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Here’s a Halloween tale that will scare the pants off any personal injury attorney.

It was a dark and stormy night.

Well, perhaps not stormy, but it was dark in 2006 when Dakari Shaw decided to go with a group of friends to Camp Fear in Ellisville, Mississippi.

Camp Fear is one of those haunted house adventures that sprout up across the countryside like pumpkins every fall.

One of Camp Fear’s prime attractions back in 2006 was a cabin in which kids and teens ran around in the dark with flashing strobe lights randomly robbing them of their night vision.

This already sounds like a bad idea.

The climax to the attraction came when a frightening creature called “Ring Girl” would pop up from a “well” and send everybody fleeing from the cabin into the night.

Adding spice to this mass exodus was the fact that outside the cabin door was a darkened porch and set of steps.

You know someone was bound to get hurt in this kind of setup, and that someone was our Dakari.

Yep, running for his life from Ring Girl, Dakari missed one of the steps outside the cabin, fell and seriously injured himself.

Dakari sued the operators of Camp Fear for negligence.

Now here’s the scary part: Camp Fear was operated by a state agency entitled to governmental immunity.

Eek!

Yep, Camp Fear was operated by and for the benefit of the Ellisville State School. The school serves the mentally disabled and is an agency of the Mississippi Department of Mental Health.

So this was an uphill battle for any personal injury attorney. Not only would you be dealing with the immunity issue, but what jury is going to be inclined to return a verdict against a school that helps the mentally retarded?

Surprisingly, a state judge hearing Dakari’s personal injury suit refused to grant the Ellisville State School summary judgment on the ground of governmental immunity.

But earlier this month, just in time for Halloween, the Mississippi Supreme Court righted what appeared to be an obvious wrong.

Dakari tried to argue that the school’s operation of Camp Fear as a fund-raising event brought it outside the protections of the state’s governmental immunity law.

But the court rejected the notion that Camp Fear was a “commercial” activity, deciding that the school’s promotion of the event qualified for discretionary-act immunity.

“[W]e find the promotion of Camp Fear involved social and economic policy decisions and so was a discretionary function that qualifies for immunity,” the court said. (Mississippi Department of Mental Health v. Shaw)

– Pat Murphy

patrick.murphy@lawyersusaonline.com

The guys and gals at the IRS must have thought this one was a joke.

After all, how often do they see a taxpayer claim a business deduction for colorpuncture?

Collette Lewis is a mortgage broker, “life coach” and personal trainer in California. Perhaps she should concentrate on being a mortgage broker since that was her only source of income in 2005.

Even so, 2005 wasn’t a banner year for Collette in her mortgage broker persona.

According to court records, that tax year Collette reported business income and adjusted gross income of negative $128.

Of course, the IRS had some questions about how Collette arrived at that figure and ultimately determined that she had a deficiency in her 2005 federal income tax of $36,000.

A piece of Collette’s tax puzzle included her claimed business deductions for colorpuncture training and equipment.

You see, in addition to be a mortgage broker, Collette lists as a profession “Certified Esogetic Medicine Practitioner.” Esogetic medicine is a holistic healing technique involving colorpuncture.

Colorpuncture is sorta like acupuncture except, instead of being stuck with pins, strategic areas of your body are targeted with colored lights.

According to the Colorpuncture website, as “the light is absorbed by the skin and transmitted along energetic pathways or meridians deep into the body, it stimulates intra-cellular communication which supports healing.” 

Riiight.

Not surprisingly, Quackwatch lists colorpuncture in its Index of Questionable Treatments. 

Of course, that doesn’t stop some people from shelling out $105 for a colorpuncture treatment. Sure beats snake oil.

Getting back our taxpayer, Collette claimed business deductions of more than $3,400 for colorpuncture training and education. In addition, she sought a deduction for $972 paid for esogetic supplies like Perlux light pens and crystal therapy tools.

Personally, I would have rejected these deductions under the “you gotta be kidding me” standard.

But the guys at the IRS have to follow the U.S. Tax Code, so their analysis was a bit more involved.

Under the Tax Code, an education expense is not deductible as a business expense if it leads the taxpayer to a new trade or business.

This was where Collette was in a bind because her claimed deductions had nothing to do with an ongoing colorpuncture practice. In fact, Collette had no intention of opening a colorpuncture business. As odd as it seems, Collette said that she used her colorpuncture training to accentuate her business as a mortgage broker.

This week, the U.S. Tax Court concluded that Collette’s colortherapy deductions were properly disallowed under the subtle distinctions made by the Tax Code.

 The court explained that Collette’s “certification as a practitioner of esogetic medicine qualified her to perform tasks and activities significantly different from those she could perform as a mortgage broker. [Collette] admitted at trial that ‘technically’ her certificate entitled her to open a business in colorpuncture therapy. But she explained that she did not and did not intend to open such a practice.

“What matters, however, is whether the education qualifies the taxpayer for a new trade or business, not whether the taxpayer engages in a new trade or business.” (Lewis v. CIR)

Given the state of her mortgage broker business, perhaps Collette should seriously think of becoming a practicing colorpuncturist.

After all, charging $105 a pop for shining colored lights on people sounds like the next best thing to owning an ATM machine.

– Pat Murphy

patrick.murphy@lawyersusaonline.com

You’d think that a principal’s knowledge of inappropriate text messaging involving a teacher would at least be enough to have a jury decide whether there was sufficient notice of misconduct to impose liability for the sexual abuse of a student.

Yesterday, however, the 8th Circuit concluded that the parents of a high school student who was sexually abused by her basketball coach could not proceed in their civil rights lawsuit against the Delight School District in Arkansas.

According to court records, during the 2006- 2007 school year the plaintiffs’ daughter had a sexual relationship with Chad Smith, her high school basketball coach.

Upon learning of the relationship, the plaintiffs sued the Delight School District under §1983 and Title IX, alleging that school officials acted with deliberate indifference in failing to protect their daughter from sexual abuse.

As is typical in these cases, the key issue was whether school officials had a duty to act based on “actual knowledge” of the illicit relationship.

The plaintiffs claimed that Tanya Wilcher, the former principal of Delight High School, had sufficient notice of the relationship between their daughter and Smith.

The key evidence was that school officials had received a series of complaints about text messages involving the coach.

One parent reported that Smith had sent her daughter a text message that read, “Are you drunk yet?” Another parent expressed discomfort over the fact that her daughter had received text messages from Smith throughout the summer regarding practice times.

In another incident, a teacher who confiscated a female student’s cell phone during class discovered a text message that read, “OMG you look good today.” The message had been sent from Smith’s phone.

Then there was an incident in which a male student received from a female student a vulgar text message that supposedly had been meant for Smith.

When confronted by Wilcher about the text messages, Smith explained them away as mistakes in judgment on his part or claimed he was in no way responsible for a particular transmission.

But while the various text message controversies were popping up during the course of the school year, there were also reports that the plaintiffs’ daughter was missing class time to be with Smith, and rumors circulating throughout the school that “something was going on” between the two.    

In any event, Wilcher took no steps against Smith for the text messages beyond issuing a reprimand. That was until things came to a head in March 2007.

The school district had already decided not to renew Smith’s contract based on parent complaints against the basketball coach. Spurred by more rumors, Wilcher did some serious investigating and uncovered the sexual relationship between Smith and the plaintiffs’ daughter.

Smith was sent to prison for sexual assault and the plaintiffs went to federal court to sue the school district.

Tuesday, the 8th Circuit decided that the plaintiffs could not show that school officials had actual knowledge of Smith’s illicit conduct. Accordingly, the court directed the entry of judgment for the school district and the individual defendants named in the plaintiffs’ complaint.

On the issue of texting, the court concluded that Smith’s messages to female students did not provide Wilcher with actual notice of sexual abuse.

“The inappropriate comments in those messages, without more, did not alert Wilcher that Smith was involved in a sexual relationship with a student. Smith’s first message to provoke a parental complaint, asking a female student — ‘Are you drunk yet?’ — did not rise to the level of showing sexual abuse or harassment of [the plaintiffs’ daughter] or any other student, especially in light of the context that the recipient allegedly had been charged with public intoxication. …

“Even the most suggestive text message, which was sent from Smith’s phone to a female student stating, ‘OMG you look good today,’ did not go so far as to suggest actual sexual conduct or sexual abuse,” the court said.  (Doe v. Flaherty) 

– Pat Murphy

patrick.murphy@lawyersusaonline.com

In today’s world of copy and paste, it’s a wonder that more lawyers aren’t caught using the words of another without proper attribution.

Unfortunately for Peter Cannon, one federal judge became suspicious when he found the lawyer’s brief to be of “unusually high quality.” Those suspicions ultimately placed Cannon in jeopardy of having his law license suspended for six months.

Cannon’s travails stem from his participation in a case before a U.S. bankruptcy court in Iowa.

Cannon filed a brief in an effort to disqualify the attorneys for the bankruptcy trustee. According to court records, Cannon billed the client $5737.50 for the work.

It’s probably not the best of signs when a judge’s antennae go up because one’s brief is too good. A wise lawyer might come to the conclusion that a writing course or two might be in order.

After reading Cannon’s brief, U.S. Bankruptcy Judge Paul J. Kilberg had some questions to ask. As a matter of fact, the judge took the rather extraordinary step of ordering Cannon to certify that he was the author of the brief.

Cannon couldn’t do that because his brief contained whole passages from the article “Why Professionals Must be Interested in ‘Disinterestedness’ Under the Bankruptcy Code,” by William Schrag and Mark Haut.

Judge Kilberg later determined that 17 of the 19 pages of analysis in Cannon’s brief were copied verbatim from the article.

Caught with his hand in the cookie jar, Cannon knew better than to make matters worse by claiming the work as his own. Cannon fessed up to the plagiarism.

The lawyer admitted that his brief “exceeded permissible fair use without attestation” of the source, offering the lame excuse that he had been pressed for time in writing the document.

Seeking to ameliorate the consequences of his transgression, Cannon informed his client and reported the matter to the state bar association.

Of course, Judge Kilberg wasn’t satisfied with these steps. He ordered Cannon to disgorge his fee to the client for the preparation of the brief, which probably hurt the lawyer the most.

Then there was the obligatory order requiring Cannon to take a course in professional responsibility and notify the authors of the legal article of his plagiarism.

Cannon’s biggest problem was with the members of the state disciplinary board. Those minders of professional good behavior wanted their pound of flesh, so they imposed a six-month suspension.

Friday, the Iowa Supreme Court agreed that Cannon’s plagiarism constituted a violation of the professional rules of conduct.

“We recognize that the term ‘plagiarism’ is something of a scarlet letter that imposes a brand on a wide variety of behaviors. We do not believe our ethical rules were designed to empower the court to play a ‘gotcha’ game with lawyers who merely fail to use adequate citation methods.

“This case, however, does not involve a mere instance of less than perfect citation, but rather wholesale copying of seventeen pages of material. Such massive, nearly verbatim copying of a published writing without attribution in the main brief, in our view, does amount to a misrepresentation that violates our ethical rules,” the court said. (Iowa Supreme Court Attorney Disciplinary Board v. Cannon)

Okay, so the court got that part right. But then it went astray by vacating Cannon’s suspension and imposing a public reprimand.

The reduction in penalty is hard to understand. The court noted as an aggravating factor that Cannon has a history of prior ethical problems.

And Cannon apparently fully understood the ramifications of his conduct when he copied whole sections of the legal article.

A public reprimand simply doesn’t fit the bill when a lawyer knowingly crosses the line.

– Pat Murphy

patrick.murphy@lawyersusaonline.com

There’s a big difference between $17 million and $155,610. Just ask the lawyers at Chimicles & Tikellis. 

C&T is a 20-lawyer firm based in Haverford, Pennsylvania. The firm specializes in class actions and filed two complaints on behalf of plaintiffs alleging securities fraud by Adelphia Communications Corporation.

C&T’s class actions were consolidated with other securities class actions filed against Adelphia. Unfortunately, C&T didn’t get the choice lead counsel gig. That prime position was shared by Abbey, Spanier, Rodd & Abrams and Kirby McInerney.

The class settled the case for $245 million with a number of Adelphia’s lenders and underwriters.

So it was time for the class action lawyers to divvy up the loot.

U.S. District Judge Lawrence McKenna awarded lead counsel $52.4 million in fees, a substantial multiplier over their lodestar amount.

Abbey and Kirby in turn allocated $155,610 of the Adelphia attorney fee award to C&T, an amount representing C&T’s lodestar with no multiplier.

C&T wasn’t overly impressed by the generosity of lead counsel, no siree Bob.

Instead, C&T claimed it was entitled to $17 million in fees, arguing that the firm played a pivotal role in obtaining the $245 million settlement. According to C&T, the firm deserved a large chunk of the attorney fee award because the claims it raised in its complaints were the only claims to survive defense motions to dismiss.

Alas, yesterday the 2nd Circuit decided that C&T would have to be satisfied with $155,610.

In its ruling, the court addressed the proper framework for awarding attorney fees to non-lead counsel under the Private Securities Litigation Reform Act (PSLRA) for work completed prior to the appointment of lead plaintiff.

As a starting proposition, the court agreed that a “qualitative comparison between non-lead and lead counsels’ work products is certainly appropriate when determining whether non-lead counsel has provided a substantial benefit to the class.”

Pertinent to this case, the court recognized that “comparing the complaint filed by non-lead counsel with other complaints filed in the action, including the complaint filed by lead counsel, will often show whether non-lead counsel contributed important factual information or innovative or novel legal theories.”

In the end, though, the court concluded that C&T’s $155,610 was reasonable under the standard Goldberger factors.

In demanding $17 million, the court observed that C&T was looking to be paid $45,000 per hour for 381.1 hours of work.

“Forty-five thousand dollars per hour seems to us to be quite high regardless of a lawyer’s talent, ability, or contribution to a common fund,” the court said.

The court also implied that C&T may have had an overly inflated view of its role in the Adelphia litigation.

The court said that “contrary to C&T’s assertions, the District Court engaged in a reasonable analysis of C&T’s fees request, concluding that its contributions did not support its requested fee.

“Since lead counsel is typically well-positioned to weigh the relative merit of other counsel’s contributions, it is neither unusual nor inappropriate for courts to consider lead counsel’s proposed allocation of attorneys fees, particularly in the PSLRA context, where the district court retains the ultimate power to review applications and allocations and to adjust them where appropriate.” (In Re: Adelphia Communications Corp. Securities & Derivative Litigation)

– Pat Murphy

patrick.murphy@lawyersusaonline.com

Lady Luck can be fickle. Take the case of Tom Donovan.

Last time we saw Tom, he was riding high. Just one year ago the blackjack player convinced the Indiana Court of Appeals that a riverboat casino could not ban him simply because he was a successful card counter.

Unfortunately for Tom, the Indiana Supreme Court decided to take a look at his case.

Last month, the Indiana high court decided that the state’s Riverboat Gambling Act did not abrogate the absolute common law right of casinos to exclude a customer for any legitimate reason.

“An owner of an Indiana business has long had the absolute right to exclude a visitor or customer, subject only to applicable civil rights laws. This long-standing common law right of private property owners extends to the operator of a riverboat casino that wishes to exclude a patron for employing strategies designed to give the patron a statistical advantage over the casino,” the court said. (Donovan v. Grand Victoria Casino & Resort)

This result seems like a raw deal. I don’t gamble, so I don’t have a dog in this fight.

But it seems to me that if someone like Tom isn’t cheating in the traditional sense, he should be allowed to play.

It’s only right that a gambler be able to take advantage of the fact that he’s smart enough to keep track of the cards as they’re played and bet in accordance with the shifting probabilities.

After all, casinos profit from the hordes of bad gamblers who simply seek entertainment and the compulsive gamblers who wreck their lives.

It only seems fair that casinos accept as a regular business risk the odd, cagey customer who has figured out their games of chance.

– Pat Murphy

patrick.murphy@lawyersusaonline.com

Hawking counterfeit CDs out of a corner barbershop is hardly the stuff of Blackbeard the Pirate.

Nor does the ongoing tussle between the music industry and illegal downloaders bring to life adventures of the Spanish Main.

Nope, instead of the clash of swords on surging decks, those of us on the sidelines of the music industry’s epic struggle to protect creative rights are treated to the rustle of papers in some dreary courtroom.

Well, tally one victory for the music pirates. Yesterday, a California appeals court decided that the Recording Industry Association of America wasn’t entitled to $14,600 in restitution from two men who pleaded guilty to crimes involving counterfeit CDs.

Maybe it would have been better if Robert Trongale and Micah Kelly had stuck to cutting hair. Trongale ran a barbershop in San Bernardino. Kelly worked for Trongale.

In March 2006, Kelly sold five counterfeit CDs for $20 to a customer. Unfortunately for the barbers, the customer turned out to be an undercover police officer.

Prosecutors charged Trongale and Kelly for violating California’s criminal antipiracy statute. Trongale later admitted to storing upwards of 2,000 counterfeit CDs at his shop and Kelly admitted to engaging in several other sales of the CDs.

The two barbers ultimately entered pleas to lesser offenses and that’s when the nefarious RIAA made an appearance.

The trade association demanded restitution as part of the barbers’ sentences and a trial judge agreed to that demand, entering an order making Trongale and Kelly jointly and severally liable for $14,600.

On Tuesday, the California Court of Appeal reversed the order of restitution, concluding that RIAA as a trade association was not a “direct victim” of the barbers’ criminal acts.

The court explained that “RIAA is not a direct victim because it was not the object of defendants’ crimes and it cannot claim lost profits or other losses caused by defendants’ crimes.”

The court noted in particular that the record failed to disclose what music labels or recording artists were the subject of the barbers’ counterfeit CDs and whether RIAA receives an assignment of rights from its members.

“Even if RIAA’s members were identified and correlated with the counterfeited products, RIAA’s investigator testified that RIAA does not seek restitution for the direct benefit of its members. Instead, RIAA uses any recovery of restitution to offset the costs of its piracy investigations,” the court said. (California v. Kelly)

So for Trongale and Kelly, it’s back to cutting hair, happy to be relieved of their $14,600 burden. Hopefully, they’ve learned their lesson and will give up their music pirating ways.

After all, such nefarious activities should be left to true pirates. Aaaargh!

– Pat Murphy

patrick.murphy@lawyersusaonline.com

It’s an outrage that a single mother and her daughter would have their unmentionables pawed through by a predatory apartment manager.

But is a landlord who hires such a misanthrope on the hook for damages?

Last week, one California court answered that question in the negative.

The case involved Lourdes Ramirez and her minor daughter, Jessica. They lived in an apartment building in Los Angeles.

Weller Wong owned the property and she had hired Daniel Valdez as resident manager.

According to court records, one day in June 2007, Valdez entered the Ramirez apartment when Lourdes and Jessica were out.

Valdez went into the bedroom, opened a dresser drawer, and removed and sniffed the female tenants’ underwear.

When Ramirez discovered what had happened, she sued Wong under California’s Unruh Civil Rights Act. The statute provides the right to be free from violence or intimidation by threat of violence based on sex, as well as prohibiting sexual harassment, generally.

The complaint alleged that Wong was vicariously liable for the actions of Valdez and sought treble damages, statutory damages of $25,000 each, and attorney fees.

Unfortunately for Ramirez, the California Court of Appeal decided on Wednesday that she didn’t have a cause of action against Wong.

The court explained that “Valdez’s conduct may constitute burglary or other crimes, and may be a severe intrusion into plaintiffs’ privacy. But those facts cannot transform Valdez’s conduct into sexual harassment, which requires ‘a concerted pattern of harassment of a repeated, routine or a generalized nature’ or, in the case of an isolated incident, ‘a physical assault or the threat thereof.’ Neither is alleged here.” (Ramirez v. Wong)

– Pat Murphy

patrick.murphy@lawyersusaonline.com

Question: When does the statute of limitations begin to run on a medical malpractice claim involving a displaced intrauterine device?

1. When the doctor-patient relationship ends
2. When the patient learns that the device has become dislodged and needs to be removed
3. When the device is naturally expelled from the patient’s body

According to the South Dakota Supreme Court, the correct answer is “2,” when the patient learns that the device has become dislodged from its proper position in the body and needs to be removed.

The court arrived at that conclusion last week in a lawsuit brought by Anne Schmiedt against Dr. Nathan Loewen in Beadle County, South Dakota.

Dr. Loewen is a family practitioner. He implanted Schmiedt’s IUD on July 27, 2004.

Schmiedt returned to see Dr. Loewen for an apparent problem with the device on October 22, 2004. Schmiedt reported that she could no longer feel the threads attached to the IUD, which is an indication of possible migration.

Dr. Loewen could not locate the IUD when he performed a pelvic exam, but an x-ray showed that the IUD had moved and become deformed.

Schmiedt claims that that Dr. Loewen did not inform her of these findings. Instead, she alleges that Dr. Loewen simply told her that the IUD would have to be surgically removed if she wanted to have more children.

Over the course of the following year Schmiedt saw Dr. Loewen four more times, complaining of cramping, heavy menstruation, and abdominal pain. According to Schmiedt, Dr. Loewen continued to assure her that the IUD was doing its job.

That opinion proved overly optimistic because a March 2006 home pregnancy test came back positive.

Naturally, Schmiedt had some pointed questions for Dr. Loewen. She saw the doctor for the last time on April 3, 2006. A transvaginal ultrasound performed by Dr. Loewen that day was unable to locate the IUD.

The following day, Schmiedt saw her gynecologist. He ultimately determined that the IUD had penetrated the uterine wall and migrated into the woman’s abdomen.

To avoid endangering the pregnancy, Schmiedt’s new doctors decided to postpone the surgical removal of the IUD until after she gave birth.

Schmiedt delivered her baby on November 28, 2006. However, on January 31, 2007, before surgery to remove the IUD could be performed, Schmiedt passed the device rectally.

Schmiedt filed her medical malpractice lawsuit against Dr. Loewen on August 18, 2008.

The doctor argued that the lawsuit was barred by the state’s two-year statute of limitations.

According to Dr. Loewen, under the “continuing treatment” doctrine the clock started ticking on Schmiedt’s lawsuit when she terminated the physician-patient relationship in April 2006.

Schmiedt countered that her action was timely because the IUD became a “foreign object” subject to the continuing tort doctrine once it became dislodged.

Under a typical application of the continuing tort doctrine, the statute of limitations did not begin to run until the IUD was expelled from Schmiedt’s body in January 2007.

The South Dakota Supreme Court agreed with Schmiedt that the IUD had become a foreign object for medical malpractice purposes.

“We agree with those authorities concluding that once it becomes known that it is reasonably and medically necessary to remove an IUD, its character changes. Under those circumstances, an IUD is no longer intentionally in the body and the IUD becomes a foreign object,” the court said.

Unfortunately for Schmiedt, this conclusion was not a game clincher for the survival of her lawsuit.

Instead, the court went on to decide that the statute of limitations was triggered when Schmiedt’s gynecologist informed her in April 2006 that the IUD needed to be surgically removed.

The court explained that “the continuing wrong is the failure to remove the foreign object or to inform the patient of its existence. In this case [Schmiedt was] informed of the foreign object’s existence in April 2006. Therefore, the statute of limitations began to run at that time.” (Schmiedt v. Loewen)

So Schmiedt’s medical malpractice suit is time-barred.

– Pat Murphy

patrick.murphy@lawyersusaonline.com