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Archive for the tag “damages”

The Secret Defense to Debt Collection Matters

Unfortunately, many people find themselves in a situation where they get behind on paying their bills and, due to lack of funds, wind up not paying some of them.  Not paying one’s bills will more often than not result in that debt being sold to a collections agency and that agency suing the debtor for payment (and adding on all kinds of things, like interest, attorney’s fees, penalties and the like to boot).

Selling one’s debt to a collection agency is an important step in the process that directly affects the subsequent lawsuit against the debtor.  Typically, large lenders – especially lenders like credit cards companies – have a fair amount of debtors who stop paying (for whatever reason) on the debt owed to the lender which results in their debts being sent to collections.  When these lenders send debts to collections, they do so by selling the debts to a collection agency.  When they sell the debts to a collection agency, they will often sell the debts in bulk, often for pennies on the dollar.  The transaction benefits the creditor as it gets something for the debts owed without having to pursue costly and time consuming litigation.  The transaction benefits the collection agency because it can pursue collection (including law suit) against a debtor for the full amount despite having bought the debt for far less than its principal value, let alone its value inflated by interest and such.

More often than not, when debts are sold to collection agencies, the initial creditor (e.g.: a credit card company) simply provides an affidavit to the collection agency regarding the amount of the debts and the names of those who owe the debts.  Typically, no other document is supplied by the initial creditor to the collection agency, including any contracts with the debtor or anything bearing the signature on the debtor.  Once the collection agency assumes the debt, it has the right to bring suit against the debtor for the unpaid debt.

The lack of documentation of the contract with the debtor is absolutely key to any defense to the collection of the debt.  If the creditor brings suit against the debtor in the Court of Common Pleas and does not attach the contract between the debtor and the creditor which underlies the alleged debt, the debtor can file objections to the complaint (the document which initiates the law suit) asking for it to be dismissed due to the lack of a contract.  I can say, from personal experience, that such a tactic works as, very often, the collection agency pursing the debtor simply does not have the underlying contractual documentation to prove its case against the debtor.

If the case is brought in small claims court, the creditor does not have the obligation to include a copy of the contract to the complaint, so successfully defending against a collections law suit takes some shrewd strategy.  The lack of documentary evidence is still a huge problem for the creditor, but the small claims aspect of this matter makes the approach different and much trickier.  As the complaint does not require the contract to be appended to it, and the primary place for these matters to be resolved is at a hearing before a judge, the creditor has the procedural advantage.  At the hearing, the collection agency, armed with an affidavit from the initial creditor (as described above), secures almost all of the other evidence it needs to win against the debtor through the debtor’s testimony.

Here is how the hearing would play out: the creditor describes the claim to the judge, which is that the debtor had a contract with a credit card company (for example), he did not pay the debt owed, and is now in collections and all of this is supported by the affidavit.  Now, the affidavit, taken alone, is insufficient to win the case as there is no evidence that the debtor actually contracted with the creditor.  So, at the appropriate time during the trial, the creditor will ask the debtor some questions (i.e.: cross-examination).  These questions will be something like: “did you have a credit card from XYZ company on these dates”?  “Did you make charges on it?” “Did you make all the payments on it?”  “Do you owe $XYZ on the credit card?” And other questions like it.  At the end of the examination, the debtor himself provides all of the evidence against himself that the creditor needs to win the case against him.   As a result, the creditor will win the case against the debtor thanks to the debtor supplying all of the evidence, via his testimony, need by the creditor.

So, how does a debtor avoid the fate of the debtor in the above scenario?  That is where a good lawyer comes into play.

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Limiting Legal Malpractice Claims: Applying the Glenbrook Analysis

The statue of limitations for a legal malpractice action in Pennsylvania is two years from the date of the malpractice; however that time period may be extended under certain circumstances.  In Glenbrook Leasing Co. v. Beausang, 839 A.2d 437 (Pa. Super. 2003), affirmed, 881 A.2d 1266 (Pa. 2005), the Pennsylvania Superior Court explored the viability of various ways to potentially extend that two year period.

Plaintiff in Glenbrook is a real estate partnership which purchased office space in a condominium development to be used as medical offices.  The agreement of sale for the office space included language granting Plaintiff use (and alleged ownership) of 35 parking spaces.  Nothing was placed in the deed regarding Plaintiff’s ownership of the aforesaid parking spaces.

About six years later, the condominium association took action to limit Plaintiff’s use of the aforesaid 35 parking spaces.  Unsurprisingly, a dispute arose between Plaintiff and the condominium association regarding the ownership and use of the parking spaces, which eventually evolved into litigation.  The litigation culminated in a ruling in favor of the condominium association.  The ruling was based on the merger doctrine, which generally states that any guarantee to be granted in a real estate transaction must be stated in the deed to the subject property.  As applied to the instant matter, Plaintiff was considered not to have any ownership rights over the parking spaces as they were not memorialized in the deed to the property.

When the initial real estate transaction took place, Plaintiff was represented by Defendant, a real estate law firm.  Plaintiff believed that its loss in the litigation against the condominium association, and the resulting loss of the 35 parking spaces, was a direct result of the legal malpractice of Defendant in failing to take into consideration the merger doctrine, and by failing to include language regarding the parking spaces in the deed to the property at issue.  About a year after the conclusion of the litigation against the condominium association, and about six years after the association first presented the issues regarding the deed, and its lack of language dealing with the parking spaces to Plaintiff, the company brought suit against Defendant law firm, claiming it committed legal malpractice.

Defendant ultimately filed a motion for summary judgement, claiming that Plaintiff brought suit far beyond the two year statute of limitations.  The trial court ruled in favor of Defendant.  On appeal, the Superior Court affirmed the trial court’s ruling, and the Supreme Court issued a per curiam order affirming the Superior Court’s ruling.  It is the Superior Court’s opinion that is the subject of this article.

While the statue of limitation in a legal malpractice claim is two years, that period can be extended via the equitable discovery rule which sates that the two years is initiated not at the occurrence of the malpractice, but when it was, or should have been, discovered.  The Court ruled that Plaintiff discovered, or should have discovered, that there may have been legal malpractice six years before it initiated suit against Defendant (or four years longer than the two year statute allows) when the dispute with the condominium association first arose.

Plaintiff then argued that the Court should apply the “continuous representation rule” which states that the limitations period would not begin to run until plaintiff terminated Defendant’s services.  The Court was unmoved by Plaintiff’s argument to extend the legal malpractice statute of limitations based on the continuous representation rule.  The Court noted that the rule was not the law of Pennsylvania (although it is in other jurisdictions) and it is not the place of the Superior Court to adopt new rules without authority to do so.

Plaintiff next argued that the limitations period should be extended through estoppel, asserting that the “special relationship” between a lawyer and his client lulled Plaintiff into a false sense of security, through fraud, or deception, or concealment, to trust Defendant beyond when it would have been prudent to do so.  This sort of argument has traction among physicians and patients and Plaintiff attempted here to apply it to attorneys and clients.  The Court rejected this argument as well, as it found Defendant was completely candid with Plaintiff regarding the claims made by the condominium association, including providing Plaintiff with the first allegation of their own malpractice nearly six years prior to Plaintiff’s bringing suit.

Finally, Plaintiff argued that the question of precisely when it discovered the malpractice is a question of fact that should have been decided by a jury, not via a motion for summary judgement.  The Court rejected this argument as well, ruling that the facts in this matter were abundantly clear as to when Plaintiff discovered the malpractice.

The statute of limitations is critical to be aware of when considering bringing suit.  Although the Court made a variety of rulings, as described above, it is significant and useful in that it lays out some guidelines as to how to apply the various means to extend the statute of limitations and notably refuses to adopt and apply the continuous representation rule.

Originally published in Upon Further Review on September 24, 2015 and can be seen here.

Local Ice Rink Tries to Put Law Suits on Ice

My nephew recently had a birthday and, because he is an avid ice hockey player, he chose to celebrate it at a local ice rink.  Before I get to the meat of this post let me say that I had not ice skated in at least ten years before that party and I was seriously out of practice!  By the end of the party I felt I was back to some semblance of respectability, but my back, ankles, and knees are clearly not as young as they once were.

Anyway, the ice rink facility the party was held at is very large and well equipped for such a party.  The facility is so large that there are two ice rinks separated by a common area for eating and lacing up one’s skates.  Next to one of the rinks are a series of smaller rooms where people gather for the parties that are held.  As one may expect from a kid’s party, much pizza, cake, and Coca-Cola are consumed in these rooms.

Part of the party process requires anyone intending to participate in ice skating to receive a sticker which identifies him/her as a guest of a party.  The sticker is a white paper with the name of the party on a piece of wax paper.  The person who receives the sticker peels off the sticker from the wax paper and puts the sticker on his or her shirt as identification on the ice rink.

All seemed rather typical to me for such a party until I noticed something peculiar.  While I was enjoying a slice of pizza, one of the kids at the party peeled off his sticker from its wax paper backing and threw the wax paper onto the table in front of me.  I glanced down at the wax paper and noticed that it was covered with text.  Curiosity got the best of me, so I picked up the wax paper and read all of the text written on it, which read as follows:

WAIVER OF LIABILITY

ASSUMPTION OF RISK:

I am aware that ice skating, hockey and/or broomball activities involve inherent risks dangers and hazards which can result in serious personal injury or death.  I am also aware that the ice skating rinks and arenas contain dangers that can cause serious injury or death.  I hereby freely agree to assume and accept all known and unknown risks of injury arising out of ice skating, hockey and/or broomball activities.  I recognize and acknowledge that risks of ice skating, hockey and/or broomball can be greatly reduced by: taking lessons, abiding by the Responsibility Code and using common sense.

RELEASE AND WAIVER OF CLAIMS AGREEMENT:

For allowing m e to participate in public skating, hockey and/or broomball activites at the [ice rink], I agree to the fullest extent permitted by law, as follows: 1) TO WAIVE ALL CLAIMS that I have or may have against the [ice rink] and its owners and affiliates, arising out of public skating, hockey and/or broomball.  2) TO RELEASE the [ice rink] and its owners and affiliates from all liability for any loss, damage, injury or expense that I (o my next of kin, parent, guardian estate) may suffer, arising out of ice skating, hockey and/or broomball activities from any cause whatsoever including negligence or breach of contract on the part of the [ice rink] in the operation, supervision, design or maintenance of its facility.

So, basically, on the back of the wax paper for the identification sticker was a rather detailed waiver which protects the ice rink from all liability for injuries sustained there.  When I saw this, I instantly knew I had to write a blog on it because this waiver seemed so ridiculous to me.

I find this waiver to be of dubious enforceability.  Waivers must be accepted knowingly.  The identification stickers are merely provided by the ice rink to the person in charge of the party who then distributes them to the people at the party.  No one at the ice rink indicated that a waiver of liability is written on the back of the stickers.  Furthermore, the waiver is written on what is ostensibly trash.  The people there had no idea that the back of the stickers had text on them, let alone something as vitally important as a waiver of liability.  Instead, the people at the party – as one may expect – simply peeled off the stickers from the wax paper and threw out the wax paper.  I would have never noticed it myself had the kid at my table not, by chance, tossed his trash in front of me.  In addition, the waiver of liability is received after the contract was formed and payment was made for the use of the ice rink.  So, no consideration was exchanged for the waiver.  A waiver cannot simply be thrust onto someone after the contract was formed and payment made.  Even if it could be argued that there was consideration for the waiver between the ice rink and the person who paid for the party, there was certainly no consideration between the ice rink and a guest of the party.

A waiver of this sort is basically an exculpatory clause.  When it comes to exculpatory clauses, they are to “be strictly construed with every intendment against the party seeking their protection.” Phillips Home Furnishings v. Continental Bank, 231 Pa. Super. 174 (1974) citing Kotwasinksi v. Rasner, 436 Pa. 32 (1969). Furthermore, an exculpatory clause will not be valid if there is a disproportionate bargaining power between the parties to the contract at issue. Id. citing Hennigsen v. Bloomfield Motors, Inc., 161 A. 2d 69 (NJ, 1960).  In addition, an exculpatory clause that a Court is unwilling to enforce is where the terms of a contract are unwilling to be altered by its maker.  In other words, a contract where the other party (i.e.: not the drafter of the contract) “has no bargaining power and must accept [the] terms” presented to him and is “powerless to alter” them, with rejection of the contract as the only alternative to executing the contract.  There is no meeting of the minds in this sort of contract negotiation. Galligan v. Arovitch, 421 Pa. 301 (1966).  In addition to the relationship of the parties to a contract, the Court also analyzes whether a party to a contract were “aware of and understood the terms of the release before his agreement can be deemed a particularized expression of the intent to assume risk.” Wang v. Whitetail Mountain Resort, 933 A.2d 110 (Pa.Super., 2007) citing Chepkevich v. Hidden Valley Resort, 911 A.2d 946 (Pa.Super.2006).  Finally, “[i]n determining whether a releasing party had such awareness and understanding, we consider: 1) the release’s placement in the document; 2) the size of the release’s print; and, 3) whether the release is highlighted in some fashion.” Id.,citing Beck-Hummel v. Ski Shawnee, Inc., 902 A.2d 1266, 1269 (Pa.Super.2006)

Based on the above, I think it is pretty clear that the language located on the back of the sticker is problematic. The contract relationship is obviously imbalanced.  A person seeking admission to the ice rink has no choice but to accept the exculpatory clause else he cannot gain access.  Further, the exculpatory clause is printed on what amounts to a piece of trash.  The guest cannot bargain and negotiate with the person at the ice rink’s office about the terms of the clause and try to change them.  In fact the person at the office likely has no authority at all to act on the ice rink’s behalf in order to change or alter the language on the sticker even if he wanted to do it.  So, obviously, there is a “take-it-or-leave-it” aspect to the sticker.  In terms of whether the recipient of the sticker was aware of and understood the terms of the exculpatory clause, I think even the average observer can see that there is likely no awareness of this clause, let along comprehension, at the time of entry into the rink.  Who reads what is basically trash?  No one gets the language mentioned or explained by the person at the ice rink’s office.  I would guess that the person at the office has likely never read it either or knows what it means.  What non-lawyer knows what an exculpatory clause is or how it works and how it could effect him?  Remember, this is all in the context of a busy kids’ party and being handed a sticker for one’s shirt amid the hustle and bustle at an ice rink.  Who is taking the time to read the wax paper on the back of a sticker, let alone understand the technical legal jargon on it?

I wrote a similar post to this one a couple of summers ago about my trip to the Philadelphia Zoo.  The Zoo tries to do similar things as this ice rink, which is to sneak in an exculpatory clause on the back of an admission ticket after the ticket is purchased which means, therefore, there is no opportunity to read it at the time of purchase.  You can read more about that clause here.

So, suffice it to say, I think the inclusion of the exculpatory clause on the back of the ice rink’s identification sticker is pretty sneaky.  I do not think the clause is particularly enforceable and is of questionable legitimacy in contractual terms.

The Philadelphia Zoo Tries to Put Bars Around its Visitors

I just purchased a season pass to the Philadelphia Zoo last weekend.  We took a trip to the Zoo last year and my older son loved it and so we decided to try to go regularly this year as it is a nice place to be outside and do something and, for my son, a nice place to do something fairly interesting and educational that does not involve video games, death defying stunts, or tormenting his younger brother.  The fact that he spent an hour staring at a gorilla, which has sparked something of a gorilla obsession for him, is a little weird, but so be it; everyone has their “things”!  At least it led to an evening watching the original King Kong movie after our visit to the Zoo, which is one of my favorite movies.

My visit to the Zoo last weekend inspired this post because of very curious language I discovered on the back of my admission ticket when I got home.  The ticket to park at the Zoo had the normal disclaimers more-or-less about how the Zoo is not responsible for damage done to one’s car in the lot and that the ticket only entitles someone to park there in order to visit the Zoo for the day.  I did not find any of this language questionable or objectionable; indeed, I found it pretty typical.

The back of the admission ticket was what struck me.  The language on the back of the admission ticket says the following: “By accepting this ticket guest agrees to hold the Zoo and its employees harmless and waive any claim against the Zoo and its employees for bodily injury to guest or damage to guest’s property even if caused in whole or in part by the negligence of the Zoo or its employees.”

This language is very problematic in many ways.  Language like the above is commonly known as an “exculpatory clause” which, perhaps obviously, tries to exculpate one party from liability or guilt from certain actions or instances.

First of all, when it comes to exculpatory clauses, they are to “be strictly construed with every intendment against the party seeking their protection.” Phillips Home Furnishings v. Continental Bank, 231 Pa. Super. 174 (1974) citing Kotwasinksi v. Rasner, 436 Pa. 32 (1969). Furthermore, an exculpatory clause will not be valid if there is a disproportionate bargaining power between the parties to the contract at issue. Id. citing Hennigsen v. Bloomfield Motors, Inc., 161 A. 2d 69 (NJ, 1960).  In addition, an exculpatory clause that a Court is unwilling to enforce is where the terms of a contract are unwilling to be altered by its maker.  In other words, a contract where the other party (i.e.: not the drafter of the contract) “has no bargaining power and must accept [the] terms” presented to him and is “powerless to alter” them, with rejection of the contract as the only alternative to executing the contract.  There is no meeting of the minds in this sort of contract negotiation. Galligan v. Arovitch, 421 Pa. 301 (1966).  In addition to the relationship of the parties to a contract, the Court also analyzes whether a party to a contract were “aware of and understood the terms of the release before his agreement can be deemed a particularized expression of the intent to assume risk.” Wang v. Whitetail Mountain Resort, 933 A.2d 110 (Pa.Super., 2007) citing Chepkevich v. Hidden Valley Resort, 911 A.2d 946 (Pa.Super.2006).  Finally, “[i]n determining whether a releasing party had such awareness and understanding, we consider: 1) the release’s placement in the document; 2) the size of the release’s print; and, 3) whether the release is highlighted in some fashion.” Id.,citing Beck-Hummel v. Ski Shawnee, Inc., 902 A.2d 1266, 1269 (Pa.Super.2006)

Based on the above, I think it is pretty clear that the language located on the back of the Zoo’s admission ticket,  in very small print (albeit all in capitals), is problematic. The contract relationship is obviously imbalanced.  A person seeking admission to his local zoo has no choice but to accept the exculpatory clause else he cannot gain access.  Further, the exculpatory clause is printed on an existing ticket which is handed to the Zoo’s guest upon entry.  The guest cannot bargain and negotiate with the person at the Zoo’s ticket window about the terms of the clause and try to change them.  In fact the person at the ticket window likely has no authority at all to act on the Zoo’s behalf in order to change or alter the language on the ticket even if he wanted to do it.  So, obviously, there is a “take-it-or-leave-it” aspect to the admission ticket.  In terms of whether the recipient of the admission ticket was aware of and understood the terms of the exculpatory clause, I think even the average observer can see that there is likely no awareness of this clause, let along comprehension, at the time of purchase.  Who reads the ticket when it is handed to him?  Who gets the language mentioned or explained by the person at the ticket window?  I would guess that the person at the ticket window has likely never read it either or know what it means.  What non-lawyer knows what an exculpatory clause is or how it works and how it could effect him?  Remember, this is all in the context of waiting in a line with dozens of other people at a zoo ticket window with children (likely making some sort of ruckus) in the hot sun in the middle of the day.  Who is taking the time to read the ticket let alone understand the technical legal jargon on it?  Speaking as a parent, I am lucky to be able to receive the ticket from the window and cram it in my pocket in a reasonable way while in line let alone read it intelligently.

Second, even if none of the above applied, I think there are serious contractual issues at play.  The basics of a contract is that one party makes the offer of terms while another accepts them in consideration for some sort of exchange of goods and/or money.  The exchange of money for admission to the Zoo is a type of contract.  The Zoo is trying to append the exculpatory clause as a term of their offer of admission in exchange for one’s money.  The problem with that is that the exculpatory clause is not ever disclosed to the guest until after the transaction is made (i.e.: money for ticket) and once the transaction is made, the Zoo is clear that (from its website and the back of the admission ticket) “[a]ll ticket sales are final and may not be resold. No exchanges or refunds for any reason including inclement weather.”  The transaction for the ticket is as one may expect: the guest stands in long line outside (in whatever weather there is on a given day) with multiple other people (most of which have their share of rambunctious children including the guest purchasing the ticket) who, after shouting through a little porthole in a window with poor acoustics, receives tickets in exchange for money through a little slot at the bottom of the window.  The interaction between the guest and the ticket agent is one which merely involves inquiring into how many people (and their respective ages) for whom the guest would like admission tickets and the payment for the tickets.  It is not until after the tickets are purchased – for which there is no refund – that the guest learns that suddenly he has agreed to an exculpatory clause.  Therefore, this clause was not bargained for by the guest as he had no idea he was buying the clause along with his ticket as the small print on the back of the ticket is the only place where it exists and is communicated to the guest and that all takes place after a non-refundable purchase.  Indeed, not even the “tickets” portion of the Zoo’s website (seen here) has any mention of the exculpatory clause (though they are sure to make sure the reader knows that the purchase is non-refundable on the same page).  On the Zoo’s website, the exculpatory clause language is hidden on the “print tickets” page here, which is a page that one would not look at if purchasing tickets at the window (as I did).

One final note before I conclude.  Children under two years old require no ticket so I suppose one would presume that, even if enforceable, the exculpatory clause does not apply to them, which I find curious in itself.

So, suffice it to say, I think the inclusion of the exculpatory clause on the Zoo’s admission ticket is pretty sneaky and, if I may say so, pretty sleazy, especially considering it purports to exculpate its own negligence.  I do not think the clause is particularly enforceable and is of questionable legitimacy in contractual terms.

Losing Even Though You Win

Probably every practicing attorney has had to have a conversation with a client which goes something like this: “I know you’re “in the right” and would win your case, but is winning your case worth the cost to do so?”  Such counsel is a difficult pill for someone to swallow and sometimes an even more difficult pill to administer.

One of the reasons one hires an attorney is that an attorney can offer a dispassionate and objective view of a case that the party in the case may not have as a result of the emotional and personal ties he has to it.  Unfortunately, it costs money to pursue a case.  Anyone who has been quoted a retainer fee or has had to pay an attorney’s hourly rate will know just how expensive lawsuits can become.  This is true even for those litigants who hire an attorney on a contingency basis.  Sure, they may not have to pay a retainer fee but the potential damages they may receive may not make the investment into litigating the case worthwhile; for example, there is little financial sense for an attorney to sink $25,000 into a case which may only garner $10,000 in damages or, from the client’s perspective, the contingency fee, once deducted, makes the damages payable to the client less than his actual loss.

Many people look to the justice system honestly seeking justice, but people often view balancing the costs to pursue a case as an injustice in itself and, quite honestly, it is sometimes unjust.  For example, a person who has been truly wronged may seek justice in court in order to be made whole and remedy the loss/injury/damage caused by another.  Unfortunately, sometimes the cost to pursue that remedy is greater than the loss/injury/damage itself, which means pursuing the case will put that person in a worse position than the loss/injury/damage itself!

The reverse is also sometimes true.  Practically anyone can file a lawsuit for practically any reason against practically anyone; this is not to suggest that these law suits are legitimate or meritorious (they may not be), but that there is no gatekeeper at the start of a case to reject these sorts of cases.  Instead, parties who are perfectly “innocent” and/or without any shred of liability to the plaintiffs in these cases have to spend money to defend a completely meritless case.  There is little recourse against the plaintiffs of meritless cases.  Potential plaintiffs have a wide latitude to bring cases, especially because there is often no way of knowing whether a case is meritorious at its inception, and before discovery is conducted and evidence is produced, and, perhaps more importantly, the right to petition the government for redress is enshrined in the First Amendment of the U.S. Constitution and few restrictions are in place as a result.  Unless an “innocent” defendant can demonstrate that the plaintiff brought the case knowing it was meritless, or brought it negligently, for a vexatious purpose, and/or knowing the case was complete frivolous, an “innocent” defendant will have no redress against the plaintiff for bringing a meritless suit.  Of course, to add insult to injury, if there is potentially a claim against a plaintiff for abusing the legal system, a defendant will have to outlay money (either through a retainer fee or contingency fee) to pursue that claim.

Now, some people pursue claims “for the principle” and know going into a case that they will likely lose money even if they win the case when their winnings are compared to the money they had to outlay to pursue the claim.  People pursue these claims “on principle” because they view justice as not allowing someone else to “get away with” whatever it is he did.  This is certainly a choice someone can make, but in my experience in practice, very few people have the stamina to actually follow through with their crusade for principle when the costs begin to mount.

So, until there is some sort of fundamental change in the American legal system, parties to a law suit will have to expend money in some way to pursue a claim or defend a claim and, unfortunately, that may lead to a financial injustice of some sort.  When looking at the facts of a case in which one is or could be a party, please be sure to seriously consider the financial implications of the money that will have to be spent to pursue it and/or defend it.  It may not be just, and one’s attorney may be the person bearing the bad, but unfortunately, accurate news, but it is the reality of the legal system with which one must work in America at the moment and there is not much one can do about it when considering (or defending) a lawsuit!  No one wants to win a case but ultimately lose when all of the numbers are tallied up.

The Grounds for the Famous McDonald’s Coffee Case

Most people have heard of the 1994 case of the old woman spilling McDonald’s coffee in her lap, being severely burned in the process, suing McDonald’s over it, and securing millions of dollars after a verdict in her favor.  My law school career began in 1999 and, I must say, when non-lawyers speak to me about the law, this McDonald’s coffee case, often to the exclusion of all the famous, important, and significant cases that the Courts have heard over the years, decades, and centuries, is routinely mentioned, especially as some sort of lament over the perceived abuse of the legal system, and using tort law as a substitute for playing the lottery.

There is just so much misconception over this case that any conversation about it becomes a sort of deconstruction of previously held misconceptions – generally thanks to the media and widespread public perception – more than it is about the legal significance of the case.

Before reading this post and/or watching the video below, did you know:
(1) the coffee was heated 30 degrees hotter than a home brewer can heat coffee?

(2) the woman burned was not driving and her car had no available cup holders?

(3) the woman did not make millions but only about $600,000, much of which went to pay her very large medical bills?

(4) the woman suffered third degree burns?

(5) McDonald’s was aware of the fact that literally hundreds of people had been similarly burned by their coffee over the 10 year period prior to the famous 1994 case and took no action to make their coffee safer?

Once all of the facts are known, it becomes clear that this case is far from being the poster child of the abuse of the legal process and is hardly an example of people looking to “frivolous” tort cases to become overnight millionaires.

For a great look at the details of this case – and some photographs of the burns themselves – check out this video posted on upworthy.com:

You can find it here as well: http://www.upworthy.com/ever-hear-about-the-lady-that-spilled-coffee-on-herself-at-mcdonalds-then-sued-for-millions?g=2&c=ufb1

Also, here is the wiki page for the case which includes the official caption and citation and other details which may be interesting:  http://en.wikipedia.org/wiki/Stella_Liebeck

Hell’s Kitchen: Getting to the Meat of the Case

On July 18, 2011, the Superior Court of New Jersey issued a decision in the matter of Gupta, et al. v. Asha Enterprises, LLC et al., Docket No.: A-3059-09T2, in the context of a motion for summary judgment and its response. After hearing arguments and reviewing briefs, the Court affirmed in part and reversed in part the lower court’s decision and remanded the case accordingly.

Most legal remedies include various types of financial and equitable damages, such as liquidated, punitive, compensatory, and specific performance for a wide variety of claims, including breach of contract, physical and/or emotional injuries and defective products. By contrast, the Gupta case presents what seems to be a unique claim seeking an unusual remedy. The Plaintiffs in Gupta found themselves spiritually patronizing Hell’s Kitchen after a sort, having been served religiously inappropriate/impure food despite ordering the opposite. The Gupta case asks the Court to determine whether a spiritual injury is cognizable and, if so, what the remedy for that injury can be.

The Plaintiffs in Gupta were practicing Hindus, and were scrupulously and strictly vegetarian. For them, the consumption of meat, even if by accident, fraud, or deception, meant that their souls became impure, thereby adversely affecting their karma and dharma, and impairing their ability to meet the Divine after death. Their only spiritual remedy after the consumption of meat was to participate in a ritual cleansing bath in the Ganges River in India.

Plaintiffs patronized Defendants’ restaurant and ordered vegetarian samosas which were on the menu. Plaintiffs specifically informed Defendants that the samosas must be vegetarian. Employees of Defendants assured Plaintiffs that the samosas would be vegetarian because that was the only variety that they made. Indeed, the Director of Edison Division of Health Food Services later confirmed that Defendants maintained separate cooking facilities for vegetarian and non-vegetarian foods. After the samosas were prepared, Defendants provided them to Plaintiffs, reassuring them of their vegetarian nature, and labeled them accordingly on their tin-foil wrapping. Unfortunately for Plaintiffs, Defendants mixed up their order with a concurrently ordered meat samosas order. Plaintiffs consumed some of the meat samosas and returned them to Defendants, complaining that they were not what were ordered. Defendants immediately prepared a batch of vegetarian samosas for Plaintiffs, which they accepted and for which they were not charged. Due to Plaintiffs’ consumption of the meat samosas, they believed they experienced profound spiritual injuries.

Plaintiffs brought suit against Defendants raising the following claims: products liability, violation of the Consumer Fraud Act (“CFA”), negligence, breach of implied warranty, and deceptive/fraudulent advertising. I will relate how the Court addressed each of these claims below.

The Court measured Plaintiffs’ products liability claim against the requirements of New Jersey’s Products Liability Act (“PLA”) and the decisions thereunder. Per the terms of the PLA, any and all claims regarding a defective product are subsumed within it. Therefore, all of Plaintiffs’ claims for a defective product sounding in negligence, the CFA, or breach of implied warranty were all individually dismissed as being statutorily subsumed within the PLA. As a point of clarity, Plaintiffs brought claims sounding in negligence, the CFA, or breach of implied warranty that were not brought pursuant to an alleged defective product. These were not dismissed on based on the above, and are each addressed below.

The Court decided that the PLA is applicable to food cooked and sold by restaurants, such as Defendants’, but Plaintiffs’ claims were not cognizable under the PLA as the PLA requires the products sold – in this case samosas – to be defective. The Court pointed out that the meat samosas were not defective themselves, they were simply the wrong product. Accordingly, while the meat samosas were edible and fit for human consumption, they just were not what Plaintiffs ordered. Indeed, the Court noticed that Plaintiffs’ claims focused on the conduct of Defendants’ employees in supplying the order as opposed to any defect in the food itself.

The Court next addressed Plaintiffs’ claims that Defendants were in violation of the CFA because, they allege, Defendants fraudulently and/or deceptively advertised the sale of vegetarian food. The Court conducted an analysis of the CFA after which the Court concluded that a party could be liable under the CFA for misrepresentation in advertising even if the misrepresentation is inadvertent. As long as the statement is false – which in the case of food includes a false/misleading description of its contents – a party can be found liable under the CFA. As a result, as Defendants represented that the samosas were vegetarian when, in fact, they contained meat, the Court determined that Plaintiffs have a cognizable claim against the Defendants for fraudulent/deceptive advertising under the CFA.

Despite the Court’s finding that Defendants did, in fact, commit misrepresentation, the Court was unable to find any evidence of actual loss on Plaintiffs’ part. Under the literal language of the CFA, a plaintiff bringing a claim under it must provide evidence of ascertainable loss of money or property. Based on the language of the CFA, the Court ruled that Plaintiffs did not present any evidence of any “loss of money or property.” Indeed, the Court noted that as the Defendants provided Plaintiffs replacement samosas free of charge, any money or property loss Plaintiffs may have incurred was remedied by Defendants. The Court further ruled that, unfortunately for Plaintiffs, the damages for spiritual injuries being sought by Plaintiffs simply are not a loss of money or property. Due to the clear language of the CFA, and the cases thereunder, the Court was unwilling to expand the language of the CFA to include spiritual losses.

The Court then addressed Plaintiffs’ negligence claims. In its analysis of Plaintiffs’ negligence claims, the Court focused on the duty element of a negligence claim. When making a claim for negligence, a plaintiff must demonstrate that a defendant owes a duty to that plaintiff; the breach of the aforesaid duty constitutes the negligent act. When analyzing Plaintiffs’ claims, the Court had to discern whether Defendants had the ability to foresee that serving meat samosas would or could cause Plaintiffs substantial injury. The Court further noted that foreseeability of an injury is particularly important for the tort of negligent infliction of emotional distress. When reviewing the claim of negligent infliction of emotional distress, the Court pointed out that it is only recognized in limited circumstances: when there is reasonable fear of personal injury and there was substantial bodily injury or sickness as a result of the fear. Based on its above analysis, the Court ruled that Plaintiffs’ claims do not fit into the requirements detailed above because Plaintiffs did not experience substantial bodily injury or sickness as a result of Defendants’ actions.

Finally, the Court addressed Plaintiffs’ claims of breach of express warranty of fitness of the samosas. It reviewed the Uniform Commercial Code which states that the description of goods to be sold creates an express warranty that the goods conform to their description. As Defendants’ samosas were certainly not what they were described by Defendants to be, namely vegetation, the Court ruled that Plaintiffs’ claims of breach of express warranty of fitness was cognizable.

As the Court ruled that Plaintiffs’ claim of implied warranty of fitness was cognizable, the Court then had to determine whether Plaintiffs experienced any cognizable damages, specifically the spiritual damages claimed. The Court indicated that there has been at least one previous case where a religionist (Jewish in that case) successfully sued, and received recoverable damages, for emotional distress as a result of a violation of his religious needs. Though the Court acknowledged that precisely valuing Plaintiffs’ damages will be difficult, that was not a sufficient reason to dismiss Plaintiffs’ claims pursuant to a motion for summary judgment; however, the Court also acknowledged that Plaintiffs must establish that their damages were reasonably foreseeable by Defendants at the time the samosas were sold to Plaintiffs.

Among their damages, Plaintiffs requested recovery for the costs required to travel to purify their souls in India. It was Plaintiffs’ burden to prove that Defendants could reasonably foresee that, due to serving them meat-filled-samosas, Plaintiffs would sustain such spiritual damages as claimed. The Court did not believe that sufficient discovery was done to determine the total amount of damages and whether Defendants could have foreseen them.

As a side note, the Court, in a footnote, indicated that it did not think the litigation of Plaintiffs’ case caused, or could cause, inappropriate religious entanglement with the Court in violation of the First Amendment of the United States Constitution. The Court believed that simply neutral legal principles could be employed that would not involve ruling on religious concepts.

In the end, the Court ruled that almost all of Plaintiffs’ claims were not cognizable; however, the Court did ultimately rule that Plaintiffs do have at least a limited claim and that spiritual damages can, at least in theory, be demanded in a context of a civil suit. Perhaps the Court really can require Hell’s Kitchen to be washed with the waters of the Ganges River.

This article was the featured article in the Philadelphia Bar Association’s “Upon Further Review” on September 14, 2011.

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