What Do eBay, The “40 Year-Old Virgin,” And The Litigation Privilege Have In Common?

 by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Jonah hillNot much, but please keep reading.

In the movie, the 40-Year-Old-Virgin, an almost unrecognizable Jonah Hill has a very small, but funny, part. He plays a customer at the “We Sell Your Stuff On Ebay” store, which is owned by Steve Carell’s character’s love interest, played by Catherine Keener. According to IMDB.com, Hills plays “Ebay Customer,” who is, to say the least, having trouble understanding how the store works. He wants to buy some "wonderful" shoes that he found at the store. Keener's character explains that she does not actually sell any of the items in her store at the store, she sells them on eBay. Hill's character just doesn't get it, eventually telling Keener's character that he just wanted to buy the shoes and take them home, but that she was "making it extremely difficult" for him to do so.

The recent Appellate Division decision, XCalibur Communications v. Karcich, involved a dispute over the sale of the plaintiff’s merchandise on eBay. No word on whether any of those sales involved shoes like the ones Hill’s character was looking to buy, but the decision helps clarify the scope of the litigation privilege, which is broader than many people think. 

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Clear Arbitration Provision, Negotiated By Sophisticated Party While Represented By Counsel Deemed Enforceable

     by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Arbitration def (pd)The headline of this post is a little like "Dog bites man." But, given the recent trend in New Jersey of "man bites dog" type cases where courts have invalidated arbitration provisions that once seemed unambiguous (look here, here, and here for examples), the headline should make more sense.

In Columbus Circle NJ LLC v. Island Construction Co., LLC, the Appellate Division enforced an arbitration provision contained in a construction contract. Plaintiff was a single-member LLC that retained defendant to build a $1.9 million home on the bay in Avalon, New Jersey. Plaintiff's representative circulated an initial draft contract for the project that used the standard American Institute of Architects (AIA) forms. These forms contain a provision entitled "BINDING DISPUTE RESOLUTION," which, as the name suggests, requires the parties to choose "the method of binding dispute resolution" for any claims between them that are not resolved by mediation. In the draft it circulated, plaintiff's representative checked off "Arbitration pursuant to Section 15.4 of AIA Document A201-2007," rather than "Litigation in a court of competent jurisdiction." Before it was signed, the attorney for the LLC's sole member reviewed the draft and proposed changes, as did defendant, but none of these changes appear to have altered the dispute resolution provision.

During construction, disagreements arose between the parties regarding the cost of the project, leading both parties to terminate the contract. When mediation apparently failed, defendant filed a demand for arbitration. Three months later, plaintiff sued in state court. Defendant successfully moved to dismiss plaintiff's complaint and compel arbitration, and Plaintiff appealed.

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Do Lawyers Have A Duty To Disclose, To The Client, Significant Errors Committed By Co-Counsel?

by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Ethics (pd)
This was the question posed to the Committee on Professional Ethics of the New York State Bar Association. Its answer was a qualified yes — counsel has a duty to disclose the alleged error to the client but only if it was a significant error that could give rise to a malpractice claim.

The issue presented to the Committee was the following:

The inquirer was engaged to represent a client on the eve of trial. The client’s prior counsel is serving as co-counsel.  In preparing the case, the inquirer has learned that co-counsel conducted virtually no discovery and made no document requests, although the inquirer believes correspondence and emails between the parties could be critical to the case.  The inquirer believes this was a significant error or omission that may give rise to a malpractice claim against co-counsel. The outcome of the case, however, has yet to be decided. The inquirer is concerned about disclosing this situation to the client because it would undermine inquirer’s relationship with co-counsel, but the inquirer also believes it is in the client’s best interests to disclose the facts as soon as possible.

It is already established in New York (and several other jurisdictions, including New Jersey) that lawyers must report their own significant errors or omissions to clients. This requirement is based partly on Rule 1.4 and partly on Rule 1.7, each of which the Committee discussed in its opinion.

Rule 1.4 requires lawyers to keep clients informed about any material developments in their representation, and to explain issues "to the extent reasonably necessary to permit the client to make informed decisions regarding the representation." A client may decide not to continue to retain a lawyer who makes significant errors or omissions, and the client cannot make an informed decision on this issue unless the lawyer self-reports his own errors. Accordingly, clients must self-report their own significant errors or omissions to their clients. The Committee held that this rationale applied equally to lawyers reporting significant errors or omissions committed by co-counsel because the decision facing the client in both situations was the same — whether to continue to retain the lawyer who committed the errors or omissions — and the client cannot make an informed decision on that issue without full disclosure.

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Indigent Corporations Are People Too! New Jersey Court Holds That Indigent Corporations Are Entitled To Appointed Counsel, Just Not Public Defenders

 by:  Peter J. Gallagher (@pjsgallagher)

Anyone who has watched Law & Order or any other police procedural probably knows the Miranda warnings by heart, including the part about the perpetrators having the right to an attorney and the right to have an attorney appointed to represent them if they cannot afford one. But, did you ever stop to consider whether an indigent corporation that is charged with a crime has the right to have counsel appointed to represent it? Probably not, right? (For me, it is hard to imagine Detective Lennie Briscoe (played by the great Jerry Orbach) slapping the cuffs on Enron and wise-cracking about their misuse of special purpose entities and mark-to-market accounting.) However, this question was recently addressed by the Appellate Division in an interesting opinion that offered a primer on both the history of the right to counsel under New Jersey Law and the public defender program before answering the question.

In State v. Western World, Inc., the defendant, Western World, Inc., was a corporation that operated “Wild West City,” which is, as the name suggests, a western heritage theme park. Western World was indicted in connection with a shooting that occurred during the reenactment of a gunfight. The indictment originally named Western World along with its president, one of its employees, and the entity that owned the land on which the theme park operated. In exchange for the dismissal of the indictment as to these other defendants, Western World agreed to plead guilty as an accomplice to one count of the indictment (third-degree unlawful possession of a handgun). As part of the plea agreement, Western World waived its right to appeal, except as to the “limited question of whether a carry permit was required by the actors under the facts of [the] case.” Western World was subsequently sentenced to one year of probation and required to pay a $7,500 fine. Western World was represented by private counsel throughout this process.

Approximately one month after Western World entered its guilty plea, its counsel wrote to the regional office of the Office of the Public Defender (“OPD”), indicating that Western World wanted to appeal the issue reserved for appeal as part of its plea agreement and also appeal the fine imposed upon it at sentencing. Counsel indicated that he would not be representing Western World because he had not been paid. He further indicated that the judge that accepted Western World’s plea indicated that it would be entitled to a public defender if it could not afford one, but that Western World had been “turned away by the Public Defender’s Office.”

 

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