The Investors’ Control of Their Investment Advisers. Who Has the Final Word?

TAMAR FRANKEL

BU Law emerita professor Tamar Frankel discusses an emerging issue affecting financial advisers—when a client may exercise control over the actions of the adviser. Frankel relates the story of an investment adviser that did not follow the client’s orders to cease certain investments, at a cost of almost $5 million to the client. As Frankel explains, the Securities and Exchange Commission (SEC) got involved, resulting in the investment adviser’s settlement for a significant payment to the client and other conditions.

Read More

Ellingsworth v. Vermeer Manufacturing Co.

Court: US Court of Appeals for the Eighth Circuit

Docket: 18-3587

Opinion Date: February 10, 2020

Judge: Kobes

Areas of Law: Personal Injury, Products Liability

Plaintiff filed suit against Vermeer in Missouri state court, alleging that he was injured while operating a Vermeer wood chipper. After Vermeer successfully removed to federal court, the district court denied plaintiff's motions to remand and for leave to amend, granting summary judgment to Vermeer. The Eighth Circuit affirmed, holding that the district court did not improperly remove the case where plaintiff voluntarily dismissed the only nondiverse party that was in the case at the time. Furthermore, even if the district court did not err, plaintiff could not get the relief he sought in light of Caterpillar Inc. v. Lewis, 519 U.S. 61, 64 (1996). The court also held that plaintiff failed to sufficiently establish good cause and the district court was well within its discretion to deny the motion for leave to amend his complaint to add a claim of agency liability against Vermeer. Finally, the court held that the district court did not err in granting summary judgment on the products liability and failure to warn claims. In this case, the record clearly established that Vermeer did not manufacture the winch attachment that injured plaintiff.

MSPA Claims 1, LLC v. Kingsway Amigo Insurance Company

Court: US Court of Appeals for the Eleventh Circuit

Docket: 18-14980

Opinion Date: February 13, 2020

Judge: Newsom

Areas of Law: Insurance Law, Personal Injury, Public Benefits

Of two people injured in a car wreck in April 2012, one was a Medicare beneficiary who received her benefits from an MAO-Florida Healthcare Plus, which later assigned its claims to appellant MSPA Claims 1, LLC. The other party involved in the accident was insured by appellee Kingsway Amigo Insurance. The Medicare beneficiary obtained medical treatment for her accident-related injuries between April 29, 2012 and July 26, 2012, and Florida Healthcare made $21,965 in payments on her behalf. On March 28, 2013, the beneficiary settled a personal-injury claim with Kingsway and received a $6,667 settlement payment. The issue this case presented for the Eleventh Circuit’s review centered on the timeliness requirement with which the government had to comply as a prerequisite to filing suit to seek reimbursements that it made on behalf of the Medicare beneficiary, and whether filing suit beyond a statutory three-year period beginning on the date on which medical services were rendered was fatal to the government’s claim. The district court held that MSPA’s claim was stale because it didn’t comply with what the court (somewhat confusingly) called “the three-year limitation requirement.” The Eleventh Circuit disagreed and reversed. “The Medicare Secondary Payer Act’s private cause of action, and our cases interpreting it lead us to conclude that the Act’s claims-filing provision, doesn’t erect a separate bar that private plaintiffs must overcome in order to sue. A closer look at the claims-filing provision’s text and the Act’s structure confirms that conclusion. Accordingly, the district court erred in granting Kingsway’s motion for judgment on the pleadings.”

Ex parte Cowgill

Court: Supreme Court of Alabama

Docket: 1180936

Opinion Date: February 7, 2020

Judge: Greg Shaw

Areas of Law: Civil Procedure, Personal Injury

Petitioners George Cowgill and Elise Yarbrough, petitioned the Alabama Supreme Court for a writ of mandamus to direct the circuit court to grant their motion for partial summary judgment on the ground that plaintiff's substitution of them for fictitiously named defendants was made after the expiration of the applicable two-year statute of limitations. Petitioners owned Black Mark 2, LLC, a Birmingham bar. On New Year's Eve 2012, plaintiff Paul Thomas was with his friend Brian Pallante. Pallante and another patron, Dalton Teal, got into an altercation. Staff from Black Market removed Teal. An unidentified female patron returned a handgun Teal had dropped inside Black Market. Teal waited outside for Thomas, Pallante and another to leave. Within five minutes, a second altercation ensued, ending with shots fired, and leaving Thomas injured. The Supreme Court that although Thomas disputed knowledge of petitioners' precise duties, it was undisputed he possessed sufficient information from which he should have known or was at least placed on notice of a factual basis for his eventual claims against them. "Because [he] knew of [petitioners'] involvement in [training and supervision of Black Market employees], it was incumbent upon [Thomas], before the statute of limitations on [his] claim expired, to investigate and evaluate the claim to determine who was responsible for [his injuries]." Therefore, the Court concluded the undisputed evidence demonstrated Thomas failed to exercise due diligence in identifying petitioners as proper party defendants; the trial court thus erred in denying petitioners' motion for partial summary judgment. The Court issued the writ and remanded for further proceedings.

Soto v. Union Pacific Railroad Co.

Court: California Courts of Appeal

Docket: B289712(Second Appellate District)

Opinion Date: February 13, 2020

Judge: Dennis M. Perluss

Areas of Law: Civil Procedure, Personal Injury, Real Estate & Property Law, Transportation Law

Irma Yolanda Munoz Soto sued Union Pacific Railroad Company and two of its employees, Scott King and Robert Finch (collectively, Union Pacific), for wrongful death (premises liability and general negligence) after Soto’s 16-year-old daughter was struck and killed by a freight train on an at-grade railroad crossing in Santa Clarita. The court granted Union Pacific’s motion for summary judgment, concluding as to Soto’s premises liability claim Union Pacific had no duty to remedy a dangerous condition because it did not own or control the railroad crossing. As to Soto’s negligence claim, the court ruled Soto could not establish that Union Pacific employees had negligently operated the train. On appeal, Soto argued she raised triable issues of material fact sufficient to defeat summary judgment. After review, of the evidence and governing law applicable to Soto’s claim, the Court of Appeal concurred there were no triable issues of fact, and summary judgment was appropriate.

Torres v. Design Group Facility Soultions, Inc.

Court: California Courts of Appeal

Docket: B294220(Second Appellate District)

Opinion Date: February 13, 2020

Judge: Dhanidina

Areas of Law: Civil Procedure, Construction Law, Personal Injury

Ismael Torres, Jr. sued Design Group Facility Solutions, Inc. (Design) for personal injuries after he fell through a skylight at a construction site. Design moved for summary judgment. The trial court initially denied the motion. Design moved for reconsideration based on new evidence under Code of Civil Procedure section 1008(a). At the hearing on the motion, the trial court granted reconsideration and, at the same time, granted the motion for summary judgment without giving Torres an opportunity to respond to the new evidence. After review, the Court of Appeal found the trial court abused its discretion: “a party unsuccessfully moving for summary judgment cannot circumvent the requirements of section 437c by subsequently moving for reconsideration under section 1008(a).”

Lee v. Smith, II

Court: Supreme Court of Georgia

Docket: S18G1549

Opinion Date: February 10, 2020

Judge: Harold D. Melton

Areas of Law: Civil Procedure, Personal Injury

In a personal injury case, the trial court excluded the testimony of an expert defense witness, reasoning that the expert had “not [been] properly identified within the parameters of the scheduling order.” The Court of Appeals affirmed, and the Georgia Supreme Court granted the defendant’s petition for a writ of certiorari to answer whether: (1) a trial court could exclude an expert witness solely because the witness was identified after the deadline set in a scheduling, discovery, and/or case management order; and (2) If not, what factors should a trial court consider when exercising its discretion whether to exclude an expert witness who was identified after the deadline set in a scheduling, discovery, and/or case management order? The Court concluded the answer to (1) was “no,” and with respect to (2), the Court concluded that when a trial court exercises its discretion in a civil case to determine whether to exclude a late-identified witness, it should consider: (1) the explanation for the failure to disclose the witness; (2) the importance of the testimony; (3) the prejudice to the opposing party if the witness is allowed to testify; and (4) whether a less harsh remedy than the exclusion of the witness would be sufficient to ameliorate the prejudice and vindicate the trial court’s authority. Based on these answers, the Court reversed the Court of Appeals in part and remanded this case with direction that the Court of Appeals vacate the trial court’s ruling and remand to the trial court for reconsideration.

Gomez v. Crookham

Court: Idaho Supreme Court - Civil

Docket: 45542

Opinion Date: February 10, 2020

Judge: Moeller

Areas of Law: Civil Procedure, Labor & Employment Law, Personal Injury, Products Liability

Francisca Gomez died as the result of a horrific industrial accident that occurred while she was cleaning a seed sorting machine as part of her employment with the Crookham Company (“Crookham”). Her family (the Gomezes) received worker’s compensation benefits and also brought a wrongful death action. The Gomezes appealed a district court’s grant of summary judgment to Crookham on all claims relating to Mrs. Gomez’s death. The district court held that Mrs. Gomez was working within the scope of her employment at the time of the accident, that all of the Gomezes’ claims were barred by the exclusive remedy rule of Idaho worker’s compensation law, that the exception to the exclusive remedy rule provided by Idaho Code section 72-209(3) did not apply, and that the Gomezes’ product liability claims fail as a matter of law because Crookham is not a “manufacturer.” The Idaho Supreme Court determined that given the totality of the evidence in this case, which included prior OSHA violations for similar safety issues, the district court erred by failing to consider whether Crookham consciously disregarded information suggesting a significant risk to its employees working at or under the picking tables, which were neither locked nor tagged out, as they existed on the date of the accident. On this basis, the decision of the district court granting summary judgment to Crookham was reversed and the matter remanded for the trial court to apply the proper standard for proving an act of unprovoked physical aggression, and to determine whether there was a genuine issue of material fact as to whether Crookham consciously disregarded knowledge of a serious risk to Mrs. Gomez.

Nelson v. Kaufman

Court: Idaho Supreme Court - Civil

Docket: 46027

Opinion Date: February 13, 2020

Judge: Stegner

Areas of Law: Contracts, Entertainment & Sports Law, Personal Injury

Amey Nelson brought a negligence claim against Stefani Kaufman, the Idaho Falls Anytime Fitness, and AT Fitness, LLC. Nelson was using a weight machine at the Idaho Falls Anytime Fitness under the direction of Kaufman, a personal trainer, when Nelson injured a metacarpal bone in her hand. Nelson filed suit alleging that Kaufman had improperly instructed her on the machine’s use, which caused her injury. The district court granted summary judgment in favor of Kaufman, holding that Kaufman was an express or apparent agent of Anytime Fitness and therefore released from liability under the terms of the Member Assumption of Risk and Release form Nelson signed when she joined the gym. Nelson unsuccessfully moved for reconsideration, and appealed. The Idaho Supreme Court determined Nelson did not waive her appeal by failing to expressly challenge the district court's finding of an express agency relationship. The Court determined the district court erred in granting summary judgment to Kaufman on the basis that Kaufman was an express agent of Anytime Fitness. Further, the court erred in apply the apparent agency doctrine defensively to find Kaufman was covered by the specific terms of the Membership Agreement. With judgment reversed, the Supreme Court remanded the case back to the district court for further proceedings.

Shubert v. Ada County

Court: Idaho Supreme Court - Civil

Docket: 46403

Opinion Date: February 12, 2020

Judge: Brody

Areas of Law: Civil Procedure, Government & Administrative Law, Legal Ethics, Personal Injury, Professional Malpractice & Ethics

Natalie Shubert filed a negligence claim against her former public defender, Michael Lojek, former Ada County chief public defender Alan Trimming, and Ada County (collectively, “Ada County Defendants”). In 2008, Shubert was charged with two felonies and pleaded guilty to both charges. Her sentences were suspended in each case, and she was placed on probation. After a probation violation in 2011, the Ada County district court entered an order extending Shubert’s probation beyond the time period allowed by law, and the mistake was not caught. After Shubert’s probation should have ended in both cases, she was charged and incarcerated for a subsequent probation violation in 2014. Thereafter, in 2016, Shubert was charged with a new probation violation. Shubert was assigned a new public defender, who discovered the error that unlawfully kept Shubert on probation. Shubert’s new public defender filed a motion to correct the illegal sentence, raising the error that had improperly extended her probation. The district court granted Shubert’s motion to correct the illegal sentence and released Shubert from custody. Shubert then sued her original public defender, the Ada County Public Defender’s Officer, and other unknown Ada County employees alleging false imprisonment, intentional infliction of emotional distress, negligence per se, negligence, and state and federal constitutional violations. The district court dismissed all of Shubert’s claims except for negligence. In denying the Ada County Defendants’ motion for summary judgment on Shubert’s negligence claim, the district court held that public defenders were not entitled to common law quasi-judicial immunity from civil malpractice liability, and two provisions of the Idaho Tort Claims Act (ITCA) did not exempt public defenders from civil malpractice liability. The Ada County Defendants petitioned the Idaho Supreme Court, but the Supreme Court affirmed, finding the district court did not err in its finding that the public defenders and the County were not entitled to immunity. The case was remanded for further proceedings.

Wilson v. Stop & Shop Supermarket Co., LLC

Court: Massachusetts Supreme Judicial Court

Docket: SJC-12664

Opinion Date: February 11, 2020

Judge: Per Curiam

Areas of Law: Personal Injury

The Supreme Judicial Court affirmed the judgment of the county court denying, without a hearing, Appellant's petition for relief under Mass. Gen. Laws ch. 211, 3, in which Appellant sought review of certain rulings in a personal injury action, holding that because of serious deficiencies in Appellant's petition, the single justice neither erred nor abused his discretion by denying extraordinary relief. The district court dismissed Appellant's complaint in the personal injury action, and Appellant's appeal was also dismissed. Two subsequent attempts to appeal were also dismissed. Appellant then brought this action under Mass. Gen. Laws ch. 211, 3 asserting, without any supporting documents or other substantiation, that the district court judge acted improperly. The single justice denied the petition. The Supreme Judicial Court affirmed, holding that the single justice properly denied extraordinary relief due to significant deficiencies in Appellant's petition.

Shelter Mutual Insurance Co. v. Freudenburg

Court: Nebraska Supreme Court

Citation: 304 Neb. 1015

Opinion Date: February 7, 2020

Judge: Freudenberg

Areas of Law: Insurance Law, Personal Injury

In this insurance dispute, the Supreme Court reversed the decision of the district court granting summary judgment to Shelter Mutual Insurance Company on its declaratory judgment action, holding that Neb. Rev. Stat. 60-310 does not allow provisions known as partial household exclusion clauses. Larry Freudenburg was injured in an accident where he was the passenger in a car covered by a policy Freudenburg and his wife had purchased from Shelter. Shelter refused to pay Freudenburg's request for reimbursement of expenses in the amount of the policy limit for bodily injury based on a partial household exclusion clause in Freudenburg's policy. Partial household exclusion clauses reduce automobile liability coverage from the policy amount to the state minimum when the injured person is an insured, relative, or resident of the insured's household. The district court concluded that partial household exclusions are not prohibited by section 60-310. The Supreme Court reversed, holding that an automobile liability policy policy in any coverage amount is not permitted to exclude or reduce liability coverage under the policy on the ground that the claimant is a named insured or resident in the named insured's household.

House v. Iacovelli

Court: Supreme Court of Ohio

Citation: 2020-Ohio-435

Opinion Date: February 12, 2020

Judge: Fischer

Areas of Law: Labor & Employment Law, Personal Injury

The Supreme Court reversed the judgment of the court of appeals reversing the judgment of the trial court dismissing Plaintiff's wrongful-termination-in-violation-of-public-policy claim, holding that Plaintiff's dismissal did not jeopardize the public policy identified by the trial court and that Plaintiff did not satisfy the jeopardy element of her wrongful-termination-in-violation-of-public-policy claim. Plaintiff alleged that her employer wrongfully terminated her employment because she had challenged the employer for failing accurately to report her earnings to the Bureau of Unemployment Compensation. The trial court dismissed the complaint, concluding that dismissing employees under such circumstances would not jeopardize the stated public policy manifested in the provisions of Ohio Rev. Code Chapter 4141 and that section 4141.27 sets forth an adequate remedy for violating the public policy embodied in the statute. The court of appeals reversed, concluding that the trial court erred by determining that Plaintiff could not satisfy the jeopardy element and that the statutory remedies contained in Chapter 4141 was insufficient to protect Plaintiff's interests. The Supreme Court reversed, holding that the remedies in Chapter 4141 are sufficient to protect society's interest in the public policy that employers accurately report employees' pay and tips and the lack of a personal remedy for the dismissed employee does not jeopardize the stated public policy.

Texas Department of Criminal Justice v. Rangel

Court: Supreme Court of Texas

Docket: 18-0721

Opinion Date: February 7, 2020

Judge: Debra Lehrmann

Areas of Law: Personal Injury

The Supreme Court reversed the judgment of the court of appeals holding that none of the Texas Tort Claims Act's exceptions to a waiver of immunity applied in this case, holding that the riot exception applied and that the Tort Claims Act did not waive the Texas Department of Criminal Justice's immunity for Plaintiff's claims against it. In this case, a Department prison guard filed a skat shell at a group of prison inmates, injuring Plaintiff. Department officials had authorized and instructed the guard to use the tear-gas gun and shell in response to two groups of inmates who had refused to comply with orders from several prison officials for almost an hour. The Department filed a plea to the jurisdiction, asserting that its sovereign immunity had not been waived for Plaintiff's claims. In response, Plaintiff asserted that a fact question existed as to whether the Act's emergency and riot exceptions applied to bar his claims. The trial court denied the Department's plea to the jurisdiction, and the court of appeals affirmed. The Supreme Court reversed, holding that the Act's riot exception applied as a matter of law and foreclosed waiver of the Department's immunity.

Tahboub v. Thiagarajah

Court: Supreme Court of Virginia

Docket: 190019

Opinion Date: February 13, 2020

Judge: William C. Mims

Areas of Law: Medical Malpractice, Personal Injury

In this medical malpractice appeal, the Supreme Court reversed the judgment of the circuit court granting Defendants' motion to strike the evidence on the ground that it was insufficient to prove causation, holding that Plaintiff's evidence was sufficient to establish a prima facie case and survive a motion to strike at the conclusion of Plaintiff's case-in-chief. Plaintiff, as the personal representative and the administrator of his deceased wife's estate, filed a complaint alleging that Defendants had been professionally negligent, which had caused his wife's wrongful death. At the conclusion of Plaintiff's case-in-chief, Defendants moved to strike the evidence. The circuit court granted the motion and entered a final order awarding judgment to Defendants. The Supreme Court reversed, holding that Plaintiff's evidence was sufficient to defeat Defendants' motion to strike and that the circuit court erred by failing to view all of Plaintiff's evidence in the light most favorable to him.