Minding Your Business

Proskauer’s perspective on developments and trends in commercial litigation.

Judge, Jury and . . . Attorney’s Fees

When a contract awards attorneys’ fees to one party in a contract action, California Civil Code § 1717 intervenes by a) directing the attorney’s fees to the prevailing party, regardless of the party awarded fees in the contract, and b) requiring the court to fix the attorney’s fees as an element of the costs of suit. But does § 1717 supplant the right to a jury trial in situations where attorney’s fees are sought as damages, instead of as costs? As the California Court of Appeal recently held in Monster, LLC v. Superior Court of Los Angeles County: No. Continue Reading

Robotic Review: The Use of Artificial Intelligence in Contract Review

Through the help of artificial intelligence (“AI”), your smartphone can act as a GPS that adjusts its recommended route in real-time based on emerging traffic patterns. By adapting to changes in traffic, the smartphone is able to redirect a driver to a faster route. Now imagine these adaptive capabilities in the legal field. With the potential of AI growing rapidly, the use of AI technology, though still in its infancy, is gaining traction with law firms, helping to provide better outcomes for clients, faster. According to a recent survey by management consulting firm Altman Weil, law firms are beginning to explore AI’s potential. While only 7.5% of surveyed law firms are currently making use of AI, nearly a third of the surveyed law firms have begun to explore opportunities to use AI as a legal tool. The capabilities of AI, whether currently available or on the horizon, suggest that both lawyers and clients can benefit from the legal field’s embrace of AI. This is particularly true with respect to the use of AI in the many phases of contract review: contract creation, contract analysis, and contract due diligence. Continue Reading

New CFPB Arbitration Rule Already Under Attack

On July 10, 2017, the Consumer Financial Protection Bureau (CFPB) issued a new rule that would make it easier for consumers to bring class action lawsuits against financial institutions. The new rule bans financial institutions from using mandatory arbitration clauses in consumer contracts to prevent and avoid class action lawsuits. If the new rule goes into effect, it would apply to all new contracts involving consumer financial products and services, such as credit cards, bank accounts, and auto leases. The rule does not cover consumer mortgages because Congress already prohibits arbitration agreements in the residential mortgage market. Continue Reading

Supreme Court Clarifies Specific Jurisdiction and Ends Forum Shopping Spree

The Supreme Court has put an end to a jurisdictional contrivance used by the plaintiffs’ bar to shop for a friendly state forum, even if neither the plaintiff, nor the defendant, nor the actionable conduct took place in those states. In last month’s Bristol-Myers Squibb Company v. Superior Court decision, the Court ruled that out-of-state plaintiffs could not piggyback on the claims of in-state plaintiffs to assert jurisdiction over an out-of-state defendant. In doing so, the Court rejected the notion that plaintiffs’ counsel can exploit the claims of a handful of in-state plaintiffs as a hook to bring a nationwide lawsuit against an out-of-state corporation in the plaintiffs’ preferred forum. Continue Reading

Supreme Court Clarifies When Service by Mail is Permitted under the Hague Convention

The Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (“Hague Service Convention” or “Convention”), was designed to simplify and standardize the service of legal documents across international borders. But for decades, U.S. courts divided over a seemingly simple question: does the Hague Service Convention prohibit service by mail? Continue Reading

The Supreme Court Says “Game Over” to Crafty Gamers’ Attempt to Circumvent Class Certification Appeals

The Xbox 360 is designed for gaming. Appellate litigation, gamers learned, is not.

On behalf of a putative class of purchasers of the Xbox 360, a group of gamers brought suit alleging a defect with the consoles. After the district court struck the class allegations, plaintiffs sought permission to appeal under Rule 23(f), which the Ninth Circuit denied. Rather than proceeding in litigation to final judgment, plaintiffs instead voluntarily dismissed their claims, with prejudice, while reserving a right to appeal the order striking class allegations. Plaintiffs then appealed the order under Section 1291. On appeal, the Ninth Circuit held that it had appellate jurisdiction and thus the case was still “sufficiently adverse” to be heard under §1291. The Supreme Court granted certiorari on the question of whether courts of appeals “have jurisdiction under §1291 and Article III . . . to review an order denying class certification (or, as here, an order striking class allegations) after the named plaintiffs have voluntarily dismissed their claims with prejudice.” Continue Reading

A District Court’s Discretion to Sanction Is Broad, “But For” a Causal Limitation

Recently, the U.S. Supreme Court clarified in Goodyear Tire & Rubber Co. v. Haeger that even a district court’s exercise of broad discretion to impose a civil sanction for a litigant’s bad faith conduct has to be limited by a causal link.

The parties in Goodyear had reached a settlement of the underlying product liability case after several years of contentious discovery. After the settlement, however, plaintiffs, the Haegers, learned (and Goodyear, the defendant, conceded) that Goodyear had withheld certain information that the Haegers had requested early and often during the discovery stage. Accordingly, the Haegers asked the District Court to impose sanctions on Goodyear for discovery fraud. Because the parties had already settled, the only sanction available was to award the Haegers attorney’s fees and costs expended in the litigation.  Continue Reading

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