Death case against Robinhood tests common law disfavor for liability upon negligence leading to suicide

U.S. CFPB images

The family of a 20-year-old college student who committed suicide has sued the lately notorious Robinhood financial services company.

Filed yesterday in California, the suit has been reported widely (e.g., Fortune), as was the death in the lockdown summer of 2020 (e.g., Financial Times, Forbes).  I feel compelled to mention the case here because, in tragic coincidence, my Torts II class covered suicide in causation just last night.  Hat tip to law student Paul McAlarney, who spied the story at CNBC.  Courthouse News has the complaint. 

In the instant case, decedent Alex Kearns, a sophomore at the University of Nebraska–Lincoln, ran in front of a train while believing mistakenly that he had lost about $730,000 in investments through Robinhood.  The service emailed him to demand a deposit of $178,000 to rectify his negative balance, Fortune explained, without clarifying that he had options in his account that could more than cover the deposit.

I am no investment wiz, but McAlarney said that a representation of negative balance like this is normal in margin trading, and that understanding one's actual position can be "tricky" and "super confusing" for beginners.  Kearns tried three times to reach Robinhood customer service, to no avail; we all know how that goes.

Historically, common law was not friendly to claims of tort liability against actors whose negligence was alleged to have precipitated suicide.  The abrupt and powerfully intentional act of suicide was, and usually still is, regarded as a supervening cause of loss, breaking the chain of legal causation between injury and the conduct of actors earlier in time, and freeing them of legal responsibility.  The rule arose naturally from the social stigma that attached to suicide historically, and, relatedly, the criminalization of the act.

In recent decades, however, the historic common law approach softened.  Understanding of mental health issues diminished the stigmatization of suicide and pushed a wave of decriminalization.  Insofar as suicide remains criminalized or regulated as a civil offense, the rationale today is more often to facilitate mental health intervention than to deter or punish.  Accordingly, courts have evidenced increased willingness to see negligence as a legally cognizable cause in the aggravation of mental illness.

I wrote here on the blog about two cases in the last three years arising in higher education in Massachusetts.  In a case against MIT, in 2018, the Supreme Judicial Court (SJC) held that the defendant university could not be held liable in the suicide of a student, Nguyen, for failure of duty.  However, the Court wrote that it was not rejecting wholesale a university-to-student duty to prevent suicide; rather, on the facts, MIT could not have foreseen the tragedy.  Then in a case against Harvard, in 2019, the Superior Court followed the SJC's lead and refused to dismiss a liability claim in the suicide of a student, Luke Tang (documentary film).  That case is now in discovery (search Middlesex County case no. 1881CV02603).

The civil iteration of the Michelle Carter case, in which Carter, by text message, exhorted teen peer Roy Conrad to commit suicide, would have marked a profound test of the old common law rule, but was settled in 2019.  Pending in the Massachusetts legislature is a bill, "Conrad's Law," that would explicitly criminalize the facilitation of suicide.  Carter was convicted of involuntary manslaughter, and the SJC upheld the conviction as against a First Amendment challenge.  The U.S. Supreme Court denied certioari.

At the end of December, the Sixth Circuit affirmed denial of a Cincinnati school board's motion to dismiss a suit over a third grader's suicide precipitated by bullying.  Professor Alberto Bernabe wrote about the case for his Torts Blog and observed, as to proximate causation, "the court found that the boy’s suicide was plainly foreseeable, especially considering [that] the school’s guidelines on bullying include suicide as a risk."

Tragedy arising from investment losses is not new.  My torts casebook with Professor Marshall Shapo, in the chapter on attenuated duty and causation, noted a mass shooting and suicide by a day trader in 1999.  The Georgia Court of Appeals affirmed summary judgment for the shooter's former employers as against claims by victims.  The court wrote that "the issue of proximate cause is so plain, palpable, and indisputable as to demand summary judgment for the defendants."  The Kearns case relocates the risk to the private home and compounds the matter with investor inexpertise, changes wrought, for better and worse, by the electronic democratization of access to financial markets.

The case is Kearns v. Robinhood Financial LLC, No. 21CV375872 (Cal. Super. Ct. Santa Clara Cty. filed Feb. 8, 2021).

Netflix's 'Enola Holmes' tangles with family copyright

Brown (image by Gage Skidmore 2017 CC BY-SA 2.0)

I quite enjoyed the film Enola Holmes, released on Netflix in 2020, a welcome respite from #QuarantineLife.  Stranger Things sensation Millie Bobby Brown was delightful as the lesser known teen sister of the super-sleuth Sherlock, played with rich arrogance by Henry Cavill.  I did not know then that the movie was based on a YA book series, by fantasy writer Nancy Springer, dating to 2006. 

The Arthur Conan Doyle estate seemed content to let Springer go about the quiet business of spin-off fan fiction, but got its hackles up when Netflix got into the game.  The copyright picture behind Sherlock Holmes is complicated: one might say, a puzzle to be solved.  Some of the works have fallen into the public domain and some have not, and the matter is further complicated by a U.S. copyright regime that protects copyright a full generation longer than British law.

The Doyle estate sued Springer and Netflix in federal court in New Mexico in June for copyright and trademark infringement.  The estate's U.S. licensing representative lives in Santa Fe, an attorney explained to the Las Cruces Sun News.  The case, Conan Doyle Estate Ltd. v. Springer (D.N.M.), was dismissed in December upon stipulation, suggesting the parties reached a settlement.

Claims of copyright in fictional characters are always dicey, because they press the limits of the doctrinal dichotomy in copyright law that only fixed representations, and not ideas, may be protected by copyright.  A character has one foot fixed in a tangible medium of expression, as the law requires, and, at the same time, has one foot in the wind of idea.  In the instant case, the plaintiff advanced one remarkable theory to bolster its position.

The plaintiff suggested that Arthur Conan Doyle in fact authored two distinct versions of the Sherlock Holmes character, and that the fictional Holmes universe created by Springer and Netflix employed specifically the latter incarnation—which, suitably for the plaintiff's case, remains copyrighted.  The complaint explained that before WWI, Holmes was famously "aloof and unemotional," quoting Watson from "The Adventure of the Greek Interpreter" on Holmes's "deficien[cy] in human sympathy," "aversion to women," and "disinclination to form new friendships."  Then:

All of this changed. After the stories that are now in the public domain, and before the Copyrighted Stories, the Great War happened. In World War I Conan Doyle lost his eldest son, Arthur Alleyne Kingsley. Four months later he lost his brother, Brigadier-general Innes Doyle. When Conan Doyle came back to Holmes in the Copyrighted Stories between 1923 and 1927, it was no longer enough that the Holmes character was the most brilliant rational and analytical mind. Holmes needed to be human. The character needed to develop human connection and empathy.

Conan Doyle made the surprising artistic decision to have his most famous character—known around the world as a brain without a heart—develop into a character with a heart. Holmes became warmer. He became capable of friendship. He could express emotion. He began to respect women.

Thus, the complaint posits, Enola Holmes, the story of Sherlock's sister, a figure long marginalized but now primed for redemption, is derivative specifically of post-WWI Sherlock Holmes—©.

Despite the dismissal, you still can enjoy untangling the skein of intellectual property claims in Conan Doyle Estate v. Springer with Alice Chaplin, writing on February 4 for A&L Goodbody's Ireland IP and Technology Law Blog.  Then solve a mystery with Enola Holmes on Netflix.

UK court: Long arm of GDPR can't reach California*

Image my composite of Atlantic Ocean by Tentotwo CC BY-SA 3.0

and "hand reach" from Pixabay by ArtsyBee, licensed

*[UPDATE, Jan. 30, 2022:] On December 21, 2021, the Court of Appeal allowed service on U.S. defendants without ultimately resolving the GDPR territorial scope question.  Read more from Paul Kavanaugh, Dylan Balbirnie, and Madeleine White at Dechert LLP.]

A High Court ruling in England limited the long-arm reach of European (now British) privacy law in a suite of tort claims against Forensic News, a California-based web enterprise doing "modern investigative journalism."

The complainant is a security consultant investigated by Forensic News and a witness in the U.S. Senate Intelligence Committee probe into Russian interference in the 2016 U.S. elections.  A British national, he accused Forensic News of "malicious falsehood, libel, harassment and misuse of private information," the latter based on violation of the British enactment of the European General Data Protection Regulation (GDPR).

The extraterritorial reach of the GDPR has been a hot topic lately in privacy law circles, as U.S. companies struggle to comply simultaneously with foreign and burgeoning state privacy laws, such as the California Consumer Privacy Act (CCPA).  

Forensic News has no people or assets in the UK, but the complainant tried to ground GDPR application in the news organization's website, which accepts donations in, and sells merch for, pounds and euros.  No dice, said the court; it's journalism that links Forensic to the plaintiff and to the UK, not the mail-order side show.

The case is Soriano v. Forensic News LLC, [2021] EWHC 56 (QB) (Jan. 15, 2021).  Haim Ravia, Dotan Hammer, and Adi Shoval at Pearl Cohen have commentary.

Atlas Obscura fills in fuzzy history of title, 'esquire'

Squire (NYPL)

Atlas Obscura has an excellent piece on the title "Esquire" and its connection to the American legal profession.  The writer is L.A.-based freelancer Dan Nosowitz. He writes:

One of the weirder movements in modern American political action attempted to attack a title so vigorously that it would have essentially collapsed the entire history of the American government. The movement didn’t succeed, because it was both factually wrong and wildly misguided, but it was wrong in a really interesting way. It relied on the title "Esquire," which is one of the more common but most unusual ways a person can ask to be addressed.

The essay is Dan Nosowitz, What Does the Title "Esquire" Mean, Anyway?: And What Does it Have to Do with Lawyering?, Atlas Obscura, Feb. 3, 2021.

Birth announcement: Ontario court is reluctant parent of new tort of 'internet harassment'

UNESCO image CC BY-SA 4.0

The tort world is abuzz with a court decision in Ontario that has birthed a new common law cause of action for online harassment.

The facts that gave rise to the case were extreme.  The defendant was the subject of a New York Times story (subscription) on January 30 about the difficulty of remediating online reputational harm.  The perpetrator of the harassment targeted some 150 victims, including children, spat accusations ranging from fraud to pedophilia, and was adjudged a vexatious litigant and jailed for contempt of court.  Floundering in a dearth of effective enforcement mechanisms, the Ontario Superior Court of Justice (para. 171) recognized a "tort of harassment in internet communications" that means to be narrow:

where the defendant maliciously or recklessly engages in communications conduct so outrageous in character, duration, and extreme in degree, so as to go beyond all possible bounds of decency and tolerance, with the intent to cause fear, anxiety, emotional upset or to impugn the dignity of the plaintiff, and the plaintiff suffers such harm.

The case is Caplan v. Atas, 2021 ONSC 670 (Ont. Super. Ct. Jan. 28, 2021).  Jennifer McKenzie and Amanda Branch at Bereskin & Parr have commentary.  Hat tip to Dan Greenberg for bringing the New York Times story to my attention.

Attorney Scaturro talks monument metrics

Grant monument in Chicago (image CC BY-SA 3.0)

Attorney Frank Scaturro has written an in-depth, four-part-essay series on monument destruction for Emerging Civil War, a platform "for sharing original scholarship related to the American Civil War."  Here is part one, and here are links to all four parts.

Scaturro is president of the Ulysses S. Grant Monument Association and is working on a book about "New York City’s largely forgotten sites from the founding era."  I quoted Scaturro writing about Grant's civil rights record here on the blog back in November.  I put a couple of my own coins in the monument meter in October.

Court: UK hospital's mishandling of corpse after suspicious death violated human rights convention

St. James's Hospital is among those managed by the Leeds group

(image by CommsLTHT 2020 CC BY-SA 4.0).

From the eastern shore of the pond comes an unusual spin on the tort of mishandling a corpse.

The usual mishandling case invokes the longstanding common law exception to the rule against recovery in negligence for emotional distress in the absence of physical injury to person or property.  There was more at stake in this case, as The Guardian explained:

The family of a woman whom they suspect was killed has won a lawsuit against a health trust that allowed her body to decompose to the point that experts were unable to rule out third-party involvement in the death ....

The court ruled that the Leeds, England, hospital violated Article 8 of the European Convention of Human Rights, on the right to respect for private and family life.

The case is Brennan v. Leeds Teaching Hospitals NHS Trust, per High Court Judge Andrew Saffman.  I cannot locate the opinion online.  Besides The Guardian, there is more coverage at the Yorkshire Evening Post and Wharfedale Observer.  Hat tip to Professor Steve Hedley's Private Law Theory.  See also Professor Eugene Volokh's compelling 2019 missive on "the tort of loss of sepulcher."

FDA reg doesn't preempt state medical device liability, but plaintiff must plead 'plausible' theory, Court says

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Medical-device liability claims in state courts are not preempted by federal law, the Massachusetts Supreme Judicial Court confirmed Friday, but the plaintiff before the Court failed to meet the pleading standard.

Seeking relief from the pain of osteoarthritis, Plaintiff Dunn received in her knees two injections of "Synvisc-One," a product of defendant Genzyme Corp. and an FDA-approved "Class III medical device," the Court retold.  Subsequently, she "experienced severe side effects, including 'pain and swelling in her knees, difficulty walking, hip bursitis and systemic pseudoseptic acute arthritis," resulting in falls and injuries, including a torn meniscus and broken neck.

The plaintiff sued Genzyme in negligence and product liability and under Massachusetts consumer protection law.  Commonly called "93A," after its codification, the latter theory of unfair or deceptive practices is favored by plaintiffs' lawyers for its allowance of punitive damages upon an up-to-treble multiplier.  Massachusetts allows punitive damages only upon statutory authorization, and 93A is generous, tracking tort liability theories, including product liability, that would not be thought of as statutory consumer protection in other states.

The U.S. Supreme Court ruled in 2008 that state law claims are not necessarily preempted by regulatory approval under the 1976 Medical Device Regulation Act (MDA).  To survive preemption, a plaintiff's claim must parallel, and not exceed, federal regulatory requirements.

Justice Gaziano

Applying the Supreme Court standard, the SJC determined that the plaintiff's claims met the standard.  Specifically, "negligent failure to warn, breach of warranty, negligent manufacture, products liability, and violations of [chapter] 93A—all can be interpreted as coextensive with the comprehensive Federal requirements."

Contrary to implication by the defense, the SJC held that a plaintiff asserting medical-device liability in parallel with the MDA is not required to plead with the high level of particularity (Rule 9(b)) required in fraud.  Rather, the requisite pleading standard is "plausibility": "plaintiffs asserting parallel State-law claims based upon a violation of FDA regulations must articulate only "factual allegations plausibly suggesting (not merely consistent with) an entitlement to relief" (quoting SJC precedent).

Nevertheless, the plaintiff failed to meet that standard.  The complaint alleged foreseeability of "significant dangers," known or reasonably knowable "dangerous propensities," and, as an alternative theory, adulteration or defect of the product.  But the plaintiff alleged no factual support for causation linking the injection to the injury other than "temporal proximity."  Evidence of other complaints about the product would have helped, the Court suggested.  But deficiency of pleading does not entitle a plaintiff to discovery.

Accordingly, the Court reversed the trial court's denial of the defense motion to dismiss.

The case is Dunn v. Genzyme Corp., No. SJC-12904 (Mass. Jan. 29, 2021).  Justice Frank M. Gaziano authored the opinion of the unanimous Court.

Court: Employer has no free speech right to republish worker healthcare data that state provides conditionally

Confidential (Nick Youngson Alpha Stock Images CC BY-SA 3.0)

An employer has no First Amendment right to republish the identity of workers who relied on publicly subsidized healthcare when the state provides the names conditionally, for restricted use, the Massachusetts Appeals Court held yesterday.

A state program imposed assessments on employers whose employees relied on publicly subsidized healthcare.  The state offered to tell the employer which employees triggered assessment, so that the employer could review, and if appropriate challenge, the assessment. But the names came with strings attached: employers were required to promise that they will use the names in the administrative process only and not republish them.

Emerald Home Care, Inc., challenged the assessment program and conditional disclosures as violative of procedural due process and the First Amendment.

Affirming the Superior Court, the Appeals Court rejected both arguments.  As to due process, the state provided employers ample notice and opportunity to be heard in resisting the assessments.  As to the First Amendment, the state may attach conditions to access to confidential information.

In the First Amendment analysis, the court cited two U.S. Supreme Court oldies but goodies: LAPD v. United Reporting (1999) and Seattle Times v. Rhinehart (1984).  In LAPD, the Court allowed a statute to condition access to criminal histories on non-commercial use.  In Seattle Times, the Court allowed a protective order on discovery disclosures in a defamation-and-privacy case in which a newspaper was the defendant.

Justice Desmond

The Appeals Court applied intermediate scrutiny, drawn from Seattle Times.  The court reasoned that confidentiality in healthcare insurance information is an important state interest, and the restrictions on disclosure were closely tailored to the purpose of maintaining confidentiality while allowing the employer limited access for the purpose of administrative review.

The case is not remarkable for its holding, but it marks an ongoing tension between U.S. and foreign law over free speech, privacy, and data protection.  In the United States, the First Amendment often is a wrench in the works of government efforts to regulate information downstream from its disclosure to a third party.  Legal systems elsewhere in the world are more comfortable with the notion that a person's privacy rights may tag along with information in its downstream transfer from hand to hand, outweighing the free speech right to republish.

I noted some years ago that in some areas of U.S. law, including freedom of information (FOI), or access to information, we can see examples of American privacy expectations that accord with, not diverge from, European norms.  Downstream control by contract has been a key advancement in making some jurisdictions willing to furnish court records to information brokers.  Binding a broker to adjust records later as a condition of receipt helps to solve problems such as expungement, the American judiciary's equivalent to the right to be forgotten.

The case is Emerald Home Care, Inc. v. Department of Unemployment Assistance, No. AC 20-P-188 (Mass. App. Ct. Feb. 2, 2021).  Justice Kenneth V. Desmond Jr. authored the opinion for a unanimous panel that also comprised Chief Justice Green and Justice Lemire.

Collateral to drug-testing race discrimination suit, Boston wins chance to demand indemnity by lab

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Is hair-follicle drug testing racially discriminatory?

That was not the question before the Massachusetts Supreme Judicial Court Friday, but the Court's decision ancillary to that disparate-impact civil rights question is instructive on indemnity.

The civil rights claim in this case was filed in 2005 and still is in litigation in federal court.  Plaintiffs in that suit are eight police officers, a police cadet, and an applicant for a 911-operator job who suffered adverse action after testing positive in hair-follicle drug tests administered by the City of Boston.  Seven of the officers were fired for cocaine-positive results.

The plaintiffs, all African American, deny drug use.  They assert that the test is inaccurate and "disproportionately yielded false positives for people of color, resulting in disparate impact by race," the SJC wrote Friday.  "During the eight years for which the plaintiffs present data, black officers and cadets tested positive for cocaine approximately 1.3% of the time, while white officers and cadets tested positive just under 0.3% of the time," the First Circuit wrote in 2014.

The city won summary judgment twice in the trial court, yet the First Circuit twice found error, in 2014 and in 2016, and remanded for further proceedings.  The case, Jones v. City of Boston, remains in the district court, though the docket shows no activity on the merits since the latter remand, suggesting a resolution might have been reached.

The instant case is a dispute in state court between the city and the test provider, Psychemedics Corp.  In the city's contract with Psychemedics, the company promised "to 'assume the defense of' the city, and to 'hold [it] harmless' from all suits and claims arising from 'wrongful or negligent' acts by Psychemedics."  After suit was filed against the city, it went to Psychemedics to talk defense.  It's not clear that the two ever got on the same page.  Psychemedics seemed to regard the suit as outside the scope of the indemnity and regarded its obligations fulfilled by offering the city technical assistance on the science.

Then, as the SJC recounted flatly, "Ten years passed."  In 2017, the city started looking around for help with its long mounting legal expenses and set its sights on Psychemedics.  "What?!" Psychemedics said.  I paraphrase.  Psychemedics sued for declaratory relief, and the city counterclaimed for breach of contract and related theories.

The case boils down to an indemnitee's duty to notify an indemnitor of the need to defend.  An indemnitee, the Court held, "must give the indemnitor 'notice and an opportunity to defend.'  The indemnitee then must allow the indemnitor to take over the defense (if it attempts to do so), and must not later block the indemnitor from doing so."  Parties are free to contract specifics, but in the absence of other specification, "'no particular form of words is necessary' to present notice and the opportunity to assume the defense."  (Citations omitted throughout.)

Justice Lenk

The SJC vacated the trial court summary judgment for Psychemedics and remanded.  The trial judge had improperly decided questions of fact, inadvertently burdening the city with having to refute the company's assertions of fact.  The SJC rejected as unproved, as yet, a number of Psychemedics theories, such as that the city had declined the company's defense or had not litigated Jones in good faith as to protect Psychemedics from liability.

To my novice reading—I am no expert on insurance or indemnity—the city fairly invoked the company's duty to defend many times, and Psychemedics tried to weasel out.  Anyway, the SJC concluded that that was how the trial court should have looked at the case on summary judgment motion, because that was the position of the city, which was the non-moving party.

The case is Psychemedics Corp. v. City of Boston, No. SJC-12903 (Mass. Jan. 29, 2021).  Justice Barbara A. Lenk, since retired, authored the opinion of the unanimous Court.