded as having ratified the wrongful conduct of its employees and agents simply by denying that wrongful conduct occurred or by mounting a legal defense against actual or anticipated lawsuits arising from the conduct;
"we reject the Hospital's argument that an employer's ratification ... can only be established by the employer's explicit affirmation or endorsement of the wrongful behavior."
"In order that the ratification may be effective, there must be an intention to ratify, although the intention may be inferred from the facts and circumstances."
ratification of the unauthorized acts of one assuming to act as agent may be either express or implied
An employer's ratification of an employee's offensive conduct requires two elements: 1) an after-the-fact awareness of the conduct; and 2) an intent to ratify it.
There are two main, basic problems with the arbitration clauses that corporate America relies on:
First and with all due respect to the arbitrators, the system is structured to favor the repeat players, which is the corporations. Arbitrators get paid when they preside over an arbitration, so they want to be selected to arbitrate a matter. If they don't get picked, they don't get paid. So this leads them inevitably to tilt in the favor of the corporations who will again have an arbitration. It's like buying the jury, and it is not fair.
Cost. Most arbitration clauses require the consumer and the corporation to share the arbitrator's charges and fees, which are likely to run into quite a hefty sum, perhaps tens of thousands of dollars. Individuals and families rarely have the money to pay for this. You could say that lawyers could represent them on a contingent fee basis; well, in reality, taking a case on a contingent fee basis where the arbitrator is likely to naturally and inherently favor the opposition adds a level of risk that sometimes is too much to bear.
For nearly 50 years, legislative attempts to provide prosecutors additional leeway to criminally charge automakers and their employees have been quashed.
and
The pattern of loopholes and legislative victories illustrates the lobbying might and political clout of the auto industry, even as it careens from one safety crisis to another.
Contrary to what has been reported, there are major and important differences between the "religious freedom" law passed recently in Indiana and the federal Religious Freedom Restoration Act and about 19 other state laws similar to it. Here's the main difference: Indiana's law "has been carefully written to make clear that 1) businesses can use it against 2) civil-rights suits brought by individuals."
The Wall Street Journal blog Pharmalot reports that 1/3 of the physicians and other experts sitting on FDA advisory panels reviewing medical devices from 2012 to 2014 have financial ties to the companies whose devices they are reviewing, see What Money? Financial Ties of FDA Device Advisers are Often Undisclosed. Nearly 10% of these experts were directly compensated by the specific companies whose products they were directly reviewing. Interestingly, the FDA disclosed only 1% of these financial ties.
One of the hardest things in the world is getting someone to understand whose paycheck is dependent upon them not understanding.
Here's the game: medical device companies capture the FDA by buying influence with these experts and secure FDA approval for their devices, which in turn serves as a defense to defective product lawsuits, often a complete defense. So at the front end it is possible for medical device manufacturers to buy their way out of any accountability or liability to individuals and families hurt be defective medical devices.
And so it goes. Remember money doesn't talk it swears.
Here's the lead point of a New York Times series on the neutering of Attorney Generals in many states by campaign contributions, gifts and lobbyists on behalf of corporate interests the AGs are supposed to be policing:
Attorneys general are now the object of aggressive pursuit by lobbyists and lawyers who use campaign contributions, personal appeals at lavish corporate-sponsored conferences and other means to push them to drop investigations, change policies, negotiate favorable settlements or pressure federal regulators, an investigation by The New York Times has found.
In 1979 a wrongful death suit was filed claiming that talc sold by a BASF corporate predecessor contained asbestos. Indeed, the suit turned up numerous test and assay results confirming the presence of asbestos, a fact also acknowledged in extensive deposition testimony by the company's scientists and executives. Defense counsel was the law firm of Cahill Gordon and Reindel.
The case settled, the terms including "a confidentiality clause that prohibited the parties from discussing the case or sharing the evidence." As the Third Circuit observed, '[m]uch of the ... evidence has yet to be seen again."
It appears that the company sold this initial as best the suit as the iceberg's tip. And so, according to the complaint, all documentary evidence regarding asbestos containing talc "was thereafter gathered up, collected ... and subsequently ... destroyed or secreted away."
BASF's efforts to evade responsibility did not end with destruction of evidence, according to the complaint. Aided by its law firm, Cahill Gordon & Reindel, it "manufactured favorable evidence" including false affidavits, false and incorrect expert reports and discovery verifications.
The one-two of destroying or concealing inculpatory evidence and manufacturing exculpatory evidence proved effective. The plaintiffs all "discontinued, dismissed or settled" there as best as-injury lawsuits based on the "false representations" of the company and its lawyers, according to the complaint. And the hammer was swung wide: the lawyers threatened plaintiffs and plaintiff's lawyers with sanctions and penalties if they did not accept the false representations and dismiss their lawsuits, according to the complaint.
The scheme began to unravel a few years ago. A former research chemist testified in a case in New Jersey state court that the company's talc contained asbestos, that the company had closed its talc mine because of asbestos and that a company executive had required him to hand over all his asbestos-related documents. This led to the following the Third Circuit recited:
The chemist's testimony triggered discovery into what documents BASF had destroyed or concealed in the litigation. Many of these documents had been secretly in a Cahill storage facility. The case settled and the incriminating documents were placed in escrow pursuant to the terms of the settlement agreement.among the documents are test from 1972, 1977, 1978, and 1979 that establish the presence of asbestos fibers in [the company's] talc. None had ever been produced or disclosed in earlier litigation. (emphasis added).
The plaintiffs claimed that these wrongful and fraudulent actions -- destroying and concealing inculpatory evidence while fabricating exculpatory evidence -- deprived them of fair resolutions of their asbestos injury claims. The district court dismissed the plaintiff's claims, ruling that they were barred by the "litigation privilege."
The "litigation privilege" serves as a form of civil immunity and "generally protects an attorney from civil liability arising from words he has uttered in the course of judicial proceedings." The idea, of course, is to encourage and protect "unfettered expression" in adversary proceedings. The ultimate idea and purpose being that such "unfettered expression" will promote and serve the truth-finding function of the adversary process and its lawsuit. So, in the way that the law can sometimes stand on its head, the question presented was whether the "litigation privilege," a tenet based on protecting the truth-seeking function, can also bear any liability or responsibility for wrongful actions actions that have frustrated and precluded the truth-seeking function by destruction and/or manufacturing of false evidence.
The Third Circuit ruled it could not, finding the proposition a step quite too far. Quite simply, the court concluded that the "litigation privilege" has "never immunized systematic fraud designed to prevent a fair proceeding." So the case was remanded back to the district court for further proceedings.
The case was a medical malpractice case. The principal defendant, Baptist Healthcare Systems, had outside counsel investigate the incident in question and claimed the attorney-client privilege applied to two documents: an "Investigative Case Report" and a "Risk Occurrence Report." The trial court ordered the documents produced; the hospital corporation obtained a writ of prohibition from the Court of Appeals.
The Supreme Court, in an unanimous decision written by Deputy Chief Justice Mary C. Noble, reversed the Court of Appeals and vacated the writ. First, while an assertion of privilege is presumed valid, it is burden of the party claiming its privilege to establish its application. Second, while statements of employees to the corporation's lawyers can be privileged, the statements must be within the scope of the employee's employment and must regard matters within the scope of employment.
This second point is critical and provides a critical limitation under KRE 503(a)(2)(B)(ii) on the attorney-client privilege as applied to corporations under Kentucky law:
The limitation under KRE 503(a)(2)(B)(ii) is even more
important. It distinguishes between employees who are "mere
eyewitnesses" to an alleged tort by happenstance, and
those who are witnesses because of their employment (and, more often than
not, are alleged to have been involved in the tortious conduct). As Professor
Lawson notes, this requirement is perhaps the most important because it "distinguishes
between those employees who qualify as clients and those who must be
viewed as mere witnesses." The distinction is perhaps best illustrated by an example used in the commentary that was included when the rules were
first proposed in the 1990s:
Suppose, in a suit for personal injuries sustained when the
client's truck entering the client's loading yard struck a
pedestrian, the lawyer for the client interviews the driver of the truck and
a secretary who happened to be looking out the window when the accident occurred. The interview with the driver would be privileged but not so the interview with the secretary
because the accident was not a matter within the course and scope of her employment.
Ultimately, the Court resolved that it could not determine how or whether the attorney-client privilege did or did not apply to the documents in question, because the hospital had not created a record sufficient for review of the question. Accordingly, the case was remanded to the circuit court for further proceedings.
William King and Mazak Corporation signed an employment severance and separation agreement in 2003, which included a clause releasing King "from any and all claims, both known and unknown ... including but not limited to claims of negligence, lack of objectivity, conflict of interests, and insufficient corporate disclosure." King had served since 1990 as Mazak's Vice President and Controller. Beginning in 1998 he and another Mazak employee had developed lucrative interests in companies that did business with Mazak, although neither disclosed those interests to Mazak.
Mazak found out about King's undisclosed outside interests in 2005 and sued him for breach of fiduciary duty and other claims. Naturally, King offered the separation agreement as a defensive bar to Mazak's claims; after all, Mazak had released King from "any and all claims, both known and unknown including ... conflict of interests and insufficient corporate disclosure." This appears a good defense since alleged conflict of interests and insufficient disclosure are the very basis of Mazak's breach of fiduciary duty claim as discussed on a post on the Kentucky Employment Law Blog:Does A Corporate Executive Breach His Fiduciary Duty Where He Has An Undisclosed Interest In A Noncompeting Company?
King got nowhere with this defense in the district court, which entered judgment against him for $3,472,896. He appealed to the Sixth Circuit, which likewise rejected the defense in its decision Mazak Corporation v. William King explaining as follows:
the vast majority of state and federal courts have held that a release must be set aside if the fiduciary failed to make a full disclosure of all relevant facts to the beneficiary
under federal common law, a contract between a fiduciary and a beneficiary is voidable unless (1) it is fair on its terms and (2) "all parties beneficially interested manifest assent with full understanding of their legal rights and of all relevant facts that the fiduciary knows or should know"
the Kentucky Court of Appeals, in a different context, set aside a release obtained by an estate executor who did not disclose to estate beneficiaries the tax advantages of probating an estate under Pennsylvania as opposed to Kentucky law. Hale v. Moore, 289 SW3d 567 (Ky App 2008)
From this the Sixth Circuit concluded that "Kentucky court would decline to enforce the release here" and so the $3.4 million judgment against King stood.
Deaths in auto accidents and car wrecks in the United States last year were at the lowest level since 1949, despite the Americans driving some 21 million miles more in 2010 than sixty-one years earlier.
Gibson Vance, the President of the American Association for Justice, discusses the role of accountability and liability for auto makers in the civil justice system that has led directly to safer cars and fewer traffic deaths in an essay, "How Our Cars Got Safer," in the Washington Post.
