The Brief Case: DRI Committee News

Insurance Law: Covered Events

Happy New Year Insurance Law Committee Members!

By Melanie Lockett

Traditionally, the New Year brings hope and a renewed spirit as we reflect upon the past and plan for the year to come. 

In keeping with this tradition, I am reflecting on the outstanding Insurance Coverage Practice Seminar held in December 2022, in New York City.  Attendance rebounded to pre-COVID-19 numbers.  We are resilient, and we are back!  The quality speakers and timely thought-provoking topics met the standard to which we have grown accustomed at DRI seminars.  The excitement of getting together with colleagues and friends in New York in December was magical.  That magic fueled the networking events – events which are more meaningful than ever in a post-COVID-19 world.   Congratulations and thank you to our Seminar Chair, Matthew M. Haar; Seminar Vice Chair, Elaine Pohl; Industry Chair, Naomi Kinderman; and all members of the seminar planning and marketing committees on the success of this program!  

Looking ahead, I am excited to work with all of you to build upon the success of our committee and the success of our professions. This year promises to be a stellar one. Seminars slated in 2023 include our flagship seminar, the Insurance Coverage and Claims Institute, which will be held on March 8-10, 2023, in Chicago, followed by the Insurance Bad Faith and Extra-Contractual Liability Seminar, which will be held on June 14, 2023, in Charlotte, North Carolina.  I am also looking forward to this year’s Insurance Law Boot Camp, which our Committee Chair, Jonathan Schwartz, recently announced is expected to return in the fall of 2023. 

I and the Insurance Law Committee continue to value the expertise and loyalty of our tried and true leaders while simultaneously encouraging and cultivating new ones.  We encourage each of you to become involved in the Insurance Law Committee in 2023.  Whether you are interested in publications, podcasts, membership, seminar planning, seminar marketing, mentoring, or substantive law groups, we have a position for you.  Seize it and reap the rewards in 2023!   

May each of you enjoy a fulfilling and prosperous New Year!  I look forward to seeing you in Chicago in March.           

Sincerely,

Melanie Lockett 

Melanie Lockett is a Partner at Lowe Stein, LLC, and serves as the Vice Chair of the Insurance Law Committee.

Bad Faith SLG Leadership Note 

By Matthew J. Lavisky

Edited by Rob Friedman

The Bad Faith SLG had a very active 2022.  We met regularly, by Zoom, with planned presentations from excellent speakers.  The meetings benefited the members’ practices with topics such as jury selection and use of experts in bad faith lawsuits. 

In addition to the educational benefits, these meetings provided members with opportunities to get to know others from the comfort of their offices.  Getting involved in the Bad Faith SLG is a great way to interact with colleagues and make new friends. 

The Bad Faith SLG is gearing up for 2023.  Want to be a part of it?  Please email me at mlavisky@butler.legal.  We look forward to seeing you at the next meeting.

Matthew J. Lavisky is a partner in the Tampa office of Butler Weihmuller Katz Craig LLP. 

Conflicts of Law in Bad Faith: Contractual Claims vs. Tort Claims and the Choice of Law

By Becky Thornton

Edited by Rob Friedman

Introduction  

Bad faith substantive law varies between states, which makes the threshold issue of which substantive law will apply an important question to answer. Many states treat bad faith as sounds in tort, while others treat bad faith as sounding in contract. Does the law of the forum state apply, or is it the law of the state where the act of bad faith occurred? Choice of law questions will guide litigation strategy as the answers will identify a plaintiff’s burden of proof and make it clear how much a successful plaintiff could recover. As such, choice of law is the key to every initial case evaluation and can mean the difference between a favorable outcome or a potentially nuclear one. The issues lie in the lack of uniformity between states, which means that choice of law questions are complicated and oftentimes unsettled. The conflicts of law analysis begins and revolves around the type of claim asserted, which makes understanding this threshold issue of paramount importance.  

Basic Principles 

First, let’s examine choice of law in contract cases. There is no federal contract law, which is governed by state law. In some instances, the contract itself will contain a choice of law provision that provides the answer to the substantive law question. And in most states, choice of law provisions are generally upheld and enforceable.  

Tricky situations arise when the contract does not contain a choice of law provision because states will then apply their own tests to make the determination. There are multiple approaches to the choice of law analysis. Many states apply lex loci contractus, the law of the place where a contract was formed – that is, so long as the laws of the state where the contract was formed do not violate the public policy of the forum state. Otherwise, the forum state may determine that its own laws apply.   

If that was not wobbly enough - some states follow the rule of lex loci contractus while also having other laws in place to limit the rule. For example, though Georgia follows the rule of lex loci contractus, where the contract state lacks an applicable statute, instead of applying the common law of the contract state, Georgia applies Georgia common law. See Shorewood Packaging Corp v. Commercial Union Ins. Co., 865 F. Supp. 1577, 1578-82 (N.D. Ga. 1994).  

In tort cases, because these cases often involve multiple parties from different states, many states have adopted the most significant relationship test to determine choice of law. Under this test, the law of the state with the most significant relationship to the underlying incident will apply. This analysis involves consideration of a number of factors – which, for most states, are encompassed within the Restatement (Second) of Conflicts of Law. Under § 6 of the Restatement, a court will first look at the rights and liabilities of the parties and then will examine the contacts of the parties. When examining the rights and liabilities of the parties, courts will consider: (1) the needs of the interstate and international systems; (2) relevant policies of the forum state; (3) the relevant policies of all interested states and the relative interests of those states in the determination of the particular issue; (4) justified expectations of the parties; (5) certainty, predictability, and uniformity; (6) and ease of administration.  In addition, courts should also take into account the place where the injury occurred, the place where the conduct causing the injury occurred, the domicile, residence, nationality, place of incorporation and place of business of the parties, and the place where the relationship, if any, between the parties is centered.  

In addition to differing tests and analyses on issues of conflicts of law, each state’s handling of bad faith contract claims and bad faith tort claims can also differ. For breach of contract claims, the common concept in every contract is the implied covenant of good faith and fair dealing. Because many states apply the implied covenant of good faith and fair dealing in law and statute, violation of the covenant can result in bad faith claims. In these cases, plaintiffs can seek recovery of economic damages and, in very rare instances, punitive damages.  

Additionally, in some states, plaintiffs can pursue bad faith in tort. The tort of bad faith arises out of an insured-insurer relationship based upon an insurance contract. These claims oftentimes (but not always) require an intentional tort, such as a refusal to pay, coupled with a conscious intent to injure. See, e.g. Davis v. Cotton States Mut. Ins. Co., 604 So. 2d 354, 359 (Ala. 1992). Negligent and sometimes wanton claim handling are not sufficient to allow for bad faith claims in tort. These claims can include emotional distress/mental anguish losses, economic losses and contract damages. And in some cases, plaintiffs can recover punitive damages.  

Choice of Law - Differences Between States 

Individual tests have been developed in many states providing guidance on choice of law decisions in contract and tort claims. Examining how these tests are applied is key to understanding the uniquities of how the analysis and choice of law issues can impact a case.  

Now let’s examine how some of these tests are applied in different states:  

Tennessee, for example, applies the rule of lex loci contractus in contract claims, which provides that a contract is presumed to be governed by the law of the jurisdiction in which it was executed, absent a contrary intent. See Williams v. Smith, 465 S.W.3d 150 (Tenn. Ct. App. 2014). Similarly, North Carolina follows the rule of lex loci contractus such that the law of the place where the contract was formed will govern. See Eli Research, Inc. v. United Communications Group, LLC, 312 F. Supp. 2d 748, 754 (M.D.N.C. 2004). Those applications are relatively straightforward.  

By contrast, other states have precedent and application decisions that are more nuanced and complicate the analysis. One such state is South Carolina. South Carolina has historically followed the doctrine of lex loci contractus. See Sangamo Weston, Inc. v. National Sur. Corp., 307 S.C. 143, 147, 414 S.E.2d 127, 1309 (1992). However, the Sangamo court determined that although both parties were not residents of South Carolina and the insurance policies were executed in different states, both parties availed themselves of the law of South Carolina when they respectively provided or received insurance on interests located in the state. Id. This case established a two-part test that requiring analysis of South Carolina code related to whether contracts are made in the state (S.C. Code § 38-61-10) and whether South Carolina has sufficient contacts creating a state interest in the dispute such that applying South Carolina’s substantive law is consistent with both the Full Faith and Credit Clause and the Due Process Clause. See Hartsock v. American Auto. Ins. Co., 788 F. Supp.2d 447, 451 (D.S.C. 2011). Pursuant to South Carolina Code § 38-61-10, all contracts of insurance on property, lives, or interests in South Carolina are considered to be made in the state. It further states that all contracts of insurance the applications for which are taken within the state are considered to have been made within South Carolina and are subject to the laws of South Carolina. Courts therefore do not look to where the contract was formed, but rather focus on whether the subject of the insurance contract is in South Carolina. See id. There is no requirement that a policyholder or an insurer be a citizen of South Carolina – the sole relevant issue is where the insured property, lives or interests are located. See id.  

An example of this analysis played out in Hartsock. In that case, Mr. Harstock was a resident of North Carolina, and the vehicle at issue was registered in South Carolina to his decedent wife, a South Carolina resident. Id. In examining whether there was significant contact with the state, the court determined that there must be “insuring property, lives and interests in South Carolina that constitutes a significant contact with this stat.” Because the insurer and policyholder both provided or received insurance on interests in South Carolina, they availed themselves of South Carolina law without running afoul of the Full Faith and Credit Clause or the Due Process Clause. Id. at 452.  

In Minnesota, a differing analysis considers that when a conflict of laws exists and more than one state has sufficient contacts, courts will look to the five following influencing facts: “(1) predictability of result; (2) maintenance of interstate and international order; (3) simplification of the judicial task; (4) advancement of the forum’s governmental interest; and (5) application of the better rule of law.” See Jepson v. General Cas. Co. of Wisconsin, 513 N.W.2d 467, 470 (Minn. 1994).  

In tort claims, North Carolina uses the law of the situs test for choice of law questions, which considers the state where the injury occurred. See Martinez v. National Union Fire Ins. Co., 911 F. Supp.2d 331, 336 (E.D.N.C. 2012). Under Florida law, when conflicts of laws in tort or statute of limitations, the most significant relationship test is used. See State Farm Mut. Auto. Ins. Co. v. Roach, 945 So.2d 1160, 1163 (Fla. 2006). Illinois, for example, applies the most significant relationship test, and as part of the analysis, courts consider: the place of injury, the place of the tortious conduct, the domicile of the parties, and the place where the relationship between the parties is centered. See Medicine Industries Inc. v. Maersk Medical Ltd., 230 F. Supp.2d 857, 864 (N.D.Ill. 2002). For tort claims in Colorado, the most significant relationship test as stated in Restatement (Second) of Conflict of Laws is followed. Accordingly, Colorado courts analyze various contacts, such as the place where the injury occurred, the residence of the parties, and the place where the parties’ relationship is centered, as well as the policies of the interested states. See Hawks v. Agri Sales, Inc., 60 P.3d 714, 715 (Colo. App. 2001).  

Case Study 

The hypothetical below helps flesh out a choice of law analysis:  

The insurer in State A issued an insurance contract to a policyholder, also located in State A. The policyholder was transporting goods in State B, when the policyholder crashed into a car. The owner of the car was a resident of State C, the accident took place in State B, and the insurance contract was issued in State A.  

States A and C follow the rule of lex loci contractus, while State B follows a unique significant contact test, similar to that which is applied in South Carolina. The accident occurred in State B, and the action will likely be brought to court in State B. 

Which state law will apply?  

The court in State B will perform a conflicts of law analysis on the matter. To have significant contact with State B the insuring property must be located in State B, regardless of the residency of the parties. But the policyholder was only transporting the good through State B. The contact is likely too minimal to allow the application of State B’s law.   

The State B court will then look at the laws of State A - a lex loci contractus state. The policyholder is a resident of State A, and the insurance contract was executed in State A. The court will likely hold that the laws of State A apply because it was the state where the contract was made. The court is not likely to even consider whether State C’s law applies despite the fact that the car owner resided there.  

Conclusion 

The choice of law analysis can be like winding through a maze where you don’t always find a way out. In some cases, it may not be possible to provide a definitive answer to the question, and the best we can do is narrow down the possibilities and consider the potential outcomes. Some of the state’s laws are similar enough that there is not significant difference between them, while others may have unexpected nuances that complicate the analysis. Early consideration of the issue will help narrow down the possibilities and create a road map for successful litigation.

Becky Thornton, a partner in the Raleigh, NC office of Teague Campbell, has a diverse litigation practice within the Firm, including in the Insurance Coverage Services Group, with a focus on first- and third-party bad faith litigation. Becky is an active member of DRI’s Insurance Law and Retail and Hospitality Committees.  Special thanks to Ellen Koscielniak, a coverage associate in Teague Campbell’s Raleigh office, for her contributions to the article.

Interested in joining the Insurance Law Committee? Click here for more information.

Commerical Litigation: The Business Suite

Federal Trade Commission Proposes Ban on Noncompetition Agreements

By Peter A. Lauricella, Esq. 

On January 5, 2023, the Federal Trade Commission (FTC) issued a Notice of Proposed Rulemaking that would effectively ban Noncompetition Agreements, or “non-compete clauses” across the United States. Such a rule, if adopted, would have a significant impact on employers who require certain employees to sign such agreements as a condition of employment, particularly those high-level employees who have access to a company’s trade secrets or “proprietary” information.  

A non-compete clause is a contract term that basically prohibits an employee from working in a similar position at a competing employer, usually within a certain geographic area for a limited period of time after the employee’s employment ends.  

Justification for the Ban 

According to the FTC, this proposed rule banning non-compete clauses is necessary because “non-compete clauses prevent workers from leaving jobs and decrease competition for workers, they lower wages for both workers who are subject to them as well as workers who are not” and “also prevent new businesses from forming, stifling entrepreneurship, and prevent novel innovation, which would otherwise occur when workers are able to broadly share their ideas.” The FTC estimates that its proposed rule would increase American workers’ earnings between $250 billion to $296 billion per year. 

While the FTC’s justification for this proposed rule has been hotly debated and contested by numerous pro-business groups and associations representing employers, what is certainly true is that, in recent years, non-compete clauses have been more heavily scrutinized and criticized by state governments and state and federal regulators. Much of this scrutiny resulted from certain large employers imposing non-compete clauses against lower-level employees who do not have access to the companies’ highly sensitive confidential information or its “trade secrets.”  

In one of the most noteworthy examples of this trend, in 2016, Jimmy John’s, the national submarine sandwich franchise, was sued by multiple states, including Illinois and New York, for its imposition of non-compete clauses on front-line workers who made its sandwiches. These non-compete clauses prevented those workers from taking jobs with competitors for a period of time. Jimmy John’s agreed to settle these lawsuits, rescind its non-compete clauses for its “low wage” workers and pay hundreds of thousands of dollars in fines. The Jimmy John’s settlement led many other companies to reconsider how they use non-compete clauses, and what classes of employees they would ask to sign them. 

Confronting the Challenges 

Most significantly, FTC’s proposed rule goes beyond just targeting employers who “overuse” non-compete clauses, it bans them for all employees, and even would require employers to rescind existing non-compete agreements. In addition, the rule “shall supersede any state statute, regulation, order, or interpretation to the extent that such statute, regulation, order, or interpretation is inconsistent” with the rule.  

Accordingly, if the FTC’s rule is adopted, employers will have to think long and hard about how they can implement alternative protections that would prevent or “dis-incentivize” departing employees from harming their business if they choose to go to a competing business. These could include a variety of clauses, such as the use of confidentiality, non-solicitation and forfeiture clauses, and bringing claims under a variety of under-used state and federal trade secret statutes, such as the Federal Defend Trade Secrets Act. Employers should consult counsel to determine the best way to proceed in drafting and/or revising their employment agreements that address these issues, and in general. 

There is little doubt that the FTC’s proposed rule banning non-competes will be legally challenged by employer groups, or possibly by individual companies. The grounds for the challenge will likely include: (i) that the FTC does not have the authority to adopt such a rule; (ii) that the rule infringes on a state’s right to regulate contracts; (iii) that the rule “impairs” existing contracts and (iv) the rule infringes on the right of parties to freely enter into such agreements.  

Stay tuned, this battle will be interesting. But employers should not be complacent in the hopes that such challenges to the rule will be successful. Employers should act now to address their non-compete agreements.  

For more information on the FTC’s proposed Noncompetition Rule, contact Peter A. Lauricella at 518.320.3607 or peter.lauricella@wilsonelser.com. 

Peter Lauricella is the Regional Managing Partner of Wilson Elser’s Albany, NY office.  Peter is also Co-Chair of the Firm’s National Commercial Litigation Practice Group. Peter handles a wide variety of high-stakes Commercial Litigation matters for clients in a wide variety of industries, but particularly specializes in business dissolutions, shareholder derivative claims and the enforcement of provisions protecting companies’ competitive knowledge and secrets. 

Interested in joining the Commerical Litigation Committee? Click here for more information.

Life, Health & Disability News

Fourth Circuit Holds ERISA Benefit Determinations Involving Disputed Issues of Material Fact Are to Be Resolved Through a Bench Trial Under Fed. R. Civ. P. 52 Rather Than Through Summary Judgment Under Fed. R. Civ. P. 56.

By Stephen E. Keith

In Tekmen v. Reliance Standard Life Ins. Co., 55 F.4th 951, 2022 WL 17725720 (4th Cir. Dec. 16, 2022), the Fourth Circuit addressed the proper procedural mechanism for resolving ERISA denial-of-benefits cases involving disputed issues of material fact and the standard of review on appeal. Ms. Tekmen was employed as a financial analyst by Adsum, Inc. (“Adsum”) and, through her employment, received long-term disability (“LTD”) coverage under a plan administered by Reliance Standard Life Insurance Company (“Reliance”). 

After Ms. Tekmen was involved in a car accident in October 2013, she began experiencing symptoms including dizziness, sensitivity to light and noise, difficulty concentrating, and vestibular issues, but she otherwise returned to work and her condition gradually improved. By 2015, Ms. Tekmen’s employer relocated her to a new building with higher levels of ambient noise and vibration, which exacerbated her symptoms. From the time of the accident through November 2015, Ms. Tekmen was treated by many specialists and received varying diagnoses for her symptoms, including post-concussive syndrome, hyperacusis, endolymphatic hydrops, tinnitus, and vestibular dysfunction. Based on a recommendation from her physician, Ms. Tekmen took a leave of absence from work and then filed a short-term disability (“STD”) claim with Reliance, which was approved. She then sought continued benefits in her LTD claim.  

In reviewing Ms. Tekmen’s claim for LTD benefits, Reliance hired independent physicians to review her medical records and, based on those reviews, concluded she had the capacity to perform the duties of her occupation on a full-time basis provided there was a quiet work environment with low ambient noise and vibration. Reliance determined that Ms. Tekmen’s symptoms were “location-specific” and, therefore, denied her LTD claim and subsequently affirmed the denial on appeal. 

On October 18, 2018, Ms. Tekmen initiated her action against Reliance in the Eastern District of Virginia. The parties each filed cross-motions for summary judgment. In her opposition to Reliance’s motion for summary judgment, Ms. Tekman requested that the court resolve the case pursuant to Fed. R. Civ. P. 52 due to the conflicting physicians’ opinions in the administrative record concerning her ability to perform the regular duties of her occupation. Following a hearing, the district court denied both cross-motions for summary judgment and conducted a bench trial based on the administrative record pursuant to Fed. R. Civ. P. 52. The court, finding the opinions of Ms. Tekmen’s treating physicians more persuasive than Reliance’s medical consultants who reviewed her paper record, awarded judgment to Ms. Tekmen.  

Reliance appealed to the Fourth Circuit and argued the district court erred in resolving the case pursuant to Fed. R. Civ. P. 52 because Fed. R. Civ. P. 56 was the only appropriate vehicle for resolving ERISA benefits cases. Reliance relied on prior Fourth Circuit and Supreme Court decisions for the proposition that review of ERISA benefits cases is de novo. However, the Fourth Circuit clarified that the Supreme Court in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989), did not intend to create an ERISA-specific rule that Courts of Appeals should conduct de novo review of factual findings in the ERISA denial-of-benefits context; rather, factual findings made after a bench trial should be reviewed for clear error. 

Reliance further contended that since ERISA cases are based on the administrative record and factual findings pursuant to Fed. R, Civ. P. 52 are reviewed for clear error, a bench trial is an improper mechanism to resolve ERISA denial-of-benefits cases. The Fourth Circuit disagreed that there could never be a disputed fact when review is based on the administrative record: “Where, as here, the district court is faced with directly at-odds contentions regarding whether the individual’s claimed impairment is genuine, we see no alternative to the district court making findings of fact. And where such findings implicate material issues, summary judgment is simply not appropriate.” The Fourth Circuit concluded the district court did not err in resolving the case pursuant to Fed. R. Civ. P. 52.  

Having determined that a bench trial was appropriate, the Fourth Circuit then turned to the merits of Ms. Tekmen’s LTD claim and stated the district court’s factual findings would be reviewed for clear error and its legal conclusion that Ms. Tekmen was entitled to benefits would be reviewed de novo. Reliance argued, based on the Supreme Court’s decision in Black & Decker Disability Plan v. Nord, 538 U.S. 822 (2003), it was clear error for the district court to give more weight to the opinions of treating physicians than those of non-treating physicians. The Fourth Circuit rejected Reliance’s argument explaining “Nord did not create such a rule,” and it merely stated that nothing in ERISA requires plan administrators from giving more weight to treating physicians and it was clearly permissible to do so. The Fourth Circuit further found the fact that Ms. Tekman was able to work for a period despite her symptoms did not necessarily mean she was not disabled. The Fourth Circuit concluded that the district court did not clearly err in its findings of fact. Based on its de novo review of the district court’s legal conclusion that Ms. Tekman was entitled to benefits, the Fourth Circuit agreed that she was “totally disabled” under the terms of the Plan and affirmed the judgment of the district court. 

Interested in joining the Life, Health and Disability Committee? Click here for more information.

Young Lawyers: Raising the Bar

Civility in Emails and Correspondence to Opposing Counsel 

By Brianna Weis

In a landscape of fast communications, it is easy to send a quick snippy or snarky reply to your opposing counsel. To combat the rise of uncivility that seems to be increasing in the legal world, many states have adopted rules regarding civility, decorum, and engaging with opponents. Some states have adopted language in the creed that each lawyer professes, while some courts have adopted local rules to address similar concerns. Yet, it often seems these aspirational guidelines are easily forgotten in the midst of responding to emails.  

What To Do When Receiving Uncivil Responses 

At some point in every attorney’s career, an opposing attorney will send an email that either questions your qualifications as an attorney or sends a snarky/abusive reply to a simple question. The first thing to do when receiving an email of this nature is to avoid hitting the reply all button and firing off your response. You will often find that that a snarky reply would only add more turbulence to an already turbulent relationship. In the moment, responding immediately may seem to be the best, but as is the case with most fights, the second person who throws the punch is often in more trouble than the first (this can be especially true in plaintiff-friendly venues or smaller venues where opposing counsel may have a home-field advantage). Remember, anything in writing may eventually end up as an exhibit in court and used to demonstrate that you are the true bully.    

When responding to disdainful correspondence, sometimes the simplest way to reengage with opposing counsel is to use formal titles (Ms. Smith/ Mr. Jones). Often in lengthy correspondence, titles are simplified to first names or salutations are completely left forgone. By reintroducing titles, it is an easy reminder to opposing counsel that this is professional correspondence. The second item to address is the actual issue that is trying to be resolved—whether that is part of a negotiation, discovery dispute, etc. This shifts the focus of your response from a potential personal attack to the litigation issues at hand. The final item to address is the abusive/offensive nature of the prior email. This can be as simple as, “While I will give you the benefit of the doubt that you are zealously advocating for your client, your email read as slightly abusive, particularly towards me. Nevertheless, in the best interest of our clients we will continue to engage in negotiations/supply deposition dates.” Formatting correspondence in this way allows you to address opposing counsel’s behavior in a professional way that can be introduced as an exhibit if necessary in future motion practice.  

Depending on your practice area, it may be beneficial to add additional parties to the email thread. Perhaps opposing counsel is kinder when their partner or your partner is on the thread. This not only provides additional witnesses to the negative behavior, but it may also provide you with an ally. If you are able to add another person to the email thread, they may be willing to respond to the abuse and state it will not be tolerated.  

Finally, it may be more effective to change the medium with which you are communicating. Because most attorneys remember that emails may become exhibits, some counsel are much nicer on the phone or face-to-face (even over Zoom), than in emails. If this is the case, start engaging in phone calls, and then memorializing those calls via email. Occasionally, an opponent may be more abusive on the phone than in emails. In these cases, adding an additional party to the call may be effective, but it may also be necessary to transition to emails. By utilizing these tactics, hopefully your opposing counsel will remember that although this is an adversarial field, correspondence can remain civil. 

What To Do When Clients Are Involved 

Unfortunately, often times if an opposing counsel is a bully in one area, it extends to other areas of practice. If you are dealing with a particularly abusive opposing counsel, it may be necessary to video depositions, especially if your client is being deposed. A transcript will not always capture the tone or belittling nature of the remarks. It may be helpful to warn your client that you anticipate this behavior, thus the deposition is going to be videoed, and remind them not to give snarky responses. Documenting abusive behavior is often the easiest way to make sure it stops. 

Occasionally, clients will be included on emails where opposing counsel begins to engage in this behavior. The American Bar Association Standing Committee on Ethics and Personal Responsibility recently released Formal Opinion 503 regarding model rule 4.2 (often referred to as the no contact rule). If an opposing counsel has included their own client on an email, they are implicitly inferring consent to a reply all response from the receiving counsel. In this case, all of the previously discussed advice applies. By responding formally, addressing the issue at hand, and calling out the abusive behavior, the opposing party may feel the need to converse with their own counsel regarding their behavior.  

Additionally, make sure your client understands that you will not be engaging or returning the uncivil behavior. Sometimes clients feel that everything should be a fight. It is your responsibility as the attorney to remind your client that part of your professional duty includes civility and decorum. Remind them that by utilizing etiquette, it may help achieve the desired outcome faster and more efficiently.   

How To Ensure You Are Being Civil 

The easiest way to remain civil is to avoid engaging in personal attacks. Opposing counsel may be late in responding or unwilling to answer questions, but do not allow your resentment to build to the point where you become unprofessional. Determine the best medium that you communicate with and shift your communication towards that medium. This will help ensure that you are less likely to accidentally fire off a snarky reply. Finally, remind yourself that your reputation is often cemented in everyday practice and not just the courtroom.  

It may be the case that you have found you are the bully on an email tread. The first thing to do is take a step back and reevaluate your responses. Perhaps take the initiative and call opposing counsel to solve the current issue. Second, apologize for any rudeness, especially if opposing counsel has pointed it out. Then make sure to follow through on the apology and refrain from continuing to engage in that behavior. Third, make sure that you are focused on the issues at hand and not engaging in personal attacks. You may find that you need to wait a day before responding or need to include your secretary on the thread so that you remain professional in your responses.  

In conclusion, there are professional standards for civility and decorum for attorneys because litigation is an adversarial system. However, just because someone else is behaving unprofessionally does not give license to respond in a similar way. The best thing to remember is to document abusive behaviors as everything in writing can be used as evidence. It may not initially solve the issue, but eventually a court may notice that you are not the bully. Finally, by remaining professional and courteous, your reputation for handling difficult situations will not go unnoticed.  

Brianna Weis is an associate attorney in Dallas, Texas with Hartline Barger, LLP. She practices personal injury and warranty defense litigation. She is involved in the Young Lawyers and Women in the Law Group with DRI, in addition to being an active member in several local bar committees. She is a licensed attorney in Texas and New Mexico. 

Tips for Preparing for Corporate Representative Depositions 

By Taylor Harris      

Federal Rule of Civil Procedure 30(b)(6) 

Federal Rule of Civil Procedure 30(b)(6) is the mechanism under which corporate representative depositions are noticed and taken in federal civil cases. The purpose of a Rule 30(b)(6) deposition is to streamline the discovery process. Risinger v. SOC, LLC, 306 F.R.D. 655, 662 (D. Nev. 2015) (internal citations omitted). Rule 30(b)(6) “gives the corporation being deposed more control by allowing it to designate and prepare a witness to testify on the corporation's behalf.” Id. (citing United States v. Taylor, 166 F.R.D. 356, 360 (M.D.N.C.1996)). It is a discovery device employed by the examining party “to avoid the ‘bandying’ by corporations where individual officers disclaim knowledge of facts clearly known to the corporation.” Id. 

The Rule 30(b)(6) Notice 

Rule 30(b)(6) contains a notice provision, which states: 

In its notice or subpoena, a party may name as the deponent a public or private corporation, a partnership, an association, a government agency, or other entity and must describe with reasonable particularity the matters for examination.  

Fed. R. Civ. P. 30(b)(6). Rule 30(b)(6) places the initial burden on the noticing party to tender a notice describing “with reasonable particularity” the topics on which the corporate witness is expected to testify. Id. The reasonable particularity requirement is designed to enable the noticed party to adequately prepare the corporate witness for his or her deposition.  

Objecting to the Rule 30(b)(6) Notice 

Like other forms of discovery, “a Rule 30(b)(6) deposition notice is subject to the limitations under Rule 26 – deposition topics should be proportional to the needs of the case, not unduly burdensome or duplicative, and described with “reasonable particularity.’” Blackrock Allocation Target Shares: Series S Portfolio v. Wells Fargo Bank, Nat'l Ass'n, 2017 WL 9400671, at *1 (S.D.N.Y. Apr. 27, 2017). Overbroad Rule 30(b)(6) notices including “topics that generally seek testimony as to every fact that supports a legal claim will likely fail the reasonable particularity requirement.” Id. When a Rule 30(b)(6) notice is vague, overbroad, or unclear, counsel for the noticed party should timely file objections to the notice. Failing to set forth objections to a Rule 30(b)(6) notice can result in waiver of objections and, in some cases, sanctions against the noticed party. 

When to Choose a Corporate Representative  

It is important to begin evaluating your options for selecting a corporate representative as soon as your client is sued. If at all possible, do not wait until a Rule 30(b)(6) notice is served to select a corporate representative. You will need as much time as possible to evaluate potential candidates and choose a strong advocate for the company.  

Choosing the Right Corporate Representative  

Pursuant to Rule 30(b)(6), “[t]he named organization must designate one or more officers, directors, or managing agents, or designate other persons who consent to testify on its behalf; and it may set out the matters on which each person designated will testify.” Fed. R. Civ. P. 30(b)(6). The corporate representative “represents the corporation's position on noticed topics” in the 30(b)(6) notice. Risinger, 306 F.R.D. at 662 (citing United States v. Massachusetts Indus. Fin. Agency, 162 F.R.D. 410, 412 (D.Mass.1995)). Thus, it is imperative that you choose the right person or persons to serve as corporate representatives. Corporate representative testimony is considered binding on the company, so you must choose a witness who is knowledgeable about matters known or reasonably available to the corporation. See Dravo Corp. v. Liberty Mut. Ins. Co., 164 F.R.D. 70, 75 (D.Neb.1995); see also Taylor, 166 F.R.D. at 361 (M.D.N.C.).  

Possible candidates include:  

• Top-level decision makers within the company
• Current or former employees
• In-house counsel
• Those most knowledgeable about certain product lines  

When selecting a corporate representative, consider candidates who are familiar with the litigation process. A witness who has been deposed in other cases and is prepared for tough questions is ideal for this type of deposition. Also consider the personality and demeanor of your candidates, as the witness must be able to counter many jurors’ negative impressions of businesses. A recent poll found that 53% of those surveyed believe that large corporations have a negative impact on the United States (Pew, 2019). Another poll showed that only 54% of the general population trusts businesses in the United States (Edelman, 2021). Your corporate witness should be able to advocate for the company while still coming across as empathetic to the injured party.  

Preparing the Corporate Representative for Deposition  

Once a candidate is chosen, you must prepare your corporate witness for his or her deposition. Under Rule 30(b)(6), the noticed party has “a duty to educate its witnesses so they are prepared to fully answer the questions posed at the deposition.” Louisiana Pac. Corp. v. Money Market 1 Institutional Inv. Dealer, 285 F.R.D. 481, 485 (N.D. Cal. 2012).  

Meet with your corporate representative as many times as necessary to prepare him or her for the deposition. This process can take days or weeks depending on the size of the case, the number of documents to be reviewed, and your witness’ familiarity with the litigation process. Prior depositions, company records, information regarding relevant product lines, and interviews with former and current employees must be reviewed and analyzed so that the corporate representative is equipped with the knowledge and information necessary to answer questions about the matters in the Rule 30(b)(6) notice.  

When meeting with your corporate representative, be sure to impress upon the witness that he or she is going to testify on behalf of the company and not just about his or her personal knowledge. Pay special attention to problem documents and prior deposition testimony you anticipate opposing counsel to bring up in the deposition. Also, be sure to discuss issues such as attorney-client privilege and prepare your witness to anticipate the objections that may be made during the deposition.  

Consequences of Inadequately Preparing the Corporate Representative  

Failure to properly prepare a corporate representative for his or her deposition can result in sanctions against the noticed party. “If a Rule 30(b)(6) witness is not adequately prepared to testify about topics properly identified in a notice to take the deposition, the court may impose various types of sanctions, including the imposition of reasonable attorneys’ fees and expenses caused by the failure, unless the failure was ‘substantially justified.’” Cherrington Asia Ltd. v. A & L Underground, Inc., 263 F.R.D. 653, 658 (D. Kan. 2010); Fed. R. Civ. P. 37(d)(3). Courts have held that “producing an unprepared witness is tantamount to a failure to appear, and sanctionable under Rule 37(d).” Great Am. Ins. Co. of New York v. Vegas Const. Co., 251 F.R.D. 534, 542 (D. Nev. 2008); Black Horse Lane Assoc., L.P. v. Dow Chem. Corp., 228 F.3d 275, 304 (3d Cir. 2000).  

Further, “the [c]ourt can require the corporation to re-designate its witnesses and mandate their preparation for re-deposition at the corporation's expense. Marker v. Union Fid. Life Ins. Co., 125 F.R.D. 121, 126 (M.D.N.C. 1989). Thus, it is imperative that you prepare your corporate representative to fully answer questions about the matters in the Rule 30(b)(6) notice.  

Conclusion  

To ensure compliance with Rule 30(b)(6), remember to select the right corporate representative and do so well in advance. Make timely objections to a vague or overbroad Rule 30(b)(6) notice and adequately prepare your corporate witness to testify regarding the topics listed. Remember that failure to prepare your corporate representative could result in sanctions or necessitate a second deposition.  

Taylor Harris  is an asbestos defense attorney with HeplerBroom LLC in St. Louis, Missouri. She is a chairperson for DRI’s Young Lawyers publication, The Brief Case, as well as a Young Lawyers Liaison to DRI’s Toxic Tort and Environmental Law Committee. 

Interested in joining the Young Lawyers Committee? Click here for more information.