Insights

by James D. Crosby

The “Losing Contract” Limitation on Reliance Damages in Breach of Contract Cases – Agam v. Gavra.

In Agam V. Gavra, 2015 WL 1843009, the Sixth District Court of Appeals recognized a “losing contract” limitation on reliance damages in California breach of contract cases, and laid out the respective burdens of the parties in such cases. For its discussion of reliance damages alone, this case will be useful to any California attorney litigating contract cases. And, its recognition of a “losing contract” limitation on reliance damages provides an opening to breaching parties to limit exposure for their own breaches.

The case involved a partnership agreement for the purchase and development of land in Los Altos Hills. The deal apparently spoiled with the collapse of the housing market and the Great Recession, leading to litigation. The losing side on breach claims appealed, contending, in part, the trial court misallocated the burden of proof on breach of contract reliance damages.

In its opinion, the Sixth District first noted the traditional definition of reliance damages in California:

One proper “measure of damages for breach of contract is the amount expended [by the nonbreaching party] on the faith of the contract.” (Mendoyoma, Inc. v. County of Mendocino (1970) 8 Cal.App.3d 873, 879 (Mendoyoma ); 1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 883, p. 970 [“[One] measure of contract damages is the amount of the plaintiff’s expenditures, together with the reasonable value of his or her own services, in preparation and performance in reliance on the contract.”].) As our Supreme Court explained in Buxbom v. Smith (1944) 23 Cal.2d 535, 541, “ ‘[w]here, without fault on his part, one party to a contract who is willing to perform it is prevented from doing so by the other party, the primary measure of damages’ “ includes “ ‘his reasonable outlay or expenditure toward performance.’ “ That the nonbreaching party’s damages include his or her “outlay incurred in making preparations for the contract” has been the law in California for over a century. (Cederberg v. Robison (1893) 100 Cal. 93, 99 (Cederberg ); see also United States v. Behan (1884) 110 U.S. 338, 345–346 (Behan ) [nonbreaching party’s damages include “actual outlay and expenditure”].)

The court described the well-recognized burdens on the parties in the context of reliance damages. The burden is initially on the non-breaching plaintiff to establish the amount which he was induced to expend in reliance on the breached contract. The burden then shifts to the breaching defendant to show the plaintiff’s expenses were unnecessary, such that his recovery of reliance damages should be reduced. Standard breach of contract stuff!

But, the Court then discussed a second limitation on reliance damages – the “losing contract” limitation – which allows the defendant to reduce or eliminate plaintiff’s reliance damages with proof the plaintiff would have suffered a loss even if the defendant had fully performed. The court noted no California court appears to have addressed the “losing contract” limitation upon awards of reliance damages. Citing a variety of out-of-state cases, the court discussed the “losing contract” limitation as follows:

Courts also have recognized a second limitation on reliance damages awards (aside from proof of unnecessary expenditures)—proof that the plaintiff would have suffered a loss even if the defendant had fully performed. “[I]n such a case the plaintiff should not be permitted to escape the consequences of a bad bargain by falling back on his reliance interest.” (Dialist Co. v. Pulford (Md.Ct.Spec.App.1979) 399 A.2d 1374, 1380.) Put differently, the plaintiff should not be put “ ‘in a better position than he would have occupied had the contract been fully performed.’ “ (Bausch & Lomb Inc. v. Bressler (2nd Cir.1992) 977 F.2d 720, 729 (Bausch & Lomb ).) Thus, much like courts allow the breaching party to prove the nonbreaching party’s expenditures were unnecessary, courts allow the breaching party “to reduce [the nonbreaching party’s recovery] by as much as he can show that the [nonbreaching party] would have lost, if the contract had been performed.” (L. Albert & Son v. Armstrong Rubber Co. (2nd Cir.1949) 178 F.2d 182, 189 (L.Albert ); (Holt v. United Sec. Life Ins. & Trust Co. (1909) 76 N.J.L. 585, 597 (Holt ) [“if he who, by repudiation, has prevented performance, asserts that the other party would not even have regained his outlay, the wrong-doer ought at least to be put upon his proof”]; Westfed Holdings, Inc. v. United States (Fed.Cl.2002) 52 Fed.Cl. 135, 155 (Westfed Holdings ) rev’d in part on other grounds, 407 F.3d 1352 (Fed.Cir.2005) [plaintiff “must show that the expenses submitted as reliance damages were incurred in reliance on the contract … while defendant may prove, in diminution of the amount of losses proved by plaintiff, any losses that plaintiff would have incurred in the event of full performance of the contract”]; Bausch & Lomb, supra, at p. 729 [“a reliance recovery will be offset by the amount of ‘any loss that the party in breach can prove with reasonable certainty the injured party would have suffered had the contract been fully performed.’ “].)

The court’s holding laid out the respective burdens of the parties in the context of reliance damages to include the “losing contract” limitation.

Accordingly, we hold that, in the context of reliance damages, the plaintiff bears the burden to establish the amount he or she expended in reliance on the contract. The burden then shifts to the defendant to show (1) the amount of plaintiff’s expenses that were unnecessary and/or (2) how much the plaintiff would have lost had the defendant fully performed (i.e., absent the breach). The plaintiff’s recovery must be reduced by those amounts.

Agam v. Gavra is significant because it opens up a new avenue for defendants, in breach of contract cases where reliance damages are sought, to argue, if the facts so warrant, that plaintiff should not be able to recover some or all his claimed reliance damages because he would have done worse if the contract had been fully performed. As the court stated, under such circumstances, the plaintiff “should not be permitted to escape the consequences of a bad bargain by falling back on his reliance interest.” So, at trial, plaintiff proves he spent $1M in reliance on the now-breached contract and wants judgment in that amount for breach. To negate those claimed reliance damages, defendant can then attempt to prove that if he had not breached, plaintiff would have lost more than $1M on the contract and plaintiff should not be put in a better position upon breach than he would have been in the absence of breach. In effect, defendant puts on a “this is what would have happened to plaintiff if I hadn’t breached – I did him a favor” case! Interesting.

Agam v. Gavra – a must read for any California attorney litigating contract cases.

by James D. Crosby

The “Referral Rules” – Guidelines for Professionally Handling Referrals.

Referrals are the lifeblood of law practices – they are the “coin of the realm” for most attorneys. There are attorneys with large loyal clients providing cases year after year. But, for most attorneys, it’s not 20 cases from one client, its 20 cases from 20 different referral sources. Yet, despite the significance of referrals as a source of business, attorneys often mishandle referrals and torch referral sources. So, as a public service to the “referral-source-torchers” out there, I offer The Referral Rules! (Click this link – The Referral Rules ). This article originally appeared in the January/February 2015 edition of San Diego Lawyer from the San Diego County Bar Association.

by James D. Crosby

Denials of Requests For Admissions Are Not Admissible At Trial – Gonsalves v. Li.

In a case of first impression, the First District Court of Appeal in Gonsalvez v. Li (Case No A140284), 2015 Daily Journal D.A.R. 472, has held that denials or qualified denials of requests for admissions (RFAs) are not admissible evidence “in an ordinary case, i.e., a case where a party’s litigation conduct is not directly at issue”.

In this auto accident case brought by an injured passenger against the driver, plaintiff propounded RFAs requesting defendant to admit, among other things, that he was driving too fast for the conditions at the time of the accident and that his pressure on the gas pedal was a substantial factor in the accident. Defendant responded with standard denials for lack of information and belief. At trial, plaintiff’s counsel asked defendant on the stand to confirm his RFA responses and that they were made under oath. He then proceeded to question defendant, over objections, about his qualified denials of the RFAs. At the conclusion of the testimony, the court, again over objection, admitted the RFAs and responses.

In closing, plaintiff’s counsel urged the jury to look at the RFAs and the responses, and then cleverly argued they showed that defendant, through “a bunch of double talk” (i.e., the lawyer-drafted qualified denials for lack of information and belief), was failing to take responsibility for his actions. The closing argument passage quoted in the opinion is very clever and was likely quite compelling to the jury.

“I encourage you to look at … the Requests for Admissions that we sent to Ran Li asking him to admit some very basic facts about this crash. His responses are there as well. Let’s just look at a few of them…. [¶] … [¶] This is a simple question, ladies and gentlemen. ‘How much did you push on the accelerator.’ [His response] is a bunch of double speak[,] … a bunch of ‘I’m sorry I’m not taking responsibility and not only am I doing it, I’m doing it in a way that makes no sense.’ [¶] … [¶] … [I]t’s been more than four and a half years since this crash, and he will not in any way take any responsibility for it…. And that’s why we need to impanel a jury like you.”

Very good stuff! The jury apparently thought so, too. The jury found that defendant Li was negligent, that plaintiff Gonsalves was not comparatively negligent, and awarded plaintiff more than $1.2 million in damages for significant back injuries.

Defendant appealed, arguing the trial court erred in permitting plaintiff’s counsel to examine defendant on his negative responses to RFAs and admitting those responses into evidence. The First District Court of Appeal agreed, vacated the judgment and remanded the case to the trial court for new trial.

In the opinion, the court first undertook some statutory interpretation, noting defendant’s arguments that the applicable discovery statutes expressly allow any part of a deposition or interrogatory to be introduced at trial, whereas they only provide that admissions in response to RFAs are binding on the party at trial (Code Civ. Proc., §§ 2025.620 re depositions, 2030.410 re interrogatories and 2033.410 re RFAs). The court further noted the statutory scheme provides for monetary sanctions (i.e., reasonable expenses including attorney fees) when a party unreasonably fails to admit a matter in response to RFAs, but does not expressly permit a denial, objection or failure to respond to RFAs to be used against the party at trial. (Code Civ. Proc., § 2033.420, subd. (a)).

The court then drew a parallel to Rifkind v. Superior Court (1994) 22 Cal.App.4th 1255, a well-known opinion which condemned the use of “legal contention questions” at deposition (i.e. asking a deponent to state all facts or identify all documents which support an affirmative defense). Rifkind held that “legal contention questions” unfairly require the deponent to make a “law-to-fact application that is beyond the competence of most lay persons” and “to sort out the factual material in the case according to specific legal contentions and to do this by memory and on the spot.” Likewise, in Gonsalves, the court noted that defendant “Li was asked to explain “by memory and on the spot” and without the ability to consult with his attorney why he took the legal position that he could not admit or deny certain RFA’s without further inquiry. And he was asked to do this not in a deposition, as in Rifkind, but in front of the jury.”

The court then noted, citing cases from Massachusetts, Florida, Missouri and Texas, that the weight of authority from other jurisdictions supports the position that denials or qualified denials of requests for admissions are not admissible evidence.

Finally, the court rejected the argument the RFA denials were admissible to impeach defendant’s credibility by showing his attitude toward the action in which he testifies under Evidence Code § 780(j). The court found no support for plaintiff’s attempt to make a party’s litigation conduct a legitimate subject for inquiry under Evidence Code section 780(j).

The court held that “denials of RFA’s are not admissible evidence in an ordinary case, i.e., a case where a party’s litigation conduct is not directly in issue” and, thus, “the trial court permitted examination of Li that was unfair and prejudicial to him, and erred in admitting those responses in evidence”.

There are takeaways from this case for both sides:

1. For the Propounding Party – Propound your RFAs early in discovery so there will be sufficient time to bring motions to compel admissions and to, through orders and sanctions, narrow issues for trial. If only RFA admissions have evidentiary value at trial, leave time in your discovery plan to get the admissions you need to narrow trial issues and streamline your trial. Unchallenged RFA denials have no worth at trial. Also, draft your RFAs as clearly as possible so you can get the compelling orders you want or need.

2. For the Responding Party – Under Gonsalves, the trial risk of serving denials or qualified denials is gone. Denials and qualified denials to RFAs cannot be used to impeach a witness, or to question witness veracity, or as fodder for closing argument as so cleverly done by plaintiff’s counsel in the case. And this is appropriate. Given the likely significance of an admission, counsel should be free, without risk of adverse consequences or unfair arguments at trial, to carefully and meticulously scrutinize the wording of RFAs to insure that what will be admitted is crystal-clear and not subject to misconstruction, misinterpretation or misunderstanding by the parties, the court or the jury.

But, while the trial risk of RFA denials and qualified denials is gone under Gonsalvez, the monetary risk is not. Under Code Civ. Proc., §2033.420, if a party fails to admit the genuineness of any document or the truth of any matter when requested to do so, and if the party requesting that admission thereafter proves the genuineness of that document or the truth of that matter, the court, upon motion and subject to certain conditions, may require the party to whom the request was directed to pay the reasonable expenses incurred in making that proof, including reasonable attorney’s fees. Thus, you will not lose a jury and a trial as a result of your RFA denials. But, you or your client may end up writing a big check after it is all done if your denials were unreasonable under §2033.420(b)(1)-(4).

by James D. Crosby

This coming year, I will litigate cases like a professional athlete . . . . . .

This coming year, I will litigate cases like a professional athlete . . . . . .

When I win a MSJ at oral argument, I will stop, look to the heavens momentarily, then look down and kiss both of my biceps.

When I lose a MSJ at oral argument, I will hold my arms out, look at the Judge for a few seconds with the “are you kidding me” look, look away, slowly shake my head in disbelief, and flash the “you’re a f…ing idiot” look.

When I win a significant motion in limine, I will throw my arms down, flex my biceps, run around the counsel tables, looking sideways and yelling.

When I lose a significant motion in limine, I will look at the Judge and slap my forearm repeatedly with the disbelieving “where’s the foul” look.

When my trial objection is sustained, I will walk over and chest-bump opposing counsel, wag my finger at him, shake my head, and yell “don’t try me again”!

When my trial objection is overruled, I will look at my second chair co-counsel with the questioning “where were you” look.

When the jury returns a favorable verdict, I will jump up, stand, throw out my chest, throw my pen down to the floor, slide sideways two steps and spin around, drop to one knee, bow my head, cross my chest, look to the heavens, say a few words, stand up, butt foreheads with my second chair co-counsel, and slowly walk out.

When the jury returns an unfavorable verdict, I will look at them in disbelief, slowly shake my head, look dejectedly at the ground, slap the butt of my second chair co-counsel, and walk out with my head bowed.

When I see opposing counsel in the hall after the trial, I will walk up to him, grab him by the back of the head, dramatically touch foreheads with him for a few seconds, privately whisper a few words in his ear, then turn around and walk away, flush with victory.

When interviewed outside the courtroom by the Daily Transcript about the trial victory, I will do one of two things:

• I will say “I told that hack on the other side not to try me, not to take this case to trial against me, that there could be only one result when you go to trial against me, a loss”, and then apologize profusely whenever and wherever possible for my comments for the next few weeks; or,
• I will say that it was a team effort, that my trial team just kept fighting to the end, that I couldn’t have won without my client, second chair co-counsel, trial team, excellent staff and partners, and the love and support of my wife and children, that it was a close case that could have gone either way, and that my opposing counsel is a great lawyer – and then thank heaven for the victory.

When interviewed outside the courtroom by the Daily Transcript about the trial loss, I will do one of two things:

• I will say “the judge was awful, he took the case away from us with lousy rulings, he clearly had his mind made up about this case from the start, what a hack, we really need to take a good look at who we are putting on the bench in this state”, and then apologize profusely whenever and wherever possible for my comments for the next few weeks; or,
• I will say that I feel poorly for our client, that I are obviously unhappy about the loss but that my opponent tried a good case and I respect the jury and its decision, and that after getting a little rest I will be looking at the result to determine whether there are issues that an appellate court should review to insure that justice was done in this matter.

As I head back to my office after the trial victory, I will trot away in slow motion, waving one finger in the air for the victory.

As I head back to the office after the trial loss, I will walk quickly, briefcase in hand, red Beats headphones on, stern-faced, eyes forward, acknowledging no one.

Come to think of it, I don’t think I will litigate cases this year like a professional athlete!

by James D. Crosby

Scrap the “separate statement” requirement for summary judgment/adjudication motions in California!

This last week, my paralegal and I put together and filed an opposition to a motion for summary or, in the alternative, for summary adjudication. It was one of several summary judgment motions and oppositions I have done this year. Now, I think summary judgment/adjudication motions are extraordinarily powerful weapons in the trial attorney’s arsenal. Cases for which there is no defense can be adjudicated without the expense and delay of trial. Meritless or, more crassly put, BS cases can be dispensed with. Claims can be narrowed, defenses can be vetted, evidence can be challenged. Trials are interesting, challenging, and, in my view, the best part of this business. But, a client should not have to bear the risk, expense, and emotional misery of trial where there really is nothing that needs to be tried. Summary judgment/adjudication motions, when serving their proper function, separate the proverbial wheat from the chaff. They are essential to a proper-functioning civil justice system.

But, it is really time to dump the separate statement of undisputed/disputed facts requirement for such motions in California! Preparing and, more-significantly, responding to these statements is time-consuming, expensive to the client, and, in my view, a largely worthless undertaking.

I know these requirements were put in place to attempt to streamline the summary judgment/adjudication process. But, at least from this trial attorney’s perspective, they have done just the opposite. Regularly, even the simplest of summary judgment motions includes a separate statement with pages, and pages, and pages of redundant “undisputed facts”, which are then, in the case of the customary alternative summary adjudication motion, cut and paste verbatim into the statement for each successive cause of action at issue. And, per statute, all of this largely meaningless redundancy and paper must be responded to with more meaningless redundancy and paper.

This is all made more complicated and onerous by the inability of many attorneys to recognize the difference between undisputed facts and evidence. Undisputed facts material to resolution of a case or cause of action offered with supporting evidence, as contemplated by the statute, are often times replaced with pages and pages filled with formatted columns setting forth specific pieces of evidence as “undisputed facts”. The summary judgment motion I just opposed, a motion that involved fairly straight-forward substantive issues and limited evidence, came with a 69-page separate statement, including 234 separate “undisputed facts”, all of which had to be responded to, per statute. My responsive separate statement was 85 pages long! And, really, the matters at issue were well-briefed, with references to the relevant evidence, in the 20-page points and authorities on each side. The opposing briefs succinctly teed-up the relevant issues for consideration. The separate statements were a largely meaningless sideshow.

It can be, it is, a real mess. Does this really streamline the summary judgment/adjudication process? Should a lawyer or paralegal have to spend hours and hours cutting pasting verbatim text from one column to another across pages of redundant “undisputed facts” to complete a separate statement? Do the judges actually read and review all of the pages and pages of separate statement materials accompanying the large majority of summary judgment/adjudication motions? How could they, and still effectively handle their now-crowded motion and trial calendars? And, most importantly, should clients have to pay for all this time and effort? Or, should attorneys have to eat what would otherwise be good billable time because they cannot, in good conscience, bill a client for such busy work? The answers to these questions are self-evident.

I could, perhaps, envision a better separate statement procedure – maybe one centered around the actual elements of a cause of action or a defense, as opposed to one centered around claimed “undisputed facts”. If an element of a cause of action or a defense is claimed not to be subject to factual dispute, the separate statement could set forth that element and the corresponding evidence that establishes the absence or, conversely, the presence of a factual dispute. That might work better.

But, really, I think the whole separate statement thing should just be scrapped! Put it on the shelf with all the other good ideas that did not work out as contemplated. Get rid of it. Competent attorneys should be, and are, fully able to explain to the court in customary briefings with lodged relevant evidence why they are, or the other side is not, entitled to summary judgment or adjudication. That’s what lawyers do – brief issues and tee them up for resolution by the courts! It really is just that simple.

So, I say, repeal the separate statement requirement for summary judgment/adjudication motions in California! We have lived long enough with this onerous, expensive beast. I think you would hear an immediate, loud, collective sigh of relief from both Bar and Bench were that to happen.

by James D. Crosby

Good Time To Go To Law School?

Interesting New York Times DealBook article on the emerging buyer’s market for those entering law school. http://nyti.ms/1vmF7QC Prospective law students are in great bargaining positions for law school admissions and aid – especially top students. I also think the legal market for new business is continuing to pick up, after a number of tough recession years. The U.S. economy is ticking along with modest but sustained growth. The stock market is booming – more deals for attorneys to work on and to litigate over when they fall apart. And with fewer students coming out of law school over next few years – some incoming classes are as low as they have been since the 70’s, demand for new attorneys should heat up as well. Good time to go to law school?? Looks like it.

by James D. Crosby

The Importance of Early and Effective Trademark Clearance Searches

A nice piece on trademarks and trademark clearance searches from my Klinedinst colleague, Sam Strohbehn. http://wp.me/p4jZaw-L via @wordpressdotcom

by James D. Crosby

“…an attorney does not provide a service to the client by stealing his or her money.” Lee v. Hanley – The 4th District Weighs in on CCP 340.6.

In an opinion that will put a broad grin on the faces of plaintiff malpractice attorneys across the state, the Fourth District Court of Appeal held this week in Lee v. Hanley (G048501) that the Code of Civil Procedure Section 340.6 one year statute of limitations for attorney malpractice may not apply in cases involving a client claim for return of attorneys fees retained by the attorney. The court distinguished leading cases applying section 340.6 and analyzed the legislative history of the statute. But, the basic premise of the opinion is stated by the court as follows:

“Here, we find the words of the statute to be plain and unambiguous. They provide the applicable statute of limitations for an action based on “a wrongful act or omission, other than for actual fraud, arising in the performance of professional services . . . .” (§ 340.6.) So, if the wrongful act or omission at issue arises “in the performance of professional services,” the statute applies. If the wrongful act or omission at issue does not arise “in the performance of professional services,” the statute is inapplicable. As we have already stated, an attorney does not provide a service to the client by stealing his or her money.”

While I share in the Court’s obvious revulsion towards an attorney stealing a client’s money, I think the opinion, especially in its repeated reference to the tort of conversion as one area where the one-year statute may not apply, is problematic. And it will certainly be used by plaintiff’s attorneys to attempt to break open the one year statute in any malpractice case involving a claim for the return of fees, including those where the attorney hasn’t stolen anything or done anything wrong.

This was a demurrer case. In its analysis of the complaint at issue, the Court stated the following:

The second amended complaint in the matter before us alleged that, after Attorney Hanley’s services with respect to the settled litigation had been fully completed,he knowingly refused to release money belonging to Lee, which he himself had characterized as her “credit balance.” When we liberally construe the second amended complaint we see that, despite Lee’s form of pleading, she has made factual allegation adequate to state a cause of action for conversion, for example. (Welcon Electronics, Inc. v. Mora (2014) 223 Cal. App. 4th 202, 208-209, 215-216 [wrongful exercise of dominion over identifiable sum of money belonging to another].) 

To me, this is a troubling passage and subject to much potential abuse by smart attorneys with otherwise stale claims. Seems like the case could be used to extend the limitation period beyond one year in any matter involving fees – like when the client wants a refund of fees already earned. Couldn’t the client just claim the attorney is not entitled to the fees, sue for conversion and then, based on Lee v. Hanley, push the applicable statute to 2 or 3 years?

But, conversion is an odd bird – it can be an intentional tort but it can also be just a general intent exercise of dominion or control over another’s property. “Conversion is a strict liability tort. The foundation of the action rests neither in the knowledge nor the intent of the defendant. Instead, the tort consists in the breach of an absolute duty; the act of conversion itself is tortious. Therefore, questions of the defendant’s good faith, lack of knowledge, and motive are ordinarily immaterial.” Los Angeles Federal Credit Union v. Madatyn (2012) 209 Cal.App.4th 1383, 1387. “Conversion must be knowingly or intentionally done, but a wrongful intent is not necessary. Because the act must be knowingly done, ‘neither negligence, active or passive, nor a breach of contract, even though it result in injury to, or loss of, specific property, constitutes a conversion.’ It follows therefore that mistake, good faith, and due care are ordinarily immaterial, and cannot be set up as defenses in an action for conversion.” Taylor v. Forte Hotels International (1991) 235 Cal.App.3d 1119, 1124. Under Lee v. Hanley, a careful drafter with a stale claim but a story involving client money, will sue, claim “conversion” and maybe get past demurrer on an otherwise time-barred claim – but, on a claim based on a strict liability tort where the attorney’s good-faith, mistake and due care are meaningless. Conversion is not always theft and not always “wrongful” in the traditional sense.

I  understand the court’s concern about disreputable lawyers absconding with client monies. I share it, as most all lawyers do. And the simple phrase “…an attorney does not provide a service to the client by stealing his or her money” makes sense. But, this is a case where the law of unintended consequences may trap a lot of fine attorneys, who have good faith disputes with clients over earned fees, into defending what would otherwise be stale claims and losing the statutorily-mandated protection accorded by Section 340.6.

by James D. Crosby

Your Memory Rewrites the Past! Are Eye-Witness Testimony and Witness Recollections of Prior Events Ever Credible?

Trial lawyers spend much of their professional existence trying to prove that a witness’ or party’s testimony is not truthful – that the party or witness is lying. We seek out and use documents, photos and ESI that are contrary to the witness’s current testimony to call the witness’ credibility into question. We depose witnesses to get their story “under oath” in case they change their testimony at trial. When a party testifies differently from his deposition testimony or other previous statement on a material point, we go on the attack! “Do you recall giving deposition testimony in this case? And, you gave that testimony under oath, right? You swore to tell the truth at that deposition just like you did in front of this jury today, right?” Then, we point out the inconsistencies between the deposition testimony and the trial testimony, and stride triumphantly back to our counsel table having decimated the opponent. Come on, admit it, don’t we all just love catching the opposing party in a bald-faced lie in front of a jury entranced by the real-life conflict playing out in front of them. “Ladies and gentlemen of the jury, he’s a liar – he says one thing one time and another thing another time – and all under oath – don’t believe him!”

But, what if the witness’ current testimony, while materially different from her previous testimony, is no less “truthful” than the previous impeaching testimony was when given? What if a witness testifying differently at different times about a past event was still telling the “truth” each time? Wouldn’t that undercut the whole premise of what trial attorneys spend much of their time doing – using the contrast between a witness’s testimony at trial and her testimony or statements at prior times to suggest the witness is a liar? It appears that may just be the case. In fact, it may be worse than you think. According to neuroscientists at Northwestern University Feinberg School of Medicine in a study recently published in the Journal of Neurosceince (Hippocampal Binding of Novel Information with Dominant Memory Traces Can Support Both Memory Stability and Change by Donna J. Bridge and Joel L. Voss, Journal of Neuroscience, February 5, 2014), your memory regularly rewrites the past with current information, updating your recollections with new experiences. When a memory is recalled, the brain updates that memory in light of current salient facts – “… all memory is adaptively tuned to information that is currently salient.”

In a layman’s discussion of the study (“How Your Memory Rewrites Your Past.” by Marla Paul, Northwestern University News, February 4, 2014), Donna Jo Bridge, one of its co-authors, states that “Our memory is not like a video camera. Your memory reframes and edits events to create a story to fit your current world. Its built to be current.” The co-author notes the study’s implications for eyewitness court testimony – “our memory is built to change, not regurgitate facts, so we are not very reliable witnesses”. The other study co-author, Joel Voss, says the notion of perfect memory is a myth. “Everyone likes to think of memory as this thing that lets us vividly remember our childhoods or what we did last week. But, memory is designed to help us make good decisions in the moment and, therefore, memory has to stay up-to-date. The information that is relevant right now can overwrite what was there to begin with.”

If this study, and these findings, are correct and generally applicable to everybody, it is profoundly disturbing. If this is correct, can a witness or party recollection of a past event or discussion ever be deemed reliable and credible, or, more pointedly, can we even lay a foundation of personal knowledge for a witness’ testimony about past events if that witness’ personal knowledge and memory of those events has been “updated” multiple times since the event she is recalling? Look at it this way, if an agreement was altered to reflect current facts and circumstances every time somebody read it, would such an agreement ever be admitted into evidence as reflective of the parties’ actual agreement at the time it was signed? Surely not. But it seems that may be exactly how the brain alters memories!

If this is true, are not contemporaneous-to-the-event-in-question agreements and writings perhaps the only credible evidence of the event in question; that is, unless the author’s memory of the event wasn’t recalled and “updated” between the event and the writing?

Is a party’s memory of a critical event “updated” to reflect current circumstances every time that party recalls and discusses those events with his attorney?

If a witness recalls an event at trial differently than she did in deposition a year earlier, is she really lying and simply giving truthful testimony both times based her then-current and -updated memory of those events?

If this is true, shouldn’t we have jury instructions that advise a jury to view testimony based upon memories of past events with much skepticism in that such memories are subject to change and not likely accurate evidence of the events recalled?

If you have a case which pits testimony about past events against contemporaneous documents memorializing those events, shouldn’t the documents always win. And, shouldn’t you be able to call one of these neuroscientists to give an expert opinion that, based upon their study, witness recollection of past events should never be believed over contemporaneous documents memorializing those events because the memories have likely been “rewritten” any number of times since the events and the documents presumably have not?

Given these findings, shouldn’t all integration clauses in all contracts be fully and strictly enforced, because current witness testimony about prior contractual intent is always suspect and likely incorrect?

I could go on and on. If these findings are correct and generally applicable to everybody, the permutations are endless and disturbing to the point that perhaps witnesses should never be allowed to testify based upon memories of past events because those memories could never actually reflect the event. Wow! Sure shakes things up a bit, doesn’t it?

This is all pretty troublesome and, frankly, warrants a great deal of serious thought about the quality and reliability of the evidence upon which triers of fact regularly decide cases – cases which bear profound significance not only to the litigants involved, but to us all.

All I can say now is – take a lot of pictures!

by James D. Crosby

Can a Lawyer Review a Juror’s Facebook, Linkedin or Twitter Page During Trial? ABA says Yes!

On April 24, 2014, the American Bar Association Standing Committee on Ethics and Professional Responsibility issued Formal Opinion 466 – Lawyer Reviewing Juror’s Internet Presence. In the opinion, the Committee considered the following question:

“Whether a lawyer who represents a client in a matter that will be tried to a jury may review the jurors’ or potential jurors’ presence on the Internet leading up to and during trial, and , if so, what ethical obligations the lawyer might have regarding information discovered during the review.”

The Committee formally opined that:

Unless limited by law or court order, a lawyer may review a juror’s or potential juror’s Internet presence, which may include postings by the juror or potential juror in advance of and during a trial, but may not communicate directly or through another with a juror or potential juror.  

A lawyer may not, either personally or through another, send an access request to a juror’s electronic social media. An access request is a communication to a juror asking the juror for information that the juror has not made public and that would be the type of ex parte communication prohibited by Model Rule 3.5(b).

The fact that a juror or a potential juror may become aware that a lawyer is reviewing his Internet presence when a network setting notifies the juror of such does not constitute a communication from the lawyer in violation of Rule 3.5(b).

In the course of reviewing a juror’s or potential juror’s Internet presence, if a lawyer discovers evidence of juror or potential juror misconduct that is criminal or fraudulent, the lawyer must take reasonable remedial measures including, if necessary, disclosure to the tribunal.

More simply stated, using Facebook as an example, a lawyer can look at the juror’s Facebook page before and during trial, but cannot seek to “friend” the juror. The former would not be an improper communication with a juror, the latter would be. Further, if the juror’s Facebook page evidences juror or potential juror misconduct that is criminal or fraudulent, the lawyer must disclose same to the court.

In an interesting opinion, the Committee noted the “strong public interest in identifying jurors who might be tainted by improper bias or prejudice” and the equally strong public policy “in preventing jurors from being approached ex parte by the parties to the case”. The Committee stated that in today’s “Internet-saturated” world, the line between properly investigating jurors and improperly communicating with them is “increasingly blurred.” With the opinion, the Committee sought to clarify where that line is.

In approving the “passive review” of a juror’s social media presence or websites, the Committee stated that “the mere act of observing that which is open to the public” is not an improper communication. By analogy, the Committee noted that “a lawyer … would not be engaging in an improper ex parte contact with a prospective juror by driving down the street where the prospective juror lives to observe the environs in order to glean publicly available information that could inform the lawyer’s jury-selection decisions.”

But, the Committee opined that sending an access request ( e.g., a Facebook “friend” request) to a juror crosses the line  – it is an improper communication because it asks the juror for information that the juror has not made public.

On the issue of the obligation of a lawyer who sees evidence of juror misconduct on a juror’s social media site, the Committee drew a bright line where the juror’s misconduct is fraudulent or criminal – the lawyer must act and report the misconduct to the court. But, where the juror conduct evidenced on the social media site or website violates court instructions to the jury but does not rise to the level of criminal or fraudulent conduct, the lawyer’s obligation is less clear and not addressed by ABA Rule. The court noted:

“While any Internet postings about the case by a juror during trial may violate court instructions, the obligation of a lawyer to take action will depend on the lawyer’s assessment of those postings in light of court instructions and the elements of the crime of contempt or other applicable criminal statutes. For example, innocuous postings about jury service, such as the quality of the food served at lunch, may be contrary to judicial instructions, but fall short of conduct that would warrant the extreme response of finding a juror in criminal contempt. A lawyer’s affirmative duty to act is triggered only when the juror’s known conduct is criminal or fraudulent, including conduct that is criminally contemptuous of court instructions.”

So, according to the ABA, trial lawyers can review the Facebook, Linkedin, Twitter, Instagram, etc., pages of jurors and potential jurors in advance of, and during, trial without violating ABA ethical rules.

And well they should! Social media sites can provide a wealth of information that can be very useful in voir dire, jury selection, opening statement and closing argument. Social media postings can provide insights into a juror’s politics, prejudices and predilections, insights which can be extraordinarily valuable at trial.

In fact, in the future and perhaps even now, not conducting Internet research into jurors could be risky. In an opinion footnote, the Committee noted as follows: “While this Committee does not take a position on whether the standard of care for competent lawyer performance requires using Internet research to locate information about jurors that is relevant to the jury selection process, we are also mindful of the recent addition of Comment [8] to Model Rule 1.1. This comment explains that a lawyer “should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology.”