Tuesday, April 30, 2013

Court Of Appeals Grants Leave In Products Liability Action

On April 30, 2013, the Court of Appeals granted leave in Hoover v. New Holland North America, Inc., a products liability action involving an alleged design defect.  In Hoover, the sixteen year old plaintiff suffered an above-the-elbow amputation because her coat became tangled on a bolt protruding from a driveline that connected a tractor to an implement used to dig post holes.  The device had been designed with a plastic shield that covered the protruding bolt.  Notably, however, the plastic shield had been removed from the device by its owner (not the plaintiffs) because the shield was “damaged beyond repair during use.”

The jury found that a design defect caused the plaintiff's injuries, and the Appellate Division, Fourth Department affirmed.  The Fourth Department noted that there was sufficient evidence that the protruding bolt was an entanglement hazard and that there were design alternatives that would reduce or eliminate the hazard at only a nominal increase in cost.  The court also rejected defense arguments that the verdict was against the weight of the evidence or that there was insufficient evidence of causation.

With respect to the owner’s removal of the plastic shield, the Fourth Department noted that a manufacturer will not be liable when a safely designed and produced product is substantially altered or modified by a third party.  Nevertheless, the Fourth Department wrote that a modification defeats such a claim only where the modification made a safe product defective and caused the injuries. In that vein, the Fourth Department acknowledged that the device was designed with a plastic shield, but noted that there was sufficient evidence that the shield “could be damaged by normal use or foreseeable misuse.”  Given the evidence concerning the bolt and the shield, the Fourth Department held that “plaintiffs presented sufficient evidence that the digger was defectively designed, and we further conclude that they presented sufficient evidence that [the owner’s] removal of the damaged gearbox shield did not constitute a substantial modification.”

This Week At The Court Of Appeals

J. P. Morgan Securities Inc. v. Vigilant Insurance Co.:

The plaintiffs commenced this insurance coverage action after their insurers disclaimed coverage for more than $200 million in damages related to an underlying SEC investigation, settlement, and shareholder lawsuits.  The claimed damages stem from allegations that the plaintiffs facilitated late trading in violation of various securities laws.  As a result of the investigation, the plaintiffs agreed to pay $160 million as “disgorgement” in a settlement that neither admitted nor denied the SEC’s findings.  The $160 million itself allegedly represented disgorgement of an estimated $20 million in fees and commissions and $140 million of profits that customers made on illegal trades.

The defendant insurers provided professional liability policies covering loss incurred from “any Wrongful Act,” which included settlements and compensatory damages but not fines or penalties imposed by law or costs that are legally uninsurable.  The policies also excluded claims based upon or arising out of the insured “gaining in fact any personal profit or advantage to which [it] was not legally entitled.”   The insurers disclaimed, claiming the disgorgement was not an insurable loss and was excluded from coverage.

In response to the complaint, the insurers moved to dismiss the action under CPLR 3211 (a)(1) & (7), claiming there was documentary evidence precluding recovery, highlighting the SEC findings, or that the pleadings failed to state a claim.  The trial court denied the motion to dismiss and the defendants appealed.  The Appellate Division, First Department, reversed and dismissed the complaint, holding that the “disgorgement of ill-gotten gains . . . does not constitute an insurable loss.”  The First Department wrote that wrongdoers should not be permitted to shift the cost to an insurer and “retain the proceeds of his or her illegal acts.”  The plaintiffs argue, among other things, that the disgorgement is a covered loss because it did not receive ill-gotten gains and was not unjustly enriched.

Oral argument will be Wednesday, May 1, 2013. The Court streams oral arguments online. To watch live, you can visit the New York Court of Appeals website on Wednesday around 3:30 p.m. and click on the “Oral Arguments Webcast” link on the right-hand side of the page.

Monday, April 22, 2013

This Week At The Court Of Appeals

Update: New post discussing the Court of Appeals' opinion in this matter.

Wild v. Catholic Health System:

In this medical malpractice action, the Court of Appeals will have the first opportunity in almost forty years to address the rule about loss of a chance of a better outcome.  At Mercy Hospital, the plaintiff’s decedent had difficulty breathing and emergency room doctors decided to insert a breathing tube.  The doctors unsuccessfully attempted to intubate the decedent multiple times before inserting the tube properly.  The decedent suffered a perforated esophagus that was not diagnosed until days later.  When eventually diagnosed, the damage was irreparable and the plaintiff needed a permanent feeding tube.

The trial court gave a “lost chance” instruction based on the theory that had the perforated esophagus been timely diagnosed, the perforation might have been fixed by immediate surgery.  The instruction at issue allowed the jury to find for the plaintiff where “the defendant’s actions or omissions deprived Mrs. Horn of a substantial possibility of avoiding the consequence of having a permanent feeding tube.  The instruction noted that “to be substantial, [the chance of avoiding the need for a permanent feeding tube] does not have to be more likely than not and it does not have to be more than 50 percent, but it has to be more than slight.”  The defense will argue in the Court of Appeals, among other things, that this instruction improperly reduced the plaintiff’s burden for proving causation to “more than a slight chance.”

The Appellate Division, Fourth Department, had partially rejected that argument, noting that the instruction was partly in error but that the error was harmless.  The Fourth Department held that the lost chance instruction was appropriate for the plaintiff’s failure to diagnose the perforation but was not appropriate for creating the perforation.  In the Fourth Department’s view, though, the finding of negligent intubation “necessarily entailed a finding of proximate cause,” making the causation instruction harmless as to the intubation.

Oral argument will be Wednesday, April 24, 2013. The Court streams oral arguments online. To watch them live, you can visit the New York Court of Appeals website on Wednesday after 2:00 p.m. and click on the “Oral Arguments Webcast” link on the right-hand side of the page.

Tuesday, April 16, 2013

First Department Dismisses a $5.5 Million Medical Malpractice Verdict

Disclaimer: This is an MLN case

In Bustos v. Lenox Hill Hospital, the jury determined that the defendant Hospital departed from accepted practice in connection with (1) the dosage of an epidural block administered during plaintiff’s delivery of her infant child and (2) the maneuvers performed on plaintiff during the delivery.  The jury also concluded that such departures from accepted practice caused the plaintiff’s claimed injury, which consisted of a 9.5 centimeter pubic symphysis diastasis, and awarded plaintiffs $5.5 million ($4.5 million for her past and future pain and suffering and $1 million for her husband’s loss of services).  The Supreme Court denied the Hospital’s motion to set aside the jury’s verdict. 

Based upon the insufficiency of the expert testimony proffered by the plaintiffs, the First Department unanimously reversed the trial court’s Order, and directed that the plaintiffs’ complaint be dismissed.  With respect to the alleged departure from accepted practice in connection with the epidural dosage, the Court concluded that the plaintiffs’ “own expert conceded that the dosage was standard and appropriate.”  Concerning the birthing maneuvers, the Court noted that the “only testimony plaintiffs’ expert gave as to the alleged deviation from the accepted standard of medical care in the performance of the birthing maneuvers was that the maneuvers ‘were excessive and caused th[e] injuries’ and deviated from the appropriate standard of care.”  Noting that the plaintiffs’ expert failed to “explain or in any other way support his opinion,” the Court concluded that the opinion “was speculative and conclusory and without probative force.”

Friday, April 5, 2013

Governor Cuomo Nominates First Department's Justice Abdus-Salaam for Court of Appeals

Governor Andrew Cuomo has announced his nomination of Appellate Division, First Department, Associate Justice Sheila Abdus-Salaam to the New York State Court of Appeals.  Here is the link to the Governor's press release.  The Senate now has thirty days to confirm or reject the appointment. 

Monday, April 1, 2013

Court of Appeals Judges Share Their Practice Tips

On Monday, the New York Law Journal highlighted a two-hour symposium held on March 21, 2013 at Albany Law School involving the Judges of the Court New York State Court of Appeals.  The program was titled “The New York Court of Appeals: The Untold Secrets of Eagle Street."  Among other things, the Judges discussed how they prepare for cases, what appellate practitioners should know about appearing before the court, and offered a little insight into how they work behind closed doors. 

Video of the two-hour symposium is available online.  The video includes recently sworn-in Judge Rivera sharing her perspective as the newest Judge on the court (around the 95 minute mark).