Thursday, July 21, 2016

Punitive Damages. Evidence of both reprehensibility and malice was sufficient to support $4M punitive award where defendant knowingly placed dangerous product in the market.

Drake v. Allergan, Inc., No. 2: 13-cv-234 (D. Vt. May 22, 2015).

WILLIAM K. SESSIONS, III, District Judge. Allergan argues that is entitled to judgment as a matter of law on the issue of punitive damages because the evidence was insufficient to support the jury's verdict. The Court disagrees.

The Vermont Supreme Court's jurisprudence on punitive damages, by its own concession, "has not been a model of clarity." Fly Fish Vermont Inc. v. Chapin Hill Estates, 2010 VT 33, ¶ 18, 187 Vt. 541, 996 A.2d 1167. Plaintiffs seeking punitive damages must prove two elements: 1) "wrongful conduct that is outrageously reprehensible" and 2) malice, "defined variously as bad motive, ill will, personal spite or hatred, reckless disregard, and the like." Id. ¶ 18.

Thus, the Plaintiffs were required to prove that Allergan's conduct was outrageously reprehensible and that Allergan acted with malice. It is clear that in this case the Plaintiffs do not allege — nor could they prove — that Allergan had any ill will, personal spite, or hatred towards the Drakes individually. The question then is whether the Plaintiffs proved that Allergan's conduct was outrageously reprehensible and demonstrated a "bad motive" or "reckless disregard" sufficient to constitute malice in the state of Vermont.

Defining the contours of a standard for reckless disregard sufficient to warrant a finding of malice proved to be somewhat slippery for the Vermont Supreme Court. On the one hand, the court had held that in order to qualify for punitive damages the conduct at issue must be more than simply wrongful or unlawful. Fly Fish, 2010 VT 33, ¶ 19. And conduct evincing a "mere reckless disregard of the plaintiff's rights" or "a reckless disregard of the right of others" is likewise insufficient. Id. ¶¶ 19-20 (discussing Brueckner v. Norwich University, 730 A.2d 1086 (Vt. 1999) and Bolsta v. Johnson, 848 A.2d 306 (Vt. 2004) (internal quotation omitted)). The court noted that there must be some kind of bad motive on top of the tort because a threshold of reckless disregard, without more, would be so flexible it could become virtually unlimited in its application. Fly Fish, 2010 VT 33, ¶¶ 20-21.On the other hand, the Vermont Supreme Court had long-recognized the notion of malice arising from acting with a wanton disregard for great harm. Id. ¶ 23.

When defining the line between "reckless, wanton, or heedless misconduct" sufficient to warrant punitive damages and "mere reckless disregard" the Vermont Supreme Court held:
the culpability necessary for an award of punitive damages based on reckless or wanton misconduct requires evidence that the defendant acted, or failed to act, in conscious and deliberate disregard of a known, substantial and intolerable risk of harm to the plaintiff, with the knowledge that the acts or omissions were substantially certain to result in the threatened harm.
Id. ¶¶ 19, 21, 25. This is the measure by which reckless misconduct reaches the point of actual malice sufficient to support an award of punitive damages. Id. ¶ 25.

There are some circumstances, however, in which no reckless disregard analysis was necessary to find malice when there was either an element of bad motive by definition or otherwise demonstrable malice present. For example, the Vermont Supreme Court explained that an attorney who intentionally misappropriated money from a widowed plaintiff and lied about it in DeYoung v. Ruggiero, 2009 VT 9, ¶ 27, 185 Vt. 267, 971 A.2d 627, was egregious enough that malice could be inferred. Fly Fish, 2010 VT 33, ¶ 29.

In DeYoung the court noted that "malice may arise from deliberate and outrageous conduct aimed at securing financial gain or some other advantage at another's expense, even if the motivation underlying the conduct is to benefit oneself rather than harm another." DeYoung, 2009 VT 9, ¶ 27. The defendant's admitted motive in DeYoung was to enrich himself and promote the interests of his company, which the court found "in and of itself demonstrates a bad motive." Id. ¶ 29. It is not necessary to find an intention to do harm to find malice. Id. The court also included dicta suggesting that punitive damages should be available against companies that "knowingly [place] dangerous products into the market, hoping that people [will] not get hurt" while ignoring a great risk of harm to increase profits. Id. The court later explained that malice could be inferred in situations like the one DeYoung presented without an analysis of recklessness. Fly Fish, 2010 VT 33, ¶ 22.

The other cases in which the court described finding demonstrable malice involved, for example, fraud, Follo v. Florindo, 2009 VT 11, 185 Vt. 390, 970 A.2d 1230, a campaign of terror motivated by sectarian and racial bias, Shahi v. Madden, 2008 VT 25, 183 Vt. 320, 949 A.2d 1022, and filing a false mechanic's lien on property in an effort to extort right-of-way concessions from owners who had no prior business with the company and owed nothing, Wharton v. Tri-State Drilling & Boring, 2003 VT 19, 175 Vt. 494, 824 A.2d 531.

Wrongful and Outrageously Reprehensible Conduct. The evidence was sufficient to support the jury's conclusion that Allergan's promotional activities were outrageously reprehensible, especially in light of the Plaintiffs' evidence regarding the promotion of higher doses. The jury could have reasonably concluded that Allergan's conduct was outrageously reprehensible because Allergan did more than simply promote an off-label use. Allergan promoted the use of doses that it knew were risky in order to increase profits. A reasonable jury could have felt morally outraged by a corporation's desire to put its bottom line above children's health, safety, and even lives.

Malice. Evidence presented by the Plaintiffs reasonably suggested that Allergan was motived by financial gain and knowingly encouraged risky doses despite the real possibility that children could be injured. Even if malice cannot be inferred on this evidence, the Plaintiffs presented sufficient evidence from which a jury could find that Allergan's promotional campaign was undertaken "in conscious and deliberate disregard of a known, substantial and intolerable risk of harm to the plaintiff, with the knowledge that the acts or omissions were substantially certain to result in the threatened harm." Fly Fish, 2010 VT 33, ¶ 25. The jury could have found that Allergan was aware of the risks of high doses but promoted them anyway in order to reap greater profits.

Thus the Court finds that the Plaintiffs' evidence was sufficient to support the jury's award of punitive damages.

Wednesday, July 20, 2016

Long term leasehold interests are subject to both statutory and equitable partition in a case seeking to divide property of unmarried cohabitants.

Wynkoop v. Stratthaus. 2016 VT 5 (filed January 15, 2016)

DOOLEY, J. The parties to this appeal are co-lessees in a thirty-year ground lease for a ten-acre parcel of land The parties constructed improvements on the land and shared the parcel as unmarried cohabitants Upon termination of their relationship, plaintiff sought partition the property under 12 V.S.A. § 5161 and compensation for ouster under 12 V.S.A. § 4765. Defendant appeals the trial court's property division and compensation to plaintiff. We reverse in part and affirm in part.

On appeal, defendant claims the leasehold is not real property subject to partition under 12 V.S.A. § 5161; and that the court erred in calculating the parties' contributions to the project; We affirm the trial court's judgment with respect to the applicability of the partition statute to the leasehold. We reverse and remand for the court to correct errors in its calculation of the parties' respective contributions and to value the property and determine the partition remedy.

All, or virtually all, decisions that have considered the question before us have held that artition is available for leasehold interests. Based on our own analysis, as well as the precedents from other jurisdictions, we hold that plaintiff could seek partition under 12 V.S.A. § 5161.

There is, however, an alternative remedy applicable to the situation in which plaintiff is left. Partition is both an action at law, pursuant to the statute, and a remedy in equity that came to us as part of the English legal system a court could partition a leasehold interest under the court's equitable powers, In applying partition then, we have relied on equitable partition and not the action at law known as statutory partition. While there may be multiple reasons for proceeding this way in particular cases, the overall rationale applicable to property division for unmarried partners in marriage-like relationships is that we must consider all relevant circumstances to ensure that complete justice is done.

Thus, even if § 5161 did not apply because the parties have a leasehold interest and not ownership in fee, we would hold that partition in equity is the proper remedy.

Equitable partition can follow its own flexible procedures, and the court is not bound by those in the statute, including the use of commissioners. We conclude that appointment of commissioners is particularly inappropriate and unnecessary in a case like this because they add cost to the process, the value of the property is relatively small, and the role of the commissioners is very limited. Thus, we conclude that in this case the trial court should value the property and not refer valuation to commissioners. Once the court has valued the property, it should determine and order the partition remedy, either by assigning the property to plaintiff with a pay-off to defendant or sale of the property with distribution of the proceeds according to the percentage shares of the parties. If a sale is ordered, the court may appoint commissioners to sell the property.

In summary, we hold that he superior court has jurisdiction over this case based on the common leasehold interest of the parties. This case is appropriately an equitable partition case to be adjudicated under the equitable principles and procedures of a normal civil case.  The superior court should proceed to fashion a remedy without use of commissioners except, if necessary, for purposes of sale of the property.

EATON, J., concurring. I agree with the majority's conclusion that equitable partition, in addition to statutory partition, is part of the law of Vermont and that in reaching an equitable division of the parties' property, the court could employ equitable partition under the facts of this case. In my view, 12 V.S.A. § 5161 does not apply in this instance, making equitable partition available and appropriate.

Because the majority relies upon equitable partition, the historical overview of statutory partition is largely unnecessary to the result. I am also not convinced that statutory partition is available in this case, and to the extent the majority holds that statutory partition provided any authority for the court to partition the leasehold interest, I disagree

Partition, whether employed under the statutory framework, or as a part of the court's equitable powers, is cumbersome, potentially expensive, and time-consuming. Using it with every division of a leasehold interest that comes before the court in a divorce or civil proceeding among unmarried cohabitants, would be unwise and unworkable. In long-term lease situations, however, or those where valuation of the leasehold is particularly difficult, it should be one of the tools available to the trial court, in its discretion, in discharging its obligation to divide the parties' property in an equitable manner.

I concur with the outcome reached by the majority, and agree with its analysis of the issues, except as to the applicability of 12 V.S.A. § 5161

Tuesday, July 19, 2016

Police not required to warn suspect of consequences of refusing field sobriety test.

State v. Farrow, 2016 VT 30 (filed March 11, 2016).

ROBINSON, .J. This case calls upon us to consider the admissibility of evidence of defendant's decision not to complete a field sobriety exercise as requested by a police officer in the context of an answer to a question we left open in a prior decision: Under the Vermont Constitution, is a defendant's refusal or failure to perform voluntary field sobriety exercises admissible if the defendant was not advised at the time of the refusal that evidence of a refusal to perform the exercises may be admissible in court? We conclude that the refusal evidence is admissible without regard to whether police advised the individual that a refusal to perform the exercises could be admitted as evidence in court. Because we reject defendant's argument to the contrary on this point, as well as her arguments that on the record in this case the evidence in question was irrelevant and unduly prejudicial, we affirm.

Defendant challenges the trial court's admission of the video recording and the trooper's testimony concerning defendant's conduct and ultimate cessation of the MRT on the basis of the Vermont Rules of Evidence According to defendant, in light of the absence of any evidence supporting the validity of the exercise in the first place, and the presence of many explanations for her decision to stop the exercise, the evidence in question proved nothing, and its admission was prejudicial because it suggested otherwise to the jury. We conclude that the trial court did not abuse its discretion in admitting the evidence to show that defendant discontinued her participation in the exercise because: (1) the evidence may have some probative value in showing consciousness of guilt, and (2) especially given its instructions to the jury, the trial court could reasonably conclude that the prejudicial effect of the evidence did not substantially outweigh its probative value.

Defendant's appeal raises a question that this Court has previously left unresolved: whether the Vermont Constitution requires—as a prerequisite to use of the individual's refusal as evidence in court—that an officer advise an individual that refusal to perform a field sobriety exercise may be admitted as evidence of consciousness of guilt. We reject defendant's Fourth Amendment argument. It is well established that police may, without a warrant but upon reasonable suspicion, ask a driver to perform field sobriety exercises. To the extent defendant is arguing that the Fourth Amendment, and its Vermont Constitution analog in Chapter 1, Article 11, nevertheless require some sort of warning to an individual asked to perform field sobriety exercises, she makes no argument linking those constitutional provisions to the claimed warning requirement.

Defendant argues that the protections against compelled self-incrimination in the Vermont Constitution extend to nontestimonial evidence because Article 10 provides that a person cannot be compelled to "give evidence against oneself," whereas the Fifth Amendment provides that a person cannot be compelled to be "a witness against himself." The logic of defendant's argument might support a conclusion that evidence of an individual's refusal to perform an exercise is inadmissible in court—an issue we do not revisit here. But defendant does not provide a logical connection between Article 10, as she understands it, and a requirement that an individual be warned. We emphasize that the strength of our holding on this point is limited by the vagueness of defendant's arguments on appeal.

Appellate procedure. Motion for interlocutory appeal was sufficient to permit jurisdiction over appeal from final judgment.

State v. Alcide, 2016 VT 4 ( filed - January 8, 2016)

DOOLEY, J Defendant has filed a motion to dismiss this appeal on the grounds the State untimely filed its notice of appeal. We reject defendant's argument and conclude we do have jurisdiction over this appeal.

Although the trial court's dismissal was entered on July 3, 2014, the State did not file its Vermont Rule of Appellate Procedure 4 notice of appeal with the trial court until September 8. The State argues that the prosecution had filed a motion for permission to appeal the earlier interlocutory suppression ruling under V.R.A.P. 5 on July 10, which was granted by the trial court on August 25 without opposition, and was sufficient to put the defense on notice of the appeal. We agree and will consider this appeal as timely filed.

A mistake in designating a judgment appealed from is "not always fatal, so long as the intent to appeal from a specific ruling can be fairly inferred by probing the notice and the other party was not misled or prejudiced." We "decline to interpret Rule 4" in an unduly narrow fashion, Casella Const., Inc. v. Dep't of Taxes, 2005 VT 18, ¶ 5, 178 Vt. 61, 869 A.2d 157, in recognition of the limited purposes served by a notice of appeal: to inform the "parties and tribunals concerned that the proceedings are not concluded so that they may respond accordingly" and to invoke "appellate jurisdiction by accomplishing the transfer of the case to the reviewing authority while the question sought to be reviewed remains open to appeal." ¶ 11.

Here, Because the Rule 5 motion clearly indicated the State intended to appeal from the trial court's order on suppression and dismissal, and because "imperfections in noticing an appeal should not be fatal where no genuine doubt exists about who is appealing, from what judgment, to what appellate court," Becker v. Montgomery, 532 U.S. 757, 767 (2001), we hold that the State's motion for permission to appeal an interlocutory ruling was sufficient to afford defendant with notice, and consequently sufficient to permit us jurisdiction over this appeal.

Court affirms suppression of evidence of drugs seized after dog sniff search following traffic stop that was "prolonged beyond the time reasonably required to complete the mission" of issuing a ticket for the traffic violation.

State v. Alcide, 2016 VT 4 ( filed - January 8, 2016)

DOOLEY, J. Defendant I was charged with possession of heroin and cocaine and sought to suppress all evidence of drugs seized from his vehicle after a police dog indicated the presence of drugs. The trial court found that the contraband was obtained through the illegal expansion of the scope of a motor vehicle violation stop into a criminal drug investigation, suppressed the evidence, and dismissed the charges. The State of Vermont appeals the trial court's grant of defendant's motion to suppress and dismiss. On appeal, the State contends that a minimal delay following the completion of a traffic stop for a dog sniff is reasonable under federal and state law. However, in light of the U.S. Supreme Court's decision in Rodriguez v. U.S., ___ U.S. ___, ___, 135 S.Ct. 1609, 1612 (2015), we affirm the trial court's decision to dismiss the case against defendant.

A police stop exceeding the time needed to handle the matter for which the stop was made violates the Constitution's shield against unreasonable seizures. Rodriguez  established that the Fourth Amendment does not permit a dog sniff conducted after the completion of a traffic stop that is "prolonged beyond the time reasonably required to complete the mission" of issuing a ticket for the violation.

After the corporal informed defendant he would be mailing a ticket for operating a motor vehicle while under suspension defendant denied permission for a search of the vehicle. The corporal returned to his cruiser and released the drug dog and walked him around defendant's vehicle. The dog alerted to the presence of drugs upon reaching the driver's side door. The corporal informed defendant of the alert; he again asked for permission to search, and defendant denied permission. Approximately seven to eight minutes had passed from the time the corporal stopped defendant until he deployed the drug dog.

We agree with the trial court that the stop "extended beyond the time reasonably necessary . . . to address the traffic offense," as the corporal deployed the drug dog after informing defendant he would mail a ticket for the traffic violation, the point at which he presumably accomplished the purpose of the stop.

Dismissal as discovery sanction affirmed.

Synecology Partners, L3C v. Business RunTime, Inc., 2016 
VT 29 ( March 4, 2016)

EATON, J.. In this dispute between two computer software companies, SynEcology Partners, L3C challenges the trial court's order dismissing its complaint against Business RunTime, Inc. stemming from its failure to comply with Business RunTime's discovery requests. For the reasons stated herein, we affirm.

We have held that "where the ultimate sanction of dismissal is invoked it is necessary that the trial court indicate by findings of fact that there has been bad faith or deliberate and willful disregard for the court's orders, and further, that the party seeking the sanction has been prejudiced thereby." Med. Ctr. Hosp. of Vt., Inc., 136 Vt. at 519, 394 A.2d at 1135. "The imposition of the dismissal sanction cannot be imposed merely as punishment for failure to comply with the court's order." Id. Rather, the party's failure must evidence "flagrant bad faith" and "callous disregard of responsibilities counsel owe to the court and to their opponents." Id. at 520, 394 A.2d at 1135

SynEcology's contention that the circumstances called for a less drastic sanction than dismissal is incorrect because the trial court's order includes findings that describe a pattern of conduct that satisfies the standard articulated in Med. Ctr. Hosp. of Vt., Inc., and therefore warrants dismissal. The trial court reviewed the thirty-four month long discovery process, which included multiple requests for supplemental production by Business RunTime and two motions to compel. In drawing the conclusion that SynEcology acted in bad faith, the trial court specifically noted SynEcology's repeated insistence that it had produced all emails from the Comcast account, which it later retracted, without explanation, when that insistence was shown to be false. With regard to its finding that SynEcology acted with deliberate and willful disregard for the court's orders, the trial court noted SynEcology's failure to produce a privilege log, despite promising to do so on at least three occasions and being compelled to do so by a court order. Further, the trial court found Business RunTime was prejudiced by this behavior because: (1) the case was delayed for more than two years; (2) it was required to engage in unneeded motion practice to obtain materials it was properly entitled to; and (3) it suffered increased attorneys' fees. Considering this, combined with SynEcology's repeated failures to comply with the production requests, including its failure to produce a privilege log, its numerous unmet promises to do so, and the production of additional emails without explanation, the trial court properly concluded that SynEcology "purposefully and knowingly, and in bad faith, failed to provide accurate responses to the document requests

We disagree with SynEcology's claim that the dismissal of the action without a hearing on the motion for contempt was error.As reflected by the record, neither party requested a hearing with respect to the motion for contempt pursuant to Rule 78(b)(2).the trial court informed Synecology that before ruling upon the contempt motion, it would allow time for substitute counsel and supplemental pleading. This is exactly what the trial court did. Synecology's new counsel filed the supplemental pleading, but did not request a hearing on the motion. Rule 78(b)(2) authorizes a court to dispose of a motion without argument, and the decision to do so is within the discretion of the court. Bandler v. Cohen Rosenthal & Kramer, LLP, 2015 VT 115, ¶ 11, ___ Vt. ___, ___ A.3d ___

Placing product in stream of commerce is a basis for personal jurisdiction.

State v. Atlantic Richfield Co.,2016 VT 22 (filed February 12, 2016)

REIBER, C.J.This interlocutory appeal requires us to examine the contours of the "stream-of-commerce" doctrine of personal jurisdiction, which was introduced by the U.S. Supreme Court in a 1980 decision but later divided the Court with respect to its scope. Defendant Total Petrochemicals & Refining USA, Inc. (TPRI) challenges a decision of the superior court, civil division, denying its motion to dismiss for lack of personal jurisdiction, a complaint alleging that TPRI, along with twenty-eight other defendants, contaminated the waters of the state by introducing into those waters a gas additive called methyl tertiary butyl ether (MTBE). We affirm.

The superior court "has discretion to decide a pretrial motion to dismiss for lack of personal jurisdiction on the basis of affidavits alone, to permit discovery, and to conduct an evidentiary hearing." Godino v. Cleanthes, 163 Vt. 237, 239, 656 A.2d 991, 992 (1995). If, as in this case, "a court chooses to rule on a motion to dismiss for lack of personal jurisdiction on the basis of affidavits alone, the party opposing [the] motion need make only a prima facie showing of jurisdiction, or, in other words, demonstrate facts which would support a finding of jurisdiction." Id. The nonmoving party's prima facie showing must go beyond the pleadings and rely upon specific facts set forth in the record. Schwartz v. Frankenhoff, 169 Vt. 287, 295, 733 A.2d 74, 81 (1999). "In assessing the submitted materials, the [trial] court eschews fact finding and simply accepts properly supported proffers of evidence as true and rules on the jurisdictional question as a matter of law." Id.

The crux of TPRI's argument on appeal is that recent controlling U.S. Supreme Court case law-specifically J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 1058, 131 S. Ct. 2780 (2011) and Walden v. Fiore, ___ U.S. ___, 134 S. Ct. 1115 (2014)-preclude Vermont courts from exercising personal jurisdiction over it in this case. According to TPRI, those cases stand for the propositions, respectively, that a defendant cannot be subjected to personal jurisdiction based on either the mere foreseeability that its product will end up in the subject forum or the unilateral conduct of third parties. We conclude that the governing law permits the exercise of personal jurisdiction in Vermont under the circumstances of this case.

Although "`foreseeability'" alone has never been a sufficient benchmark for personal jurisdiction under the Due Process Clause," it is not "wholly irrelevant." World-Wide Volkswagen, 444 U.S. at 295, 297. "[T]he foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State," but rather "that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." Id. at 297. Therefore, "[t]he forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State." World-Wide Volkswagen, 444 U.S. at 297-98

World-Wide Volkswagen's stream-of-commerce analysis is the governing law on the stream-of-commerce doctrine, given the failure of the competing factions on the U.S. Supreme Court since that decision to garner a majority of votes to limit or expand the doctrine. Accordingly, we reject TPRI's argument that both the plurality and concurring opinions in McIntyre preclude the exercise of personal jurisdiction over a defendant based solely on the defendant's introduction of its product into a national distribution system aimed at bringing the product into the forum state among others. Given the facts of this case as they have been developed thus far, we conclude that the superior court did not err in denying TPRI's motion to dismiss for lack of personal jurisdiction.