$1.1 Billion (Yes, Billion) Verdict
Against Pharmaceutical Manufacturer
April 28, 2004
Plaintiffs’ attorney John O’Quinn just won a $1.1 billion (yes, billion) jury verdict for the widower of a woman who took a diet drug. The verdict came in a wrongful-death suit against pharmaceutical manufacturer Wyeth.
About $ 900 million of that amount was punitive damages, making the ratio of punitives to actual damages approximately 9 to 1. Why didn’t this verdict violate Texas’s statutory cap on punitive damages? Attorney O’Quinn was quoted in this Associated Press story:
Public Allegation of Copyright Infringement
Leads to $300K Defamation Verdict
April 23, 2004
If you think a competitor is doing something illegal, like infringing your copyright, it’s usually best not to complain to customers about it. If it turns out you’re wrong about the alleged illegality, you could be liable for defamation. A Web site operator named Boats.com recently learned a $300,000 lesson on that subject in a Florida federal district court.
Martha Stewart Juror Says Her Changing
a Phone Message Brought Her Down
March 8, 2004
This AP story reports some post-trial comments by jurors in the Martha Stewart case. It seems that one of the key pieces of evidence was testimony that Stewart had tried to change a phone message from her stockbroker:
Other jurors said Stewart’s assistant Ann Armstrong, who reluctantly testified that Stewart tried to alter a phone record of a message from her stockbroker, was the key witness leading them to the domestic diva’s conviction.
Armstrong testified that Stewart sat down at Armstrong’s desk to change a message from her broker, Peter Bacanovic, that informed her that he thought the ImClone stock price would start falling.
“She ultimately gave the testimony that was going to bring Martha down. That was a very important piece,” said juror Chappell Hartridge, one of six jurors who spoke to “Dateline NBC” in interviews that aired Sunday night.
“We all believed her 100 percent,” juror Adam Sachs said of Armstrong.
This is another example of a brutal fact of legal life: In a trial, evidence can often be confusing, difficult to understand, or even contradictory. If you are accused of wrong-doing, it may not be entirely clear whether what you did was wrong. (This can be especially true in intellectual-property cases, by the way.) On the other hand, evidence-tampering is very easy to understand. If jurors conclude that you tampered with evidence, they may well seize on that as “proxy evidence” that your actions must indeed have been wrong, otherwise why would you have tried to cover your tracks?
It bears repeating: If you’ve been sued, or if you think you’re going to be sued, or if you hear that government authorities are investigating your actions, DON’T destroy or tamper with potential evidence. The chances are you’ll only be hurting yourself.
Compuware: Hit By Its Own Torpedoes
February 11, 2004
In my Navy days I was a carrier sailor, not a submariner. But I still heard the story about the valor of the submarine USS TANG, sunk in the middle of a furious battle in 1944 by one of its own faulty torpedos with the loss of all but nine of its crew. TANG’s skipper, Richard O’Kane, was one of the most successful U.S. sub skippers of WW II; he was awarded the Medal of Honor after he and his surviving crew were released from Japanese captivity at the end of the war.
(In re-reading this essay before posting it, I wonder whether I’ll be guilty of poor taste in using TANG’s epic saga as a motif for a far less-heroic tale. But many of you will have never heard of either TANG or O’Kane, and you should, so here goes.)
Compuware, a mainframe computer software vendor, seems to have been hit by several of its own torpedoes. In 2002, it launched a copyright- and trade-secret lawsuit against IBM, its former alliance partner. Not long afterwards, CompuWare’s own assertions were re-directed at them, as part of a class-action securities lawsuit. Last week, Compuware’s motion to dismiss the class-action lawsuit was denied in part, leaving the unfortunate Compuware to the tender mercies of the securities plaintiffs’ bar. See In re Compuware Securities Litigation, _ F. Supp.2d _, 2004 WL 231464 (E.D. Mich. Feb. 3, 2004) (link via Securities Litigation Watch.)
SEC Hammers Company’s Customers
for Securities-Fraud Participation
January 7, 2004
The SEC has again gone after customers of a company for allegedly helping to perpetrate the company’s securities fraud by “round-tripping,” i.e., creating fictitious transactions that were reported as revenue. As part of the settlement, the customers’ principals, as well as the company insiders who were involved, were barred from serving as an officer or director of a publicly-held company.
Junk FAXing brings $5.4M Fine
January 7, 2004
On Monday the Federal Communications Commission (FCC) announced that it was fining Fax.com, Inc. nearly $5.4 million “for faxing unsolicited advertisements to consumers in violation of the Telephone Consumer Protection Act (TCPA) and the Commission’s rules. . . . This is the largest single fine ever imposed by the Commission for violation of the TCPA.”
The FCC said that it imposed the maximum permissible forfeiture of $11,000 for each of 489 separate violations on grounds that “Fax.com’s primary business activity itself constitutes a massive on-going violation” of the TCPA.
See the FCC’s press release for more details.
Review Your Unused Sales Tax Permits
November 5, 2003
In late 2001, a Texas lighting-fixtures vendor sued one of its customers, a California company, for breach of contract. The vendor brought the suit in, surprise, Texas. The California customer tried to get the lawsuit thrown out because of lack of “personal jurisdiction.” That means the customer claimed it didn’t have enough presence in, or contact with, the state of Texas to be subject to suit there.
Earlier this year, a federal magistrate judge in San Antonio denied the California customer’s motion to dismiss the suit. Her principal stated reason suggests that companies might do well to periodically review their state sales- and use-tax permits. See Ergonomic Lighting System, Inc. v. Commercial Petroleum Equipment/USALCO, No. SA-02-CA-0031 (W.D.Tex. 03/05/2003).
Alone, Unarmed (maybe), and Uninsured
October 31, 2003
Here’s a story about a software vendor that found out — in probably the worst possible way — that its general-liability insurance policy did not have the specific coverage that was probably the most crucial for the vendor’s software business. Not a good day for the vendor’s risk-management people.
Victoria’s Secret Exposes Too Much
(It’s Not What You Think)
October 28, 2003
No, it’s not what you think. Victoria’s Secret had computer security problems that allowed customers to browse through other customers’ on-line orders. (Insert your choice of joke here.) That attracted the attention of NY attorney general Elliot Spitzer. When the dust settled, the Victoria’s Secret parent company agreed to give refunds or credits to customers in New York and to pay the state of New York a $50,000 fine. See the AP story.
POSSIBLE LESSON: This is yet another example of how companies doing business on the Internet may have to contend with multiple legal authorities. Some other examples:
- Earlier this month, Google was ordered to pay a French company 75,000 euros in damages for allowing paid advertisements to be linked to the French company’s trademark in search terms; see the Reuters story.
- Last December, an Australian court ruled that a local business executive could bring suit — in Australia — against Dow Jones for allegedly libelous statements posted on a U.S. Web site. See this BBC analysis.
- In November 2000, another French judge ordered Yahoo! to block French access to Nazi-memorabilia sites; see this BBC story.
Mother Always Said, Don’t Brag
October 14, 2003
The exuberance and assertiveness of marketing people can make enormous contributions to a company. They can also put the company in a deep hole. Here’s an example of the latter: Some not-atypical, faintly boastful language in a company’s press releases language, of a kind your marketing people might well have used themselves, kept the company mired in a securities class-action lawsuit, when the lawsuit might otherwise have been dismissed.