The Legal Intelligencer Blog

Superior Court Remands Bridgeport Fire Litigation Over Recusal Motion

By Amaris Elliott-Engel
Of the Legal Staff

The state Superior Court has remanded the Bridgeport fire class action case for a trial judge to consider a recusal motion and to reconsider the fees paid to the claims administrator.

The decision is only one part of many aspects of the In Re: Bridgeport Fire Litigation case that have been appealed to the state Superior Court.

Montgomery Common Pleas Judge Steven T. O'Neill approved the $35 million settlement in a complicated class action stemming from a fire that destroyed the Continental Business Center at Front and Ford streets in Bridgeport, Montgomery County, May 15, 2001. The class action brought by a class of 300 business owners, nearby homeowners, business patrons and employees alleged negligence by the business center's owners and other defendants.

Attorney Donald Haviland, who was class counsel before leaving class counsel Kline & Specter and who now represents some of the class, had moved for O'Neill's recusal, while the judge did not act on the motion "upon its belief that attorney Haviland's clients lacked standing to seek his recusal," Judge Anne E. Lazarus wrote on behalf of the panel, which also included Judge Cheryl Lynn Allen and Senior Judge Robert A. Freedberg.

The Superior Court said that Haviland's clients, while not class representatives, do have standing to file a motion to recuse.

"As a general rule, individual class members acting through private counsel are not allowed to participate independently of the class, except in limited circumstances where class members are allowed to appear and object," Lazarus said. "However, we believe that the the unique situation with which we are presented requires an exception to that general rule. In particular, where a portion of a class alleges bias on the part of the presiding court against it and in favor of another segment of the class, we conclude that it is proper and, indeed, necessary to allow a motion for recusal to be filed by the complaining individual class members, by and through private, non-class counsel."

The court said it was making no statement on the merits of the recusal motion.

And on an apparent issue of first impression in Pennsylvania, the court said that judges should abstain from entering any substantive orders until a pending recusal motion has been disposed of.

Lazarus also said that claims administrator Gary S. Silow's fees and costs should not have been approved by O'Neill before giving an opportunity for objections to be filed. That part of the case also has been remanded.

Silow is now a Montgomery Common Pleas judge.

Wolf Block Sued by Litigation Support Services Provider

By Gina Passarella
Of the Legal Staff

Wolf Block has been sued by a company it hired in March 2007 to help with on-site litigation support services.

Reliable Copy Service Inc. filed its complaint Friday against the defunct law firm, seeking $30,807 in unpaid bills plus 1.5 percent interest monthly and attorney fees and costs.

This is the second suit by an outside vendor lodged against the law firm since it voted to dissolve in March 2009.

LexisNexis filed suit against the firm June 21 for failure to pay in full on services provided by the company, such as Martindale-Hubbell listings and Internet legal research and court filing services, according to the complaint.

The company is seeking $511,226 in unpaid bills plus $138,031 in interest for a total of $649,257, according to court filings in LexisNexis v. Wolf Block Schorr & Solis-Cohen. LexisNexis is being represented by Jeffrey S. Wilson of Springfield, Pa.

Reliable Copy Service is being represented in its suit, Reliable Copy Services Inc v. Wolf Block, by Dean E. Weisgold of Philadelphia.

Klehr Harrison Picks Up Dechert Corporate Partner

By Gina Passarella
Of the Legal Staff

Klehr Harrison Harvey Branzburg has picked up a Dechert corporate and securities partner in Philadelphia.

Lisa Burnett moved to the firm after 13 years at Dechert — serving the last few as a partner.  Burnett has represented private equity clients in middle market deals and has handled general mergers and acquisitions work for public and private companies. She joined Dechert in 1997 after clerking for now Chief Justice Ronald D. Castille.

She said she was talking to someone in the legal community about what she was looking for in her career and that person suggested she reach out to Klehr Harrison. Burnett said she was looking to bring in more clients, a difficult prospect in this economic environment coupled with the rates at Dechert, she said.

 “I was looking for a place where I could build relationships with clients and get them to be comfortable calling me on a general basis, not just [for] a really big deal because of the rate structures.”

Burnett said Klehr Harrison was a good fit and had recently brought over a tax partner with experience in the private equity realm, Benedict Kwon. Partner Keith W. Kaplan has a strong funds formation practice and a lot of contacts in the private equity world that could be helpful as well, she said.

Burnett isn’t bringing over any clients from Dechert, but said she hopes some of the client relationships she had there that weren’t under her name might want to look at Klehr Harrison. Burnett said she also wants to capitalize on the relationships already at her new firm as well as the possibility of bringing on old contacts as new clients, now that she is at a firm with a lower rate structure.

City Council Authorizes Criminal Justice Hearings

By Amaris Elliott-Engel
Of the Legal Staff

The Philadelphia City Council is the latest governmental entity to take its own look at Philadelphia's criminal justice system, which has come under scrutiny for problems such as witness intimidation.

A resolution was adopted this week for the Joint Committees on Law and Government and Public Safety to "hold hearings to investigate how the various agencies that comprise the criminal justice system in Philadelphia can better operate, collaborate, and cooperate in an effort to increase efficiencies and reduce costs in order to lessen the burden on city taxpayers."

In the  past several months, there have been U.S. Senate Judiciary Committee field hearings convened by outgoing U.S. Sen. Arlen Specter and legislative hearings by the state Senate Judiciary Committee on the state of the city's criminal courts. A task force led by state Supreme Court Justice Seamus P. McCaffery also is scrutinizing criminal courts.

What Should I Wear?

"What should I wear?" I have been asked this question more than a few times in my career. The last time was by a witness who brought no less than three suits, five shirts and four ties to the war room to have me pick out his outfit. 

I know that some jury consultants deal heavily with the fashion aspect of image; I think most of them reside in Los Angeles.  I, on the other hand, am no TLC reality fashion show host. 
That said, I do have some basic thoughts on the idea of image in the courtroom. These thoughts apply to anyone in the courtroom — attorneys, clients and witnesses alike. 

1) Whether you are litigant or lawyer, show respect for the courtroom with what you wear. The courtroom is a professional setting and should be treated as such. I once worked on a case in which one of the litigants showed up to court in jeans. I am proud to say I was on the other side.

2) Ladies, please wear stockings. The no-stockings thing is big with me. Yes, even in the summer when you are tan.  We are not at the beach. Personally, stockings and I do not get along, so you will not find a skirt suit in my closet. I wear pants. No stockings needed.
Some female attorneys believe that it is important to wear skirt suits. I say go for it, but wear stockings. At a trial I attended, a young, attractive, female lawyer on the other side went sans stockings with a relatively, but not ridiculously, short skirt. I saw one of the jurors blatantly try to look up her skirt.  I doubt he was taking her seriously at that trial.

3) A big question from men is  “To beard or not to beard?” When all else is told, it is best for men to be clean-shaven. A lot of people don’t like beards because it hides your face and makes it harder for folks to read you. My only exception is for those men who have had a beard for so long that not having it is a distraction (one client told me a story of shaving his beard for a trial and, when his young child saw him, she cried because she didn’t recognize him). If it truly is so uncomfortable to lose the beard that you are distracted from your job at hand, trim it close and move on. Otherwise, shave it off. 

4) For either gender, if you can see the sparkle from 10 feet away, take it off. Big watches, flashy jewelry, etc. serve as distractions to jurors and separate you from them. Jewelry is fine as long as it is not too large or too flashy. 

5) Beware of clothing that makes you stand out too much. The courtroom is an understated, professional fashion setting. I attended a trial in which one of the corporate representatives was a woman who wore brightly colored, patterned jackets with coordinating bags (again, she was on the other side of the courtroom). While there was nothing wrong with the clothing per se, she stood out like a sore thumb in the sea of gray and brown suits. A bright color is fine, but save it for the shirt underneath, not the suit itself. The last thing anyone wants is for jurors to be paying more attention to the outfit of the day instead of the case messages. The same can apply to men with overly slick suits or outlandish ties. Be aware of drawing too much attention to yourself as opposed to your case.

6) Finally, my most important rule of thumb is that you have to be as comfortable as possible within reason (remember the jeans — that was too comfortable). It you are distracted by your clothing because it is “not you,” you are paying attention to the clothes and not the case. I have to admit, though, I have made clients buy suits despite the fact that they have lived their lives in t-shirts. Those folks just had to deal with it.

Melissa M. Gomez, Ph.D., is a jury consultant and owner of MMG Jury Consulting LLC. She holds a Ph.D. in psychology from the University of Pennsylvania. Her experience includes work on close to 200 jury trials in Philadelphia and across the country, with a focus on the psychology of juror learning, behavior and decision-making. She has more than a decade of expertise in research design and methodology, as well as in behavioral and communication skills training. 

This posting is for general informational purposes only and should not be construed or interpreted as advice specific to any matter. Each case is different and no strategy applies uniformly to all. 

If you have any questions regarding jury psychology that you would like to see addressed in this blog, please contact Dr. Gomez at melissa@mmgjury.com or call 215-292-7956.

Melissa M. Gomez
MMG Jury Consulting LLC
www.mmgjury.com

Superior Court: Insurer's Reasonable Reliance on UIPA Regs Cannot Support Bad Faith Claim as Matter of Law

On May 24, in Jones v. Nationwide, a panel of the Pennsylvania Superior Court unanimously affirmed preliminary objections granting a demurrer in favor of Nationwide Property and Casualty Insurance Co., dismissing a class action complaint against them, which, in part, claimed that Nationwide committed bad faith by prorating deductible reimbursements under its auto policies. The plaintiffs claimed that such a practice, though Nationwide contended it relied on regulations promulgated under the Unfair Insurance Practices Act, constituted a breach of contract, bad faith conversion and unjust enrichment, and also sought an injunction to stop the practice.

In affirming dismissal of the complaint at the trial court level, the Superior Court relied on Harnick v. State Mutual Insurance Company, the 2009 U.S. District Court for the Eastern District of Pennsylvania case, also involving the practice of prorating deductible reimbursements. The Harnick court found that the insured defendant did not commit bad faith in acting in reasonable reliance on valid state insurance regulations. The court found the reasoning in Harnick to be persuasive. The panel in Jones therefore adopted Harnick’s reasoning as sound and affirmed the trial court’s order granting the demure in favor of Nationwide.

This is not to say that an insurer cannot still be incorrect, or liable for breach of contract if enforcement or reliance on the regulations is inconsistent or violative of the insurance policy at issue. But being wrong, even being negligent, has never been sufficient evidence of bad faith in Pennsylvania, and the breach of contract and bad faith remedies in the state have always been distinct. (See, e.g., Smith v. Westfield Ins. Co., 2007) (Westfield did a thorough investigation and made a reasonable finding. That the determination may turn out to be incorrect does not mean that it had a dishonest purpose or was made with reckless disregard for the truth).

The ruling in Jones makes sense, as a sort of “pre-emption with boundaries” defense, and offers protection to insurers who act in reasonable reliance on valid state insurance regulations. Inasmuch as one of the chief inquiries in bad faith litigation is the conduct of an insurer viewed objectively, i.e., whether an insurer acts reasonably, an insurer’s practice in following regulations enacted under unfair insurance practice statutes would seem to be a good stake in solid ground, and therefore a good ground to provide protection to those insurers electing to proceed down such a path. Judged from such a perspective, Jones appears to be in agreement with Harnick, and to articulate a fair boundary line for bad faith claims.

Charles Haddick
Dickie McCamey & Chilcote
http://www.dmclaw.com

I welcome feedback from readers, along with any suggestions for topics you would like to see discussed in this space.  Please e-mail me at chaddick@dmclaw.com.

GCs Well-Compensated, But Are They Satisfied?

By Jaime Bochet

Of the Legal Staff

One of the hats I wear here at The Legal is as the editor of "GC Mid-Atlantic" magazine.  Our most recent issue - which followed on the heels of an issue devoted to the same topic from our sister publication, Corporate Counsel -  featured a special section on GC compensation, in which senior staff reporter Gina Passarella noted, "the bulk of Pennsylvania general counsel did see a bump in their total cash draw. In fact, only 12 saw a decrease, one stayed the same and the rest took home more than they did in 2009."

So now that we've pored over their paychecks, it's only natural that we address the next natural question: "Are they satisfied?" To put an even finer point on it, "How satisfied are they with their outside counsel?"

In order to find out, we set up our fourth annual GC Satisfaction Survey, which is  currently available online (and completely anonymous) here. It asks about what GCs think firms could improve upon, what their biggest pet peeves are, and what gives them the warm fuzzies when it comes to their outside counsel. 

I encourage all the in-house counsel reading this to not only click on and answer the survey to the best of your ability, but also to share the link and this blog with all your colleagues in-house. The more responses we get, the more comprehensive a snapshot we will be able to take, and the better able we will be to communicate your thoughts to the people who want to hear them most - the firms themselves. 

The survey is open to all in-house counsel in the Mid-Atlantic region - Pennsylvania, South Jersey, Delaware and Maryland, and the final results and analysis will be published in the December 6 edition of the magazine. To check out what last year's respondents had to say about communication, rising costs and alternative billing fees, click here.

As always, feel free to call me at 215-557-2368 or e-mail me let me know if you have any questions.

Reporter's Notebook: Hot Industries for M&A

By Gina Passarella
Of the Legal Staff

Just as with the hot topics in legislation these days, the hot industries seeing M&A activity are the life sciences/health care and financial services sectors.

Corporate attorneys seeing deals on the rise said many industries are witnessing an uptick in activity because any type of business could be looking to sell off non-core businesses or pick up revenue streams. But on the whole, pharmaceutical companies and health care technology companies are keeping busy with transactions as are banks and asset management companies.

Duane Morris' George Nemphos said he has definitely seen a rise in deals related to medical device technology. Media-related technology is also a busy area, he said, particularly where mobile communications and the Internet tie together.

On the financial services side, Nemphos pointed to deals involving electronic transfers among banks and the processing of consumer product transactions.

Paul Jaskot of Reed Smith said his firm's heavy focus on the financial services and life sciences sectors may be why he has seen so many deals in those areas. He said there are a number of large pharmaceutical companies looking to replenish the pipeline of new drugs coming to market.

Data security and record retention in the health care industry are also spawning a number of deals. Similar product lines are in the works in the financial services realm as well, Jaskot said. The financial reform legislation has created opportunities for large companies to buy up distressed assets and has created deal momentum in the asset management world, he said.

And the energy sector can't be forgotten.

"The renewable energy space continues to attract a lot of investment," Jaskot said.

Ballard Spahr's Brian Doerner also pointed to the energy, financial services and life sciences sectors as hotbeds for deals.

Aside from those areas, the chemical industry has kept Morgan Lewis & Bockius' Steven Navarro busy. He said there were a number of high-profile bankruptcies in the chemical sector that led to a number of spinoffs of assets.

Judge Rules Against Expediting Family Courthouse Bankruptcy Case

By Amaris Elliott-Engel
Of the Legal Staff

A federal bankruptcy judge has ruled against settling the dispute over the property rights to the stymied Philadelphia family courthouse project with a mandatory preliminary injunction. The case will go to trial instead.

Bankruptcy Judge Eric L. Frank of the U.S. Bankruptcy Court for the Eastern District of Pennsylvania denied the Philadelphia Parking Authority's motion for emergency interim relief and request for an expedited hearing. A pretrial conference has been set for Sept. 23.

Northwest 15th Street Associates, the private developer at the center of the family courthouse project, told Frank in a court filing Monday evening that centuries of U.S. property law, as well as its constitutional rights to not be deprived of its property without due process of law, would be violated if the judge issued an interim order that would transfer title to the air rights at the proposed courthouse site.

The parking authority, however, told Frank he has the equitable power to settle definitively, with a mandatory preliminary injunction, whether the once-proposed developer of the courthouse project defaulted on its mortgage with the parking authority.

Northwest mortgaged the air rights to the proposed courthouse site at 15th and Arch streets from the Philadelphia Parking Authority, which still owns the underground part of the site.

Northwest 15th Street Associates, the corporate entity formed by developer Donald W. Pulver to develop the 15th and Arch streets site, filed for bankruptcy June 23 after the original family court structure unraveled in the wake of the revelation that Pulver struck a co-development deal with the First Judicial District's former tenant representative, Jeffrey B. Rotwitt. Pulver and Rotwitt have said that their deal was disclosed, while the FJD and the parking authority have said Rotwitt's dual role was not disclosed.

The planners of the courthouse project view time as of the essence because the successor to Gov. Edward G. Rendell, a former Philadelphia mayor and district attorney, may not commit to releasing the $200 million in capital funds earmarked by the Pennsylvania General Assembly for the project. A new governor, to be elected in November, would take office in January and is not bound by Rendell's commitment. 

Court Stays Bad Faith Claim, Picks Up Breach of Insurance Contract Claims First

On Aug. 2nd Judge Albert Masland of the Cumberland County Court of Common Pleas in ECSM Utility Contractors, Inc. v. Selective Insurance Group, Inc., et. al. granted in part the defendant’s motion to bifurcate and stay the plaintiff’s bad faith claims in a combined coverage and bad faith case. 

Judge Masland wrote:

 “First, the court agrees that resolution of plaintiff’s contract claim in defendants favor could eliminate the need for consideration of the bad faith claims. . . Second, defendants believe the contract claim is ripe for resolution via summary judgment. Thus, if defendants are correct, the entire matter may be resolved expeditiously without resort to a jury trial and onerous discovery regarding the bad faith claims. Accordingly, the court grants defendants’ motion in part and stays plaintiff’s statutory bad faith claims pending the resolution of defendants’ motions for summary judgment. However, should the court deny these motions, the stay will be lifted and plaintiff will be able to pursue its bad faith claims in anticipation of a jury trial on the contract claims, which, if successful, will be immediately followed by a non-jury trial of the bad faith claims. Finally, in light of plaintiff’s concerns regarding protracted litigation caused by this stay, the court directs defendants to file their motions for summary judgment within 30 days. . .”

I believe that  Masland has delivered in a few short lines a relatively simple mechanism for dealing with the oftentimes thorny problem of combined breach of contract and faith cases. 

Severance and stay are, it seems, simple mechanisms that are often requested in combined cases like ECSM, but are all too often denied for fear of somehow bogging down the case. Masland seems to have resolved that issue effectively by imposing upon the defendants the duty to file a dispositive motion on the coverage issue within a brief amount of time. Thus, the approach taken by Masland would also, it seems, impose upon defendant insurers seeking to avail themselves of the benefit of bifurcation and stay, the obligation not to request bifurcation and stay until such time as they are ready to seek a dispositive ruling on a breach of contract/coverage issue by way of motion such as motion for summary judgment.

Charles Haddick
Dickie McCamey & Chilcote
http://www.dmclaw.com

I welcome feedback from readers, along with any suggestions for topics you would like to see discussed in this space.  Please e-mail me at chaddick@dmclaw.com.