The Mystery of the Student Loan Fraud, or Of In Pari Delicto, Respondeat Superior, et Cetera

A still mysterious financial fraud perpetrated on students of Merrimack College resulted in a high court ruling last week on agency law with important implications for tort liability and the equitable doctrine of in pari delicto.

Students at Merrimack College Orientation in 2015.
By Merrimack College (CC BY-NC-ND 2.0)

Merrimack is located in North Andover, Massachusetts (where the recent gas explosions occurred).  Merrimack is a small liberal arts college founded in the Roman Catholic tradition after World War II especially to serve returning vets.  Despite the depressed market in higher education, Merrimack this fall reported a record-size freshman class and plans to join Division I athletics.

In 2014, Merrimack financial aid director Christine Mordach pleaded guilty to federal criminal fraud charges, and in 2015, she was sentenced to a year’s imprisonment and ordered to pay $1.5 million in restitution.  She had been accused of perpetrating a scheme that replaced college scholarship awards with federal loan money on the college books.  The scheme came to light when a new accounting system started to inform students of federal Perkins debts they did not know they had.

Why Mordach did what she did is the mystery.  The scheme shored up the college’s bottom line through lean times, because money paid out of college coffers in grants was replaced with borrowed dollars that students would be on the hook to pay back.  But there was no evidence that Mordach was ordered to execute the scheme.  To the contrary, she seems to have taken steps to conceal it, which she did so well that Merrimack auditor KPMG gave the college a clean bill of health while the fraud was ongoing.

That brings us to the instant civil case.  Merrimack seeks to recover against KPMG on a range of theories, including breach of contract, professional malpractice, and negligent misrepresentation, for KPMG’s failure to detect the fraud.  KPMG won dismissal in the superior court upon the doctrine of in pari delicto.  Literally Latin for “in equal fault,” in pari delicto translates as the clean hands doctrine of equity.  In tort, the doctrine prevents a tortfeasor from recovering against a co-tortfeasor or innocent party—such as a bank robber who blames a co-conspirator for his bullet wound, or the burned arsonist who would blame firefighters for too slow a rescue.  Merrimack appealed the dismissal to the Massachusetts Supreme Judicial Court (SJC).

Being a doctrine in equity, rather than a rule, in pari delicto calls for a fact-sensitive application, operating as a function of the parties’ relative moral blameworthiness.  Thus in a 1985 case discussed in the instant opinion, the U.S. Supreme Court allowed would-be beneficiaries of insider trading to sue their tipsters for losses resulting from misinformation, even if both plaintiffs and defendants were wrongdoers.  The plaintiffs’ trading upon a failure to disclose was not “substantially equal” in moral culpability to the tipsters’ illegal insider disclosures, the Court decided, and public policy favored holding the tipsters to civil account.

KPMG Boston (Google Maps Aug. 2017)

KPMG argues more than just Merrimack’s benefit derived from a favorable financial picture.  KPMG argued successfully in the superior court that Mordach’s actions must be imputed strictly to Merrimack upon the tort-and-agency doctrine of respondeat superior, because Mordach was an employee of Merrimack and acted within the scope of her employment.  So if intentional fraud is imputed to Merrimack, then in pari delicto precludes recovery against KPMG for the diminished culpability state of mere negligence.

On the one hand, the SJC reasoned, look at the problem from the perspective of Merrimack students:  Were they to have sued Merrimack—not actually necessary, as the college spent $6 million to square its affairs with students—there is little doubt that Mordach’s intentional tort would have imputed strictly, even to an otherwise innocent Merrimack, through respondeat superior.  From where the student sits, the fraud was perpetrated by Merrimack’s financial aid office: Mordach and college, one and the same.  Merrimack might have sought indemnity from employee Mordach, but that’s always true in respondeat superior cases (notwithstanding employment contract).

On the other hand, the SJC reasoned, look at the problem from the perspective of Merrimack College:  Strict liability through the action of respondeat superior imputes liability irrespective of fault and certainly says nothing about moral blameworthiness.  Merrimack as liable to students is never adjudicated as bearing fault.  From a moral standpoint, Merrimack is at worst guilty of neglect, or failure to act, such as by negligent supervision of its financial-aid director.  So notwithstanding strict legal liability, Merrimack’s negligence would implicate moral blameworthiness of a magnitude less than what the college alleges of KPMG.

When co-tortfeasors both commit an intentional tort, in pari delicto precludes liability of one to the other.  But that’s not necessarily so when merely negligent co-tortfeasors A and B unwittingly combine efforts to cause loss to C, incidentally causing loss also to B.  In the subsequent action B v. A, the old contributory negligence rule, as a complete defense, would have effectuated the clean-hands doctrine.  But contemporary tort law commits negligent co-tortfeasors to comparative-fault analysis.  In a modified-comparative-fault jurisdiction such as Massachusetts, B may recover from A if A bore more fault than B, and B’s recovery is reduced in proportion to B’s own share of fault. 

The SJC decided that moral blameworthiness, not legal liability exposure, must be the guiding principle for an equitable doctrine.  Merrimack might be on the hook hypothetically for respondeat superior liability, and even negligent supervision.  But neither of those rules suggests moral blameworthiness greater than KPMG’s.  The case might be different if Mordach has been a senior executive of Merrimack; she was not.  And there is no evidence that Merrimack knew what Mordach was up to, much less directed her actions.

So in the absence of an intentional tortfeasor between Merrimack and KPMG, in pari delicto does not apply.  If Merrimack’s negligence contributed to its own losses, that will come out in the comparative-fault wash.  That conclusion is bolstered by a comparative-fault-like mechanism in Massachusetts statute that applies specifically to client-versus-auditor malpractice claims.  Accordingly, the SJC reversed and remanded.

Chief Justice Gants at UMass Law (2016)

The SJC received amicus briefs from the American Institute of Certified Public Accountants, the Massachusetts Academy of Trial Attorneys (MATA), and the Chelsea Housing Authority.  For the MATA, attorney Jeffrey Nolan argued, like in the U.S. Supreme Court insider trading case, that liability exposure is needed to hold KPMG accountable, especially in a market dominated by the Big Four accounting firms.  The housing authority also backed Merrimack, attorney Susan Whalen recounting her client’s victimization by internal misconduct that went undetected by accountants.  She asserted that in pari delicto has “the perverse result of de facto immunity for gross levels of negligence” by auditors (Law360, subscription required).

All of that is not to say that KPMG will be held liable.  Besides fault yet to be proved, the SJC affirmed the superior court’s leave for KPMG to amend its answer, adding a defense of release.  Ut victoriam tyranne?

The case is Merrimack College v. KPMG LLP, No. SJC-12434 (Mass. Sept. 27, 2018).  The opinion was authored by Chief Justice Ralph D. Gants, a graduate of Harvard undergrad and law, one-time AUSA, and 2016 recipient of an honorary law degree from UMass Law School.

Public officials must know religious freedom gets strict scrutiny, so lose qualified immunity in civil rights case over church access

In a civil rights case involving the freedom of religion, the Massachusetts Appeals Court today denied qualified immunity to public officials who prevented the employee-plaintiff from going to church for Christmas, even without a plain prior case on similar facts.  The decision has important implications across the field of qualified immunity and "constitutional tort," because civil rights plaintiffs routinely claim violations of fundamental rights that officials should know trigger strict scrutiny in constitutional law.

St. Michael's Chapel at Chelsea Soldiers' Home
By Randall Armor, Boston's Hidden Sacred Spaces (CC BY-NC-ND 4.0)

Teresa Krupien was working at the Soldiers' Home in Chelsea, a veterans' healthcare facility.  Another employee reported that Krupien injured the other's wrist when the two were moving a patient into a wheelchair.  After investigation, and upon mixed conclusions among officials, Krupien was issued a "stay-away directive," barring her from the home premises.  Krupien promptly informed officials that the directive would prevent her from attending Christmas services at the chapel, her "spiritual home," and alleged in her civil rights complaint that the directive in sum barred her from church services for 37 days.  Officials for that time refused to modify the directive.

The trial court dismissed claims under the Massachusetts civil rights act on grounds of qualified immunity, and the Appeals Court reversed.  Qualified immunity pertains when (1) a plaintiff complains of a public official's violation of statutory or constitutional rights, (2) the plaintiff's right was clearly established at the time of the alleged violation, and (3) a reasonable person in the shoes of the defendant would have understood that plaintiff's rights were clearly violated.  Qualified immunity is an important defense in the law of "constitutional tort," because torts with public-official defendants usually must rise to the level of civil rights violations in order to overcome sovereign immunity, which is absolute unless waived.

The argument in qualified immunity usually centers on the second element, with an assist from the third, the two forming something like a "reasonable belief" test.  Public officials, who bear the burden of proof of immunity, invariably argue that they were clueless about any clear violation because never before have the courts had a case quite like this one.  Plaintiffs invariably respond by saying that of course this has never happened before, but come on, a lot of cases just like this have happened.  Where element two is hard on plaintiffs with its clarity requirement, element three gives plaintiffs an assist by testing officials' denial objectively.  Many a commentator has noted that the odd yet defensible effect of this rule is to give public officials a pass on a kind of civil rights offense once--but only once.

True to form, defendants here argued that no precedent provided clear guidance to officials on how to handle Krupien's desire to go to church.  Nevertheless, the court opined, ample precedents demonstrate that struct scrutiny applies to claims of free religious exercise.  And strict scrutiny, a public official should know, tests for narrow tailoring to achieve a legitimate state interest.  Officials here had no evidence that Krupien's attendance at church would jeopardize anyone's safety.  It would have been a simple matter to narrow the order and let her attend worship services.

Judge Posner at Harvard Law
By chensiyuan (CC BY-SA-2.5)

The appeals court pointed to an oft-cited lamentation of renowned jurist, sometimes-"consummate ass," advocate-for-the-downtrodden-whilst-né-Circuit-Judge Richard Posner, in which he pointed out that the lack of case law spelling out the impermissibility of selling a child into slavery cannot mean that a defendant gets one free pass to do so.  Wrote Judge Posner in full:

Our job is the humbler one [than Congress's, in extending or abolishing immunity] of applying the immunity doctrine. We begin with the elementary proposition that it would be improper to deny immunity to a particular defendant on the ground that his conduct could be subsumed under some principle of liability in force when he acted. That approach would shrink immunity to trivial dimensions, since it is always possible to find a principle of comprehensive generality (such as "due process of law"). But the immunity doctrine as it has evolved goes much further than this to protect public officers. It is not enough, to justify denying immunity, that liability in a particular constellation of facts could have been, or even that it was, predicted from existing rules and decisions, even though law, as Holmes famously remarked, is a prediction of what courts will do faced with a particular set of facts. (Maybe it is more than that, but it is at least that.) Liability in that particular set must have been established at the time the defendant acted.

It begins to seem as if to survive a motion to dismiss a suit on grounds of immunity the plaintiff must be able to point to a previous case that differs only trivially from his case. But this cannot be right. The easiest cases don't even arise. There has never been a section 1983 case accusing welfare officials of selling foster children into slavery; it does not follow that if such a case arose, the officials would be immune from damages liability because no previous case had found liability in those circumstances.

Judge Henry
(Ballotpedia)

Murphy ex rel. K.H. v. Morgan, 914 F.2d 846, 851 (7th Cir. 1990) (paragraph break added).  The Massachusetts Appeals Court here sought to fine-tune that balance between the general principle, religious freedom, and the specific distinction between one strict-scrutiny case and the next.

The case is Krupien v. Ritcey, No. AC 17-P-870 (Sept. 26, 2018).  The opinion was authored by Associate Justice Vickie L. Henry.  A graduate of Wellesley College and Boston University Law, Judge Henry left a lucrative commercial litigation practice with Foley Hogg in 2011 to serve as senior staff attorney and youth initiative director for Gay & Lesbian Advocates & Defenders (GLAD).  In that capacity, she appeared in the consolidated cases that became Obergefell v. Hodges (U.S. 2015), establishing the federal constitutional right of gay marriage.  Judge Henry was appointed to the bench by Governor Baker in 2015.

The Adventures of Mass. App. and the 700 Gold Coins

                                                       pnging.com CC BY-NC 4.0

The Massachusetts Appeals Court dove into foreign law and comity today, leaving "700 gold coins" in the possession of an Iranian divorcée.  The case is No. AC 16-P-1131 (Mass. App. Ct. Sept. 25, 2018).

Family law is not my area, but this decision from Mass. App. presented a modest if compelling problem in comparative law.  The divorce of husband and wife precipitated litigation in Iran over the dissolution of the marriage contract and also in Massachusetts over the division of property.  Central in the dispute were "700 gold coins," representing a mahr--a gift from groom to bride in Islamic marriage tradition.

I put "700 gold coins" in quotation marks because I don't think there need actually be 700 gold coins.  The mahr represents a quantifiable asset that is expected to grow in value with the duration of the marriage, thus, at least in theory, providing a divorcée with a time-commensurate award in case of separation.  According to the husband's testimony in Massachusetts court, in event of divorce, the wife may retain the entirety of the mahr, but may receive nothing more.

Despite that testimony, the husband contested award of the mahr in Iranian courts.  He lost at two levels, in trial court and intermediate appellate court in Tehran.  He told the court in Massachusetts that he was appealing to the Supreme Court of Iran.

Meanwhile the trial judge in Massachusetts divided the couple's property assets within U.S. jurisdiction more or less evenly, faithfully to Commonwealth law.  The husband showed that an inherited property in Tehran was wholly under the control of, and generating income for, the husband's mother, so the property was left with the husband as not entwined with the marriage.  But the court awarded the wife an equal share of the appreciation of the property over the course of the marriage.  Other assets were divided evenly.  The court regarded the mahr as an asset of the marriage, so divided it equally as well.  On that latter point, the appellate court reversed.

The principle of comity in international law demands that Massachusetts respect the judgment of a foreign court if it does not run contrary to domestic public policy.  The appellate court found no public policy imperative that would warrant disregard for the Iranian court ruling on the disposition of the mahr.  In the view of the Iranian lower courts, the mahr was the sole property of the wife.  Even if the Iran Supreme Court reverses on that question, no American public policy principle would be offended.  So the Massachusetts trial court abused its discretion in substituting its judgment for that of the Iranian courts on the mahr.  All other rulings of the trial court, including the ruling on the appreciation of the Tehran property, were affirmed.

The courts seemed able to resolve the question presented without expert testimony on Iranian law.  The appeals court relied on the treatment of mahr in a prior New Jersey decision.  Were it necessary, rule 44.1 of both federal and commonwealth rules of civil procedure allows the unusual step of expert evidence on questions of law.  That's fun, because legal scholars get to be experts in court, like experts from other disciplines.  Usually we're relegated to the sidelines.

The opinion was written by Associate Justice Sydney Hanlon, a graduate of Brown and Harvard Law.  Her skills include training for court personnel on dealing with domestic violence, training she has given in central and eastern Russia, as well as the United States, as part of rule-of-law work. 

The court's decision on comity comes at a curious time, with the United States tuning up sanctions on Iran and the EU negotiating with Iran to the express end of undermining U.S. sanctions.  Of course domestic claims playing out against the backdrop of U.S.-Iranian foreign policy is no new thing in American tort law.  See The Adventures of Tort-tort and the Frozen Assets.

John Does on sex-offender registry lose all civil rights claims against state, despite possible errors in listings

Persons listed on a part of the Massachusetts sex-offender registry for perpetrators who "moved out of state" have no constitutional privacy claims, state or federal, against commonwealth officials, despite a possibility of egregious error in listings, the Massachusetts Appeals Court ruled yesterday.  The case is John Doe, Sex Offender Registry Board No. 474362 v. Sex Offender Registry Board, No. 17-P-985 (Mass. App. Ct. Sept. 19, 2018).

Plaintiffs sued officials of the Massachusetts Sex Offender Registry Board (SORB) on theories of procedural and substantive due process under the federal and state constitutions after their names, pictures, and criminal histories were posted on the SORB website as "moved out of state."  The claimants alleged errors in the reporting, both in accuracy of the information and in the propriety of the posting.  The court recited the facts of one egregious case that suggested merit in the allegations of error:

[John] Doe No. 106929 came to Massachusetts in 2005 to attend school. He had previously been convicted in California for engaging in sexual relations with a sixteen year old when he was nineteen years old; California's age of consent was eighteen. After learning that Massachusetts had preliminarily classified him as a level three offender, Doe No. 106929 immediately left Massachusetts, and SORB ceased publishing his photograph and criminal history. Ten years later, in June of 2015, Doe No. 106929 learned through an Internet conversation that SORB had resumed publishing his name and photograph—this time on its "moved out of state" page. The sex offense listed on the page was "rape of a child." Doe No. 106929 received no notice from SORB regarding SORB's new practice, or that his name was being republished on SORB's Web site. Moreover, after Doe No. 106929 left Massachusetts, a court in California had entered an order expunging the record of his sex offense. Doe No. 106929 lost two jobs in California in 2015 once this information was made known at his workplaces.

The SORB abandoned its practice of publishing "moved out of state" records in 2015, but the superior court rejected the state's mootness defense.

Nevertheless, the Appeals Court rejected all plaintiff claims.  Affirming on federal procedural due process, the court held that the defendants were entitled to qualified immunity, because federal case law has not established any clear wrong in privacy violation.  Indeed, federal constitutional law points widely to the contrary.  Affirming on federal substantive due process, the court held that the claimants were unable to meet the demanding "shocks the conscience" standard that can turn what otherwise might be a state tort into a violation of the Fourteenth Amendment.  And reversing on claims under the Massachusetts Declaration of Rights, the court held that the defendants were entitled to sovereign immunity.  The Massachusetts legislature has voluntarily abrogated sovereign immunity for claims of "threats, intimidation or coercion" under the Massachusetts Civil Rights Act, but plaintiffs did not make such claims.

The court's reasoning on constitutional law is sound, but the facts point to the continuing failure of U.S. law to keep pace with Americans' privacy expectations in the digital age, especially relative to the pace of privacy law developments elsewhere in the interconnected world.  John Doe No. 106929's case is especially troubling in light of his California expungement.  Expungement already is an embattled concept—cf. "ban the box" movement—in the age of the internet that never forgets and the refusal of American policymakers to engage with the right to erasure.  For persons who committed crimes but served their time, that can mean stinging and enduring punishment well beyond what society and the justice system already determined was due.  The consequences are even more grave when the punishment is civil in nature, not even necessarily predicated on a criminal conviction.

The state should have no more license to defame or invade privacy than any person.  The common law maxim prized by the renowned Justice Oliver Wendell Holmes, Jr., himself a Bay Stater, asserts that for every wrong, the law provides a remedy (ubi jus ibi remedium).  Yet where digital privacy is concerned, profitable commerce in information seems to be holding at bay common law evolution, legislative innovation, and good sense.

'Have You Seen This Man?': Student newspaper editor on libel hook for campus crime coverage

A suit for defamation and intentional infliction of emotional distress (IIED) may proceed against the former editor of the college newspaper at UMass Boston (UMB) since the Massachusetts Appeals Court reversed summary judgment for the defendant today.  The case, Butcher v. University of Massachusetts, No. 17-P-161 (Mass. Ct. App. Sept. 17, 2018), raises a buffet of compelling issues for the media law buff, to say nothing of the specter of student journalism's uneasy relationship with public university oversight.

The facts are complicated and controverted.  Plaintiff Butcher worked in IT at UMB and took pictures with his cellphone while on a university shuttle bus.  The bus driver accused him of taking pictures of women on the bus; Butcher maintains that he was taking pictures of buses and structures.  After a verbal confrontation, the bus driver and Butcher took pictures of each other.  The driver sent pictures of Butcher to UMB police.  Butcher, using a pseudonym to protect his privacy, he asserted, complained about the bus driver to UMB public safety.

The student newspaper published an item from the police blotter based on the bus driver's report.  That item recounted that "[a] suspicious white male in a black jacket took photographs and video of nearby women, as well as some buildings on campus."  Soon thereafter, the newspaper published in print and online an additional report with the pictures of Butcher and the headline, "Have You Seen This Man?"  The latter report stated that "the man in the photograph allegedly walked around the UMass Boston campus snapping pictures of female members of the university community without their permission."  The gravamen of Butcher's complaint arises from the suggestion that he is some kind of sexual predator.  The newspaper moreover erred in stating that Butcher was reported by a student rather than by a bus driver, and that Butcher took pictures "around ... campus" rather than on the bus.

Identification followed from the newspaper publication of the photographs.  Campus detectives interviewed Butcher and took his university-issued phone over his objection.  Inspection of the phone revealed only the bus and structure photos Butcher had said he took.

Butcher complained of extreme social and professional alienation as a result of the newspaper publications.  He alleged exclusion from important projects at work, "fear and loathing" in stares on campus, and harassment by bus drivers compelling him to walk rather than take the shuttle.

The superior court dismissed claims against UMass on grounds of sovereign immunity and awarded summary judgment on the merits to former student newspaper editor Cady Vishniac.  See her compelling UMass Boston alumna testimonial at the Boston Institute for Nonprofit Journalism.  The Appeals Court reversed as to Vishniac.  Here comes the buffet:

The substantial truth doctrine protected the newspaper on the small stuff.  The appeals court agreed with the lower court that defamation did not arise in the newspaper's plain errors--whether a student or a bus driver reported to police, and where the pictures were taken--because the gist or sting of the erroneous reporting was substantially the same as had the report contained the truth.  I think "around campus" sounds worse than on a bus, but OK, tomato, tomato.

The fair report privilege did not protect the newspaper's recitation of a witness statement to police.  Consistently with state high court precedent, the Appeals Court held that the fair report privilege--which gives journalists latitude to restate even defamatory falsehoods reported in official records, lest the public not be able to ascertain the use of erroneous information to support official action--is not triggered until there is an official police action, such as an arrest.  Because Butcher was not arrested--indeed, because there was no evidence to support an arrest--the fair report privilege never kicked in.  On the one hand, this is a logical construction of the privilege, as without an arrest, the risk of circulating defamatory falsehood outweighs the risk secreting falsehood as a basis of official action. On the other hand, this is a big heads up to editors--from high schools to pros--who mindlessly reprint the police blotter: the allegations of witnesses are as good as direct quotes and need to be fact checked as such.  The common law maxim rings true: the tale bearer is as responsible as the tale maker.

Actual damages include general damages, and reputational injury renders general damages.  Hear me now, believe me later, I say when I teach Gertz v. Robert Welch, Inc.: a limitation to actual damages does not mean only special damages!  Massachusetts law allows defamation to stand only on, and afford recovery only for, actual damages.  The defense here seems to have argued that that rule would preclude Butcher's recovery for want of demonstrable economic loss.  The court observed that Butcher moved on to another job that pays better, though had to forgo his pension plan, so economic loss is not a gimme.  No matter.  Butcher's alleged marginalization at work and social alienation on campus amply support his claim of reputational injury, and that's an actual damage with mental anguish as consequence, notwithstanding proof of economic loss.  General damages for reputation can be substantial in the eyes of jurors, especially jurors who have a distaste for mass media defendants.

Outrageous!  Like other states, Massachusetts allows IIED to proceed only upon conduct that would cause an ordinary person to proclaim, "Outrageous!"--i.e., as the Second Restatement put it, "so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community."  Does "Have You Seen This Man?" fit the bill?  Well, maybe: when viewing the facts in the light most favorable to the party not moving for summary judgment, "as we must" according to the rules of civil procedure, the Appeals Court recalled.  I agree.  A colleague once told me that there are two allegations that destroy a person's reputation virtually beyond repair, even if proved untrue: child molester and racist.  In the #MeToo era, there might be a third.  However much those allegations might masquerade as "opinion" or mere suspicion, they have the force of factual declaration and are socially, if not also economically, fatal.

A subtext in the case is the problem of student journalism's editorial independence at a public university.  For purposes of the litigation to date, Vishniac was represented along with UMB by university counsel.  Will that representation continue now that the university has been dismissed?  Were the university's and Vishniac's interests always interchangeable anyway?  Is UMass Boston prepared to indemnify Vishniac?  Certainly I empathize with Vishniac.  One does not become a college newspaper editor and figure on having to take out libel insurance--whether for me at 20 years old or for Vishniac as a non-traditional student juggling family and educational opportunity.  But media at public universities have long asserted editorial independence by arguing, logically, that a heavy hand in university editorial control, prior review, or censorship would invite litigation against the university--so hands off!  If the university is on the hook either way, it's much more likely to heed demons' whispers when student journalists come 'round trying to follow the money.  And it's not like UMass Boston and money problems haven't met.

Finally, let's not be too quick to the ramparts in defense of journalism here, nor to rally the troops to #MeToo battle.  Notwithstanding the issue of whether the the newspaper reports implicated sexual-predator-like conduct, falsely, it seems to me that the newspaper has a bigger problem if even the bus driver witness only accused Butcher of "snapping pictures of female members of the university community without their permission."  Despite all efforts at making that seem creepy--the newspaper characterizing Butcher as "suspicious" and the bus driver claiming that Butcher hid his face when confronted--it happens that taking pictures of people in public places is legal in America.  It's true.  I checked.  No permission required.  Men or women, no matter.  Some might even call it art.  Europe a different story, long story, but different.  There are narrow exceptions, but they don't seem to be in play here.  I would like to learn that the police's first reaction to the bus driver's complaint was, "Sorry, you said 'suspicious'; could you say a little more about that?"

With remand to superior court, this ain't over.  Happy Constitution Day!

[UPDATE, January 28, 2020:  On December 31, 2019, the SJC ruled, per Justice Lenk: "The decisive question in this case is whether a newspaper can be liable for republishing public police
logs and requests for assistance received from a police department. We conclude that, based on the particular facts of these publications, the fair report privilege shielded Vishniac from liability." Read more at Butcher v. University of Massachusetts, No. SJC-12698.]

Despite IP exclusion, insurer bound to defend in right-of-publicity case over running shoes, Mass. high court holds

Upon an underlying case involving the right of publicity coupled with consumer protection and equity claims, the Massachusetts Supreme Judicial Court (SJC) today held insurers duty-bound to defend an insured running-shoe maker, despite the exclusion of intellectual property claims from coverage.

Abebe Bikila in Rome, 1960

Massachusetts-based Vibram USA, through its affiliate Vibram FiveFingers, named a line of "minimalist" running shoes after Ethiopian Olympic athlete Abebe Bikila, who ran barefoot when he set a marathon world record in Rome in 1960.  (See clips from 1960 and Bikila's 1964 marathon win in Tokyo on the Olympic Channel).  Seriously injured in a car accident in 1969, Bikila died of a cerebral hemorrhage in 1973.  Since then, the family has made commercial use of the Bikila name in enterprises including a Spanish retail sporting goods chain, a Bikila biography, a Japanese commercial, and a biographical feature film.  The family objected to Vibram's association of its shoe with Bikila without permission.

The complaint comprised four counts: (1) right of publicity under the Washington Personality Rights Act, (2) violation of the Washington Consumer Protection Act, (3) unfair competition under the Lanham Act, 15 U.S.C. § 1125(a), and (4) unjust enrichment.  Vibram's general insurance and liability policies with two providers, Salem-based Holyoke Mutual and Maryland Casualty, covered "personal and advertising injury liability," without defining "advertising injury"; however, the coverage excluded intellectual property liability.  The insurers sought, and the superior court granted, declaratory relief from coverage.  The SJC reversed.

To trigger an insurer's duty to defend, the insured need show only "a possibility that the liability claim falls within the insurance coverage."  The duty to defend is broader than the duty to indemnify.  The Bikila complaint alleged that Vibram used Bikila as "an advertising idea."  Bikila family members alleged that they had "intentionally and specifically connected the name to running-related ventures, and the name itself conveys a 'barefoot dedication to succeed under any circumstances,' a desirable quality for any of these ventures."  The insurers were mistaken in arguing that the claim was limited to the right of publicity, or was synonymous with trademark infringement, both IP theories excluded from coverage.  Rather, the essence of the Bikila claim was that Vibram sought to profit from Bikila-associated ideas.

Vibram FiveFingers Bikila Running Shoes (by Fuzzy Gerdes, CC BY 2.0)

From the court's opinion, it is not clear to me which or what combination of claims ensures that a complaint such as this one rises beyond the coverage exclusion.  Count 1 right of publicity by itself would not have been covered by the policy, and it is informative to see that the privacy tort now resides firmly in the IP household.  I suspect that count 3 under the Lanham Act also constitutes an excluded IP claim.  So perhaps statutory consumer protection and equitable quasi-contract each could do the trick.  Yet those theories, in any given case, could overlap wholly with IP claims.  The court's opinion suggests that there is something special about the misappropriation of an "advertising idea" that sets this case apart qualitatively from IP claims.  I'm not sure I see it.

Apparently the "advertising injury" language of the insurance coverage here is not without precedent, and the court gave an informative catalog of the "wide variety of concepts, methods, and activities related to calling the public's attention to a business, product, or service [that have] constitute[d] advertising ideas":

• logo and brand name, Street Surfing, LLC v. Great Am. E&S Ins. Co., 776 F.3d 603, 611-612 (9th Cir. 2014);
• patented telephone service enabling sale and promotion of products, Dish Network Corp. v. Arch Specialty Ins. Co., 659 F.3d 1010, 1022 (10th Cir. 2011);
• advertising strategy of "trad[ing] upon a reputation, history, and sales advantage" associated with Native American made products, Native Am. Arts, Inc. v. Hartford Cas. Ins. Co., 435 F.3d 729, 733 (7th Cir. 2006);
• concept of "Psycho Chihuahua" obsessed with Taco Bell food to advertise business, Taco Bell Corp. v. Continental Cas. Co., 388 F.3d 1069, 1072 (7th Cir. 2004);
• word "NISSAN" to promote vehicles to public, constituting "quintessential example of trademark functioning to advertise a company's products," State Auto Prop. & Cas. Ins. Co. v. The Travelers Indem. Co. of Am., 343 F.3d 249, 258 (4th Cir. 2003);
• use of internet domain, CAT Internet Servs., Inc. v. Providence Wash. Ins. Co., 333 F.3d 138, 142 (3d Cir. 2003);
• artwork and product model numbers designed to promote products (claim for trade dress infringement), Hyman v. Nationwide Mut. Fire Ins. Co., 304 F.3d 1179, 1189 (11th Cir. 2002);
• word "fullblood," connoting desirable quality, to advertise Simmental cattle breed, American Simmental Ass'n v. Coregis Ins. Co., 282 F.3d 582, 587 (8th Cir. 2002);
• agent misrepresenting himself as working for another company for purposes of inducing customers to make purchases, Gustafson v. American Family Mut. Ins. Co., 901 F. Supp. 2d 1289, 1301 (D. Colo. 2012); and
• patented technology used to market music for online sales, Amazon.com Int’l, Inc. v. American Dynasty Surplus Lines Ins. Co., 120 Wash. App. 610, 616-617, 619 (2004).

 "Advertising injury" is not "injury caused by other activities that are coincidentally advertised" (quoting Couch treatise).  "Otherwise stated, '[i]f the insured took an idea for soliciting business or an idea about advertising, then the claim is covered ... [b]ut if the allegation is that the insured wrongfully took a ... product and tried to sell that product, then coverage is not triggered'" (quoting Washington precedent and offering authorities in accord from other states).  Thus coverage is excluded in cases such as:

• use related to manufacture and not marketing, Winklevoss Consultants, Inc. v. Fed. Ins. Co., 991 F. Supp. 1024, 1034 (N.D. Ill. 1998);
• conspiracy to fix egg prices, Rose Acre Farms, Inc. v. Columbia Cas. Co., 662 F.3d 765, 768-769 (7th Cir. 2011);
• disparagement of competitor's pineapples to undermine their advertising, Del Monte Fresh Produce N.A., Inc. v. Transp. Ins. Co., 500 F.3d 640, 643, 646 (7th Cir. 2007);
• advertising another's patented method for cutting concrete, Green Mach. Corp., v. Zurich-American Ins. Group, 313 F.3d 837, 839 (3d Cir. 2002);
• design of product, Ekco Group, Inc. v. Travelers Indemnity Co. of Ill., 273 F.3d 409, 413 (1st Cir. 2001);
• misappropriation of product design, Frog, Switch & Mfg. Co. v. Travelers Ins. Co.,
  193 F.3d 742, 749-750 (3d Cir. 1999);
• taking of customer list and solicitation of customers from it, Hameid v. National Fire Ins. of Hartford, 31 Cal. 4th 16, 19-20 (2003);
• manufacture and sale of patented product, Auto Sox USA Inc. v. Zurich N. Am., 121 Wash. App. 422, 427 (2004).

So memorize those, and let me know when you're ready for the exam.

The case is Holyoke Mutual Insurance Co. in Salem v. Vibram USA, Inc., No. SJC-12401 (Mass. Sept. 12, 2018).  Suffolk Law has the oral argument video of Feb. 6.  The case was heard by the full court upon granting direct appeal, and the unanimous opinion was authored by Associate Justice David A. Lowy, a Boston University law grad and former ADA and Goodwin Proctor litigator.

Statute of repose bars tort-like consumer claim, Mass. high court rules

Yesterday the Massachusetts Supreme Judicial Court (SJC) held that a statute of repose bars a claim under the Commonwealth's key consumer protection statute, chapter 93A.  The case examines the oddly "contort" (contracts-torts) role of 93A and occasions a majority-dissent dispute over judicial construction of statute vs. "usurpation of ... legislative prerogative," i.e., corrective justice vs. distributive justice.

Chapter 93A is important in Massachusetts tort law because it is drawn much more broadly than the usual state consumer protection statute.  In a Massachusetts tort case, chapter 93A often provides a parallel avenue for relief and can afford a plaintiff double or treble damages, as well as fee shifting.  That makes it a powerful accountability tool in areas such as product liability, well beyond the usual consumer protection fare in trade practices.

The SJC, per Justice Cypher, published a sound primer on statutes of limitation and repose:

Statutes of repose and statutes of limitations are different kinds of limitations on actions. A statute of limitations specifies the time limit for commencing an action after the cause of action has accrued, but a statute of repose is an absolute limitation which prevents a cause of action from accruing after a certain period which begins to run upon occurrence of a specified event....  A statute of repose eliminates a cause of action at a specified time, regardless of whether an injury has occurred or a cause of action has accrued as of that date....  Statutes of limitations have been described as a "procedural defense" to a legal claim, whereas statutes of repose have been described as providing a "substantive right to be free from liability after a given period of time has elapsed from a defined event." Bain, Determining the Preemptive Effect of Federal Law on State Statutes of Repose, 43 U. Balt. L. Rev. 119, 125 (2014). The statutes are independent of one another and they do not affect each other directly as they are triggered by entirely distinct events.  [Citations omitted.]

Chapter 93A is covered by a four-year statute of limitations.  A six-year statute of repose covers tort actions arising from deficiencies in improvements to real property: "after the earlier of the dates of: (1) the opening of the improvement to use; or (2) substantial completion of the improvement and the taking of possession for occupancy by the owner."

In the instant case, the plaintiff sought relief for damage resulting from a fire 15 years ago.  The plaintiff attributed the fire to multiple deficiencies in electrical work completed by defendant contractors.  Arguing that the electrical work was not done in compliance with the state code, the plaintiff characterized 93A as "neither wholly tortious nor wholly contractual in nature."  The court, however, found the plaintiff's claim "indistinguishable from a claim of negligence," so barred by the statute.

Three justices dissented.   Chief Justice Gants in dissent pointed out that the general statute of repose does not mention chapter 93A, while the general limitations provision does.  And yet another statute, stating terms of both limitation and repose, purports to govern both contract and tort malpractice actions against doctors.  So the legislature knew how to write what it meant.  The general statute of repose, the chief observed, predated chapter 93A, so could not have anticipated it.  Moreover, statutes of limitation and repose have distinct policy objectives:

In short, as is alleged in this case, the property owner may be barred by the statute of repose from bringing a claim before he or she knows, or reasonably should know, that he or she even has a claim -- even where the defendant has fraudulently concealed the claim from the plaintiff. Consequently, a statute of repose reflects a legislative decision that it is more important to protect certain defendants from old claims than it is to protect the right of plaintiffs to enforce otherwise valid and timely claims.

Thus a statute of repose should not be construed to cover 93A absent plain legislative direction.  The chief concluded: "[T]his is a usurpation of a distinctly legislative prerogative."

The case is Bridgwood v. A.J. Wood Construction, Inc., No. SJC-12352 (Mass. Aug. 29, 2018) (PDF opinion; oral argument via Suffolk Law School).

Mass. App. remands textbook 'keys-in-ignitions' case on foreseeability analysis

Today the Massachusetts Appeals Court published a clean and concise opinion on negligence, focusing on foreseeability as an aspect of duty.  The decision covers basic elements and points of civil procedure, so could be of use to tort profs introducing negligence this semester.  The case is R.L. Currie Corp. v. East Coast Sand & Gravel, Inc., No. 17-P-1186 (Aug. 21, 2018).

The facts are a classic keys-left-in-car-then-stolen scenario, unfortunately involving heavy equipment instead of a car.  Employee of defendant snow-plow service left a front loader running idle and unlocked in a shared company lot.  There had been previous thefts of materials, but not heavy machinery.  Keys were routinely left in unlocked vehicles, but hidden.  In the employee's four-hour absence, the loader was driven by an unknown third party and crashed into two of plaintiff's trucks.

The trial court dismissed for failure of foreseeability, deciding no duty as a matter of law and awarding summary judgment.  The court here aptly reiterated the dual role of foreseeability as an aspect of duty and of causation.  The Massachusetts Supreme Judicial Court previously declined to adopt a doctrine of no liability as a matter of law for "keys left in ignitions" cases, employing general notions of foreseeability instead.  Upon such precedents, the appellate court remanded, concluding that the trial court erred in finding intentional vandalism beyond the scope of foreseeability as a matter of law.

Incidentally, the panel author is relatively new to the court, since July 2017.  Associate Justice Dalila Wendlandt is New Orleans born (close to my heart) and was a proper engineer who built robots at MIT before going to law school, joining the IP litigation group at Ropes & Gray, and publishing in patent law.

[UPDATE, Aug. 25: Only days after this case was decided, shocking video came to light in an ambulance-keys-in-ignition story in my home state of Rhode Island that could fuel law school hypotheticals for months. Miraculously those involved sustained only minor injuries, and complicating matters, the teen perpetrator was autistic. No criminal charges are anticipated. See WJAR Providence.]

3Ps for 1Ls: Advice for the new law student

We have 96 new faces at UMass Law School this fall semester.  New students often ask for advice: how best to prepare for class?  There is no easy answer.  That is, the answer is easy to understand, but there is no getting around the fact that effective law school work is hard.  Here are my three Ps for 1Ls: preparation, perspiration, and postparation.

The first P is preparation.  You have a homework assignment and need to do it.  Especially in a large class, you will be able to hide, so I can’t guarantee accountability.  But not doing the assignment will be your loss.  So many students find themselves too far behind late in the semester, unable to compensate for poor choices early on.  That deficit can become amplified throughout law school.  When class doesn’t cover every aspect of an assignment—we skip cases, or don’t engage with all parts of a case—the student can be misled into thinking that the entirety of an assignment is not important and that the game is in trying to pare down assignments to just what one needs to know.  Make this mistake at your own risk.

Learning in law school is an organic and partly subconscious process.  When you read, for example, an appellate opinion, you are learning much more than what we have time to discuss in class: about jurisdiction, motion practice, client representation, style of argument, standards of review, judicial temperament, and legal writing techniques—not to mention overtones of politics, economics, and culture.  Reading such content across the 1L curriculum is your inculcation of American legal culture, so-called “thinking like a lawyer.”  If you opt out of this process, you will find yourself increasingly lost in law school in a way that will be difficult to put your finger on.  The materials assigned to you have been carefully selected and edited to communicate lessons on the face of the text and between the lines.  Don’t waste the opportunity; you’re paying for it.

The second P is perspiration.  You don’t have to worry about this, because it happens naturally: sweating through class.  Students often are frustrated at the start of law school.  What you thought you prepared thoroughly turns out not to answer the questions asked.  The professor seems not to be giving you “what I need to know.”  Questions often are answered with more questions.  If that’s not often happening in your law school class, then you’re not getting your money’s worth.

Legal education is not like other programs in higher education.  Contrary to popular belief—a belief held even by some misguided university administrators—the job of a law professor in a core course is neither to prepare you for the bar exam nor to prepare you for practice—at least not directly.  To be clear, we calculate that what we do in a core course advances you toward those important goals.  But our aim is not so narrow and not so shallow.  That inculcation of American legal culture again: that’s our aim.  If you can memorize rules and learn IRAC techniques of legal analysis, then you can pass the bar exam.  You don’t have to go to law school for that; you certainly don’t need year-long, five- or six-hour classes for that.  As for the practice of law, that’s much more than we can do in any one class.  The practice of law will be the culminating result of your inculcation of legal culture.  This is the archetype of the whole that is greater than the sum of its parts.

In legal education, the job of the professor is to help you help yourself.  The student bears responsibility for learning.  The process is one of much investment, trial, and often, error and correction.  The professor shows the way through assignments and class work, sometimes correcting the student’s course.  The professor supports you with formative tools; an exam is one of those.  The professor cannot do the work for you, and the professor’s job is not to make the road easy or smooth.  Sometimes a student struggles in dialog with the professor in class and is embarrassed.  There is no cause for embarrassment.  If the student struggled for failure to prepare, then one’s energy would be spent best by circling back to the first P.  If the student struggled because it took time and investment to work toward a productive answer, then the struggle should be worn as a badge of honor.  This is the archetype of growth through adversity.

The third P is postparation.  I’m not the first to use the term.  In legal education, it’s the work you do after a class, related to that class.  As a general matter, you should budget the same amount of time for preparation and postparation.  Both are critical; the learning process is only halfway done when class ends.  Postparation is the time to review what you learned; to pick up the pieces of what you misunderstood or mis-prioritized; to identify remaining knowledge gaps that you will seek to fill by consulting study aids, peers, tutors, TAs, professors; and to build your newly acquired understanding into a comprehensive recall system going forward.  An immediate goal of postparation is to outline a review for the final exam.  By semester’s-end reading days, it will be too late to outline effectively for all of your courses.  More importantly, though, postparation is reinforcement.  Ample empirical research in education has demonstrated that knowledge is committed most thoroughly and fluidly to long-term recall through multiple engagements—at least three.  If you’ve already invested well in the first two Ps, don’t throw away that investment by skimping on the third.

Law school is hard work.  It involves the training of your mind in a new way of approaching problems—not just legal problems, but social and economic problems of public policy.  It takes times and patience to train the mind in a new discipline.  The speed of this acculturation is not necessarily a function of intelligence nor purely a function of determination.  Legal acculturation changes a person, often with collateral ramifications for social, psychological, and even physical health.  Working to the endgame can nevertheless prove worthwhile.  The law is a powerful tool for those who would shape our world.  

Suggested Further Reading:

• Andrew J. McClurg, 1L of a Ride: A Well-Traveled Professor's Roadmap to Success in the First Year of Law School (3d ed. 2017) (Amazon).
• Helene Shapo & Marshall Shapo, Law School Without Fear: Strategies for Success (3d ed. 2009) (West Academic).