A question that often arises in litigation practice is: where do we file suit? We often have a choice of federal or state court. To sue in federal court, one needs either a federal question or diversity jurisdiction. Federal courts have diversity jurisdiction where there is $75,000.00 or more in controversy and the parties are citizens of different states. In JTH Tax Inc. v. Frashier, decided on November 10, 2010, the United States Court of Appeals for the Fourth Circuit issued a decision regarding the amount in controversy for the purposes of diversity jurisdiction under 28 U.S.C. Section 1332(a). In the case, Plaintiff JTH Tax had originally sued a former franchisee in the United States District Court for the Eastern District of Virginia for $80,000.00, and for an injunction for breaches of contract arising out of a franchise agreement including breaches of non-compete obligations. Later, the Plaintiff filed documents with the court showing that its actual monetary damages were only approximately $60,000.00. The District Court dismissed the case on its own motion due to its determination that the amount in controversy was conclusively less than $75,000.00. The Fourth Circuit reversed, holding that District Courts could only dismiss in such cases where there was “legal certainty” that the amount in controversy was less than $75,000.00. The Court found many ways that the controversy could be valued in excess of $75,000.00 even where money damages were only $60,000.00. One such way was to value the injunctive relief sought.
A copy of the full opinion is here.
Showing posts with label Litigation. Show all posts
Showing posts with label Litigation. Show all posts
Sunday, November 14, 2010
Wednesday, July 18, 2007
Interesting Defense Issues Under the Maryland Anti-Spam Statute - MCEMA - Excessive Statutory Damages
Another interesting legal issue yet to be decided under the Maryland Anti-Spam Act, MCEMA, is whether the statute’s damages provision is enforceable in light of the “due process” clause of the Fourteenth Amendment to the United States Constitution. The due process clause of the Fourteenth Amendment provides that: “Nor shall any State deprive any person of life, liberty, or property, without due process of law.”
MCEMA Section 14-3003, fixes statutory damages at $1,000.00 per electronic mail received by an interactive service provider, and $500.00 per electronic mail received by an ordinary recipient. Maryland law recognizes “that a defendant also enjoys an additional constitutional right, under the Due Process Clause of the Fourteenth Amendment, not to be subjected to an excessive punitive damages award.” Darcars Motors of Silver Spring, Inc. v. Borzym, 818 Md.App. 1159, 1186 (2003), citing, inter alia, BMW of North America v. Gore, 517 U.S. 559, 116 S.Ct. 1589 (1996).
The United States Supreme Court in the BMW v. Gore case held that the “guide posts” for considering the constitutionality of punitive damages under the 14th Amendment include an assessment of “(1) the degree of reprehensibility of the defendant's misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the award imposed in comparable cases.” Considering those “guide-posts” in some cases under MCEMA, the “degree of reprehensibility,” is fairly benign. Plaintiffs often contend that a defendant merely assisted in the transmission of unsolicited electronic mail – not particularly outrageous conduct warranting extremely harsh punishment. Reviewing the “disparity of actual harm when compared to the potential punitive damage award” as required by Gore shows a complete lack of relationship between actual harm and the punitive award. That is, MCEMA does not require any showing of actual harm suffered by anyone.
The Gore “comparable cases” component is instructive in showing how outrageously excessive the damages award can be in cases under MCEMA. Under Maryland Code Annotated Criminal Law Section 3-805.1(e)(2), the Attorney General is allowed to bring a civil action in cases of unsolicited commercial electronic mail and can claim only between $2.00 and $8.00 per electronic mail received by the “victim” of such electronic mail. Even under CAN-SPAM which, as shown in the preceding post has been held to preempt state statutes similar to MCEMA, the damages allowed are far more limited than the damages authorized under the Maryland Act. Under CAN-SPAM, 15 U.S.C. §7706(g), if an “Internet access service” brings a civil action, it may seek only actual damages, or $250.00 per e-mail that has false or misleading header or “from” line information, and $25.00 per e-mail that otherwise violates that Act (including e-mail that has a misleading “subject” line). The Act then allows for “aggravated” damages (of up to three (3) times the statutory damages ($750.00 or $75.00) depending on the character of the e-mail), and for the reduction of damages under certain circumstances.
Remarkably, under well settled Maryland law, a victim of an accident caused by a drunk driver cannot obtain punitive damages without proof of the specific intent to injure the particular individual who is injured. See, e.g. Owens-Illinois, Inc. v. Zenobia, 325 Md. 420, 450-463, 601 A.2d 633, 647-654 (1992) (overruling a long line of cases which, in certain ill-defined types of tort actions, permitted the recovery of punitive damages on an "implied malice" basis). Under MCEMA, however, an entity that provides assistance in the transmission of electronic mail, whether or not it has actual knowledge of the electronic mail or its destination in Maryland, is exposed to being hauled into Court in Maryland to face severe punitive damages whether or not there are actual damages suffered by anyone.
Because MCEMA may subject out-of-state persons and entities to these damages, without any requirement that those persons knew they were sending mail into Maryland or even any requirement of actual damages, MCEMA defendants should argue that MCEMA violates the due process clause of the 14th Amendment, rendering its enforcement unconstitutional.
MCEMA Section 14-3003, fixes statutory damages at $1,000.00 per electronic mail received by an interactive service provider, and $500.00 per electronic mail received by an ordinary recipient. Maryland law recognizes “that a defendant also enjoys an additional constitutional right, under the Due Process Clause of the Fourteenth Amendment, not to be subjected to an excessive punitive damages award.” Darcars Motors of Silver Spring, Inc. v. Borzym, 818 Md.App. 1159, 1186 (2003), citing, inter alia, BMW of North America v. Gore, 517 U.S. 559, 116 S.Ct. 1589 (1996).
The United States Supreme Court in the BMW v. Gore case held that the “guide posts” for considering the constitutionality of punitive damages under the 14th Amendment include an assessment of “(1) the degree of reprehensibility of the defendant's misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the award imposed in comparable cases.” Considering those “guide-posts” in some cases under MCEMA, the “degree of reprehensibility,” is fairly benign. Plaintiffs often contend that a defendant merely assisted in the transmission of unsolicited electronic mail – not particularly outrageous conduct warranting extremely harsh punishment. Reviewing the “disparity of actual harm when compared to the potential punitive damage award” as required by Gore shows a complete lack of relationship between actual harm and the punitive award. That is, MCEMA does not require any showing of actual harm suffered by anyone.
The Gore “comparable cases” component is instructive in showing how outrageously excessive the damages award can be in cases under MCEMA. Under Maryland Code Annotated Criminal Law Section 3-805.1(e)(2), the Attorney General is allowed to bring a civil action in cases of unsolicited commercial electronic mail and can claim only between $2.00 and $8.00 per electronic mail received by the “victim” of such electronic mail. Even under CAN-SPAM which, as shown in the preceding post has been held to preempt state statutes similar to MCEMA, the damages allowed are far more limited than the damages authorized under the Maryland Act. Under CAN-SPAM, 15 U.S.C. §7706(g), if an “Internet access service” brings a civil action, it may seek only actual damages, or $250.00 per e-mail that has false or misleading header or “from” line information, and $25.00 per e-mail that otherwise violates that Act (including e-mail that has a misleading “subject” line). The Act then allows for “aggravated” damages (of up to three (3) times the statutory damages ($750.00 or $75.00) depending on the character of the e-mail), and for the reduction of damages under certain circumstances.
Remarkably, under well settled Maryland law, a victim of an accident caused by a drunk driver cannot obtain punitive damages without proof of the specific intent to injure the particular individual who is injured. See, e.g. Owens-Illinois, Inc. v. Zenobia, 325 Md. 420, 450-463, 601 A.2d 633, 647-654 (1992) (overruling a long line of cases which, in certain ill-defined types of tort actions, permitted the recovery of punitive damages on an "implied malice" basis). Under MCEMA, however, an entity that provides assistance in the transmission of electronic mail, whether or not it has actual knowledge of the electronic mail or its destination in Maryland, is exposed to being hauled into Court in Maryland to face severe punitive damages whether or not there are actual damages suffered by anyone.
Because MCEMA may subject out-of-state persons and entities to these damages, without any requirement that those persons knew they were sending mail into Maryland or even any requirement of actual damages, MCEMA defendants should argue that MCEMA violates the due process clause of the 14th Amendment, rendering its enforcement unconstitutional.
Tuesday, July 17, 2007
Interesting Defense Issues Under the Maryland Anti-Spam Act - MCEMA - CAN-SPAM's Preemption of State Anti-Spam Statutes
One of my practice areas is the defense of cases brought under the Maryland Anti-Spam Act (“MCEMA”) and the Federal statute known as CAN-SPAM. I have represented companies involved in online marketing that have unwittingly become caught-up in these cases. These cases are very interesting and because they are relatively new, there is a lot of uncertainty as to the status of the law on many issues affecting their outcome.
I am currently before the United States District Court for the District of Maryland arguing that the MCEMA is preempted by CAN-SPAM. CAN-SPAM on its face states that it “supersedes any statute, regulation, or rule of a State or political subdivision of a State that expressly regulates the use of electronic mail to send commercial messages, except to the extent any such statute, regulation, or rules prohibits falsity or deception in any portion of a commercial mail message or information attached thereto." CAN-SPAM, 15 U.S.C. § 7707(b)(1).
MCEMA broadly regulates electronic mail that has the “capacity” or “tendency” to deceive. As a result, we are arguing on behalf of our clients that MCEMA regulates e-mail that may not contain any false information and it regulates e-mail that is not actually deceptive.
By regulating e-mail beyond the very limited exemption in the CAN-SPAM, the Maryland legislature crossed the line into preempted territory. If the legislature had simply written the Act to prohibit e-mail that is actually false or deceptive, mirroring the language in the Federal Act’s exemption, it could have remained on its side of the line.
In a 2006 case, Omega World Travel, Inc. v. Mummagraphics, Inc., 469 F.3d 348 (4th Cir. 2006), the United States Court of Appeals for the Fourth Circuit held that the Oklahoma anti-spam act at issue in that case was preempted by CAN-SPAM. Our position is that like the Oklahoma statute, MCEMA should similarly be deemed to be preempted by application of CAN-SPAM.
Other defendants in the case have already raised the preemption argument without success. It remains to be seen, however, how the Court will resolve the issue in regard to my clients. Moreover, the case would present very interesting issues for appeal, as the Fourth Circuit has already ruled that a statute similar to the MCEMA is preempted.
Monday, July 16, 2007
Appellate Victory - Real Estate Breach of Contract Case
The next post shows the importance of a fee-shifting clause. This time, in the context of a standard real estate sales contract.
Recently we were hired by a local home seller who was frustrated when the couple purchasing his home refused to go to closing. The purchasers contended that they had not received the Home Owners Association Disclosure Documents (“HOA Documents”) to which they were entitled under Maryland Law. After investigating the matter, we learned the purchasers’ real estate agent had previously told the seller’s real estate agent that he had in fact received the HOA Documents.
We demanded that the purchasers go to closing. The purchasers refused. After some time, the seller re-sold his home, but he suffered a loss due to a downturn in the real estate market. He also had incurred carrying-costs during the months that had passed between his original closing date and the date that he sold to the subsequent purchasers. The total of his damages was approximately $20,000.00.
Eventually, the case was tried before a jury in the Circuit Court for Montgomery County, Maryland. The jury found that the purchasers’ real estate agent had received the HOA Documents on behalf of the purchasers, and awarded our client just under $20,000.00 in damages. After trial, we submitted a petition for payment of our attorneys' fees, and the purchasers were found liable for approximately $17,000.00 in legal fees incurred by our client.
The purchasers then appealed the jury’s verdict to the Court of Special Appeals of Maryland. The Court of Special Appeals affirmed the jury verdict, finding that the purchasers had waived most of their appellate arguments, and also finding that a real estate agent’s receipt of documents constituted receipt of those documents by his clients.
We demanded that the purchasers go to closing. The purchasers refused. After some time, the seller re-sold his home, but he suffered a loss due to a downturn in the real estate market. He also had incurred carrying-costs during the months that had passed between his original closing date and the date that he sold to the subsequent purchasers. The total of his damages was approximately $20,000.00.
Eventually, the case was tried before a jury in the Circuit Court for Montgomery County, Maryland. The jury found that the purchasers’ real estate agent had received the HOA Documents on behalf of the purchasers, and awarded our client just under $20,000.00 in damages. After trial, we submitted a petition for payment of our attorneys' fees, and the purchasers were found liable for approximately $17,000.00 in legal fees incurred by our client.
The purchasers then appealed the jury’s verdict to the Court of Special Appeals of Maryland. The Court of Special Appeals affirmed the jury verdict, finding that the purchasers had waived most of their appellate arguments, and also finding that a real estate agent’s receipt of documents constituted receipt of those documents by his clients.
Once the case returned to the Circuit Court, we claimed entitlement to reimbursement of our client's attorneys fees incurred during the course of the appeal. The Purchasers settled, paying out an additional $12,000.00 in legal fees. All tolled, our client collected all of his legal fees and all of the damages awarded by the jury. Without the fee-shifting clause, the case may not have been worth litigating.
A copy of the unreported opinion can be viewed as a PDF document here: Click Here for the PDF File
A copy of the unreported opinion can be viewed as a PDF document here: Click Here for the PDF File
Friday, July 13, 2007
How Not to Answer Questions at Deposition
This is an article previously posted on my website: www.slglaw.com or www.rockvillelaw.com.
In the article, I have written about a recent deposition taken in a civil case arising from a dispute between one business owner (my client) against the other owner who had improperly used the company's funds for his own benefit with his co-owner's permission.
The deposition became "colorful" when the witness was confronted with the checks that he had written to his own creditors out of the business' bank account.
Enjoy!
HOW NOT TO ANSWER QUESTIONS AT A DEPOSITION
In our litigation practice one of the most important tools we have at our disposal is the deposition. In a deposition, we are able to ask questions of parties to the proceeding, and other witnesses. The question and answer session is transcribed by a court reporter. Prior to any of our clients having their depositions taken, we always insist on meeting with our client to discuss the “do’s” and “don’ts” of deposition testimony. One of those “don’ts” is: “don’t be argumentative and hostile to the lawyer asking you the questions;” another is “don’t use profanity.”
What follows is an excerpt from a recent deposition that illustrates how NOT to answer questions in a deposition.
Q. Why didn't you just pay [your lawyer] out of your own personal bank account?
A. Because I didn't see a need to.
Q. I'm showing you what's been marked as Exhibit Number 6 to this deposition.
[The document was a photocopy of a business check written by the witness to one of his personal creditors.]
Can you tell me what that is?
[The answer could have been as simple as “a copy of a check.”]
A. That is an installment loan from the business to Suntrust Bank, endorsed by me on the -- on the 12th 19-05, basically further saying that since the business wasn't making any money, I could pay some personal payments.
[Remember - the document he was to identify was a copy of a check.]
Q. Okay. That's a check that you wrote and you signed off the company's account to pay a debt that you had with Suntrust Bank, correct?
COUNSEL FOR DEFENDANT: I'm going to object. I think he's just answered. He said it was a business loan.
COUNSEL FOR PLAINTIFF: He wasn't answering in a language that I understand.
BY COUNSEL FOR PLAINTIFF:
Q. Well, that check is not an installment loan, correct?
COUNSEL FOR DEFENDANT: You're asking him is this check an installment loan?
COUNSEL FOR PLAINTIFF: You know, whatever anybody else thinks of anybody in this room, I asked what that document is and the gentleman said it's an installment loan.
COUNSEL FOR PLAINTIFF: You know, whatever anybody else thinks of anybody in this room, I asked what that document is and the gentleman said it's an installment loan.
THE WITNESS: That's right.
BY COUNSEL FOR PLAINTIFF:
BY COUNSEL FOR PLAINTIFF:
Q. It's a check, right? It's a copy of a check?
A. I don't know where you're going, my friend, but, yeah, it's a *%@ing check.
[It’s not usually a good idea to use profanity on the record at a deposition]
Q. Right.
A. What is wrong with you?
[The witness is being argumentative and hostile]
Q. That's why it's an easy question to answer.
A . That's what I said. I answered. It's a check.
Q. You said it's an installment loan.
A. It's a check for an installment loan. That's what I said.
Q. Now, and you wrote it.
A. *%@ing moron.
[This is additional profanity and a personal attack on counsel: that is never appropriate at a deposition]
COUNSEL FOR DEFENDANT: Hey, watch your language.
A. I don't know where you're going, my friend, but, yeah, it's a *%@ing check.
[It’s not usually a good idea to use profanity on the record at a deposition]
Q. Right.
A. What is wrong with you?
[The witness is being argumentative and hostile]
Q. That's why it's an easy question to answer.
A . That's what I said. I answered. It's a check.
Q. You said it's an installment loan.
A. It's a check for an installment loan. That's what I said.
Q. Now, and you wrote it.
A. *%@ing moron.
[This is additional profanity and a personal attack on counsel: that is never appropriate at a deposition]
COUNSEL FOR DEFENDANT: Hey, watch your language.
BY COUNSEL FOR PLAINTIFF:
Q. You wrote it, correct?
A. Yes, I did.
Q. And you signed it?
A. I did.
Q. And you paid one of your creditors with that money?
A. Absolutely, with pleasure.
In this excerpt, a witness was being asked a simple question: to identify a document being shown him at the deposition. The document was a check written by the witness from a corporate bank account to pay his personal expenses. One can infer that because the witness felt “caught” by the question, he answered evasively, and then directed his defensiveness at the lawyer asking him the questions by using profanity.
Because deposition transcripts are routinely used in court filings, for impeachment at trial, and for other purposes, it is not appropriate to turn a deposition into an argument, particularly an argument laden with profanity.
RockvilleLaw First Blog
This is the first Blog entry of Jeffrey D. Goldstein at RockvilleLaw. Jeffrey D. Goldstein is an attorney practicing with the law firm of Smith, Lease & Goldstein, LLC in, (surprise) Rockville, Maryland. We are findable on the web at www.slglaw.com or www.rockvillelaw.com.
On this RockvilleLaw Blog, I will strive to provide useful and interesting information related to my law practice which includes civil litigation of real estate, construction, collection, corporate, commercial and residential landlord/tenant and many other matters.
In addition to representing individuals and companies in varied litigation, a large part of my practice is serving as outside general counsel to a number of local businesses.
My business clients include companies that:
Provide web-hosting, network administration and Internet related services;
Develop Alternative Education programs for state and local governments;
Provide design, printing, and duplication services;
Enagage in transportation planning for state and local governments;
Are government contractors providing networking, cabling, and software development services;
Organize trade shows throughout the country;
Provide fire and water restoration services;
Construct home improvements and build new construction;
Own and operate automotive dismantling and recycling centers;
Provide real estate title services; and
Manage residential properties.
However you have made it to this Blog, thank you for taking the time to read this. I hope to post some interesting topics, or at least topics that are interesting to me.
Jeff Goldstein
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