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ATTORNEY FEES Indemnification clause includes attorney fees An indemnification provision in a contract that covered all losses from breach of warranty or negligence included the payment of attorney fees, the Mississippi Supreme Court ruled on Oct. 5. Microtek Medical Inc. v. 3M Co., No. 2005-CA-01860-SCT. 3M Co. and Microtek Medical Inc. contracted for Microtek to manufacture the ArthroSteri surgical drape for resale by 3M. Under the contract, the parties agreed that Microtek would be “responsible for . . . all losses, claims, expenses, or damages . . . by reason of [Microtek's] breach of warranty . . . or . . . negligent act,” and also would conduct safety inspections of the surgical drapes and warrant them for fitness. When Mary Catherine Chapley filed a personal injury suit against 3M for damages caused by the allegedly defective surgical drape, 3M tendered the defense to Microtek and its insurer. Microtek and its insurer refused to defend the case, forcing 3M to hire an attorney and defend itself at its own expense. After 3M prevailed in the lawsuit, it sued Microtek for indemnification for attorney fees of $223,031. The state chancery court granted summary judgment in favor of 3M. The Mississippi Supreme Court affirmed, holding that 3M did not have a duty to defend itself, that the warranty clause intended that Microtek be responsible for the safety of the product and that all of the allegations in the complaint were based on Microtek’s, not 3M’s, negligence. Full text of the decision Quantum meruit should be basis of fee calculation If a former employee continues to represent a client originally represented by her firm, attorney fees owed to the firm should be calculated based on quantum meruit, the Montana Supreme Court held on Oct. 5. Pumphrey v. Empire Lath and Plaster, No. 05-452. Lisa Brotherton Pumphrey retained both George Allen and the law firm of Edwards, Frickle, Anner-Hughes, Cook & Culver of Billings, Mont., to represent her in a personal injury suit against Empire Lath and Plaster. Allen and the firm agreed to divide any attorney fees recovered equally. Elizabeth Halverson, an associate at the firm assigned to the case, worked on the case for six months before resigning. Upon her resignation, Pumphrey decided to stay with her, not the firm. At trial, a jury awarded Pumphrey $3.9 million in damages, which was affirmed on appeal. The trial court awarded the firm $3,750 in attorney fees, based on the quantum meruit value (i.e., reasonable value of services) of Halverson’s work while she was at the firm, calculated using an hourly rate. The Montana Supreme Court affirmed in part and reversed in part. The court agreed that quantum meruit was the proper measure of attorney fees in this situation. However, the court disagreed with the lower court’s method of calculation. Rather than using an hourly rate in a contingent-fee case such as this, the court found that awarding the firm a percentage of the fees based on the time spent by the associate at the firm compared to the time spent after leaving the firm takes into account the firm’s role in initially attracting the client. CIVIL RIGHTS No immunity for official who endangered inmate Despite a prisoner’s volunteering for a job, a prison official was not entitled to qualified immunity from a 42 U.S.C. 1983 suit when he ordered a prisoner to continue operating prison work equipment that that he had reason to believe was unnecessarily dangerous, the 9th U.S. Circuit Court of Appeals held on Oct. 6. Morgan v. Canady, No. 04-35608. Steven Morgan, a prisoner at a Washington state correctional facility, volunteered for a program, according to which certain prisoners were able to perform jobs that required more skill and paid better than other prison jobs. Morgan claimed that he noticed that the printing press he operated was malfunctioning, and warned his supervisor, Tom Canady. Morgan said that Canady ordered him to continue working. An accident ensued, and the press tore off Morgan’s right thumb. Morgan sued Canady and other prison officials under 42 U.S.C. 1983, arguing that forcing him to continue working on the defective equipment constituted cruel and unusual punishment in violation of the Eighth Amendment to the U.S. Constitution. A Washington federal court granted summary judgment to all defendants except Canady. Affirming, the 9th Circuit rejected Canady’s claim that the circuit split on the issue made the law unsettled. It also rejected Canady’s argument that Morgan had volunteered for the job, the court said, “Regardless of how a prisoner obtains his work, once he is employed and not in a position to direct his own labor, his supervisors are not free to visit cruel and unusual punishments upon him. Morgan did not apply to work with a dangerously defective printing press.” CONSTITUTIONAL LAW Pastor’s occupation is ground for jury strike Prosecutors’ use of a peremptory strike to remove a pastor as a prospective juror did not violate the U.S. Constitution because the strike was based on occupation and not religion, the Indiana Supreme Court held on Oct. 4. Highler v. Indiana, No. 02S03-0512-CR-616. During jury selection in Marshall Highler’s trial for rape, prosecutors used a peremptory strike to remove a black pastor who had expressed skepticism about the fairness of trials in the jurisdiction. When Highler challenged the strike, the prosecution said that pastors and priests were often struck because they tended to be too lenient. After being convicted, Highler appealed, arguing that the state had stricken the juror based on his race and religion. An intermediate appellate court affirmed the conviction. Affirming, the Indiana Supreme Court held that the juror’s occupation as a pastor was a sufficiently race- and religion-neutral reason for the strike. The court said that “the State’s justification for striking Juror 92 was not his religious affiliation, but his occupation. As a general proposition, striking a juror because of the juror’s occupation is not unconstitutional.” CRIMINAL PRACTICE Plea agreement protects attorney-client privilege By entering into a plea agreement a criminal defendant did not impliedly waive the attorney-client privilege, the Colorado Supreme Court held on Oct. 2. In re People v. Trujillo, No. 05SA318. Cassandra Gomez was charged with aggravated robbery and theft. Gomez entered into a plea agreement with the district attorney and named others involved in the crime, including Timothy Trujillo. Trujillo’s attorney served a subpoena duces tecum on Kevin Pauly, the public defender representing Gomez, seeking a copy of Pauly’s case file for Gomez. After two hearings, the state trial court ordered Pauly to produce portions of the file for in-camera review, based on the fact that the plea agreement effected an implied waiver of the attorney-client privilege. The Colorado Supreme Court reversed, ruling that Gomez did not place privileged communications at issue simply by entering into a plea agreement absent a challenge to the propriety of her plea or the adequacy of her representation. Furthermore, agreeing to provide truthful testimony in conjunction with that plea did not effect an implied waiver of the privilege, as all witnesses under oath have a legal obligation to provide truthful testimony. Crime nonsexual but boy registers as sex offender Though a 12-year-old lacked sexual motivation in using a foreign object to penetrate a family friend’s anus, the child must register as a sex offender under Megan’s Law, the New Jersey Supreme Court ruled in a per curiam opinion on Oct. 3. In the Matter of Registrant T.T., No. A-58-2005. T.T. was adjudicated delinquent when he was 12 for sticking douches in his anus and that of his father’s girlfriend’s 6-year-old son. Upon his release from a residential treatment program nearly four years later, T.T. received notification that his Registrant’s Risk Assessment Score placed him in Megan’s Law’s Tier Two classification scheme, which would require him to register as a sex offender and would require community notification of his status. T.T. challenged his classification, which a state trial court upheld, even though expert testimony showed that T.T.’s offense had not been sexually motivated. An intermediate appellate court reversed, ruling that without proof of sexual motivation, T.T. did not have to register as a sex offender under Megan’s Law. The New Jersey Supreme Court reversed the intermediate court. Because Megan’s Law includes within its scope crimes that target children, even if not sexual in nature, T.T.’s lack of sexual motivation does not change the fact that he was originally convicted of aggravated sexual assault, a Megan’s Law crime, and must still register as a sex offender under the law. OK to cap payment of defendant’s probe costs Although Utah law mandates that an indigent criminal defendant is entitled to a government-funded investigator to assist in his defense, a trial court did not err in capping the reimbursable investigative sum at $500, at least initially, the Utah Supreme Court held on Oct. 3. Utah v. Carreno, No. 20050591. A Utah trial court granted Noe Carreno’s motion to have an investigator appointed to assist in his defense against first-degree felony charges, but placed a $500 limitation on the reimbursable expense for the investigator. The Utah Indigent Defense Act provides access for indigents to the basic tools of defense, including provision, by the local government, of “the investigatory resources necessary for a complete defense.” He was convicted. A Utah appellate court reversed, holding that a trial court may not consider cost when reviewing a motion to appoint an investigator but may only consider whether an investigator is necessary. The Utah Supreme Court reversed, holding that a trial court may ponder expense considerations in ordering the appointment of an investigator and it was not an abuse of discretion here to impose a $500 limitation on reimbursable expenses in the order of appointment. However, the $500 limitation is on the “initial sum,” and there are avenues for defendants to obtain more later. EMPLOYMENT By not resigning, worker accepts arbitration plan Under Oklahoma law, an employee who explicitly refuses to abide by a new arbitration agreement, but does not resign when told that continued employment means assent, is bound by the agreement, the 10th U.S. Circuit Court of Appeals held on Oct. 6. Hardin v. First Cash Financial Services Inc., No. 05-6090. Years after Shelle Hardin started working for First Cash Financial Services Inc., the firm created a dispute resolution program that required its employees to submit employment-related disputes to arbitration. It distributed copies of the program and a related agreement, saying that employees would immediately be bound by it, and that their continued employment after March 1, 2003, would constitute acceptance of its terms. Hardin told her supervisor she would not consent to the plan, although she would not quit. The supervisor replied that her continued employment would bind her. Ultimately, First Cash fired Hardin, and she sued alleging sex discrimination. First Cash moved to compel arbitration. An Oklahoma federal court dismissed the motion, finding that Hardin had never agreed to be bound by the arbitration agreement. The 10th Circuit reversed, resolving the case on classic principles of offer, counteroffer and acceptance. First Cash’s statements about the new plan were an offer. Hardin’s explicit rejection, combined with her failure to resign, constituted a counteroffer. First Cash rejected the counteroffer when Hardin’s supervisor reiterated that her continued employment would serve as acceptance. Thus, “Hardin’s conduct in continuing employment after March 1 manifested her assent to be bound” by the arbitration agreement. EVIDENCE Inadmissible agreement can’t be alluded to in trial Despite being witnessed by a notary public, a married couple’s premarital agreement was unenforceable because it was not witnessed by two witnesses, and a trial court erred by allowing references to the agreement at trial, the Georgia Supreme Court held on Oct. 2. Chubbuck v. Lake, No. 606F0676. Pamela Chubbuck and Thomas Lake executed a premarital agreement before a notary public five days before they married. Three months after the marriage, the couple divorced. At their divorce trial, the court held that the premarital agreement, which provided that Chubbuck would pay Lake $41,000 in the event of their divorce, was unenforceable and inadmissible as evidence because-although it was witnessed by a notary public-it was not witnessed by two witnesses as required by state law. However, the trial court did allow Lake to make references to the agreement and its contents as a “document the parties had executed prior to their marriage.” After a jury awarded Lake $41,000, Chubbuck appealed, arguing the trial court erred in allowing references to the agreement. Reversing, the Georgia Supreme Court held that, because the agreement was inadmissible, the trial court erred in allowing references to it. “[W]e conclude that once the trial court determined the antenuptial agreement is void and unenforceable, the existence of the agreement and its contents were not to be considered by the fact-finder. Accordingly, the trial court erred when it permitted testimony concerning the contents of a pre-marital document the parties had executed.” IMMIGRATION LAW Quashed drug conviction can’t be basis for removal An overseas drug conviction that has been legally quashed by a foreign court cannot be used to justify the removal of an immigrant from the United States without evidence that the petitioner’s immigration hopes were the only reason the order to quash was entered, the 6th U.S. Circuit Court of Appeals ruled on Oct. 4. Pickering v. Gonzales, No. 03-3928. While still living in his native Canada in 1980, Christopher Pickering was convicted of possession of LSD. He paid a fine and served 30 days in jail. In 1991, Pickering entered the United States on an intracompany transfer visa. In 1996, the Canadian government pardoned Pickering, and a Canadian court quashed the LSD conviction. In 1998, the U.S. immigration authorities denied Pickering’s request to adjust his status to lawful permanent resident, then initiated a petition to remove him from the country, all on the basis of Pickering’s LSD conviction. An immigration judge agreed with the government, and ordered Pickering’s removal. The Bureau of Immigration Appeals (BIA) affirmed, finding that Pickering had asked for the pardon in order to quash his conviction just so he could permanently immigrate to this country. The 6th Circuit reversed. Pickering’s motive is of “limited relevancy” where there is no evidence the Canadian court relied on that motive when making its decision. In assuming that the Canadian court quashed the conviction for Pickering’s immigration reasons, the BIA also assumed that the Canadian court did not follow established Canadian law and precedent governing orders to quash. As the only evidence supporting Pickering’s removal was the conviction, and the conviction was no longer valid, the removal order should be vacated. PRODUCTS LIABILITY No federal pre-emption of common law fraud suit Federal law does not pre-empt a common law fraud claim under Michigan’s prescription drug products liability law, the 2d U.S. Circuit Court of Appeals ruled on Oct. 5. Desiano v. Warner-Lambert & Co., nos. 05-1705, -1743 and -1745. In 1995, Michigan’s products liability law was amended to state that drug companies were immune from suit for Food and Drug Administration-approved drugs so long as the company did not withhold or misrepresent the information submitted to the FDA for approval. A class of diabetes sufferers who took the drug Rezulin alleged fraud and other causes of action in Michigan and California state court lawsuits. The drugmaker, Warner-Lambert & Co., removed the cases to a New York federal court. The suits alleged several common law negligence and fraud claims. Citing the U.S. Supreme Court’s 2001 ruling in Buckman Co. v. Plaintiffs’ Legal Comm., which held that so-called “fraud on the FDA” claims were impliedly pre-empted by federal law, and finding that it owed “quite substantial deference” to a 6th Circuit decision on the same state law (Michigan is one of the states covered by the 6th Circuit), the district court found that Michigan’s FDA-fraud exemption was pre-empted by federal law. The 2d Circuit reversed. The lower court was right to defer to the 6th Circuit’s ruling only as it applied to interpretations of Michigan law, not of federal law; and the 6th Circuit ruling was largely based on interpretations of federal law. The court distinguished this case from Buckman on three grounds: the presumption against pre-emption; Michigan’s continued acceptance of traditional common law liability; and immunity as an affirmative defense. The FDA-fraud exemption is merely a defense to any suit; it is not an element in the plaintiffs’ products liability claim. Federal law does not foreclose common law liability for fraud.

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