Archive for the ‘Uncategorized’ Category

Teeth-bleaching at Supreme Court: Can dentists make it so only they can offer popular service?

Tuesday, October 14th, 2014

  • Article by: MARK SHERMAN , Associated Press
  • Updated: October 14, 2014 – 2:55 PM

WASHINGTON — Teeth-bleaching isn’t brain surgery, although the Supreme Court seemed to find a link between the two in an antitrust case argued Tuesday.

Among the questions before the justices is whether it is unfair under federal law for a state regulatory board made up mostly of dentists to prevent lower-cost competitors who aren’t dentists from offering teeth-whitening services.

The outcome could turn on how the justices’ decision affects brain surgeons, lawyers and others whose practices often are regulated by other members of their professions.

The court’s consideration of the dispute between the North Carolina State Board of Dental Examiners and the Federal Trade Commission is being closely watched by the growing number of occupations that require licenses and state supervision, often in the form of boards made up of people in the same businesses and sometimes elected by their peers. The federal appeals court in Richmond, Virginia, sided with the FTC in ruling that the board engaged in unfair competition.

On Tuesday, several justices worried aloud about discouraging people from serving on these state boards by opening their decisions to second-guessing by the courts. Justice Stephen Breyer was among members of the court who wanted to be sure that, whatever the court decides, it does not take away authority from the people who know best.

He invoked a fictitious board of neurologists to make his point. “We would like this group of brain surgeons to decide who can practice brain surgery in this state. I don’t want a group of bureaucrats deciding that,” Breyer said.

The court has long accepted that the some actions that otherwise would raise antitrust concerns are allowable if they are done by states. The court is wrestling with whether the dental board is acting mainly in the interests of dentists or the public, which would protect its decisions from complaints about unfair competition.

In 2006, the North Carolina dental board warned operators of teeth-whitening kiosks in malls and tanning salons that they were practicing dentistry without a license. The board also sent cease-and-desist letters to malls where the kiosks operated.

The teeth-whitening businesses were pressured into closing and customers turned instead to higher-priced dentists who generally charged $300 to $700 for over-the-counter kits.

The warnings and letters seemed to go beyond the board’s powers, Justice Ruth Bader Ginsburg said.

“Why should there be an antitrust exemption for conduct that is not authorized by state law? The objection here was that this board was issuing a whole bunch of cease and desist orders. They had no authority to do that. No authority at all,” Ginsburg said. The dental board is allowed to send the letters, but lacks the authority to enforce them, said Hashim Mooppan, the board’s Washington-based lawyer.

Courts across the country have been asked to rule on similar issues. In early October, a judge in Alabama rejected a complaint against that state’s dental board and upheld restrictions on teeth-whitening services as “reasonably designed to protect the health of Alabama citizens.”

Justice Sonia Sotomayor urged Justice Department lawyer Malcolm Stewart to help the court come to a decision that might be applied broadly rather than one that “will involve us in case after case trying to decide how far too far is.”

Sotomayor has acknowledged a close friendship with a dentist who did more than $15,000 worth of dental work on her mouth before she joined the Supreme Court in 2009. Their relationship is so warm that Sotomayor is godmother to the dentist’s son, the justice said at a January appearance in Washington.

Recognition Comes Before Enforcement With Foreign Judgments

Tuesday, October 14th, 2014


Paige H. Forster, The Legal Intelligencer    | 0 Comments

General counsel know what it’s like to be on the receiving end of a complaint and to guide litigation through the trial court and the appeal. Perhaps less familiar is being on the receiving end of an opponent’s efforts to enforce a judgment rendered outside the United States. The litigation has taken place abroad under different rules and a different constitution, and maybe in a different language. Now the plaintiff arrives in a U.S. court with judgment in hand, seeking to invoke the domestic court’s enforcement powers.

Some commentators, including the U.S. Chamber Institute for Legal Reform, have noted an increase in this type of litigation. Such cases seem to be on the uptick in Pennsylvania, although they are not yet flooding the dockets. Westlaw identifies about 10 cases dealing directly with recognition of foreign judgments. But more than half of those cases were decided in the last six years—despite the fact that the state statute governing recognition of foreign judgments was passed nearly 25 years ago. As a point of comparison, the situation is similar in Delaware. That state’s recognition statute is more than 15 years old, but virtually all of the handful of cases that cite it were decided in the last eight years.

Given the proliferation of international litigation, the number of foreign judgment recognition cases should continue to accelerate here and elsewhere. A close look at the state’s enforcement procedures, therefore, is timely and helpful. The Pennsylvania Superior Court recently demonstrated as much when it ruled that a corporate plaintiff, which sought to enforce a British judgment, had invoked the wrong statute and followed the wrong procedure.

Recognition and enforcement litigation takes place in both state and federal courts, but it is a matter of state law. Pennsylvania, like most states, has passed a version of the Uniform Foreign Money Judgment Recognition Act, 42 P.S. Sections 22001-22009. Pennsylvania’s Recognition Act provides that if a foreign judgment is “final and conclusive and enforceable where rendered,” it may be enforced “in the same manner as the judgment of another state.” There are discretionary bases upon which a court may refuse to recognize a judgment, including that it is based on a cause of action that is repugnant to Pennsylvania’s public policy, conflicts with another judgment or was obtained by fraud. There are also mandatory bases for nonrecognition: a judgment is not “conclusive,” and hence it is unenforceable, if it was rendered by a court that lacked personal or subject-matter jurisdiction or in a system that does not provide impartial tribunals and due process. In addition, although a judgment that is on appeal in a foreign court is considered conclusive, the defendant may stay enforcement proceedings pending the resolution of the foreign appeal.

In a recent Pennsylvania Superior Court decision, Louis Dreyfus Commodities Suisse S.A. v. Financial Software Systems, 2014 Pa. Super. 163 (July 29, 2014), Louis Dreyfus Commodities Suisse S.A. brought a breach of contract claim against Financial Software Systems Inc. in British court. The result of the British litigation was that Dreyfus obtained a judgment for nearly $750,000. Dreyfus filed a praecipe to file and index a foreign judgment in the Montgomery County Court of Common Pleas, but rather than invoking the Foreign Money Judgment Recognition Act, it invoked the Uniform Enforcement of Foreign Judgments Act, 42 Pa. C.S. Section 4306. Dreyfus later filed a writ of execution. The court granted Financial Software Systems’ motion to strike the judgment and vacate execution, ruling that the proper statutory authority was the Recognition Act, not the Enforcement Act. Dreyfus appealed to the Superior Court.

On its face, Dreyfus’ mistake is an understandable one. After all, the Enforcement Act lays out procedures for the enforcement of “any foreign judgment.” In order to understand why the Enforcement Act does not apply to judgments rendered in other countries, it is necessary to look to both the statutory language and U.S. Supreme Court precedent. The Enforcement Act defines a “foreign judgment” as “any judgment, decree or order of a court of the United States or of any other court … which is entitled to full faith and credit in this commonwealth.” While the U.S. Constitution provides that each state must give “full faith and credit” to the judicial proceedings of every other state, the legal acts of foreign nations are not given full faith and credit. Instead, the extent to which a foreign nation’s law is recognized in the United States is a matter of comity, as the Supreme Court ruled in the 19th century. The Enforcement Act’s definition of a foreign judgment therefore applies only to the judgments of other U.S. courts.

With the Enforcement Act off the table as a vehicle for Dreyfus to enforce its British judgment, the Recognition Act plainly was the controlling authority. And while the enforcement of another U.S. court’s judgment under the Enforcement Act is relatively automatic, undertaken simply by filing a praecipe, recognition of a foreign judgment under the Recognition Act is not in the least automatic. The statute provides important safeguards for defendants, including by denying recognition under Pennsylvania law to judgments that were not obtained through due process of law in a court with jurisdiction over both the subject matter and the person.

The Dreyfus opinion highlights key takeaways for general counsel dealing with litigation involving recognition of foreign judgments. First, a judgment obtained in a foreign nation can be enforced under Pennsylvania’s Enforcement Act only if it has first been recognized under the Recognition Act. Second, a procedural misstep like Dreyfus’ may not be permanently fatal to efforts to enforce a foreign judgment under Pennsylvania law—the Superior Court noted that Dreyfus could prospectively comply with the proper procedures. Third, holding a plaintiff to the proper recognition and enforcement procedures can be crucially important. By ensuring that a foreign judgment is vetted under the Recognition Act, a defendant will be able to invoke the statute’s full range of safeguards and defenses. •

Paige H. Forster is a member of Reed Smith’s appellate litigation group and a former law clerk to Judge D. Michael Fisher of the U.S. Court of Appeals for the Third Circuit. She handles appeals in federal and state courts and dispositive motions at the trial level, as well as providing support during complex trials. Her representation covers a wide range of substantive areas including products liability, financial services, contract disputes, employment and class actions.

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Tuesday, October 14th, 2014




Graydon Head & Ritchey, LLP, an 80+ attorney law firm in Cincinnati, OH, seeks a highly motivated corporate attorney.  Applicants should have 8 – 15 years of experience in general corporate practice, including working with privately-held businesses, as well as experience in merger and acquisition transactions.  Candidates should have had direct client responsibility, understand the importance of relationship building, and be able to work independently.  Candidates must have a strong academic record, and possess excellent written and verbal communication skills, and a strong work ethic.  Preferably candidates should be licensed in the state of Ohio.  We offer a competitive compensation and attractive benefits package.  Please reply in confidence to:

Barbara Hopewell

Chief Professional Development Officer and Director of Human Resources

Graydon Head & Ritchey, LLP

1900 Fifth Third Center

511 Walnut Street

Cincinnati, OH  45202

(Phone) 513-629-2858

(Fax) 513-651-3826





Graydon Head & Ritchey, LLP, an 80+ attorney law firm in Cincinnati, OH seeks a highly motivated environmental attorney to join our growing practice group.  Applicants should have a substantial experience with environmental laws, regulations (RCRA, CERCLA, EPCRA).  Specific experience in the area of hazardous waste would be particularly helpful.  Additionally, candidates who have had direct client responsibility are preferred.  Candidates must have a strong academic record, and possess excellent written and verbal communication skills.   Candidates must be licensed in the state of Ohio and/or the state of Kentucky.  We offer a competitive compensation and attractive benefits package.  Please reply in confidence to:

Barbara Hopewell

Chief Professional Development Officer and Director of Human Resources

Graydon Head & Ritchey, LLP

1900 Fifth Third Center

511 Walnut Street

Cincinnati, OH  45202

(Phone) 513-629-2858

(Fax) 513-651-3826


First Amendment’s Limit: The Supreme Court’s Plaza

Monday, October 13th, 2014


OCT. 13, 2014


WASHINGTON — The First Amendment is strong medicine, the Supreme Court keeps telling us, and it even requires vulnerable people to listen to things they do not want to hear.

Chief Justice John G. Roberts Jr. explained this in 2011 to the father of a fallen soldier who had to endure a hateful protest while he tried to lay his son to rest. The First Amendment, the chief justice said, protects “even hurtful speech on public issues to ensure that we do not stifle public debate.”

In June, Chief Justice Roberts told women seeking abortions essentially the same thing in a decision striking down buffer zones around clinics in Massachusetts. “Vital First Amendment interests,” he said, required women to hear from opponents of abortion in the fraught moments before they entered those clinics.

But the Supreme Court’s devotion to the First Amendment has its limits. It stops at the edge of the grand marble plaza outside its own courthouse.

That vast and inviting space, with its benches and fountains, seems better suited to public debate than a military funeral or the sidewalk outside an abortion clinic. But the court insists on banning free speech on the plaza. Court police officers have been known to instruct visitors to remove small buttons bearing political messages.

Last year, a federal judge struck down the law that bans protests on the plaza, calling it “irreconcilable with the First Amendment.” Pamela Talkin, the marshal of the Supreme Court, appealed the decision, and last month, a three-judge panel of the United States Court of Appeals for the District of Columbia Circuit heard arguments.

The case involves Harold H. Hodge Jr., a student from Maryland who was arrested on the plaza in 2011. His crime was wearing a sign that read “U.S. Gov. Allows Police to Illegally Murder and Brutalize African Americans and Hispanic People.”

Such a statement, on a topic of urgent public interest, would seem to be precisely what the First Amendment was intended to protect. Then again, a Supreme Court police officer once threatened a woman with arrest for displaying a sign bearing the verbatim text of the First Amendment.

The law invoked by the officers, enacted in 1949, bars “processions or assemblages” or the display of “a flag, banner or device designed or adapted to bring into public notice a party, organization or movement” in the Supreme Court building or on its grounds.

The Supreme Court addressed the law in 1983, in United States v. Grace, ruling that it could not be applied to demonstrations on the public sidewalks around the court. Since then, the sidewalks, which are broad and set off by stairs from the plaza, have been regularly used for protests of all kinds.

But the First Amendment vanishes when concrete turns to marble, Justice Department lawyers representing Ms. Talkin told the appeals court. Their primary argument for the distinction was a curious one.

“Demonstrations outside courthouses might give rise to actual or apparent efforts to subject judicial officers to improper influence,” they said in a brief.

The idea that the justices would actually be swayed by protest signs on the plaza borders on the silly. If they were susceptible to that sort of influence, there is no reason to think that signs on the sidewalk would be less effective.

That leaves the question of public perception. In the 1983 decision, the court said the law might be justified by a desire to prevent the public from thinking “that the Supreme Court is subject to outside influence.”

The fear here is not that the justices would in fact respond to protests, but that people would mistakenly think they did. That is not a flattering view of the populace.

This also brings to mind the so-called “free speech zones”—especially relegating peaceful demonstrators to some faraway space when the…


The Supreme Court hypocritical? What a shock. That fictitious saying inscribed over the entrance, “Equal justice under law,” ought to be…

I’m stuck on the argument that the Justices might be intellectually manipulated by signs. All 9 have access to political beliefs and social…

It is also at odds with one of the core messages of the Citizens United decision, which assumed that people in a democracy would respond with skeptical discernment to the political messages that bombard them before elections.

We honor the First Amendment, Justice Anthony M. Kennedy wrote for the majority, by allowing everyone to speak and “entrusting the people to judge what is true and what is false.”

The Supreme Court is not even particularly consistent in how it treats speech on its plaza.

In a sworn statement in 2012, Timothy Dolan, deputy chief of the Supreme Court’s police force, conceded that “the court allows attorneys and parties in cases that have been argued to address the media on the plaza immediately following argument.” The court also occasionally permits “commercial or professional filming on the plaza,” he said.

It seems that people with power or connections can use the plaza. Mr. Hodge, who sought to call attention to police brutality, cannot.

Justice Thurgood Marshall, who knew something about the power of protests, dissented in the 1983 case. “Visitors to this court,” he wrote, “do not lose their First Amendment rights at the edge of the sidewalks.”

He died in 1993, long before the court fully established the double standard requiring grieving parents and distraught women to experience the gale force of the First Amendment while shielding the justices from its slightest breeze. But Justice Marshall seemed to sense where things were heading.

“It would be ironic indeed,” he said, “if an exception to the Constitution were to be recognized for the very institution that has the chief responsibility for protecting constitutional rights.”


KHS to Unveil Historical Marker Noting Civil War-era Site in Pulaski County

Monday, October 13th, 2014


Press Release Date: Monday, October 06, 2014
Contact Information: CONTACT: Janene Zaccone
502-564-1792, ext. 4490

FRANKFORT, Ky. (Oct. 6, 2014) – The Kentucky Historical Society (KHS) will dedicate a new historical marker Friday, Oct. 17, at Mount Zion Church on County Route 1634, off West Highway 80, about two miles west of Cumberland Parkway via Exit 78. The event starts at 10:30 a.m. EDT.

The marker notes the significance of the Smith W. Cain store as the headquarters of Union Col. Robert McCook’s 3rd Brigade in 1862 during the Civil War and as an early post office and community gathering place.

The Pulaski County Historical Society sponsors the marker.

More than 2,200 historical markers statewide tell Kentucky’s history. More information about the marker application process, a database of markers and their text and the Explore Kentucky History app, a virtual tour of markers by theme, is at KHS administers the Kentucky Historical Marker Program in cooperation with the Kentucky Transportation Cabinet.

For more information, contact Becky Riddle, Kentucky Historical Marker Program coordinator, at 502-564-1792, ext. 4474 or


The Kentucky Historical Society, an agency of the Kentucky Tourism, Arts and Heritage Cabinet, was established in 1836 and is committed to helping people understand, cherish and share Kentucky’s history. The KHS history campus includes the Thomas D. Clark Center for Kentucky History, the Old State Capitol and the Kentucky Military History Museum at the State Arsenal. For more information about KHS and its programs, visit

The Supreme Court just made it harder to vote in some states and easier in others

Friday, October 10th, 2014


How to Predict a Voting Rights Decision


If you have been following developments at the Supreme Court in voting cases over the past few weeks, the results have been dizzying and apparently inconsistent. First the court blocked a lower court ruling that had restored a week of early voting in Ohio. Then the court blocked a lower court ruling that had restored North Carolina’s recently repealed provisions allowing for same-day voter registration and the counting of early voting. Then, Thursday night, the court blocked a lower court ruling that had put Wisconsin’s voter ID law into immediate effect, after lower courts had consistently blocked its use until voting rights challenges had run their course. And soon enough, the court may be asked to block147-page lower court ruling, issued late Thursday night, that held Texas’ voter ID law unconstitutional and a violation of the Voting Rights Act. Sometimes (as in Wisconsin) the Supreme Court has been protecting voters; at other times (as in Ohio and North Carolina) it appears to be protecting the ability of states to impose whatever voting rules they want.

But there is a consistent theme in the court’s actions, which we can call the “Purcell principle” after the 2006 Supreme Court case Purcell v. Gonzalez: Lower courts should be very reluctant to change the rules just before an election, because of the risk of voter confusion and chaos for election officials. The Texas case may raise the hardest issue under the Purcell principle, and how it gets resolved will matter a lot for these types of election challenges going forward.

As I explained in a recent Slate column, ultimately at issue in the Ohio, North Carolina, Wisconsin, and Texas cases is how broadly courts are going to intervene to protect voting rights in states where Republican legislatures have made it harder to register and to vote. All the cases raise claims under the U.S. Constitution’s equal protection clause and Section 2 of the Voting Rights Act. Ultimately, the Supreme Court could well side with the conservative judges in the courts below who have read these protections narrowly and not worried too much about the risk of voter disenfranchisement, rather than siding with the more liberal judges who have blocked restrictive laws for hurting minority voters, poor voters, and others.

But none of these cases so far reached (or will reach) the Supreme Court as fully formed final cases. Instead, they have come up on emergency requests to block lower court orders that were put into effect just weeks before the election. The rulings have had election officials scrambling in Ohio, North Carolina, and Wisconsin to comply with new, and sometimes conflicting, court orders.

This is not the first time an emergency election case has reached the Supreme Court. In the 2006 Purcell case, the Supreme Court reversed an order of the U.S. Court of Appeals for the 9th Circuit that put Arizona’s new voter ID law on hold. The justices seemed especially perturbed that the 9th Circuit did not explain its reasons for acting, but the Supreme Court focused on the risk of last-minute changes on voters and the election:

Faced with an application to enjoin operation of voter identification procedures just weeks before an election, the Court of Appeals was required to weigh, in addition to the harms attendant upon issuance or nonissuance of an injunction, considerations specific to election cases and its own institutional procedures. Court orders affecting elections, especially conflicting orders, can themselves result in voter confusion and consequent incentive to remain away from the polls. As an election draws closer, that risk will increase.

We can understand Ohio, North Carolina, and Wisconsin as cases all applying this Purcell principle. But the Texas case shows that the Purcell principle may not be that clear. Is the principle that one should not change election rules before the election because doing so can cause voter confusion and/or electoral chaos? Or is it that courts must weigh such risks? How should such risks be weighed against the risks of voter disenfranchisement? Or is it that courts must give good reasons for blocking a law before an election?

There probably has to be some weighing here. If there is a serious risk of voter disenfranchisement, as there was in Wisconsin, where the state conceded that up to 10 percent of eligible voters might not be able to get the right ID in time for November’s elections, that’s a good reason to side with the law’s challengers.

But what about Texas? On the one hand, the law is likely to have broad disenfranchising effects, especially on poor and minority voters. On the other hand, if the court orders Texas not to use the ID rules in this election, it risks some voter confusion and messes up the plans of election administrators.

Perhaps that’s not a big cost, because the worst that happens is that voters bring identification to the polls they don’t really need, and election officials just shelve the plans they had to check IDs for the election.

While I am not sure how the Purcell principle should be applied to the case of Texas, I have a good sense how it will be resolved, either by an appeals court or the Supreme Court: I expect it will be resolved to let Texas use its ID law during the upcoming election.

My prediction is based on the same thing I used to predict that the trial judge would strike down Texas’ law: the ideology of the judge and the political party of the president nominating the judge.

It is sad in 2014 that this is a great predictor of how courts have decided these cases. But at least in the cases of North Carolina and Wisconsin, politics did not always predict Supreme Court justices’ decisions. Two Democrat-appointed justices (Stephen Breyer and Elena Kagan) voted to stop the last-minute expansion of voting rights in North Carolina, and two Republican appointees (Chief Justice John Roberts and Justice Anthony Kennedy) voted to stop the last-minute implementation of voter ID in Wisconsin.

Maybe there’s a glimmer of hope in that.


Richard L. Hasen is a professor of law and political science at the UC–Irvine School of Law and is writing a book on campaign finance and political equality. Follow him onTwitter.

Supreme Court justices are among our most secretive governmental officials; that shouldn’t be

Wednesday, October 8th, 2014



Every year the justices of the U.S. Supreme Court are faced with about 7,500 writs of certiorari seeking appellate review of lower court decisions, granting only 75 to 80. It takes four justices to grant a writ, though amazingly that rule is nowhere written down and the justices could change it at any time.

[Supreme Court] justices are public officials whose votes on matters of concern should not be kept secret unless there are compelling reasons to do so.-

When the Supreme Court votes on whether to grant a writ of certiorari, it doesn’t reveal which justices voted in favor of or against hearing the case (unless a justice writes a dissent, which is highly unusual). This secrecy is totally unnecessary and inconsistent with democratic aspirations of public transparency and open government.

The importance of the all-too-mysterious certiorari process was highlighted Monday when the court refused to hear any of the seven appeals on the decisions striking down bans on same-sex marriage. The court’s decision not to hear any of these cases means that same-sex marriage now has to be recognized in an additional 11 states. The justices’ refusal to hear the cases has important real-world consequences, yet we have no idea how each justice voted.

Why won’t the Supreme Court decide on same-sex marriage?

The normal presumption of democratic governments is that public decisions will be made openlyso that the people can hold their leaders accountable. The votes of individual members of Congress onlegislation are a matter of public record, as are the president’s decisions to veto or sign bills. Imagine trying to evaluate the work of legislators or the president if such decisions were made privately and anonymously. No one would argue that it is enough to know that a bill failed to garner enough votes to pass. We would demand to know how each member voted.


RELATED: The Supreme Court’s supremely flawed record

Erwin Chemerinsky


The Supreme Court does not keep any official record of the justices’ votes on writs of certiorari. The public cannot meaningfully evaluate the work of individual justices without this information. What if it turned out that Justice X consistently voted against hearing civil rights cases or environmental law cases, or Justice Y consistently voted in favor of hearing campaign finance reform, affirmative action or abortion cases? Which cases a justice thinks are important enough for the court to hear define, in significant part, the work and career of that justice.

I am not suggesting that the court provide reasons why it doesn’t hear a case. Many of the petitions are obviously not important enough to justify the court’s attention, and requiring the justices to have to agree on reasons for more than 7,000 denials annually would not be worth the effort. But there is no reason the votes of the justices could not be provided, especially because it is likely that most denials are unanimous, and the vote could be recorded as such. When the vote is not unanimous, the names of the dissenting justices could be released, and it would be up to them if they wanted to explain that dissenting vote in more detail.

Most important, when the court grants a writ, the names of the justices who wanted to hear the case should be made public. This data could provide the parties and the public with significant information about that particular case, and would allow Americans to see how the individual justices voted over time on important issues. After all, the justices are public officials whose votes on matters of concern should not be kept secret unless there are compelling reasons to do so.

Supreme Court justices are among our most secretive governmental officials. They never appear on television when they are hearing cases or announcing decisions, they never participate in news conferences about their work, and their all-important votes on which cases to hear and which cases not to hear are not a matter of public record. There is no reason the justices should be so invisible to the American people.

Under Article III of the Constitution, Congress has significant (almost plenary) power over the jurisdiction of the Supreme Court. If the justices don’t do so voluntarily, Congress should use this power to require the justices to make their individual votes on certiorari petitions public.

Eric J. Segall, a law professor at Georgia State University, is the author of “Supreme Myths: Why the Supreme Court Is Not a Court and Its Justices Are Not Judges.”


Thursday, October 2nd, 2014

399 S.W.3d 1

Brenda C. OSBORNE, Appellant
Steven H. KEENEY; Carolina Casualty Insurance Company; and Monitor Liability Managers, Inc., Appellees
Steven H. Keeney, Appellant
Brenda C. Osborne; Carolina Casualty Insurance Company; and Monitor Liability Managers, Inc., Appellees.

Nos. 2010–SC–000397–DG, 2010–SC–000430–DG.

Supreme Court of Kentucky.

Dec. 20, 2012.
Rehearing Denied June 20, 2013.

        [399 S.W.3d 5]

Leroy E. Sitlinger, Jr., Sitlinger, McGlincy, Theiler, Louisville, KY, for appellant/appellee Brenda C. Osborne.

Andrew Graham Beshear, Matthew W. Breetz, Stites & Harbison, PLLC, Sheryl G. Snyder, Griffin Terry Sumner, Frost, Brown, Todd LLC, Louisville, KY, for appellee/appellant Steven H. Keeney.
Douglas Cain Ballantine, Amy Olive Wheeler, Stoll, Keenon, Ogden, PLLC, Louisville, KY, for appellees Carolina Casualty Insurance Company and Monitor Liability Managers, Inc.

Opinion of the Court by Chief Justice MINTON.

Brenda Osborne sued her attorney, Steven H. Keeney, claiming he breached his professional duty to her by failing to file suit against Clifford Quesenberry before the statute of limitations expired. Because of Keeney’s breach, Osborne alleged she lost the ability to recover from Quesenberry for losses she suffered as a result of Quesenberry’s crashing his airplane into her home. A circuit court jury decided this legal malpractice case in Osborne’s favor, resulting in a judgment against Keeney in excess of $5 million. The Court of Appeals affirmed the judgment, in part, but vacated a large portion of the damage award.1

We granted Osborne’s and Keeney’s separate petitions for discretionary review to consider three important issues presented in this case: first, whether the suit-within-a-suit procedure as approved by Kentucky precedent remains the proper method for litigating legal malpractice under the circumstances presented in this case; second, whether the physical impact rule—a rule. firmly embedded in Kentucky tort law—remains the proper threshold standard for claims involving emotional distress; and third, whether lost punitive damages should be recoverable in legal malpractice actions, an issue of first impression in Kentucky.

As to the first issue, we reaffirm our precedent holding the proper method for trying legal malpractice claims is the suit-within-a-suit, which requires the trial court to instruct the jury as if it were trying the underlying tort case before instructing the same jury on the legal malpractice claim. The trial court in the case at hand properly tried the case using the suit-within-a-suit method but erred when it failed to instruct the jury on Quesenberry’s negligence. Lacking a jury determination on this issue, Osborne failed to establish that Keeney’s malpractice proximately caused her loss. And the Court of Appeals erred by upholding the trial court’s instruction on this issue. So we reverse the decision of the Court of Appeals and remand the case to the trial court for further proceedings consistent with this opinion.

Because the second issue is likely to recur in the event of a retrial on remand, we take this opportunity to address the physical impact rule and hold that it is no

[399 S.W.3d 6]

longer the threshold standard in Kentucky law for claims involving emotional distress. Today, we clarify the rule and now require that emotional-distress plaintiffs first satisfy the elements of a general negligence claim. Further, a plaintiff will not be allowed to recover without showing, by expert or scientific proof, that the claimed emotional injury is severe or serious. Put simply, a plaintiff must show that the defendant was negligent and that the plaintiff suffered mental stress or an emotional injury, acknowledged by medical or scientific experts, that is greater than a reasonable person could be expected to endure given the circumstances.

Because the third issue is also likely to recur in the event of a retrial on remand, we hold that lost punitive damages are not recoverable against an attorney in a legal malpractice case. The purpose for punitive damages is clear in this jurisdiction, and transposing them into a form of compensatory damages to allow a legal malpractice plaintiff to recover thwarts that purpose. By disallowing recovery for lost punitive damages, we align the jurisprudence in this jurisdiction with a growing number of states.

A. The Airplane Crash.

In October of 2002, while Osborne was sitting alone at home watching TV, an airplane crashed through her roof, resulting in significant damage to the home and its contents. The plane had just departed from a nearby airport. The pilot, Quesenberry, experienced mechanical difficulties with the plane before takeoff. By his estimation, the engine drive-pump had lost its prime. An airport mechanic offered to help, but Quesenberry declined and said he had encountered the problem a few times before. Attempting a quick fix to return home, Quesenberry squirted fuel into the air-intake of the left engine. The engine backfired, catching fire. Quesenberry extinguished the flames and again squirted fuel into the engine in order to get it to start. Finally, the engine started and Quesenberry took off.

Shortly after leaving the runway, at an altitude of approximately fifty feet, Quesenberry lost power to the left engine and began a rapid descent. He was able to steer the plane to avoid potentially greater damage on the ground below, but he did not avoid hitting Osborne’s home. The plane sliced through her chimney, inflicted significant damage to the second story, and set the house afire before coming to rest in the adjacent street. Osborne said she heard a “sonic boom” and ran outside to discover her home on fire. No debris from the airplane or the house struck Osborne in any manner, and she suffered no physical injury as a result of the crash.

B. Osborne’s Emotional Distress Claim.

Shortly after the crash, Osborne was transported to a local hospital where Dr. Rhonda Sively, an internist, treated her. Osborne had suffered for years from anxiety, depression, hypertension, insomnia, and diabetes. Dr. Sively testified that Osborne was in obvious shock, and her preexisting ailments were exacerbated. According to the doctor, Osborne was emotionally unstable as a result of the destruction of her home and her personal belongings. For an extended period of time after the crash, Osborne received treatment.

C. Keeney’s Representation and Malpractice Trial.

Osborne retained Keeney approximately six months after the crash. Shortly after being hired, Keeney arranged a meeting

[399 S.W.3d 7]

with an adjuster for Osborne’s homeowner’s insurance carrier. Keeney continued discussions that Osborne initiated with her carrier regarding her homeowner’s claims. Ultimately, Osborne received a series of checks from her homeowner’s insurance carrier. And, under the terms of the engagement contract she signed with Keeney, Keeney took 20 percent of these insurance proceeds.2 According to Keeney, this was a “front-loaded” fee arrangement; and Osborne would receive more from the claims to be asserted against Quesenberry. Payments totaling over $234,000 came from Osborne’s homeowner’s insurance.

In August of 2004—nearly two years after the crash—Keeney attempted to dissuade Osborne from proceeding with litigation against Quesenberry. By this time, the applicable one-year statute of limitations had expired. But Osborne insisted on going forward with litigation in hopes of receiving a substantial damages award. So Keeney filed a lawsuit against Quesenberry in state court in October 2004.

Quesenberry removed the case to federal court and claimed the action was barred by the applicable statute of limitations. Osborne claimed that she was unaware that the statute of limitations had expired.3 Keeney, in an attempt to avoid summary dismissal, filed a motion requesting the federal court hold the case in abeyance because Osborne was mentally incapacitated. Keeney had evidence that Osborne was still suffering the emotional effects, not only of the airplane crash, but also from her preceding divorce and bankruptcy. After allowing Quesenberry to depose Dr. Sively and Osborne, the federal court denied the motion for abeyance and entered summary judgment for Quesenberry because the action was barred by limitations.

Keeney did not respond to Quesenberry’s motion for summary judgment. And Keeney did not inform Osborne that a motion for summary judgment had been filed. Furthermore, Keeney did not answer interrogatories or participate in discovery leading up to the dismissal. The federal court went so far as to observe in a written order that Keeney had acted with “willfulness, bad faith [,] or fault”; was warned several times regarding his conduct; and that his conduct alone was sufficient to warrant a dismissal of Osborne’s claim.

It was January of 2006 before Osborne became aware that her federal lawsuit against Quesenberry was dismissed. Dr. Sively, not Keeney, told Osborne. Dr. Sively had become aware of the dismissal through a conversation with Quesenberry’s counsel. Without Osborne’s knowledge, the federal court entered judgment against her for the cost of the dismissed action.

Osborne later filed this action against Keeney asserting breach of contract, legal malpractice, and fraud and deceit. The jury returned a verdict in Osborne’s favor on all claims. The jury awarded Osborne the following damages: (1) $54,924.04 for loss of her personal property; (2) $500,000 for pain and suffering from the airplane crash; (3) $750,000 as punitive damages against Quesenberry; (4) $53,025.39 for legal fees paid to Keeney; (5) $250,000 for

[399 S.W.3d 8]

mental anguish resulting from Keeney’s representation. And the jury awarded Osborne $3,500,000 in punitive damages against Keeney.

D. The Decision of the Court of Appeals.

The Court of Appeals affirmed the judgment, in part, but reversed several aspects of the jury’s verdict. The damages Osborne received for pain and suffering, both regarding the pilot’s conduct and Keeney’s representation, were vacated because there was no physical impact. Further, following a discussion of whether lost punitive damages 4 are recoverable under Kentucky law, the Court vacated the punitive damages against Quesenberry because Osborne did not prove them by clear and convincing evidence. And the Court reduced the punitive damages awarded againstKeeney from $3,500,000 to $1,000,000 because that was the amount of punitive damages Osborne itemized in interrogatory answers before trial. We granted Osborne’s and Keeney’s separate petitions for discretionary review in this Court.

        Taken together, Osborne and Keeney challenge several aspects of not only the decision of the Court of Appeals, but the trial court’s rulings as well. Foremost, Keeney argues that the trial court erroneously denied his motion for directed verdict. By allowing Osborne’s malpractice claim to go to the jury with arguably little evidence, Keeney claims the importance of proving the suit-within-a-suit is disregarded completely. Additionally, Keeney disagrees with the trial court’s refusal to instruct the jury on the underlying negligence claim against Quesenberry and the unwillingness of the Court of Appeals to address the issue. And Osborne petitions this Court either to find an impact for her emotional distress claim, or if we do not find a sufficient impact, abandon our prior jurisprudence and entertain crafting a new standard for claims involving emotional distress. Finally,Osborne claims that she should be entitled to recover from Keeney punitive damages she would have recovered from Quesenberry but lost as a result of Keeney’s malpractice.

A. Keeney’s Motions for Directed Verdict Were Not Erroneously Denied.

Before delving into the record and the evidence presented at trial, it is appropriate to look first at the standard of review to be used by this Court when reviewing similar matters. The role of an appellate court, when reviewing evidence supporting a judgment entered upon a jury verdict, is limited. The Court must only determine whether the trial court erred in failing to grant the motion for directed verdict. In doing so, “[a]ll evidence which favors the prevailing party must be taken as true[;] and the reviewing court is not at liberty to determine credibility or the weight which should be given to the evidence.” 5 This Court, when reviewing a ruling on a motion for directed verdict, “must ascribe to the evidence all reasonable inferences and deductions which support the claim of the prevailing party.” 6 Finally, “the appellate court

[399 S.W.3d 9]

must determine whether the verdict rendered is palpably or flagrantly against the evidence so as to indicate that it was reached as the result of passion or prejudice.” 7

The fact that Osborne, as Keeney repeatedly argues, did not call a witness with personal knowledge of the crash is not sufficient to warrant a directed verdict to be returned for Keeney. The plaintiff, as master of her claim, is entitled to present the evidence she deems sufficient, credible, and persuasive. The jury is fully capable of weighing the value of the evidence presented and determining whether or not no witness with “personal knowledge” is damning to the plaintiff’s case.8 Basically, Keeney argues that Osborne only put on circumstantial evidence. We have held that “to entitle a plaintiff to go to the jury on circumstantial evidence[,] the essential proven facts upon which liability can be based must do more than suggest a possibility that the defendant was at fault.” 9 That is, “the evidence must furnish some basis for the jury to decide that the probability of fault preponderates over the probability of innocence.” 10 We believe Osborne met this burden.

In the instant case, the trial judge correctly refused to direct a verdict for Keeney.11 Osborne presented evidence on the events that led to the airplane crash and the cause of the crash. Expert testimony was presented to show that the pilot was negligent. The pilot’s attorney acknowledged liability on the part of his client. Taking into account all reasonable inferences and deductions supporting Osborne, there was ample evidence for the claim to overcome the hurdle of directed verdict and reach the jury because the evidence “substantially tends to support the cause of action.” 12

It cannot be said that there was a complete absence of proof on a material issue or that no disputed issue of fact existed. The case was properly given to the jury, and a directed verdict should have been denied. As such, the jury verdict, supported by reason instead of passion or prejudice, will not be overturned on these grounds.

B. The Trial Court Committed Reversible Error by Improperly Instructing the Jury as to the Suit–Within–a–Suit.

Under Kentucky law, a plaintiff in a legal malpractice action has the burden of proving: “[ (]1) that there was an employment relationship with the defendant/attorney; [ (]2) that the attorney neglected his duty to exercise the ordinary care of a reasonably competent attorney acting in the same or similar circumstances; and (3) that the attorney’s negligence was the proximate cause of damage

[399 S.W.3d 10]

to the client.” 13 In order to show that the “attorney caused the plaintiff harm, the plaintiff must show that he/she would have fared better in the underlying claim; that is, but for the attorney’s negligence, the plaintiff would have been more likely successful.” 14

The manner in which the plaintiff can establish what should have happened in the underlying action, but for the attorney’s conduct, will depend on the nature of the attorney’s error.15 When dealing with a situation such as the instant case where a claim is lost, including, but not limited to, because it is barred by an applicable statute of limitations, a plaintiff must recreate an action that was never tried,16 The plaintiff must bear the burden the plaintiff would have borne in the original trial. And the lawyer is entitled to any defense that the defendant would have been able to assert in the original trial. This is what is commonly known in Kentucky law as the suit-within-a-suit approach. While this approach has been repeatedly affirmed, the actual procedure for trying such a case remains elusive. Here, we are presented with the question of how a jury should be instructed in a suit-within-a-suit.

When trying a suit-within-a-suit, especially when the reason for the lost claim is the expiration of the relevant statute of limitations, 17 “all the issues that would have been litigated in the [barred] action are litigated between the plaintiff and the plaintiff’s former lawyer.” 18 And, in recreating the litigation, the usual instructions that should be given in the underlying case, including any special verdict forms, are those to be used in the malpractice

[399 S.W.3d 11]

trial.19 Several states have used this commonsense approach to instructing the jury.20

In fact, this is the approach that Kentucky law has adopted. Daugherty v. Runner has become a keystone in the practice of legal malpractice actions in the Commonwealth. Palmore and Cetrulo cite Daugherty as the source for the recommended legal malpractice jury instruction. 21 WhileDaugherty does provide a clear, concise instruction for a jury to determine whether an attorney has breached the standard of care, it also provides a significant example of how a jury should be instructed in a suit-within-a-suit. Daugherty involved the failure of an attorney, while representing a client injured in an automobile accident, to file timely a medical malpractice claim following the death of the client. At trial, the court instructed the jury as follows:

“The Court instructs the Jury:

1. It was the duty of the physicians providing medical care and treatment to Lula [Daugherty] Roach to exercise that degree of care and skill which is expected of reasonably competent practitioners in the same class they belong, acting in the same or similar circumstances.

2. The Jury will answer the following interrogatory:

Do you believe from the evidence that the physicians providing medical care and treatment to Lula Daugherty Roach at St. Joseph Hospital in Lexington, Kentucky, from February 22, 1972, to March 17, 1972, failed in their duty as described in instruction No. 1, and said failure was the substantial factor in causing the death of Lula Daugherty Roach?

3. If, and only if, you answered ‘yes’ to instruction No. 2, then you will determine the amount in damages, as you believe from the evidence, the Estate of Lula Daugherty Roach

[399 S.W.3d 12]

would have been awarded against the physicians involved….

4. It was the duty of the defendant, E. Michael Runner, Attorney at Law, in undertaking the legal representation of the Estate of Lula Daugherty Roach, to exercise that degree of care and skill expected of a reasonably competent lawyer acting in the same or similar circumstances about which you have heard evidence.” 22

So, in Daugherty, it is plain to see that the jury was instructed on the underlying action and then asked to find whether the attorney was negligent or not. We hold that this is the required way of determining causation in a legal malpractice claim involving a suit-within-a-suit.


For an attorney to be found liable for legal malpractice, it must be shown that the attorney violated the standard of care and that such violation was the proximate cause of injury to the client, i.e., the client would have been successful in the underlying claim but for the negligence of the attorney. The client cannot be found successful on the underlying claim if the jury is not fully instructed on the underlying claim. And it follows then that the attorney cannot be found liable without fully litigating the underlying claim and properly instructing the jury.

In the instant case, the trial court properly instructed the jury on the standard for legal malpractice to be applied to Keeney. But the trial court failed to instruct the jury at all on the underlying case.23 The instructions skip a logical and necessary step in the process—that is, a finding thatOsborne would have been successful on the underlying claim by resolving the question of the liability of Quesenberry. Instead, the jury found Keeney breached the applicable standard of care for malpractice and proceeded to award damages to Osborne from the underlying case without ever proving causation. Providing a jury instruction on the underlying case would have ensured that Keeney’s malpractice did, as a matter of fact, cause Osborne’s claimed injury.

As a result, the trial court’s jury instructions in this case are erroneous. They failed to advise the jury adequately of what it had to believe from the evidence in order to return a verdict in favor of Osborne. 24 In upholding the jury instructions, the application of the “bare bones” principle by the Court of Appeals was incorrect and misguided. It is undisputed that “bare bones” instructions are preferred in Kentucky.25 And we do not depart from that preference today. But “bare bones” does not mean nonexistent or missing. As former Justice William S. Cooper wryly stated, “I have no quarrel with the ‘bare bones’ approach to instructing juries in Kentucky—so long as the jury is given all of the bones.” 26 “Bare bones”

[399 S.W.3d 13]

instructions are intended to “pare down unfamiliar and often complicated issues in a manner that jurors, who are often not familiar with legal principles, can understand.” 27 But the “bare bones” principle does not, and should not, prevent the law of the case from being presented to the jury.

We prefer “bare bones” instructions to make the oft-confusing task of determining liability easier for the layperson to perform. But while simple instructions are preferred, correct and complete instructions are required. 28 Here, the “jury was given less than a whole skeleton.” 29 Having determined the instructions to be erroneous, we must now determine whether the error is harmless.

Of course, “it is a rule of longstanding and frequent repetition that erroneous instructions to the jury are presumed to be prejudicial.” 30 We recently affirmed our intention to “return and adhere to the presumption of prejudice inherent in an erroneous instruction.” 31 This presumption is rebuttable, but the party asserting the error is harmless bears the burden of affirmatively showing that no prejudice resulted from the error.32 In order to show no prejudice resulted from the error, it must be proven there was “no reasonable possibility” 33 the erroneous jury instruction affected the verdict. Here, the omission of the instruction as to the underlying negligence action against Quesenberry certainly made it easier to find Keeney liable to Osborne, as one less finding was required. The failure properly to instruct the jury on the underlying case, however, had the effect of allowing the jury to find Keeney liable without the necessary element of causation. We cannot say that the error in this case was harmless. For the reasons stated herein, we must reverse the judgment and remand for further proceedings consistent with this opinion. 34

Our decision to reverse and remand renders the parties’ remaining allegations of error moot. But we will address them because they are likely to recur if the case is retried.35

[399 S.W.3d 14]


A. A Physical Impact or Touching is No Longer Required to Recover for Claims Involving Emotional Distress.

This Court has long been wed to the principle that “an action will not lie for fright, shock[,] or mental anguish which is unaccompanied by physical contact or injury.” 36 This commitment has not endured without criticism. Nearly since its inception into American law in the late 19th century, 37a large body of scholarly work has disparaged the impact rule. 38 The criticism has not come from scholars alone. Our sister jurisdictions have retreated from the impact rule in droves, leaving Kentucky in a very small minority.39

[399 S.W.3d 15]

The reasons generally given for Kentucky courts’ adoption of the impact rule include: “the damages resulting from the fright are too remote; that fright caused by negligence not being itself a cause of action, none of its consequences can give a cause of action; and that to open the courts to this character of case would tend to promote fraud and the presentation of claims for injuries beyond the capacity of juries properly to assess.” 40 Moreover, there has been concern that allowing such claims will result in a flood of new litigation.41 These concerns, while reasonable, are no longer sufficient to justify adherence to the impact rule.

Unfortunately, the impact rule, while adopted with good intentions, has proven difficult in its application and has been repeatedly stretched and diluted. The supposed beauty of the impact rule is that it draws a bright line for determining when a plaintiff is entitled to recover for emotional injuries. 42 At first blush, this may make sense and seem to counterbalance the feared possibility of subjectivity in finding emotional injury. But, in practice, what constitutes a sufficient impact for purposes of liability is not an easy determination for courts. This determination is further complicated by concerns for justice and a desire to ameliorate the potential harshness of the rule. Illustrative of this difficult balance between “compensating persons who have sustained emotional injuries attributable to the wrongful conduct of others” and “avoiding the trivial or fraudulent claims that have been thought to be inevitable due to the subjective nature of these injuries” 43 are the cases of Deutsch v. Shein44 and Wilhoite v. Cobb.45

In Deutsch, this Court found that “the amount of physical contact or injury that must be shown is minimal.” 46 Indeed, a cause of action will be supported if the contact is “slight, trifling, or trivial.” 47 The bombardment of Mrs. Deutsch’s body with x-rays was found to be sufficient contact to satisfy the impact rule.48 The facts in Deutsch were especially tragic. Mrs. Deutsch, after being subjected to numerous radiological tests and diagnostic x-rays while pregnant, aborted her fetus.

X-rays are simply waves at a much higher frequency with much higher energy than light waves or sound waves, but waves nonetheless. If bombardment with x-rays is sufficient contact, would not bombardment with light waves while witnessing an event be sufficient contact? Would

[399 S.W.3d 16]

not the hearing of an event be sufficient contact to justify recovery for emotional distress? The answer in this jurisdiction for a very long time has been no.

In Wilhoite, like Deutsch, the facts were especially tragic. But, unlike in Deutsch, the plaintiff was denied the chance for a recovery because of a lack of physical impact. Wilhoite witnessed her infant daughter suffer severe injuries when the truck driven by the defendant left the road and struck her. The infant daughter eventually died as a result of her injuries. The trial court granted summary judgment to the defendant because Wilhoite suffered no physical impact, and the Court of Appeals affirmed. But the Court of Appeals did note that “[i]t might be questioned whether there is any logical difference between the [x]-rays which caused the mother distress in [Deutsch ] and the light rays which caused the mother distress in this case.” 49

In the case at hand, the trial court noted in overruling Keeney’s motion for directed verdict on the emotional distress claim that if x-rays were enough, then certainly the reverberation of the house and sound waves emitted upon the plane’s impact were sufficient to justify recovery. The trial court’s observation is not without merit. Looking at Kentucky case law, a logical conclusion would be that sound waves or Shockwaves from an incident could be sufficient contact to allow recovery in claims involving emotional distress. The Court of Appeals disagreed with the trial court’s reasoning and reversed Osborne’s claim for emotional distress. In reality, the bright line of impact establishing liability is not so bright.

Additionally, while the rationale underlying the impact rule remains relevant, there are more effective methods of effectuating and protecting that rationale. We have remained steadfast in our commitment to requiring a physical contact because emotional distress “is possibly trivial and simply too speculative and difficult to measure unless [it is] directly linked to and caused by a physical harm.” 50 But medical science and treatment have vastly improved since the late 19th century, especially in the field of mental health. In Congleton, this Court foreshadowed what may be required to depart from the impact rule, yet remain vigilant of the intangible nature of emotional injury. We noted an injury action involving a first-hand account from the victim or reliable eyewitness testimony and demonstrable evidence, proven through expert testimony, of mental distress manifesting in a medical injury would give rise to a strong challenge to the impact rule.51 Such a case is before us here.

We act today, as always, mindful of the value of precedent and the doctrine of stare decisis. The doctrine of stare decisis “is the means by which we ensure that the law will not merely change erratically, but will develop in a principled and intelligible fashion.” 52 Changing the “ebb and flow of settled law” 53 is not something we take lightly, and we do so only after careful consideration. While stare decisis “permits society to presume that bedrock principles are founded in the

[399 S.W.3d 17]

law rather than in the proclivities of individuals,” 54 it does not necessitate that this Court “unquestioningly follow prior decisions” when we are otherwise compelled.55 This Court is not assigned the duty of maintaining the watch as the law ossifies. Sound jurisprudence suggests that we depart from the impact rule in favor of a standard more at home in our current societal and legal landscape.

Today, believing the justification supporting the existence of the impact rule is no longer valid, we clarify our rule. Our research reveals that at least forty jurisdictions have either rejected the impact rule or abandoned it. An exhaustive review of the law surrounding this issue and the strengths and weaknesses of approaches used in other jurisdictions has persuaded us that these cases should be analyzed under general negligence principles. That is to say that the plaintiff must present evidence of the recognized elements of a common law negligence claim: (1) the defendant owed a duty of care to the plaintiff, (2) breach of that duty, (3) injury to the plaintiff, and (4) legal causation between the defendant’s breach and the plaintiff’s injury.56 Furthermore, we recognize that emotional tranquility is rarely attained and that some degree of emotional harm is an unfortunate reality of living in a modern society.57 In that vein, to ensure claims are genuine, we agree with our sister jurisdiction, Tennessee, that recovery should be provided only for “severe” or “serious” emotional injury.58 A “serious” or “severe” emotional injury occurs where a reasonable person, normally constituted, would not be expected to endure the mental stress engendered by the circumstances of the case.59 Distress that does not significantly affect the plaintiffs everyday life or require significant treatment will not suffice.60 And a plaintiff

[399 S.W.3d 18]

claiming emotional distress damages must present expert medical or scientific proof to support the claimed injury or impairment.61 This rule accords with the concerns we expressed in Congleton and the majority of jurisdictions in the United States. Moreover, this rule continues to address and support the concerns that prompted the adoption of the impact rule in the first place. But now the rule is updated in light of societal advancements in mental health treatment and education, in a manner that assures individuals suffering from legitimate emotional injuries will be able to seek recovery.

Criticism of this rule is to be expected. Most likely, there will be concern over a potential flood of litigation or much lamentation about the deletion of a supposed predictable demarcation of liability. We take this opportunity to dispel the initial volley of criticism by noting that there has been no noticeable flood of litigation in other jurisdictions that have adopted a similar rule.62 We believe that by applying general negligence principles to these claims, the line for recovery will be even more predictable because attorneys and litigants are intimately familiar with the elements of common law negligence. Moreover, the reasoning underlying the impact rule is unsound.63 It is at least arguable that the impact rule in its current form promotes fraudulent or trivial claims because the impact required is de minimis. Plaintiffs are encouraged to engage in extravagant and creative pleading in order to find a sufficient impact. We no longer tether ourselves to such a rule.

In adopting a new rule for claims involving emotional distress, we note that generally, there is no good reason for not applying a new rule of tort law retroactively.64 The area of tort law is not one where stability and predictability are often of utmost concern. We acted in this vein when we adopted comparative negligence in the landmark case of Hilen v. Hays.65 There, we stated that tort law was “unlike contract law” and the appellee had not acted in reliance on the state of the law at the time of the act, thus there was “no legitimate complaint against … retroactive application.” 66The circumstances of the case before us do not present any reason to depart from this view and, as such, this opinion will be applied retroactively.

[399 S.W.3d 19]


B. Lost Punitive Damages Are Not Recoverable in A Legal Malpractice Action.

We now turn to the issue of whether a legal malpractice plaintiff may recover punitive damages he would have recovered in the underlying action but for the attorney’s professional negligence. This is apparently an issue of first impression in Kentucky 68 and is one that few courts across the nation have considered. Those jurisdictions that have dealt with the issue are split on whether recovery of these lost punitive damages should be allowed with the recent trend appearing to prohibit recovery.69

Jurisdictions that have allowed recovery have done so on the basis of compensatory damages because they were lost as a result of the attorney’s negligence.70 Essentially, the punitive damages are converted to compensatory damages awarded as a result of the attorney’s negligence. On the other side, recovery of these damages has been prohibited because the purpose of punitive damages would not be advanced.71 In its opinion, the Court of Appeals observed that the recovery of lost punitive damages would be compensatory because the loss “is a result of the lawyer’s negligence.” We disagree. Because of our longstanding case law noting the purpose of punitive damages and this jurisdiction’s stated requirement of allowing recovery only against the wrongdoer, today we align with those jurisdictions that prohibit recovery of lost punitive damages in legal malpractice actions.

Kentucky has a history of awarding punitive damages to penalize egregious

[399 S.W.3d 20]

conduct.72 The purpose of allowing damages of a punitive nature “is to punish and discourage [the defendant] and others from similar conduct in the future.” 73 This purpose serves more of a societal interest rather than a private one as it strives to punish the wrongdoer rather than compensate the party harmed. It is important to note that in our judicial system, while punitive and compensatory damages are typically awarded by the same decision-maker at the same time, they serve distinctly different purposes.74 “The object of compensatory damages is to make the injured party whole to the extent that it is possible to measure his injury in terms of money.” 75 Punitive damages have nothing to do with a plaintiff’s loss or making the plaintiff whole. Rather, punitive damages “serve a broader function … aimed at deterrence and retribution.” 76

Allowing Osborne to recover lost punitive damages would not advance the policy underlying punitive damages in any way. In fact, allowing recovery would be antithetical to what punitive damages stand for, untying “the concept of punitive damages from its doctrinal moorings.” 77 As a result, punitive damages cannot effectively be transformed into compensatory damages without nullifying the explicit purpose behind the award.

Aside from the failure to conform to the purpose of punitive damages, the plain language of KRS 411.184 prohibits the recovery of lost punitive damages by a legal-malpractice plaintiff. KRS 411.184(2) allows: “[a] plaintiff [to] recover punitive damages only upon proving[ ] … that thedefendant from whom such damages are sought acted toward the plaintiff with oppression, fraud[,] or malice.” 78 Osborne argues that this Court should read KRS 411.184(2) to allow recovery against Keeney under the facts presented in the instant case. More specifically, Osborne argues that the damages sought are not punitive at all, but are merely compensatory and are appropriately awarded against Keeney.

While the issue of lost punitive damages is novel in the legal malpractice setting, we have dealt with an analogous issue in cases involving deceased tortfeasors. In Stewart v. Estate of Cooper,79 this Court held that a plaintiff may not recover punitive damages from a decedent’s estate for the decedent’s

[399 S.W.3d 21]

oppressive, fraudulent, or malicious conduct. The reasoning for this decision was simple. KRS 411.184 is clear on its face, and the estate itself had not acted toward the defendant with the requisite culpability. While factually distinct, a legal malpractice action provides “another situation in which responsibility for punitive damages is sought against a party other than the original wrongdoer.” 80 The common thread in these situations is that the stated goal of punitive damages—to deter and punish the wrongdoer—is frustrated when a party other than the wrongdoer is assessed the damages.

Osborne also argues that KRS 411.165, the statute controlling liability of an attorney for professional negligence, allows recovery of lost punitive damages because it says that an attorney found guilty of malpractice “shall be liable to the client for all damages and costs sustained by reason thereof.” In crafting her argument, Osborne seizes on the “all damages” language used in the statute to contend that “lost” punitive damages are obviously included and, thus, recoverable. Although we recognize the logic of Osborne’s argument, we disagree.

In Shawnee Telecom Resources, Inc. v. Brown, we stated the general method in which this Court interprets statutes:

In construing statutes, our goal, of course, is to give effect to the intent of the General Assembly. We derive that intent, if at all possible, from the language the General Assembly chose, either as defined by the General Assembly or as generally understood in the context of the matter under consideration. We presume that the General Assembly intended for the statute to be construed as a whole, for all of its parts to have meaning, and for it to harmonize with related statutes. We also presume that the General Assembly did not intend an absurd statute or an unconstitutional one. Only if the statute is ambiguous or otherwise frustrates a plain reading, do we resort to extrinsic aids such as the statute’s legislative history; the canons of construction; or, especially in the case of model or uniform statutes, interpretations by other courts. 81

On their face, KRS 411.184 and 411.165 do not appear to be ambiguous. But in giving the words in the statutes “their commonly understood meaning,” 82 we are faced with two statutes that appear to be in conflict. The “all damages” language of KRS 411.165, given its plain meaning, would allow legal-malpractice plaintiffs to recover all damages without limitation. 83 This would seriously undercut the mandate imposed by KRS 411.184 that recovery of punitive damages be limited to only the defendant who acted toward the plaintiff with oppression, fraud, or malice. In this case, allowing Osborne to recover “all damages” would allow recovery from Keeney those damages that are required by statute to be recovered from the pilot, Quesenberry.

[399 S.W.3d 22]

“In harmonizing the conflict between two statutes that relate to the same subject, Kentucky follows the rule of statutory construction that the more specific statute controls over the more general statute.” 84 Here, KRS 411.184 is the more specific statute. It exclusively deals with the very damages that Osborne wishes to recover. This Court has explicitly stated that KRS 411.184 does not permit recovery against a party other than the wrongdoer, and this case is no different. Lost punitive damages are not recoverable in a legal malpractice action.

Moreover, when interpreting statutes, we do not read them in a vacuum. The “all damages” language used in KRS 411.165 must be read in conjunction with other statutes of similar import and relevance.85 The statutes at issue are located in the same chapter of KRS, both concern recoverable damages, and, as such, are in pari materia (“in the same matter”). Statutes of this nature “should be construed together and, if possible, should be construed so as to harmonize and give effect to provisions of each.” 86 In so doing, we hold that “all damages” in KRS 411.165 does not include lost punitive damages because, as stated previously, KRS 411.184 only allows recovery from the individual who acted toward the plaintiff with “oppression, fraud[,] or malice.” Allowing Osborne to recover “all damages” under KRS 411.165 would render KRS 411.184 a nullity. “All damages” can be read in harmony with KRS 411.184 as allowing a plaintiff to recover all damages to which the plaintiff is entitled, i.e., those in which the requisite elements for recovery have been satisfied.87 This does not include lost punitive damages in a legal malpractice action.

Finally, it is a well-known canon of statutory interpretation that the later controls the former when two statutes appear to be in conflict. 88 The statute controlling the awarding of punitive damages, KRS 411.184, was enacted twelve years after KRS 411.165. This principle standing alone would favor KRS 411.184.

[399 S.W.3d 23]

Today we attempt to clarify an intricate issue in the practice of legal malpractice claims. We hold that lost punitive damages are not recoverable from the attorney against whom a malpractice claim is brought. We do so for two main reasons: first, the argument that punitive damages can be recast as compensatory damages in a legal malpractice claim is flawed and unsupported by our case law; and, second, the deterrence function of punitive damages would be completely written out of the law because the nexus between the attorney accused of malpractice and the actual wrongdoer is far too attenuated. 89 As such, a client’s general right to be made whole should yield in light of the nature and purpose of punitive damages.

Not permitting plaintiffs to recover lost punitive damages means that they may not recover as much as they might have in the underlying action. While this may seem harsh, we recognize that this rule is ameliorated by the fact that a plaintiff may seek punitive damages from the attorney for the attorney’s own conduct. The Court of Appeals cited Hendry v. Pelland, a D.C. Circuit case, for the proposition that it must be shown the attorney acted with “fraud, ill will, recklessness, wantonness, oppressiveness, (or) willful disregard of the (client’s) rights.” 90 We reject the need for such a standard and hold that a legal-malpractice plaintiff, in the same vein as any other plaintiff, must show that the attorney was grossly negligent in handling the case and acted with oppression, fraud, or malice. This is consistent with our prior case law awarding punitive damages against attorneys.91 Accordingly, while Osborne may not seek lost punitive damages in a retrial, she may ask the trial court to instruct the jury on punitive damages for Keeney’s conduct in his handling of her claim.92

        In legal malpractice actions requiring a suit-within-a-suit, the trial court must instruct the jury on the law of the underlying action in addition to the law involved in the malpractice action. The jury should be instructed as if it were the jury in the underlying case, and success on the underlying claim instruction is necessary to a legal malpractice recovery.

Additionally, because it is likely to occur upon the remand of this case, we hold that the impact rule is no longer the rule of law in Kentucky. A plaintiff claiming emotional distress must satisfy the elements of a general negligence claim, as well as show a severe or serious emotional injury, supported by expert evidence. And a plaintiff in a legal malpractice claim may not recover lost punitive damages. This Court refuses to convert lost punitive damages to compensatory damages for legal malpractice actions. In doing this, we reaffirm the

[399 S.W.3d 24]

clearly stated and well-reasoned purpose for punitive damages.

We conclude that the new rules espoused today governing claims involving emotional distress and lost punitive damages in legal malpractice actions shall apply to: (1) the present case; (2) all cases tried or retried after the date of filing of this opinion; and (3) all cases pending, including appeals, in which the issue has been preserved.

Reversal is necessary in this case because the trial court erred by failing to instruct the jury on the law of the underlying case involving the negligence of the pilot, Quesenberry. Accordingly, we reverse the decision of the Court of Appeals and remand this case to the trial court for further proceedings consistent with this opinion.

MINTON, C.J.; ABRAMSON, CUNNINGHAM, NOBLE, SCOTT, and VENTERS, JJ., sitting. ABRAMSON, CUNNINGHAM, and NOBLE, JJ., concur. VENTERS, J., concurs, in part, and dissents, in part, by separate opinion in which SCOTT, J., joins. SCHRODER, J., not sitting.

VENTERS, J., Concurring, in part, and Dissenting, in part.

While I concur with the Majority in the elimination of the physical impact rule and in requiring the use of the suit-within-a-suit method for trying legal malpractice claims, I disagree with its decision to the extent that it insulates lawyers from liability for the negligent destruction of a client’s claim for punitive damages. The Majority sees conflict between KRS 411.184 and KRS 411.165 where, in this case, none exists. As explained below, KRS 411.184 is plainly not implicated in the issue of whether Osborne may assert a claim for lost punitive damages. And more specifically, KRS 411.165 states a clear legislative policy that negligent lawyers must be held responsible for all of the damages sustained by the client. The Majority opinion defeats that policy with the mistaken notion that Osborne seeks to hold Keeney vicariously liable for Quesenberry’s gross negligence. Therefore, I respectfully dissent.

The Majority incorrectly holds that, because KRS 411.184(2) prohibits recovery of punitive damages from anyone but “the defendant from whom such damages are sought,” Osborne’s claim against Keeney for “ lost punitive damages ” is barred. The Majority errs because Osborne does not seek to impose punitive damages upon Keeney for Quesenberry’s conduct. That aspect of her complaint is not a claim for punitive damages; it is a claim for compensatory damages. There is a tremendous conceptual difference between the claim Osborne had for “punitive damages” against Quesenberry and her claim against Keeney for “lost punitive damages.” The former was truly a claim for punitive damages; the latter is clearly a claim for compensatory damages.

Osborne’s claim for punitive damages against Quesenberry was a vested property right that she owned and it had economic value, just as her house had value. Because of Keeney’s professional negligence, the value of that claim, like her claim for the damage to her house, was lost; the value of the punitive damage claim was reduced to $0.00. Plainly, under KRS 411.184, Osborne would have no right to recover from anyone for Quesenberry’s alleged gross negligence or recklessness. But she does not seek recovery for Quesenberry’s conduct—she’s already lost that opportunity because of Osborne’s negligence. Her present claim is to be compensated for the destruction of her right to assert a punitive damage claim. That is purely a claim for compensatory damages

[399 S.W.3d 25]

that does not implicate KRS 411.184. It is simply a part of her lawsuit to recover what she lost financially when Keeney neglected to pursue her cause of action. If successful, Osborne’s claim would not punish Keeney for Quesenberry’s misconduct. Rather, it would compensate Osborne for the economic harm she sustained due to Keeney’s own negligent conduct. And that is exactly what KRS 411.165 says must happen. KRS 411.165(1) mandates that the negligent lawyer “shall be liable to the client for all damages and costs sustained by reason [of his professional negligence];” (emphasis added) not just some of the damages, all of the damages. That includes, by definition, the financial damage Osborne suffered when her punitive damage claim against Quesenberry was, like her house, destroyed. It is what she would have had but for her lawyer’s negligence. It is intended to provide recompense for what she lost, not to punish Keeney (or anyone) in Quesenberry’s stead.

Perhaps the issue gets confused because of the way we ascertain the extent of her economic loss. The value of the lost claim can be determined a number of ways, and I agree with the Majority that the fairest way is the trial-within-a-trial approach. But in using that approach, we must not lose sight of what is truly on trial. If her suit was successful, Keeney would not be adjudged to be responsible for the negligent destruction of Osborne’s house or for the medical expenses, and mental anguish she suffered because of that ordeal. Keeney would be liable for the damages that naturally flowed from his own acts or omissions. Obviously, those damages include the value of her lost claims for the damage to her house and her belongings, her medical expenses, and the value of her lost claim for mental anguish and distress. But they also include the economic loss caused by the destruction of her punitive damage claim, which was separately destroyed by Keeney’s negligence just as surely as her house was by Quesenberry’s negligence. The trial-with-in-the-trial does not substitute Keeney as the party-defendant in the place of Quesenberry. It is simply the method that we have chosen to determine the value of those losses sustained by Osborne because of Keeney’s negligence.

The Majority gives significant weight to the historical underpinnings of punitive damages, that is, to deter and punish the wrongdoer. While that observation, concerning the historical roots of punitive damages, is unassailable, it is not relevant to the issue under review. The issue we consider is not punitive damages per se; rather the issue we review is lost punitive damages caused by professional negligence.

In summary, KRS 411.184 does not apply because Osborne’s claim does not seek to punish Keeney for what Quesenberry did. Her claim is to be compensated for the financial loss she sustained because of Keeney’s inaction. KRS 411.165 requires us to hold the lawyer responsible to the client for all of the damages the client sustained by reason of his negligence. It makes no exception for damages caused when a lawyer destroys the client’s claim for punitive damages. It follows that when an opportunity to recover punitive damages is lost because of professional negligence, the damage cannot properly be categorized as “punitive damages”; rather, the lost damages are transformed into, and correctly categorized as, compensatory damages. Therefore, KRS 411.184(2) is irrelevant to our review of this issue, and accordingly, I dissent.

SCOTT, J., joins.


1. The Court of Appeals appropriately resolved the issue concerning Carolina Casualty in this action. This issue, whether the trial court retained jurisdiction over Osborne’s amended complaint adding Carolina Casualty as a defendant nineteen days after the entry of judgment, is rendered moot as a result of our decision today. Osborne, following proper procedure, may seek to add Carolina Casualty as a party on remand.

2. Osborne alleged the contract she initially signed was only three pages. And she further argued that Keeney attempted to produce a wholly different, eight-page contract with novel terms later during his representation. We reference the initial engagement contract here.

3. Keeney argued Osborne was aware of the statute of limitations issue and supported the legal strategy to rely on incapacitation as a defense.

4. That is, those punitive damages that potentially would have been recovered if the tort claim against Quesenberry had been timely filed. They are considered “lost” because of the alleged malpractice on the part of Keeney.

5.Bierman v. Klapheke, 967 S.W.2d 16, 18 (Ky.1998) ( citing NCAA v. Hornung, 754 S.W.2d 855 (1988)); Lewis v. Bledsoe Surface Min. Co., 798 S.W.2d 459 (Ky.1990).

6.Bierman, 967 S.W.2d at 18 ( citing Meyers v. Chapman Printing Co., Inc., 840 S.W.2d 814 (Ky.1992)).

7.Id. (citation omitted).

8.See id. (“It is not the function of the court to decide how much weight should be given his testimony…. Hence, we conclude … that the plaintiff’s evidence concerning the accident was sufficient to support a jury finding that seeping natural gas caused the explosion if the jury chose to believe the evidence.”).

9.Bryan v. Gilpin, 282 S.W.2d 133, 134–35 (Ky.1955).


11. Keeney moved for directed verdict at the close of Osborne’s case and again at the close of all evidence, thus, preserving the issue for appeal. Commonwealth v. Blair, 592 S.W.2d 132 (Ky.1979).

12.Fields v. Western Kentucky Gas Co., 478 S.W.2d 20, 22 (Ky.1972) (citation and internal quotations omitted).

13.Marrs v. Kelly, 95 S.W.3d 856, 860 (Ky.2003).

14.Id. See also Mitchell v. Transamerica Ins. Co., 551 S.W.2d 586, 588 (Ky.App.1977) (“[E]very malpractice action does not carry with it a right to monetary judgment. It is the law that a malpractice action against an attorney cannot be established in the absence of a showing that this wrongful conduct has deprived his client of something to which he would otherwise have been entitled.”).

15.Mallen & Smith, 4 Legal Malpractice § 37:15 (2012 ed.). See also Lewandowski v. Continental Cas. Co., 88 Wis.2d 271276 N.W.2d 284, 289 (1979) (“Regardless of the approach used to resolve the issue of liability and damages in a legal malpractice case[,] the ultimate goal should be to determine what the outcome should have been if the issue had been properly presented in the first instance…. The general rule should be adapted to the facts of the particular case so that it effects a fair balance between the rights and burdens of both the client and the lawyer who negligently conducts litigation on his client’s behalf. Situations can be readily conceived where it would be difficult to determine the value of an original action which could not be. tried, but it is the duty of the courts to fashion a remedy as best they can when the situations are presented.”).


17. We do note that a lawyer failing to file a claim before the expiration of the statute of limitations is the predominant circumstance in which the suit-within-a-suit approach is applied. See, e.g., Nika v. Danz, 199 Ill.App.3d 296145 Ill.Dec. 255556 N.E.2d 873 (Ill.App. 4th Dist.1990);Daugherty v. Runner, 581 S.W.2d 12 (Ky.App.1978); Neill v. Hemphill, 258 Neb. 949607 N.W.2d 500 (2000); Harline v. Barker, 912 P.2d 433 (Utah 1996); Bye v. Mack, 519 N.W.2d 302 (N.D.1994)Mitchell, 551 S.W.2d 586. But that is not to say it is the exclusive set of circumstances for which the suit-within-a-suit method is proper. See, e.g., Marrs, 95 S.W.3d 856. The determining factor is whether the injury claimed is dependent on the merits of the underlying action. For example, cases involving breach of the duty of loyalty and alleged misappropriation or misallocation of settlement proceeds may not require a suit-within-a-suit. SeeMallen & Smith, 4 Legal Malpractice § 37:15 (2012 ed.).

18.Restatement (third) of Law Governing Lawyers, § 53 cmt. (b).

19.Mallen & Smith, 4 Legal Malpractice § 37:32 (2012 ed.).

20.See, e.g., Alaska: Power Constructors Inc. v. Taylor & Hintze, 960 P.2d 20, 30–31 (Alaska 1998) (instructing the jury “to determine what the outcome would have been if [plaintiffs] lawsuit against [lawyer] … had not been dismissed. Thus, you are hearing this case as if you were the jury in the [underlying] case.”); Colorado: Miller v. Byrne, 916 P.2d 566, 579–80 (Colo.App.1995) (“… requires the trial court essentially to treat the jury in the legal malpractice case as it would treat the jury in the underlying [case], i.e., it must also give the instructions that should have been given in the underlying case.”); Florida: Michael Kovach, P.A. v. Pearce, 427 So.2d 1128 (Fla.App. 5th Dist.1983); Illinois: Nika, 145 Ill.Dec. 255556 N.E.2d 873,Orzel v. Szewczyk, 391 Ill.App.3d 283330 Ill.Dec. 381908 N.E.2d 569 (Ill.App. 1st Dist.2009); Massachusetts: Fishman v. Brooks, 396 Mass. 643487 N.E.2d 1377, 1380 (1986) (“Brooks’s case was tried on this theory[ ] and [,] thus[,] first involved the question of Fishman’s negligence in the settlement of Brooks’s claim[;] and, second, if that were established, the question whether, if the claim had not been settled, Brooks would probably have recovered more than he received in the settlement. This is the traditional approach in the trial of such a case. The original or underlying action is presented to the trier of fact as a trial within a trial. If the trier of fact concludes that the attorney was negligent, the consequences of that negligence are determined by the result of the trial within the trial. Thus, in the trial within the trial in this case, the jury had to determine whether the driver negligently caused Brooks’s injury and, if so, the damages Brooks suffered and the comparative fault of Brooks and the driver.”); Minnesota: Christy v. Saliterman, 288 Minn. 144179 N.W.2d 288 (1970); Virginia: Ortiz v. Barrett, 222 Va. 118278 S.E.2d 833, 836–37 (1981); Wisconsin: Lewandowski, 276 N.W.2d 284.

21.Palmore & Cetrulo, Kentucky Instructions to Juries, Civil § 21.01, p. 21–1 (5th ed.2006).

22. “Instructions Given to the Jury,” February 26, 1976, at 1–2, Daugherty, 581 S.W.2d 12 (No. 183590).

23. The jury was simply instructed that:

“It was the duty of Defendant Steven Keeney, in the underlying legal representation of Plaintiff, Brenda Osborne, to exercise the degree of care and skill expected of a reasonably competent lawyer acting under similar circumstances.

Do you believe from the evidence that Defendant Steven Keeney failed to comply with this duty and that such failure was a substantial factor in causing the loss sustained by Plaintiff, Brenda Osborne?”


24.Olfice, Inc. v. Wilkey, 173 S.W.3d 226, 229 (Ky.2005).


26.Lumpkins ex rel. Lumpkins v. City of Louisville, 157 S.W.3d 601, 607 (Ky.2005) (Cooper, J. dissenting).

27.Wilkey, 173 S.W.3d at 229.

28.Equitania Ins. Co. v. Slone & Garrett, P.S.C., 191 S.W.3d 552 (Ky.2006) (“Correct instructions are absolutely essential to an accurate jury verdict.”).

29.Lumpkins, 157 S.W.3d at 607 (Cooper, J. dissenting).

30.McKinney v. Heisel, 947 S.W.2d 32, 35 (Ky.1997).

31.Harp v. Commonwealth, 266 S.W.3d 813, 818 (Ky.2008).

32.McKinney, 947 S.W.2d at 35.

33.Emerson v. Commonwealth, 230 S.W.3d 563, 570 (Ky.2007).

34. The trial court also erred in its instruction on the fraud claim against Keeney. The instruction was incorrect because it did not require a finding that Keeney “either knew [the statements] were not true or acted with reckless disregard for whether they were true or not.” Palmore & Cetrulo, Kentucky Instructions to Juries, Civil § 31.08, p. 31–8 to 31–9 (5th ed.2006). Instead, the instruction appeared to be one for negligent misrepresentation as the jury only had to find Keeney “should have realized that the statements or conduct were false.” Id. at § 31.10, p. 31–11. In the event of a retrial, the jury should be properly instructed on the fraud claim.

35. This Court has consistently engaged in this type of review. See, e.g., Blane v. Commonwealth, 364 S.W.3d 140, 154 (Ky.2012); Sanderson v. Commonwealth, 291 S.W.3d 610, 614 (Ky.2009) (citations omitted); Bell v. Commonwealth, 245 S.W.3d 738, 743 (Ky.2008) (“Because the judgment has been reversed for the foregoing reasons, we will address only those additional assignments of error that are likely to recur upon retrial.”); Terry v. Commonwealth, 153 S.W.3d 794, 797 (Ky.2005) (“We will also address other issues that are likely to recur upon retrial.”); Springer v. Commonwealth, 998 S.W.2d 439, 445 (Ky.1999) (“Because the other issues raised by the appellants are likely to recur upon retrial, those issues will also be addressed in this opinion.”).

36.Deutsch v. Shein, 597 S.W.2d 141, 145–46 (Ky.1980) ( quoting Morgan v. Hightower’s Adm’r, 291 Ky. 58163 S.W.2d 21, 22 (1942)). See, e.g., Steel Technologies, Inc. v. Congleton, 234 S.W.3d 920, 928 (Ky.2007); Hetrick v. Willis, 439 S.W.2d 942, 943 (Ky.1969).

37. The first articulation of the rule is thought to be in Victorian Railways Commissioner v. Coultas, 13 App.Cas. (P.C. 1888). The case was overruled some thirteen years later, but that did not stop the rule from becoming widely accepted in the United States. In Mitchell v. Rochester Ry. Co., 151 N.Y. 10745 N.E. 354 (1896), New York became the first state to adopt the rule. Massachusetts followed shortly thereafter in Spade v. Lynn & B.R. Co., 168 Mass. 28547 N.E. 88 (1897). Kentucky, following the national trend, adopted the impact rule in Morse v. Chesapeake & O. Ry. Co., 117 Ky. 1177 S.W. 361 (1903), and refined it through a line of cases beginning with McGee v. Vanover, 148 Ky. 737147 S.W. 742 (1912)Kentucky Traction & Terminal Co. v. Bain, 161 Ky. 44170 S.W. 499 (1914); Smith v. Gowdy, 196 Ky. 281244 S.W. 678 (1922)Louisville &N.R. Co. v. Roberts, 207 Ky. 310269 S.W. 333 (1925).

38.See, e.g., Magruder, Mental and Emotional Disturbance in the Law of Torts, 49 Harv. L.Rev.. 1033 (1936); Prosser, Insult and Outrage, 44 Cal. L.Rev. 40 (1956); Prosser, Intentional Infliction of Mental Suffering: A New Tort, 37 Mich. L.Rev. 874 (1939); Throckmorton, Damages for Fright, 34 Harv. L.Rev.. 260 (1921); Comment, Negligence and the Infliction of Emotional Harm: A Reappraisal of the Nervous Shock Cases, 35 U. Chi. L.Rev.. 512 (1968); Comment, Negligently Inflicted Mental Distress: The Case For An Independent Tort, 59 Geo. L.J. 1237 (1971). Article of particular interest to Kentucky: Robert E. Sanders & Julie L. Duncan, Bystander’s Right to Bring a Cause of Action for Negligent Infliction of Emotional Distress in Kentucky: An Analysis of Major v. General Motors Corp. & Deutsch v. Shein, 24 N. Ky. L.Rev. 253 (Spring 1997).

39. Kentucky is one of only six states that still use the impact rule in some form. Florida has clung to its “hybrid” impact rule, despite “in a limited number of instances either recogniz[ing] an exception to the impact rule or [finding] it to be inapplicable.” Gracey v. Eaker, 837 So.2d 348, 355–56 (Fla.2002); for a closer look at the exceptions carved out by Florida courts, see Whitney Carson Harper, Case Comment, Florida Tort Law: Keeping Florida’s Impact Rule in Step With Society, 55 Fla. L.Rev. 1093 (2003). Georgia remains committed to the impact rule, although its application has been somewhat erratic. See Lee v. State Farm Mut. Ins. Co., 272 Ga. 583533 S.E.2d 82, 84–87 (2000) (acknowledging the history of Georgia’s emotional distress law and recognizing that “there have been attempts to find theories of recovery within the confines of the present rule in order to avoid its sometimes harsh results.”); for criticism of Georgia’s rule, see Christina Hull Eikhoff, Note, Out With The Old: Georgia Struggles With its Dated Approach to the Tort of Negligent Infliction of Emotional Distress, 34 Ga. L.Rev. 349 (1999). Indiana requires a “direct impact by the negligence of another” and “emotional trauma which is serious in nature” in order to maintain an action for emotional distress. Shuamber v. Henderson, 579 N.E.2d 452, 456 (Ind.1991). Kansas also maintains there must be a “physical impact”: an actual physical injury to the plaintiff in order to recover for emotional distress. Anderson v. Scheffler, 242 Kan. 857752 P.2d 667, 669 (1988). Finally, Nevada requires a physical impact occur before the recovery is allowed for emotional distress negligently inflicted. Olivero v. Lowe, 116 Nev. 395995 P.2d 1023, 1026–27 (2000); Barmettler v. Reno Air, Inc., 114 Nev. 441956 P.2d 1382, 1387–88 (1998).

40.269 S.W. at 334.

41.Bass v. Nooney Co., 646 S.W.2d 765, 769 (Mo.1983).

42.Lee, 533 S.E.2d at 86 (“However, the benefits of an impact rule are plain in that it provides a brighter line of liability and a clear relationship between the plaintiff’s being a victim of the breach of duty and compensability to the plaintiff.”).

43.Camper v. Minor, 915 S.W.2d 437, 441 (Tenn.1996).

44.597 S.W.2d 141.

45.761 S.W.2d 625 (Ky.App.1988).

46.Deutsch, 597 S.W.2d at 146.

47.Id. It is worth noting that the impact rule, in its current form, at least arguably promotes fraudulent or trivial claims because of the requirement of a plaintiff to find an impact, however de minimis.


49.Wilhoite, 761 S.W.2d at 626.

50.Congleton, 234 S.W.3d at 929;Morgan, 163 S.W.2d at 22 (“The reason being that such damages are too remote and speculative, are easily simulated and difficult to disprove, and there is no standard by which they can be justly measured.”).

51.Congleton, 234 S.W.3d at 930.

52.Vasquez v. Hillery, 474 U.S. 254, 265, 106 S.Ct. 61788 L.Ed.2d 598 (1986).

53.Chestnut v. Commonwealth, 250 S.W.3d 288, 295 (Ky.2008).

54.Vasquez, 474 U.S. at 265, 106 S.Ct. 617.

55.Chestnut, 250 S.W.3d at 295.

56.Pathways, Inc. v. Hammons, 113 S.W.3d 85, 88–89 (Ky.2003) (citations omitted).

57.SeeRestatement (Third) of Torts: Phys. & Emot. HarmM § 46 cmt. 1 & § 47 cmt.j.

58.Camper, 915 S.W.2d at 446.

59.See Paugh v. Hanks, 6 Ohio St.3d 72451 N.E.2d 759, 765 (1983); Restatement (Second) of Torts § 46. We note that individuals are well equipped to deal with the emotional stress generally experienced throughout day-to-day living. However, recovery is only permitted when the harm experienced reaches a level where a reasonable person would no longer be expected to adequately manage it. Many factors may be considered, including, but not limited to, the intensity of the harm, the duration of the harm, and the character or nature of the defendant’s conduct. These considerations serve as indicia of the genuineness of the claim. See also Sacco v. High Country Indep. Press, Inc., 271 Mont. 209896 P.2d 411, 425 (1995) (noting the general principle that the serious harm threshold “ensures that only genuine claims will be compensated.”).

60.See, e.g., Norfolk & W. Ry. Co. v. Ayers, 538 U.S. 135, 137, 123 S.Ct. 1210155 L.Ed.2d 261 (2003) (“[I]t is incumbent upon … plaintiff to prove that his alleged fear is genuine and serious.”); Lewis v. CITGO Petroleum Corp., 561 F.3d 698, 708–09 (7th Cir.2009) (holding “mild anxiety that causes [plaintiff] to recheck her work, but that only minimally interferes with her everyday life and for which she has not sought treatment” did not as a matter of Illinois law meet the requisite severity); Smith v. Amedisys Inc., 298 F.3d 434, 450 (5th Cir.2002) (rejecting plaintiff who felt angry, belittled, embarrassed, depressed, disgusted, humiliated, horrified, incompetent, mad, very offended, and repulsed was not sufficient for severe emotional harm); Hedgepeth v. Whitman Walker Clinic, 22 A.3d 789 (D.C.2011); Perodeau v. City of Hartford, 259 Conn. 729792 A.2d 752 (2002)Johnson v. Ruark Obstetrics & Gynecology Assoc., 327 N.C. 283395 S.E.2d 85, 97 (1990) (“[M]ere temporary fright, disappointment or regret will not suffice.”); Harris v. Jones, 281 Md. 560380 A.2d 611, 616 (1977) (requiring a plaintiff to show that “he suffered a severely disabling emotional response to the defendant’s conduct”); Rodrigues v. State, 52 Haw. 156472 P.2d 509 (1970).

61.Camper, 915 S.W.2d at 446 (citations omitted).

62.See Bass, 646 S.W.2d at 770 ( citing Okrina v. Midwestern Corp., 282 Minn. 400165 N.W.2d 259, 263 (1969); Note, Negligent Infliction of Mental Distress: Reaction to Dillon v. Legg in California and Other States, 25 Hastings L.J. 1248, 1250 (1974)). See also Camper, 915 S.W.2d at 448.

63. The Tennessee Supreme Court provided two main reasons the logic of requiring an impact for a plaintiff to recover is unsound:

First, the fact that a case may be difficult to prove does not in itself justify a prohibition on the cause of action; instead, this difficulty may be addressed in rules concerning the development of the evidence. Second, because imaginary and fraudulent claims may be just as likely in cases in which an actual physical injury occurred, there is no reason to bar this cause of action simply out a fear of such lawsuits; the trial courts, through the rules of evidence and the adversarial system, can guard against these types of cases. Camper, 915 S.W.2d at 441.


64.See Kotsiris v. Ling, 451 S.W.2d 411 (Ky.1970); Hilen v. Hays, 673 S.W.2d 713 (Ky.1984); Rigdon v. Rigdon, 465 S.W.2d 921 (Ky.1970).

65.673 S.W.2d 713.


67. “A state in defining the limits of adherence to precedent may make a choice for itself between the principle of forward operation and that of relation backward.” Great Northern Ry. Co. v. Sunburst Oil & Refining Co., 287 U.S. 358, 364, 53 S.Ct. 14577 L.Ed. 360 (1932).

68. The issue was dealt with in an unreported federal court opinion out of the Western District of Kentucky. See McMurtry v. Wiseman, 2006 WL 2375579 (W.D.Ky. Aug. 16, 2006) (No. 1:04CV–81–R).

69. The line of reasoning prohibiting recovery has been adopted by the highest court in California in Ferguson v. Lieff, Cabraser, Heimann & Bernstein, LLP, 30 Cal.4th 1037135 Cal.Rptr.2d 4669 P.3d 965 (2003), in New York in Summerville v. Lipsig, 270 A.D.2d 213704 N.Y.S.2d 598 (2000), in Illinois in Tri–G, Inc. v. Burke, Bosselman & Weaver, 222 Ill.2d 218305 Ill.Dec. 584856 N.E.2d 389 (2006), and by the intermediate appellate court in Ohio in Friedland v. Djukic, 191 Ohio App.3d 278945 N.E.2d 1095 (2010)See also Paul v. Smith, Gambrell & Russell, 267 Ga.App. 107599 S.E.2d 206 (2004).

Four states and the District of Columbia have allowed recovery, with the District of Columbia in Jacobsen v. Oliver, 201 F.Supp.2d 93 (D.C. Cir.2002) (interpreting District of Columbia law), being the most recent. The other jurisdictions following this line of reasoning are Arizona (Elliott v. Videan, 164 Ariz. 113791 P.2d 639 (1989)); Colorado (Scognamillo v. Olsen, 795 P.2d 1357 (Colo.Ct.App.1990)); Kansas (Hunt v. Dresie, 241 Kan. 647740 P.2d 1046 (1987)); and South Dakota (Haberer v. Rice, 511 N.W.2d 279 (S.D.1994)).


70.See, e.g., Jacobsen, 201 F.Supp.2d at 101 (“[T]he issue is not the purpose of punitive damages, but the purpose of compensatory damages, which is to give the client what she lost because of the lawyer’s negligence.”) ( citing Monroe H. Freedman, Caveat Emptor: Conflicts of Interest of ALI Members in Drafting the Restatements, 26 Hofstra L.Rev. 641, 653 (1998)).

71.See, e.g., Ferguson, 135 Cal.Rptr.2d 46, 69 P.3d at 973 (“Thus, by definition punitive damages are not intended to make the plaintiff whole by compensating for a loss suffered. An award of punitive damages, though perhaps justified for societal reasons of deterrence, is a boon for the plaintiff.”) (internal citations omitted).

72. In fact, Kentucky has the “earliest reported American case in which punitive damages were awarded.” Michael L. Rustad, Torts as Public Wrongs, 38 Pepp. L.Rev.. 433, 448 (2011). See Fleet & Semple v. Hollenkemp, 52 Ky. (13 B.Mon.) 219 (1852).

73.KRS 411.184(1)(f). See also Ky. Cent. Ins. Co. v. Schneider, 15 S.W.3d 373, 375 (Ky.2000); Horton v. Union Light, Heat & Power Co., 690 S.W.2d 382, 389–90 (Ky.1985); Hensley v. Paul Miller Ford, Inc., 508 S.W.2d 759, 762–63 (Ky.1974); Bisset v. Goss, 481 S.W.2d 71 (Ky.1972);Ashland Dry Goods Co. v. Wages, 302 Ky. 577195 S.W.2d 312, 315 (1946); Louisville & N.R. Co. v. Jones’ Adm’r, 297 Ky. 528180 S.W.2d 555 (1944)Louisville & N.R. Co. v. Roth, 130 Ky. 759114 S.W. 264 (1908).

74.See State Farm Mut. Ins. Co. v. Campbell, 538 U.S. 408, 416, 123 S.Ct. 1513155 L.Ed.2d 585 (2003) (citations omitted).

75.Schneider, 15 S.W.3d at 374.See also Campbell, 538 U.S. at 416, 123 S.Ct. 1513 (“Compensatory damages are intended to redress the concrete loss that the plaintiff has suffered by reason of the defendant’s wrongful conduct.”). Further, by definition, punitive damages are not compensatory damages. SeeKRS 411.184(1)(f).

76.Campbell, 538 U.S. at 416, 123 S.Ct. 1513.

77.Tri–G, Inc., 305 Ill.Dec. 584, 856 N.E.2d at 417.

78.KRS 411.184(2) (emphasis added).

79.102 S.W.3d 913 (Ky.2003).

80. Lonn Weisblum, A Modest Proposal For Classifying Lost Punitive Damages in a Legal Malpractice Case: Look to the Deceased Tortfeasor for Guidance, 27 J. Legal Prof. 67, 75 (2002–03). See also Schneider, 15 S.W.3d 373 (“[I]t would be antithetical to require the UM carrier to pay a penalty assessed against the wrongdoer[ ] because the burden of payment would fall not upon the wrongdoer, or even the insurer of the wrongdoer, but on the insurer of the innocent party.”).

81.354 S.W.3d 542, 551 (Ky.2011).

82.Regional Jail Authority v. Tackett, 770 S.W.2d 225, 229 (Ky.1989).

83.All is defined as “the whole amount, quantity, or extent of.” Merriam–Webster Dictionary (2012).

84.Tackett, 770 S.W.2d at 229 ( citing Withers v. University of Kentucky, 939 S.W.2d 340 (Ky.1997); City of Bowling Green v. Board of Education of Bowling Green Independent School District, 443 S.W.2d 243 (Ky.1969)).

85.Petitioner F v. Brown, 306 S.W.3d 80, 85–86 (Ky.2010).

86.Econ. Optical Co. v. Kentucky Bd. of Optometric Exam’s, 310 S.W.2d 783, 784 (Ky.1958). See also Light v. City of Louisville, 248 S.W.3d 559, 563 (Ky.2008) (“It is incumbent upon courts to resolve the conflict between the two statutes so as to give effect to both.”).

87. It is telling that the Court of Appeals applied KRS 411.184 to govern the recovery of Osborne’s claim for lost punitive damages. The Court of Appeals stated, “Our decision rests on the statutory language in KRS 411.184(2), which requires that an award of punitive damage must be established by clear and convincing evidence that, here, the defendant [Quesenberry] from whom such damages are sought, acted toward Osborne with conduct allowing for the imposition of punitive damages.” It is clear that the court felt “all damages” meant that a plaintiff may recover all damages that have the requisite elements for recovery satisfied.

88.See, e.g., Williams v. Commonwealth, 829 S.W.2d 942, 945 (Ky.1992) (citations omitted). See also Commonwealth v. Hunt, 619 S.W.2d 733 (Ky.App.1981) (“In enacting laws, the Legislature is presumed to take cognizance of the existing statutes and the condition of the law so that when the statute under consideration is ambiguous, the new enactment is to be construed in connection and in harmony with the existing laws as a part of a general and uniform system of jurisprudence. Apparent conflicts or repugnancies between statutes on the same general subject enacted at different times should be reconciled in the light of the existing statutes and Constitution.”) (internal citations omitted).

89.See Weisblum, 27 J. Legal Prof. at 78.

90.73 F.3d 397, 400 (D.C.Cir.1996). There is no reported case in Kentucky applying this standard. But the Court of Appeals applied the standard in an unreported decision. See Payton v. Clay, 2007 WL 79711, Nos. 2005–CA–000573–MR, 2005–CA–000823–MR (Ky.App. Jan. 12, 2007).

91.See Bierman, 967 S.W.2d at 19 (awarding punitive damages for attorney’s fraudulent conduct).

92. We also note that the amount of punitive damages sought by Osborne on any subsequent retrial is limited to the amount claimed in any pretrial itemization required under CR 8.01(2). Although the Court of Appeals ruled correctly on this issue on the current state of the record, the issue is rendered moot by our remand.

Cut by the Supreme Court When the justices denied these cases, justice was underserved.

Wednesday, October 1st, 2014


By Brianne Gorod


The Supreme Court takes less than 1 percent of cases it is asked to hear.
The new Supreme Court term doesn’t officially start until the first Monday in October. But that doesn’t mean the justices are still on vacation. On Monday, Sept. 29, the justices will meet in what is known as the “Long Conference” to consider thousands of requests to hear cases that have come in since June. Shortly thereafter, we’ll find out which cases will make the cut and be heard this term. It’s a good reminder: Although Supreme Court watchers tend to focus on the cases the court decides each term, the court spends a good deal of its time deciding which cases it won’t decide. Each year, the court is asked to hear more than 10,000 cases. And each year the court holds oral argument and issues written decisions in less than 1 percent of those cases.

Why does the court take the cases that it does? We can’t know for sure. For an institution often criticized for its lack of transparency, its decisions about which cases to decide are among its least transparent. Still, we can tell a lot about what the court cares about—and what it doesn’t. Last year the cases the court didn’t care about included several with significant implications for workers’ overtime pay, the constitutional rights of criminal defendants, the victims of racial harassment, and the freedom of the press. It’s useful to consider whether that matters and why.

Juvenile offenders continue to serve mandatory life sentences that the court has said violate the Eighth Amendment.

The court didn’t always have the power to avoid the cases it didn’t want to hear. Until 1925, the Supreme Court was required to hear almost every case that arrived on its doorstep. But that year Congress passed a law that gave the court much more control over its docket. And how does the court decide which petitions to grant? That’s a loaded question (law professors and political scientists have spilled a lot of ink trying to figure that out), but on a mechanical level, it’s pretty straightforward. Unless four justices vote to hear a case, the request will be denied, most often with no explanation at all. (Very occasionally, a justice will issue a statement respecting a denial that offers some insight into the court’s reasoning.)

The court could be hearing more cases. As John Roberts noted at his confirmation hearing to become chief justice, the court was then hearing “about half the number of cases [it] did 25 years ago.” And since he became Chief Justice Roberts, the number hasn’t gone up. Last term, the court issued only 67 signed opinions (apparently the second lowest number of signed opinions since the Civil War). Many of these opinions were hugely consequential, affecting the law in areas from campaign finance toreligion to race. But the court decided not to decide many other consequential cases, as well, thereby passing up the opportunity to weigh in on important issues that merit its attention. Here are some of the cases the court should have granted last year.

Right to jury trial

Remember the classic film Ten Angry Men? Of course not, because it’s Twelve Angry Men. But not in Florida, which allows juries of less than 12. The movie wouldn’t have worked in Louisiana or Oregon either, where juries can convict even if not all members agree that the defendant is guilty. Forty years ago, the Supreme Court said the Sixth Amendment’s right to a jury trial permits those practices. Since then, the court has repudiated the reasoning and result of those old decisions; it has repeatedly said in nonbinding statements (what lawyers call “dicta”) that conviction requires theunanimous vote of 12 of the defendant’s peers. Yet it decided not to hear two crucial cases—Jackson v. Louisiana and Irving v. Florida—that would have allowed it to overrule those conflicting precedents. As a result, people will end up spending their lives in prison even though they weren’t convicted by a unanimous vote of a 12-member jury. It’s one thing to think that your rights have been violated; it’s another thing to have the Supreme Court essentially tell you that they have been, but that the court still won’t do anything about it.

Life sentences for juvenile offenders

Two years ago, the Supreme Court held that juvenile homicide offenders cannot be subject to mandatory sentences of life in prison without the possibility of parole. As the court has repeatedly recognized, children are fundamentally different than adults. But in some states children are being treated as if they’re not different, simply because they were sentenced before the court’s decisions from two years ago were announced. Other courts disagree. Yet the court decided not to hear Cunningham v. Pennsylvania, and so in some states, juvenile offenders will continue to serve mandatory life sentences that the court has already said violate the Eighth Amendment. The court might change its mind, but in the meantime, young men and women are sitting in jail thinking that they’ll never get out and potentially being denied the opportunity to take classes and otherwise better themselves for when they do.

Right to confront witnesses at trial


If you’ve ever watched CSI, you’ve seen the prosecution use an autopsy report to prove homicide charges. This isn’t just the stuff of television procedurals; it’s the stuff of real criminal trials, and it’s something that happens all the time. But unlike on television, those autopsy reports aren’t infallible. Indeed, there’s evidence that autopsy procedures are not nearly as reliable as you’d think. You’d think the place to reveal problems with an autopsy report would be at trial, where the defendant’s lawyer could ask the person who prepared the report lots of questions to probe any weaknesses or problems. Unfortunately, you’d be wrong, at least in many states. Right now courts are in disagreement about whether the Sixth Amendment—which gives criminal defendants the right to confront witnesses who testify against them at trial—requires the pathologist who actually prepared the report to testify at trial, or whether someone else from her lab can instead. The court could have resolved that conflict and protected this Sixth Amendment right by hearing Medina v. Arizona. Instead, unless the court takes up another case raising the issue, defendants will receive differing levels of constitutional protection depending on the state in which they’re prosecuted.

Protections for overtime pay

Supreme Court justices may not have to worry about getting overtime pay to which they’re entitled, but many Americans do. And many Americans know how difficult it can be to get all of the pay and benefits that their employer owes them. It should be enough just to do the job, but often it isn’t. And that’s why everyone should empathize with the plaintiff in White v. Baptist Memorial Health Care CorpIn that case, even though the plaintiff let her bosses know that she was working through her breaks, she wasn’t paid for that work. And according to the lower court that heard her case, that was fine; her employer didn’t need to pay her. It wasn’t enough that she did the work, and it wasn’t enough that she told her bosses about the work. She also needed to make clear to them that she wasn’t getting paid for it. It shouldn’t be that hard to get paid for hard work. But because the Supreme Court decided not to hear this case, it now will be for some people.


Race discrimination in commercial transactions

Imagine you are out shopping for Christmas presents with your kids, and the sales clerk starts insulting you and using racial slurs. There’s a law that should prevent that. On the books for nearly 150 years, Section 1981 is an important civil rights statute that prohibits racial discrimination in the making of private contracts. It’s why a restaurant can’t refuse to serve someone because of their race. But according to many courts, a store or restaurant can subject someone to racial harassment, so long as they’re still willing to serve them. In Hammond v. Kmart Corporation, the plaintiff alleged that her rights were violated because she was the subject of “insulting racial slurs and comments” while buying Christmas presents at Kmart. (Among other things, the sales clerk told the plaintiff, who is black, that the clerk had to move out of the neighborhood next to the plaintiff’s because “porch monkeys” lived there.) The lower courts denied the plaintiff’s claim because the sales clerk’s insulting comments didn’t actually prevent the plaintiff from making her purchases. The court passed on the opportunity to take the case and say that was wrong, so in 20 states, it remains completely lawful for commercial establishments to harass customers based on their race, so long as they’ll still sell them goods in the end.

Freedom of the press

It’s no secret that confidential sources are an important part of investigative journalism. In Risen v. United States, a reporter didn’t want to identify his confidential source when responding to a subpoena in a criminal trial. A lower court said he had to. As the dissenting judge pointed out, if reporters are compelled to divulge their confidential sources, the public’s access to important information will be limited. Perhaps for an institution that likes to be less-than-transparent, this seems unproblematic, but for Americans who want to know about what their government is up to, this may be a bigger deal. The court’s failure to hear this case leaves the press in a wholly uncertain position when it comes to protection for their sources. This matters to the press—and it should matter to everyone else who needs the press to tell them what’s going on.

Top Comment

The article glosses over many of the reasons that cert isn’t granted in cases.  Leon talks about a number of them.  But one other is that you may not have the votes to get the result that you want.  More…

-MIke M

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The court’s decision not to decide a case means that whatever the lower court said remains the law, at least in that jurisdiction. And if the lower courts are in disagreement, confusion will reign. At hisconfirmation hearing in 2005,  John Roberts recognized that the court “could contribute more to the clarity and uniformity of the law [if it took] more cases.”

The court obviously can’t—and shouldn’t—take every case, and perhaps the court had good reasons for not taking these cases (and many others). But the one thing we can know for sure is the court decides not to hear lots of important cases each year, and as a result, justice is underserved for many. Court watchers are quick to criticize the court for the way it decides cases, but the court sometimes deserves criticism for the cases it doesn’t decide, as well.

Law school dean to the Supreme Court: This love affair is over

Monday, September 29th, 2014

After nearly four decades as a lawyer and 30 years teaching would-be lawyers, and after writing a leading textbook on constitutional law and helping establish a law school, and after standing before the justices five times on behalf of his clients, Erwin Chemerinsky has fallen out of love with the Supreme Court.


Robert Barnes has been a Washington Post reporter and editor since 1987. He has covered the Supreme Court since November 2006. View Archive

His break-up note runs for 342 pages and is called “The Case Against the Supreme Court.” The book makes its regretful message clear at the very beginning:

“We should realize that this is an emperor that truly has no clothes. For too long, we have treated the Court is if they are the high priests of the law, or at least as if they are the smartest and best lawyers in society.”

His conclusion? “The court has frequently failed, throughout American history, at its most important tasks, at its most important moments. This is not easy for me to conclude or to say.”

Erwin Chemerinsky, dean of U.C . Irvine’s new law school, is photographed in his office at the Irvine campus on August 18, 2009. (Robert Lachman/Los Angeles Times)

In an interview, Chemerinsky, 61, an unapologetic liberal and dean of the law school at the University of California at Irvine, seems a bit surprised at himself.

“My nature is to be very optimistic and upbeat,” he says. Indeed, he has a reputation for trenchant and clear scholarship about the court. And his personal demeanor is unfailingly polite and soft-spoken; he is the kind of man who praises an interviewer’s questions.

He says there is nothing personal about his critique of the current court and that all of the justices are “incredibly talented individuals.”

But the justices could be forgiven for thinking that should be taken with a grain of salt.

Chemerinsky testified against Justice Samuel A. Alito at the justice’s confirmation hearings. He wrote last spring that Justice Ruth Bader Ginsburg should resign so that President Obama could appoint her successor. He told Justice Stephen G. Breyer he should be the next to pack up.

Scalia has a secrecy problem: Hiding and hypocrisy at the Supreme Court

Monday, September 29th, 2014

The court plays a growing activist role in our politics and lives — yet all nine justices hide in the shadows


Judge Richard Posner of the United States Court of Appeals for the 7th Circuit saidrecently, “I don’t understand why the judiciary should be the most secretive branch of government. The public probably knows more about the CIA than about the judiciary.”

Now that the United States Supreme Court’s 2014-15 term is about to begin, we should again ask ourselves about that court’s near-total lack of transparency.

During the last week of June every year, the Supreme Court takes over the news cycle with the announcement of blockbuster cases.  That’s great, but June only highlights the secrecy that exists at the court during the rest of the year.  For example, only a handful of people get to see those cases argued by some of the best (and increasingly specialized) advocates in the country.  Why?  Because the court refuses to allow the American people to watch oral arguments on television, or even listen to them live over the Internet.

What’s more, even if the justices had non-frivolous reasons to prohibit cameras at the court’s oral arguments (they don’t), none of those reasons would apply to decision announcement days when lawyer showboating is not possible (they don’t talk, and they often aren’t even there, as the court does not announce ahead of time which decisions it will hand down on which days).  Oh, and the justices have complete and total control over the “hand down” script. But the announcements of decisions like Hobby Lobby (religious freedom) and Citizens United (First Amendment campaign speech) are major moments in American history, and only about 250 lucky folks who happen to be at the court are allowed to witness historical moments in person, in the courtroom.

Recently, Justice Stephen Breyer was asked about the court’s reluctance to enter the 21st century and allow a broad segment of the American people to observe what the lucky few who are actually in the courtroom are allowed to see. He had no specific objections but simply said that “all of us are conservative where the court is concerned. We are trustees … So I’ll say we’re nervous about it. And probably that’s the most favorable you’ll get. I mean, nervous, uncertain, not aware of what’s going to happen. And as long as we’re uncertain … it’s tough.”


With respect to Justice Breyer, this decision shouldn’t be tough at all. State supreme courts, lower federal courts and supreme courts in other countries like Canada and the U.K. televise their public hearings with great success. It is well past time for our Supreme Court to do the same.

The lack of cameras at the Supreme Court is only one of many ways the justices hide their work from the American people. When deciding whether to recuse themselves from a given case (not participate because of a conflict of interest), the justices rarely explain their decisions or hold hearings to hear arguments on the motion to recuse. Last term, for example, Justice Samuel Alito first recused himself without any explanation from an important case concerning new live-streaming technology, and then reversed himself right before the oral arguments, again without any explanation. His initial reasons and his change of mind remain a mystery.

Justice Elena Kagan has recused herself from more than 100 cases, presumably because of her prior work as solicitor general, but without issuing a single written word explaining why. This silence became especially problematic when she refused to recuse herself in the challenge to the Affordable Care Act (despite a formal motion) after recusing herself in a huge Arizona immigration case and an important affirmative action case. The difference in her mind?  We have no idea.  Neither she nor any other justice is required to tell us.

And if Justice Kagan told her colleagues on the court why, perhaps by inter-chambers memorandum, we won’t get to see that explanation, either, even though every single pencil, piece of paper and computer at the Supreme Court is paid for by American taxpayers who, of course, must abide by the court’s decisions. Unlike the federal lawgoverning the president’s papers, which deems those papers public property subject to record-keeping requirements, no rules dictate what happens to the official papers of the justices after they retire.

This lack of regulation has led to some inconsistent and perhaps questionable decisions: For example, now-retired  Justice David Souter unilaterally sealed his papers for 50 years; we still have not glimpsed former Chief Justice Warren Burger’s papers even though he retired when Reagan was president, there was still a moderate wing of the Republican Party, and the Religious Freedom Restoration Act (RFRA, now the subject of much Supreme Court controversy after Hobby Lobby) wasn’t even a twinkle in Orrin Hatch’s eyes.

Were we to see these papers, we might also have a better idea of how the justices agree to hear a case, any case.  As of now, in those rare circumstances when The Nine decide to take a case (only four have to agree), no one other than the justices and their clerks, not the public, not the attorneys, not even the parties to the case, have any idea which justices voted to hear the controversy. Which 80 cases out of the 7,000 or 8,000 requesting review are worthy of the court’s attention – that’s a big decision.  And yet the justices keep their decision-making secret, allowing no one (not even court staff) into the room where they meet and deliberate.

The result?  American people have no way to keep track of a particular justice’s voting record on petitions for certiorari. Especially in cases where Justice Anthony Kennedy is likely the swing vote (he was in the majority in every 5-4 vote case the court decided last term), it would be helpful information to the parties, the public and the media to know if he was one of the four who wanted to hear the case. Yet, the court never officially reveals which justices voted to hear which cases.

There are indeed compelling reasons for the CIA to act with great secrecy.  Our national security may well depend upon it.  But our Supreme Court? Even though Lady Justice wears a blindfold, the justices should not force one on the American public.  Our belief and trust in the rule of law are simply too important for our justices to continue to insist on being as secretive as our spies.

Eric Segall is the Kathy & Lawrence Ashe Professor of Law at Georgia State University College of Law. He is the author of “Supreme Myths: Why the Supreme Court Is Not a Court and Its Justices are Not Judges,” and with Lisa McElroy, co-author of “Supreme Secrecy,” which will be published next year by Stanford University Press. He has written numerous law review articles on constitutional law and other legal topics. He appears regularly on “StandUp With Pete Dominic” on XM Radio and tweets at @espinsegall.


Monday, September 29th, 2014
September 27, 2014 6:00 am  •  By Dylan Woolf Harris

ELKO — As the election rolls near, northeastern Nevada voters will continue to hear about ballot questions with  significant tax ramifications for businesses, as well as mining companies specifically.

Grabbing fewer headlines, however, is a measure to alter Nevada’s judicial system — which, argues Nevada Supreme Court Justice James Hardesty, could be a “sea change” to ensure swifter justice by the state’s highest court.

“I can’t think of a more important moment for the judicial system, for our citizens and our state,” he said.

After a slim defeat in 2010, the ballot question that asks for the creation of a court of appeals is back in the hands of voters. Hardesty, who drafted the latest version, Question 1, that outlines in detail the plan for implementing and running the court, is campaigning on its behalf and made a couple stops in Elko on Friday.

Nevada is with a minority of states that doesn’t have appellate courts. The result, coupled with Nevada’s population explosion over the last few decades, is that the supreme court has a higher caseload — more than 350 cases per justice each year — than any other state supreme court.

But Hardesty said the court of appeals isn’t needed to ease the justices’ workloads and clear their dockets. The real benefit, he said, will be to the citizens whose appeals are languishing in an extensive backlog, costing them time and money.

“This has to be addressed, or justice in Nevada isn’t just going to be delayed. It is being denied,” he said. “That’s not just a trite phrase; it is a fact in our state.”

Around 56 percent of the Nevada Supreme Court cases take six months just to be heard, 29 percent take more than a year and the rest take two to three years.

“That is an inefficient system of justice,” he said.

The supreme court will continue to hear many appeals for precedential cases. But an appeal over a driver’s license revocation, for example, or an inmate’s complaint about prison food would go before the appellate court.

“I wouldn’t suggest for a moment that those people aren’t entitled to pursue an appeal, but not in front of the highest court in the state.” he said. “… Those are issues that are important to the people in the case, but not important to the system generally or the law generally.”

The measure has been estimated to cost about $1.5 million — which will cover the salaries for the three judges, three secretaries and about six law clerks. Because all appeals will continue to go first to the Nevada Supreme Court, processing costs should remain the same, and there will be no need for additional clerks and staff. The judges will also use existing facilities and new capital projects won’t be required.

Hardesty also said the Supreme Court routinely kicks back unused funds to the state’s general fund — at least one year that amount topped $2.5 million.

The emotional cost for litigants, whether it’s a criminal case, child custody case or personal injury case, waiting for a ruling, he added, are incalculable.

According to Hardesty, a recent survey revealed that state judicial systems are a top 10 concern for businesses that are considering relocation.

If approved, a judicial panel will review applicants and forward three names to the governor for approval. In the following election cycle, the appellate judges would be up for election to serve a six-year term. The Legislature already approved the expected costs during the 2013 session.

A number of neighboring states have intermediate appellant courts, Hardesty said, but that isn’t what Question 1 proposes.


Monday, September 29th, 2014


 Premises Liability, Slip and Fall, “Open and Obvious”; Post-Shelton & Post-McIntosh
COA, Published 9/26/2014 –PJ Thompson


THOMPSON, JUDGE: The matter before us is on remand from the Kentucky Supreme Court. Our Supreme Court vacated this Court’s to be published opinion rendered on June 15, 2012, and directed we consider the issue relating to the open and obvious doctrine in light of its decisions in Dick’s Sporting Goods, Inc. v. Webb, 413 S.W.3d 891 (Ky. 2013), and Shelton v. Kentucky Easter Seals Soc., Inc., 413 S.W.3d 901 (Ky. 2013).

We hold Smith did not have sufficient control and supervision of the Speedway premises to be individually liable and, therefore, the action against her must be dismissed. Likewise, the claim against Speedway must be dismissed because the condition of the parking lot was open and obvious and was not a condition that created an unreasonable risk of harm.

Based on the foregoing, we reverse the findings of fact, conclusions of law, and judgment of the Clay Circuit Court and remand for proceedings consistent with this opinion.

 Criminal Law, Diversion Revocation
COA, Published 9/26/2014 Dismissing.  Opinion by PJ Vanmeter

VANMETER, JUDGE: Raychel Stilgenbauer appeals from the Boyd Circuit Court’s order revoking her diversion, adjudicating her guilty of first-degree possession of a controlled substance, and imposing a five-year sentence of imprisonment. For the following reasons, we affirm.

Upon review of the record and applicable law, we are unable to say that the trial court exceeded its authority by modifying the diversion agreement to include completion of drug court as a condition.  Moreover, the trial court did not abuse its discretion by revoking Stilgenbauer’s diversion for failure to complete drug court as ordered.

COA, Affirming Trial Judge’s Dismissal in Boone County

As a threshold matter, in order for this Court to find that MQH and the Diocese owed a duty to the Chances under premises liability law, the injuries in question must have occurred on their property. As noted, the trial court found that the pedestrian/vehicle accident occurred off MQH’s premises. Consequently, under a premises liability analysis, neither MQH nor the Diocese had any control over Kyle and Brooke Chance’s decision to park and walk on or adjacent to Donaldson Highway, a public thoroughfare outside its premises.

Reimbursable court costs to prevailing party does not in cost of copies of deposition transcripts;  nor does it include costs of “expedited transcripts” as an extraordinary service that can be ordered by the court

Unearth truth when prosecution’s conduct suspect, SC tells trial courts

Saturday, September 27th, 2014

Unearth truth when prosecution’s conduct suspect, SC OF INDIA tells trial courts

New Delhi, Sep 27 (IANS): The Supreme Court has said that trial courts were expected to perform their duties of dispensing justice effectively and in line with the spirit of the authority they wield, unearth the truth when the conduct of prosecution is suspect or appears to be hand in glove with the accused.

“The courts are expected to perform its duties and functions effectively and true to the spirit with which the courts are sacredly entrusted with the dignity and authority…” said a bench of Justice M.Y.Eqbal and Justice Abhay Manohar Sapre in their judgment pronounced Friday.

Speaking for the bench, Justice Eqbal said: “Court has a greater duty and responsibility i.e. to render justice, in a case where the role of the prosecuting agency itself is put in issue and is said to be hand in glove with the accused, parading a mock fight and making a mockery of the criminal justice administration itself.”

The court’s observation came as it dismissed appeals by Maheshbhai Ranchodbhai Patel and his parents against their conviction for the death of his wife Renukaben Maheshbhai Patel in Gujarat’s Mehsana district. They were convicted by the high court, which reversed the session court’s acquittals, for inflicting harassment and cruelty including physical assault leading to her committing suicide on Dec 16, 1997.

The sessions court had, in just a nine-day trial, acquitted both the in-laws. Though the husband was convicted, he was let off with the three days sentence that he had already undergone.

The apex court said that the trial court has failed to perform its duties to reach to the real truth and to convict the accused.

“Besides the dying declaration, there was available evidence on record to prove the factum of cruelty and death of Renukaben, but it was not brought on record by the prosecuting agency. Instead, all concerned were in hurry to finish the case in a day,” the court said in its judgment.

Out of the prosecution’s list of 17 documents to be produced and exhibited, the trial judge exhibited only four but the prosecution did not raise any objection, the court noted.

Referring to an earlier apex court judgment in a 2002 Gujarat riot case, the court said: “The prosecutor who does not act fairly and acts more like a counsel for the defence is a liability to the fair judicial system, and courts could not also play into the hands of such prosecuting agency showing indifference or adopting an attitude of total aloofness.”

“If deficiency in investigation or prosecution is visible or can be perceived by lifting the veil trying to hide the realities or covering the obvious deficiencies, courts have to deal with the same with an iron hand appropriately within the framework of law,” the court said.

Putting onus of successful conclusion of trial on the prosecution, the court said that “it is as much the duty of the prosecutor as of the court to ensure that full and material facts are brought on record so that there might not be miscarriage of justice”.

It noted that the high court had correctly re-appreciated the evidence on record and reversed the trial court’s acquittal.

Concurring with the high court’s findings, the court said that “in the present case, prime duty of the trial court to appreciate the evidence for search of truth is abandoned and in a hurry to dispose of the case or for some other reason, the sessions judge had disposed of the trial and acquitted the accused”.

Dismissing the appeals, the court said the accused shall surrender forthwith to serve out the remaining period of the sentence, failing which the trial court is directed to take appropriate steps.

Legal Fees in Declaratory Judgment Actions Against Insurers

Saturday, September 27th, 2014


Eric Dinnocenzo, New York Law Journal    | 0

Eric Dinnocenzo

It’s not often that judges encourage litigants to appeal their decisions so they will be reversed. But Manhattan Supreme Court Justice Shirley Kornreich did just that in an April 8, 2014, decision in Madison 96th Associates v. 17 East Owners Corporation, which denied an attorney fee award to a prevailing plaintiff in a declaratory judgment action against its insurer, due to its wrongful refusal to provide it with a defense in a third-party action.1

From the perspective of this author, who is an insurance policyholder advocate, Kornreich was correct—her decision should be reversed. Her invitation highlights an oddity in New York law that a prevailing insured in a declaratory judgment action against its insurer for a breach of the duty to defend is only entitled to an attorney fee award if it is a defendant in the case. This is known as the “Mighty Midgets” rule, having been established by the Court of Appeals in a 1979 decision Mighty Midgets v. Centennial Insurance Company, 47 N.Y.2d 12 (1979).

In short, whether an insured can receive an attorney fee award in a declaratory judgment action is dependent on which side of the “v.” it finds itself. This sounds rather arbitrary, and in fact, Kornreich pointed out that Southern District Magistrate Judge James Francis has observed that this rule “has its peculiarities….[i]t seems anomalous for the entitlement to fees to turn on the fortuity of whether a party to an insurance contract is cast as the plaintiff or defendant.”2

To be clear, the focus of the Mighty Midgets rule (and this article) is on insurance coverage for third-party actions in terms of an insurance company’s duty to defend and indemnify its insured. First-party insurance claims, such as for refusal to pay benefits directly to an insured under a life, disability, or property insurance policy, are a different matter.

Misplaced When Applied

In rationalizing the rule it crafted in Mighty Midgets, the Court of Appeals found it important that in our American system, litigants customarily pay their own legal fees as it provides “freer and more equal access to the courts.”3 But the court carved out an exception for when an insured “has been cast in a defensive posture by the legal steps an insurer takes in an effort to free itself from its policy obligations.”4

While the logic of the American rule is sensible in the abstract, it is misplaced when applied to an insurance company that disclaims coverage and then faces a declaratory judgment action from its insured. It can fairly be said that keeping an insurance company in breach of its duty to defend from paying its insured’s legal fees does not contribute to the goal of “freer and more equal access to the courts.”

Kornreich pointed out that, “Over the years, countless insureds have sought to challenge the logic of this rule—which creates a perverse incentive, because allowing fees under these circumstances would create an incentive for the insurer to refuse to defend in the underlying suit, thereby leaving it up to the insured to bring a declaratory action seeking coverage.”5

Indeed, the one-sided nature of the Mighty Midgets rule encourages insurers to send out disclaimer letters and leave their insureds on their own to defend against third-party actions, instead of filing declaratory judgment actions to seek a court ruling on their obligations. After all, if they take the latter course, they might have to pick up the tab for their insureds’ legal fees.

Kornreich summed up this incentive as follows:

The court is mindful of the strong policy reasons against adopting a rule of law that would reduce the incentives for insurance companies to defend in the underlying tort actions and that would likely shift the burden of obtaining a declaratory judgment from the insurance company to the insured. Insurers could simply deny defense as a matter of course, and wait for impending actions by their insureds, without risk of incurring any liability for the insureds’ defense costs in resulting litigation. There is the potential that insurers might shrink from their defense obligations under their policies and categorically deny their insureds’ tenders of defense in an effort to reduce their financial exposure, without risk of incurring any additional liabilities or expenses associated with issuing and maintaining policies. However, until the legislature determines otherwise, this court is constrained to interpret the law as it currently stands.

Of course, a cautious insurance company may still file a declaratory judgment action in certain cases, cognizant that if it disclaims coverage and a hefty judgment is entered against its insured in the third-party action, it may ultimately be responsible for payment. But this is more the exception than the rule, at least if one assumes that insurance companies are generally of the belief that their disclaimers are valid. Thought of another way, if an insurer thinks it has a strong or perhaps even clear cut right to disclaim coverage, it does not make much sense from an economic standpoint to pay a law firm to file a declaratory judgment action to confirm that its decision is correct—especially when the insurer could be on the hook for legal fees if it loses.

Precarious Position

So where does the Mighty Midgets framework leave insureds? They are placed in the precarious, not to mention often financially untenable position of having to pay out of pocket for both the defense of the third-party action and a declaratory judgment action against their insurers. Most small businesses and regular folks do not have the financial resources to litigate on two fronts, never mind just one. So much for “freer and more equal access to the courts,” it would seem.

Some may argue, why should these cases be any different than others under the American rule? In other words, the Mighty Midgets rule gives an advantage to insureds in a specific context that other kinds of litigants do not share, and so why should they receive yet another advantage?

One response is that an insured who is wrongfully disclaimed against has not received the benefit for which it contracted. The insured purchased a policy, dutifully paid premiums, and when it needed coverage its insurer left it unprotected. Even if the insured ends up prevailing in a declaratory judgment action, it has suffered harm in the form of paying legal fees to get what it should have had in the first place.6 The insured is simply not made whole.

Then there is the important consideration that when an insurance company wrongly refuses to provide coverage, an innocent injured party may be harmed because he or she will have no way to obtain compensation.

Moreover, as opposed to a typical contract for money, the insured is not paying for something of value, but instead for a safeguard against an unfortunate event that may or may not occur in the future. As put by the Court of Appeals, insurance coverage provides “peace of mind, or comfort, of knowing that [the insured] will be protected in the event of catastrophe.”7 This is fundamentally different than a regular consumer transaction such as buying a car or hiring a house painter that does not entail the possibility of such dire consequences.

In addition, there is the unilateral aspect to how insurance companies may fulfill or not fulfill their policy obligations in this context. They either do or do not provide coverage for a third-party action. In contrast, in most consumer transactions there is often at least a partial or substantial performance which can alleviate the hardship incurred. For instance, if you buy a used car and the brakes do not work, it is not a total loss—you still have a car with value—but this is not so for an insurance disclaimer.

There is also a stark difference in economic resources between insurance companies and most of their customers, such as individuals and small businesses, who often are unable to challenge disclaimers unless they can be reimbursed for their legal fees if they prevail.

The insured in the case before Kornreich made an interesting argument for the expansion of the Mighty Midgets rule to encompass insureds who affirmatively file declaratory judgment actions against their insurance companies. Contending that the legal landscape for bad-faith insurance denials in New York has and continues to evolve based on the Court of Appeals decisions in Bi-Economy Market v. Harleysville Insurance Company of New York, 10 N.Y.3d 187 (2008) and Panasia Estates v. Hudson Insurance Company, 10 N.Y.3d 200 (2008), which allowed for an award of consequential damages to an insured that was greater than the policy limits, the insured suggested that the Mighty Midgets rule should also evolve to encompass insureds who file declaratory judgment actions, because the foreseeable result of a disclaimer is that the insured is forced to file the action.

Kornreich rejected this argument on the more technical grounds that the insured had failed to properly raise this theory in the complaint. But significantly, the judge went on to state that: “even absent bad faith, public policy strongly militates in favor of forcing [the insurer] to pay the DJ fees…The court encourages [the insured] to appeal this decision so its counsel can find out if its purported foresight is correct or if the penumbras of Bi-Economy and Panasia are illusory.”

The word “penumbra” of course hearkens back to how Justice William O. Douglas famously used it in the 1965 Supreme Court decision, Griswold v. Connecticut, 381 U.S. 479 (1965), which expanded our notions of privacy as well as the method and technique for interpreting the Bill of Rights—suggesting the law of bad faith in New York, which has historically been less consumer-friendly than in other states, can be more broadly interpreted.

It is noteworthy that some states take a more pro-consumer position. For instance, New Jersey allows an insured to recoup its legal fees if successful in a declaratory judgment action against its insured, no matter who is the plaintiff or defendant.8 In fact, New Jersey even allows injured persons to recover counsel fees if successful in a coverage action against a tortfeasor’s insurer.9

In conclusion, from a policyholder perspective, while the Mighty Midgets rule is better for insureds than no possibility of recovering legal fees in declaratory judgment actions, the shortcoming of the rule is that it does not discourage meritless disclaimers. The critical question comes down to whether the goal of “freer and more equal access to the courts” is directed to insurance companies or their insureds.


1. 43 Misc. 3d 1210(A).

2. Danaher Corp. v. Travelers Indemn. Co., 10-cv-0121, 2013 U.S. Dist. LEXIS 27214, at *10 (S.D.N.Y. Jan. 31, 2013) (quotation omitted).

3. 47 N.Y.2d at 22 (citation omitted).

4. Id. at 21 (citations omitted).

5. Quoting Folksamerica Reinsurance Co. v. Republic Ins. Co., 2004 U.S. Dist. LEXIS 21703, at *6-7 (S.D.N.Y. Oct. 29, 2004) (Baer, J.) quoting U.S. Underwriters Ins. Co. v. City Club Hotel, 369 F.3d 102, 110 (2d Cir. 2004).

6. Liberty Village Assoc. v. West American Insurance Co., 308 N.J.Super. 393, 406, 706 A.2d 206 (App.Div.), certif. denied, 154 N.J. 609, 713 A.2d 500 (1998).

7. Bi-Economy Market, Inc. v. Harleysville Ins. Co. of N.Y., 10 N.Y.3d 187, 194 (2008).

8. See Myron Corp. v. Atlantic Mut. Ins. Corp., 407 N.J. Super. 302, 311, 970 A.2d 1083, 1088 (N.J. App. Div. 2009).

9. Id. citing Sears Mortgage Corp. v. Rose, 134 N.J. 326, 356 (1993).

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Why You Can’t Trust The Supreme Court, In Three Quotes

Friday, September 26th, 2014


Why You Can’t Trust The Supreme Court, In Three Quotes


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Lawyers who are hoping to bring a case to the Supreme Court typically claim that the law is on their side, and they generally rely on citations to legal authorities and doctrines to prove this point. It’s not every day that an attorney states openly to a reporter that he thinks he’s going to win his case because he expects the justices to behave like partisan hacks.

And, yet, that’s more or less what Michael Carvin, the lead attorney behind a last ditch effort to gut the Affordable Care Act, told Talking Points Memo’s Sahil Kapur on Wednesday. According to Kapur, Carvin expects the Supreme Court to take up his case because there will be four justices — the amount needed for the Court to take a case — who aren’t “going to give much of a damn about what a bunch of Obama appointees on the D.C. Circuit think.” He added that he does not expect to “lose any Republican-appointed judges’ votes” in the D.C. Circuit, an appeals court that is currently considering the case, and that he expects the Republicans on the Supreme Court to follow their fellow Republicans’ lead.

When asked if he thinks he could lose any of the Supreme Court’s five Republicans, Carvin “smiled and said, ‘Oh, I don’t think so.’”

Last July, two Republican members of the United States Court of Appeals for the District of Columbia Circuit ordered much of Obamacare defunded at Carvin’s request. The full DC Circuit withdrew this decision earlier this month, and announced that the case would be heard again by the full court in December.

Although Carvin attributes this fact to “a bunch of Obama appointees on the D.C. Circuit,” the truth is that the Obama appointees on this court could have only played a partial role in the decision to withdraw the two GOP judges’ decision. All eleven of the DC Circuit’s active judges considered whether to rehear the case, and a majority of six was required to withdraw the two Republicans’ decision. President Obama, however, appointed only four members of the court. Thus, even if all four of the Obama appointees voted to rehear the case, at least two judges who were appointed by a different president must have agreed with them or the original decision would not have been withdrawn.

The DC Circuit does not announce how each judge votes when a request to rehear a case is filed, so, while it is likely that President Obama’s four appointees disagreed with the legally doubtful reasoning in the two Republican judges’ decision, no one except the judges themselves and some members of the court’s staff are aware of how the court’s members voted on this matter. Carvin’s claim that the Obama appointees voted against him is speculation.

Carvin is correct, however, that his best chance of winning this case is to hope that the justices will place their partisan preferences before the law, as the legal arguments presented in his briefs are weak. As ThinkProgress previously explained, Carvin’s legal theory misreads the Affordable Care Act by fixating on one line of the statute to the exclusion of other text that cuts against his claim that the law should be defunded. This method of reading a statute defies the Supreme Court’s command that “a reviewing court should not confine itself to examining a particular statutory provision in isolation” as the “meaning—or ambiguity—of certain words or phrases may only become evident when placed in context.”

Carvin also asks the courts to read Obamacare in a way that would render much of its language virtually meaningless. As we explained in a lengthy examination of the flaws in his lawsuit, Carvin “expect[s] the courts to believe that Obamacare is supposed to create barren health exchanges where little or no health insurers offer exorbitantly priced insurance that hardly anyone can afford.” This claim, among other things, cannot be squared with the law’s declaration that it will achieve “near-universal coverage by building upon and strengthening the private employer-based health insurance system.”

Nevertheless, the fact that Carvin’s legal arguments lack merit does not necessarily mean that he is wrong about how the justices will view his case. In August, the Washington Timesexamined the voting patterns of judges in cases involving the Affordable Care Act. They found that “Democratic appointees ruled in favor of Obamacare more than 90 percent of the time, while Republican appointees ruled against it nearly 80 percent of the time.” Pure partisanship, not the merits of a particular legal argument, has been the greatest predictor of how judges will decide cases involving this politically charged law.

But if judges cannot set aside their partisan preferences, then that is an indictment of the very legitimacy of the judiciary. Elected officials are empowered to govern because their authority flows from the will of the people. Federal judges, by contrast, enjoy no popular mandate and they cannot be removed from office in a future election if they abuse their power or otherwise to harm to the law. Nevertheless, the Constitution entrusts them with significant authority because it expects judges to objectively apply the law regardless of their political views.

Yet, if judges behave just like ordinary politicians, then the case for giving them any power whatsoever breaks down. Between giving an elected official who can be removed from office the power to set policy based solely on that official’s own political views, and giving that same power to an unelected official who serves for life, it is better to leave that kind of power in the hands of people who are actually accountable to the people. Placing that kind of power in the hands of unelected officials with life tenure, at least if those officials do not restrain themselves by following objective legal principles, is akin to oligarchy.

So Carvin’s prediction that Republican justices can be trusted to advance Republican policies even in a case such as this one, where the legal arguments for doing so are weak, may in fact prove correct. Should Carvin be vindicated, however, the justices will deal a grievous self-inflicted wound to their own institution.

Why the Supreme Court keeps smacking down America’s top patent court

Friday, September 26th, 2014

Updated by  on September 26, 2014, 10:40 a.m. ET

The CLS v. Alice decision was written by Justice Clarence Thomas.Alex Wong/Getty Images


If there’s one institution responsible for the state of patent law today, it’s the United States Court of Appeals for the Federal Circuit.

In 1982, Congress created the Federal Circuit and gave it jurisdiction over all patent cases. It was an unusual arrangement — most other areas of law are overseen by a dozen generalist appeals courts whose jurisdiction is based on geography, not subject matter. Federal Circuit decisions are subject to review by the Supreme Court, but in the early years, the Supreme Court gave the Federal Circuit a long leash. The high court rarely reviewed Federal Circuit decisions, making the lower court the de facto “Supreme Court of patent law.”

The results haven’t been pretty. During the 1980s and 1990s, the Federal Circuit made patent law increasingly favorable to patent holders. This produced a rapid increase in the number of patents and a surge in litigation. In recent years, patent litigation has become such a pervasive problem that the term “patent troll” has entered the public lexicon.

These developments have not escaped the attention of the Supreme Court, which has shown increasing interest in patent law in recent years. In a new essay, University of California, Hastings law professor Robin Feldman writes about the Supreme Court’s increasingly blunt efforts to force the Federal Circuit to respect the high court’s own precedents, which generally place stricter limits on patent rights.

In the most recent Supreme Court term, the high court reviewed a record six Federal Circuit rulings. In all of these cases, Feldman told me, ”the Supreme Court soundly and unanimously rejected the Federal Circuit’s logic.” Feldman believes that this heavy-handed approach was necessary because the Federal Circuit had “failed to take the hint” from previous Supreme Court rulings.

The most consequential of the Supreme Court’s rulings this term was CLS Bank v. Alice, the first Supreme Court ruling on the patentability of software in 33 years. Not only did the patent in Alice get struck down, but in the 3 months since then the precedent has led to at least 11 lower court rulings invalidating other software patents. Experts expect a lot more software patents to be invalidated in the coming years.

We spoke by phone on Tuesday afternoon. The interview has been edited for length and clarity.

Timothy B. Lee: You note in your paper that the Federal Circuit seems to be more favorable to the interests of patent holders than the Supreme Court. Do you have any idea why that is? One theory that some people have advanced is a capture theory — that the Federal Circuit has become unduly influenced by the ideology of patent lawyers, who tend to have a strongly pro-patent outlook.

Robin Feldman: I think the Supreme Court sees itself as sending strong messages to both the Federal Circuit and to the patent bar. For example, in the Alice decision, the Supreme Court five times referred to “draftsmen’s art” or “drafting efforts.”

These are strong messages not just to the bench but also to the bar that business as usual must change. In other words, there’s certainly a perception that the Federal Circuit and the patent bar are closely tied.

In my view, the stronger problem is an isolated court. Without the disciplining effect of frequent supervision or dialogue among other circuits, it’s difficult to avoid becoming insular. In other words, problems at the Federal Circuit are structurally predictable.

TBL: Why do you think the Federal Circuit’s approach to patent issues seems so different from that of the Supreme Court?

RF: For decades, the Federal Circuit operated with little oversight from the Supreme Court. For example, in the first 15 years [after 1982], the Supreme Court decided a total of only five cases from the Federal Circuit. That’s a remarkably small number compared to cases the Supreme Court took from other circuits. In addition, other circuits have the disciplining effect of different judges, different circuits coming to different opinions and conclusions. The Federal Circuit acted alone.

In that time, it developed a habit of relying on rules of convenience. That is, they may have reached the right result for the particular case, but they lacked a coherent logical base. With little oversight from the Supreme Court, little dialog from other circuits, it was easy for the Federal Circuit to operate in that manner.

Eventually, observations from various commentators and academics created interest at the level of the Supreme Court. And since the turn of the millennium, the Supreme Court has increasingly taken cases out of the Federal Circuit. This culminated in the last term, in which the Supreme Court took more cases than any other year since the founding of the Federal Circuit in 1982.


In all six patent cases decided last year by the Federal Circuit, the SC soundly and unanimously rejected the Federal Circuit’s logic. That has been a consistent pattern for the Supreme Court to the Federal Circuit in recent years.

In the article, I describe a pattern in which the Supreme Court initially tries to suggest the type of approach it would like to see, without specifying the approach, remands to the Federal Circuit, the Federal Circuit fails to take the hint, and eventually the Supreme Court slams down even harder.

TBL: It seems like since Alice, the Federal Circuit has seemed a little more motivated to follow the Supreme Court’s guidance. Do you think there’s a generational aspect to this? Are younger judges less resistant to following the Supreme Court’s direction?


RF: I have not looked at the different judges’ opinions in a careful, empirical manner. i would say that when a court is shifting direction, it may be easier for judges who are newer to the court to adapt to the shifting winds. It’s more difficult for those who have been on the court for longer to operate in a different fashion.

TBL: Is that because the older judges have opinions on the books that they’d have to repudiate?

RF: Old habits die hard.

The lower courts have invalidated about a dozen software patents since Alice came down a few months ago. Two of those decisions came from the Federal Circuit. The language of both decisions gave careful deference to the Supreme Court.

TBL: Some people, have proposed changing the rules to give jurisdiction over some patent appeals to courts other than the Federal Circuit. Do you think reforms like that would be a good idea?

RF: I haven’t read the proposal you’re talking about so it would be difficult for me to comment on it. But I suspect we are a long way from major changes in the Federal Circuit’s jurisdiction. Enthusiasm for those proposals will depend significantly on how the Federal Circuit itself reacts to the latest round of Supreme Court pronouncements.

The public is increasingly focused on patents and patent law. If public perception about the Federal Circuit becomes unfavorable, those proposals may gain credibility.

TBL: How big of a shift will the Federal Circuit need to make on patent law to satisfy the Supreme Court?

RF: The Supreme Court can only take a limited number of cases each year. The Federal Circuit continues to have significant latitude. To me, the question will be whether the court appears to be making an effort to conform to the spirit of Supreme Court pronouncements.

I read one commentator who noted essentially that patent lawyers have survived other decisions like Alice by simply shifting the way they write patent claims, and they will respond precisely the same way. If that happens, I suspect the Supreme Court will not take kindly to it.

In taking so many cases this year, the Supreme Court demonstrates remarkable focus on patent law. I would not expect that to change any time soon.


Why do so many patent lawsuits involve software?

Research shows that patents on software are particularly prone to litigation. There are several reasons for that:

  • Software patents can be extremely broad. For example, a famous patent covers the concept of purchasing products online with one click. Another patent owned by a troll called MPHJ has a patent that covers the concept of scanning documents to an email address. This kind of broad patent makes it easy for businesses to infringe by accident.
  • Most companies aren’t just users of software, they also have IT departments and web developers that produce it. So firms that wouldn’t otherwise have to worry about patent law are at risk of infringing software patents.
  • Software is extremely complex. Computer programs contain thousands, and sometimes millions, of lines of code. Since patents can be infringed in just a few lines of code, there’s no practical way for companies to figure out which patents their software products might be infringing.
Everything you need to know about patents17 CARDS / EDITED BY TIMOTHY B. LEE UPDATED JUL 1 2014, 11:40A
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Is ‘annoying’ too vague for public drunkenness law?

Thursday, September 25th, 2014


Tim Evans, tim.evans@indystar.com9:10 a.m. EDT September 18, 2014


(It takes more than just being drunk to get convicted of public intoxication in Indiana.

The law says you also have to be annoying.

The Indiana Court of Appeals ruled in February thatthe term is unconstitutionally vague.

Attorneys for the state will try this morning to convince the Indiana Supreme Court that the term is not.

The attorney general’s office, which is responsible for defending court challenges to state law, requested the high court’s review.

The challenge comes after the appeals court overturned the conviction of Rodregus Morgan, an Indianapolis man whose alcohol-induced public conduct was found annoying by a police officer.

When the high court announced it was taking up the case, Attorney General spokesman Bryan Corbin laid out the state’s argument: “The statute was not unconstitutionally vague as applied to Morgan because a person of ordinary intelligence would know that lying drunk in a public bus shelter that the general public uses throughout the day for transportation constitutes conduct that would annoy others — especially when the intoxicated person angrily and continually refuses to move when asked to do so by another person.”

A three-judge panel from the court of appeals, however, still found the “annoying” standard unconstitutionally vague. A criminal statute “must include some ‘scientifically objective measurement for compliance’ so that the public is aware of the conduct that will subject them to arrest,” the appeals opinion said.

The Supreme Court will hear oral arguments in the case at 9:45 a.m. The panel has two basic options: uphold the appeals court ruling or reverse that decision with a finding that the term annoying is not too vague.

It won’t be the first or last time a high court has taken up the issue of vagueness in the law. Most famous is the U.S. Supreme Court’s 1964 take on obscenity that included former Justice Potter Stewart’s oft-repeated “know it when I see it” standard.

“I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description … (of what is and is not obscene),” Stewart explained.

Perhaps, Stewart admitted, he could “never succeed in intelligibly” defining obscenity.

“But,” he was clear, “I know it when I see it.”

This story will be updated.

Call Tim Evans at (317) 444-6204. Follow him on Twitter:@starwtatchtim

Shakespeare Didn’t Really Want To Kill All The Lawyers, But We Should Deregulate Their Profession

Thursday, September 25th, 2014


Forbes - LAW & REGULATION 9/18/2014 

One of the Bard’s often-quoted lines is Dick the Butcher’s admonition in Henry VI, Part 2, “The first thing we do, let’s kill all the lawyers.”

That idea, argues lawyer David Epstein, is mistakenly thought to mean that Shakespeare was antagonistic toward the legal profession. Instead, as we read in this Wall Street Journal piece, Shakespeare actually meant “to portray lawyers as the guardians of the rule of law who stand in the way of a fanatical mob.”

Whether you agree with Epstein’s interpretation or not, more than four centuries after Shakespeare’s time, we should do something about lawyers, something that entails no violence.

That something is to deregulate the legal profession.

To repeat a point I have made here before, most companies and professions like regulation. They seek it, happily trading off some freedom for security from the blustery winds of wide-open competition. One of the organized interest groups that has been very successful in getting government to stifle competition so it can act like a cartel is the legal profession.

It used to be egregiously cartel-like, requiring that members adhere to fee schedules, thus shutting down price competition, and forbidding lawyers from advertising. Both of those strictures, embodied in the Canons of Legal Ethics, have been wiped away, though. The Supreme Court ruled that mandatory fee schedules violated the Sherman Act in Goldfarb v. Virginia State Bar in 1975 and the prohibition against advertising was similarly struck down by the Court in Bates v. State Bar of Arizona in 1977.

Those decisions whittled away the profession’s internal rules against competition, allowing lawyers to compete with each other. Still standing, however, is the bar’s defense against external competition: the prohibition against “unauthorized practice of law.” Only individuals who hold a license to practice law in a state may do so and anyone who does not hold a license is guilty of “unauthorized practice” should he or she venture to do anything that might be considered “practice of law.”

It doesn’t matter in the least how competent the individual may be to do the task, how expertly it was done, or how satisfied the other person was with the work. Unauthorized practice is strictly forbidden. And because exactly what constitutes the “practice of law” is not precisely defined, the effect (and the purpose) is to scare those who are not members of the bar from coming anywhere near “lawyers’ turf.”

With the high licensure barrier to entry into the market for legal services (in most states, only people who have graduated from an American Bar Association accredited law school are eligible to take the bar exam), lawyers can charge more. Owing to the great cost of getting into the guild, few lawyers can even think about taking cases from poor people who can’t afford to pay substantial fees.

Among the many who have noticed that problem are Brookings Institution scholars Robert Crandall and Clifford Winston, whose 2011 book First Thing We Do, Let’s Deregulate All the Lawyers makes a strong case in favor of a laissez-faire approach to the legal profession. They write, “The reality is that many more people could offer various forms of legal services today at far lower prices if the American Bar Association did not artificially restrict the number of lawyers…Occupational licensing limits competition and raises the cost of legal services.”

The profession’s licensure system is enforced through unauthorized practice of law (UPL) prohibitions. If it weren’t for them, people could enter the market without having first spent three largely useless but extremely expensive years in law school.

It is because of those prohibitions that many Americans can’t afford an attorney. As law professor Laurel Rigertas writes in her recent Fordham Law Review article The Legal Profession’s Monopoly: Failing to Protect Consumers, “Much of the public is left wandering around the self-help section of bookstores and self-help kiosks in courthouses trying to figure out how to handle matters on their own.”

Too bad about those Americans who are priced out of the market, but the ABA insists that its restrictions are only there to protect the public against incompetence. Some people might get bad advice from inadequately trained legal practitioners, so organized bar says it has to step in and ensure competence by keeping law students in approved law schools for three years.

The problem with that rationale is that spending all that time in law school is neither a necessary nor a sufficient condition for competence in performing legal tasks. Stanford Law School professor Deborah Rhode has been attacking that notion since 1981. She and Lucy Buford Ricca (also at Stanford) write in their Fordham Law Review article Protecting the Profession or the Public: Rethinking Unauthorized-Practice Enforcement,

“In other nations that permit nonlawyers to provide legal advice and to assist with routine documents, the research available does not suggest that their performance has been inadequate. In a study comparing outcomes for low-income clients in the United Kingdom on a variety of matters such as welfare benefits, housing, and employment, nonlawyers generally outperformed lawyers in terms of concrete results and client satisfaction….In the United States, studies of lay specialists who provide legal representation in bankruptcy and administrative agency hearings find that they generally perform as well or better than attorneys. Extensive formal training is less critical than daily experience for effective advocacy.”

If the market for legal services were deregulated, practitioners would quickly figure out the optimal kind and duration of training for them to succeed in business. It isn’t the years of law school classes (almost all of which is quickly forgotten) that make one competent, but instead the need to build your reputation through good service.

In short, the licensing regulations in the legal profession don’t protect the public, but merely raise the cost of services, doing the most harm to those who can least afford to pay.

But even if we could persuade a lot of legislators that UPL is nothing but anti-competitive turf protection, we would confront the further difficulty that UPL enforcement is mostly in the domain of the judicial branch. Professor Rigertas observes in the article cited above, “With rare exceptions, legislatures cannot authorize nonlawyers to engage in acts that are considered the practice of law, so any changes to the scope of the legal profession’s monopoly must come from the state supreme courts….”

She points out a few, small steps that have been taken in that direction. The Supreme Court of Washington has, for example, decided to permit Limited License Legal Technicians to do work in the area of family law.  The small steps these few courts have taken have been opposed by the organized bar. Trying to get to a deregulated profession through incremental liberalizations authorized by justices willing to joust with their compatriots in the profession would take forever. Or at least half of forever.

I don’t think that is necessary. State Supreme courts may have “inherent” control over the legal profession, but that should not mean that they get to create and enforce a new victimless crime on their own. The legislative branch shouldn’t sit around like potted plants while the judicial branch abuses citizens.

State legislators – a coalition of conservatives who believe in free markets and liberals who actually put the interests of poor people above lawyer campaign support – could pass statutes providing that no one will be fined or imprisoned for the rendering of any legal service except upon proof of fraud. Consumers who could prove they’d been defrauded by someone falsely claiming to have legal credentials could take action, but bar associations trying to stifle competition could not.

If that were the law of a state, all of which judges are sworn to uphold, we would probably never see any more cases where paralegals, secretaries, or family members are attacked merely for having trespassed on lawyers’ turf.

Why Every Single Supreme Court Justice Got Hobby Lobby Wrong

Thursday, September 25th, 2014

Thursday 18 September 2014  ETedited by Alex Ferraro

JURIST Guest Columnist Ron Fein, of Free Speech for People, discusses the Supreme Court’s recent Hobby Lobby decision …

The Supreme Court’s majority opinion [PDF] inHobby Lobby made a serious mistake about the nature of corporate religious claims. But so did the dissent.

As Hobby Lobby’s case worked its way through the courts, both sides took one thing for granted: they assumed that the Supreme Court had already extended the religious freedom protections of the First Amendment and theReligious Freedom Restoration Act (RFRA) to nonprofit corporations. Under that assumption, the next question was whether that supposed rule should be extended to for-profit corporations. But what if the assumption is wrong: what if nonprofit corporation—even churches—don’t themselves independently hold religious free exercise rights?

When we think of corporations, we usually think of businesses, like ExxonMobil, Wal-Mart—or Hobby Lobby. But there are also nonprofit corporations, like the Sierra Club and the National Right-to-Life Committee. Many religious congregations, such as churches, synagogues or mosques, find it useful for legal purposes to incorporate.

That brings us to Hobby Lobby. In the past few decades, there were a handful of Supreme Court cases involving religious claims where the named plaintiff was an incorporated church. But does that mean that the church corporation itself had religious rights?

Nearly everyone reading these cases assumed that the nonprofit corporations themselves have religious freedom rights. And so the argument in Hobby Lobby was about whether for-profit corporations also have religious rights.

But this assumption is wrong. Incorporated nonprofit religious institutions—including churches—don’t have, and never had, their own independent religious rights. They come into court as representatives of their members.

Let’s look at some of those cases. In Hobby Lobby, Justice Alito wrote: “[w]e have entertained RFRA and free-exercise claims brought by nonprofit corporations.” His first example was Gonzales v. O Centro Espírita Beneficiente União do Vegetal, a 2006 decision involving a request for a RFRA exemption from federal anti-drug laws by a small (incorporated) church whose members sought to use a hallucinogenic tea in religious ceremonies.

But the O Centro decision doesn’t say anything about religious rights for nonprofit corporations; it doesn’t even mention the word “corporation.” Rather, the opinion explained that RFRA should yield an “exception for the 130 or so American members of the [church] who want to practice” their religion. Members of the church: that’s people, not corporations.

It turns out that the church, which is incorporated, filed its RFRA suit as “a New Mexico corporation on its own behalf and on behalf of all its members in the United States.”

Their case was based on a legal concept known as associational standing. To file a case in federal court, you must show that you suffered harm from whatever the defendant did or didn’t do, and this violated your legal rights. This is called standing. And to have standing, you have to argue your own rights; you can’t come into court and argue that the defendant violated someone else’s legal rights.

But there are exceptions, and one of the most important is associational standing. This means that an association can bring a claim that really belongs to its members. Let’s take environmental law. Suppose a factory pollutes a river and the Sierra Club wants to sue the factory under the Clean Water Act [PDF]. But how is the Sierra Club harmed? The polluted water isn’t coursing through the Sierra Club’s San Francisco headquarters. Instead, the Club needs to identify a few members who regularly kayak through that river. Those members fill out affidavits saying that they can’t kayak the river any more because the pollution is making it so bad. And then—here’s the legal device—the Sierra Club can bring the lawsuit on its members’ behalf, because people pay dues to the Sierra Club to do exactly this sort of thing, and the Sierra Club’s lawyers can present the case in court more effectively than a few individual kayakers could.

That’s the magic of associational standing: it lets an association that has no injury or legal right of its own file a lawsuit on behalf of its members.

Let’s return to O Centro. The church’s lawyers were apparently worried that the government might pull some clever maneuver to get the case kicked out of court, because they came up with every possible plaintiff you could imagine: the church on its own behalf; the church using associational standing to argue on behalf of its members; and then 15 of those members (more than 10 percent of its total membership!) as individual plaintiffs.

And because of this abundance of plaintiffs, none of the courts involved spent too much time worrying about whether the church corporation itself had religious rights. After all, at least one of the plaintiffs could raise the claim for a RFRA exemption, so why quibble over who gets to be a plaintiff?

Something similar happened in another case that Alito mentioned, Church of the Lukumi Babalu Aye, Inc. v. Hialeah, involving a ban on animal slaughtering practices that was targeted at the Santería religion. The case is named after the first plaintiff on the complaint: the church corporation. But it could just as easily been calledPichardo v. Hialeah, after the other plaintiff: Ernesto Pichardo, a Santería priest, who was listed second. And the religious rights of Santería practitioners like Ernesto Pichardo, not any corporation’s rights, were at stake in the case. Indeed, the Supreme Court opinion focused on the “religious exercise of Santería churchmembers.” Same with another case that Alito cited, Hosanna-Tabor Evangelical Lutheran Church and School v. Equal Employment Opportunity Commission, which held that churches are exempt from discrimination law when hiring and firing ministers. The problem with applying discrimination law to ministers isn’t that the government is forcing a minister on the church corporation, but on its congregants.

We can now understand the court’s previous cases in a new way. When an incorporated church challenges a restriction on its members’ right to engage in religious activities, it can do so not because the corporation itself has any religious rights, but because its members have religious rights.

So both the majority and the dissent in Hobby Lobby got it wrong: O Centro and similar cases don’t establish that nonprofit corporations have a special status under the law of religious exercise. Rather, they’re just examples of an associational standing concept that applies across many different areas of law. The church corporations didn’t have, and didn’t need, their own religious rights; they were just asserting the rights of their members using associational standing.

Once we understand O Centro and related cases in this way, we see that both Alito’s majority opinion and Justice Ginsburg’s dissent asked the wrong question in Hobby Lobby. The question shouldn’t be whether the court’s “tradition” of “special solicitude” for nonprofit corporations raising religious freedom claims should be extended to for-profit corporations. Rather, we start with the baseline assumption that corporations don’t have religions and ask whether for-profit corporations can use associational standing to represent their investors’ religious claims in court.

The Supreme Court has addressed this issue in other contexts. Membership-oriented nonprofit organizations, the court has explained, can typically rely on associational standing because “the primary reason people join an organization is often to create an effective vehicle for vindicating interests that they share with others.” And with a nonprofit, we rarely worry about whether an organization seeking a religious exemption is truly representing the religious interests of its members, or whether it’s all a money-making ruse, since the nonprofit can’t distribute extra funds as profits.

That’s not true of business corporations. They don’t have members—they have investors. They aren’t associations of individuals joined together for a common religious purpose—they’re separate legal entities that are authorized by state law to issue stock to be purchased by stockholders. These corporations can’t raise associational standing claims on behalf of their stockholders.

That’s not to say that for-profit business corporations can never raise someone’s religious claims. In some cases, a business can argue that the rights of a third party are being violated, but the third party isn’t in a good position to bring the case directly. For example, if the government banned kosher slaughter, a kosher food company could challenge the law by arguing that its customers’ religious rights were at stake. The company might argue that it could hire fancier lawyers than individual customers and it would have factual information about slaughterhouse practices that customers wouldn’t have. And it would be arguing for a well-established standing exception, not a radical extension of the law.

But in Hobby Lobby, these factors didn’t apply. The company didn’t bring its claims on behalf of its customers, or employees—indeed, it essentially brought its claim against its employees’ interests.

So the question that the court should have asked was whether Hobby Lobby—a corporation with no religion, which has special state-granted privileges that (unlike a nonprofit) enable it to accumulate much more wealth for its investors than would be possible without the privileges of incorporation—should be able to use associational standing to raise those investors’ claims. And under traditional rules of both standing and corporate law, corporations aren’t associations of their stockholders and can’t raise these types of claims.

Why does this way of thinking about corporate rights claims matter?

First, this approach will help us think more clearly about religious nonprofit organizations that aren’t churches, like religiously-affiliated hospitals. It forces us to ask: exactly whose religious rights are they claiming?

Second, the court often works out its corporate rights thinking with non-profits and then extends those rights to business corporations. For example, consider Citizens United, which allows unlimited corporate spending in elections. The court started by describing Citizens United itself (a nonprofit) as an “association of citizens” and then generalized to all corporations, including multinational conglomerates. Similarly, in Hobby Lobby, the majority started by wrongly assuming that O Centro and similar cases had already established that nonprofit corporations could raise religious claims (when in fact the better analysis involved associational standing) and then generalized to for-profit corporations. The more the justices do this, the easier they’ll find it to blur the differences between a citizens’ association and a for-profit business corporation.

In Hobby Lobby, a misinterpretation of a few cases involving churches and their worshippers led to 13,000 employees of a for-profit retail enterprise losing insurance coverage, as will many thousands more working at other companies trying to claim this new exemption. To fix this, we must start with one basic premise: corporations, no matter what type, are not people.
Ron Fein is the Legal Director for Free Speech for People. He submitted an amicus brief to the Supreme Court in the Contestoga Wood Specialties Corporation case.

Suggested citation: Ron Fein, Why Every Single Supreme Court Justice Got Hobby Lobby Wrong, JURIST- Hotline, Sep. 18, 2014,