Massachusetts General Laws Chapter 93A and 176D have long provided the plaintiffs’ personal injury bar with an exceptionally sharp check on insurance carriers’ settlement practices. While many claims under Chapter 93A/176D appear from the outset to be pro forma, a recent Massachusetts Appeals Court in Chiulli v. Liberty Mutual Insurance, Inc., 97 Mass. App. Ct. 248 (2020) illustrates the perils of Chapter 93A/176D violations in settlement practices and the substantial penalties that may be imposed in the event of a finding of willful and/or knowing violation of good faith and equitable settlement practices.

 

Factual Background

Chiulli arose from a physical altercation at a prominent Boston restaurant in 2008. Shortly before the altercation, restaurant staff separated two groups of individuals involved in a spirited argument over the occupancy of a certain barstool but allowed both groups to remain on the premises. Unfortunately, the argument soon turned violent. Chiulli was knocked unconscious and sustained a traumatic brain injury. 

 

Chiulli, in turn, filed suit against the Restaurant, its parent company, and the opposing combatant seeking medical damages in excess of $600,000. He asserted a negligent security claim against the Restaurant and its operating group claiming they failed to reasonably address the initial altercation by not removing the respective parties from the premises and failing to ensure that the factions did not leave the premises together which was bolstered by expert testimony. The Restaurant did not offer its own expert and instead argued that it conducted itself in a reasonable manner in addressing the argument and altercation.

 

The case went to trial in 2012. The only settlement offer extended prior to or during trial was an offer for $150,000 made by the Restaurant’s primary insurance carrier. The three-week trial ended in a plaintiff’s verdict finding that both the Restaurant and its operating company were each 45% at fault for the altercation. The jury awarded Chiulli approximately $4.5 Million in damages.

 

Post-Verdict Claims Handling

After confirming that the primary carrier did not tender its policy limits of $1 Million to the Restaurant’s excess carrier, Chiulli served Chapter 93A demand letters on both carriers 16 days after the verdict. There, Chiulli alleged that both insurers failed to effectuate a fair and prompt settlement of the underlying tort action despite the fact liability was reasonably clear vis-à-vis the jury verdict. Chiulli sought $5.7 Million “to resolve the [underlying tort] case, and to avoid further litigation” wherein he would seek multiple damages under Chapter 93A.

 

Twenty-two days after the underlying verdict, the Restaurant’s primary carrier still had not tendered its policy limits, which resulted in the excess carrier serving its own demand upon the primary carrier. The primary carrier soon acquiesced and tendered its $1 Million policy limit to the excess carrier. During this timeframe, Chiulli served a second Chapter 93A demand on both carriers. This time, he sought $5.7 Million to resolve the tort case and an additional $10 Million demand to resolve putative bad faith settlement claims against both insurers.

 

The excess carrier, taking


Continue Reading Lessons to the Wise in Unfair Settlement Practice Litigation – Recent Massachusetts Appeals Court Decision Illustrates Austere Potential of Chapter 93A/176D Claims

July 18, 2019–MG+M’s Jeff McLucas successfully defended the summary judgment dismissal of a wrongful death civil case stemming from the shooting, and ultimate death, of a drive-by shooting victim in Boston that occurred on a public sidewalk adjacent to a housing development. Holloway v. Madison Trinity Limited Partnership, 2019 WL 3227215, Appeals Court of Massachusetts No. 18-P-1323 (July 18, 2019).

The decedent was shot by unidentified individuals who were never apprehended, initially paralyzed and eventually passed away from complications stemming from her injuries. The Plaintiff brought negligence claims against the operator and manager of the adjacent housing development claiming that the Defendants failed to provide adequate security in the area or to warn her about the dangers presented by criminal activity in the neighborhood. Massachusetts Superior Court Justice Paul Wilson granted summary judgment in favor of the Defendants finding that there was no legally actionable duty of care running from the Defendants to the decedent in the circumstances presented by the case. MG+M successfully defended the appeal of the dismissal.

The subject shooting incident occurred on a public street and sidewalk adjacent in the neighborhood known as Orchard Gardens which was previously operated as a public housing project by the Boston Housing Authority (BHA) and known as Orchard Park. The neighborhood was substantially redeveloped in the late 1990s and subsequently operated by the Defendants pursuant to an agreement with the BHA. Orchard Park was plagued by widespread drug trafficking and violence which persisted after the neighborhood was developed into Orchard Gardens.
Continue Reading MG+M Prevails at Massachusetts Appeals Court in Wrongful Death Shooting Case

Published Decision: Knox v. MetalForming, Inc., 914 F.3d 685 (1st Cir. 2019)

MG+M Boston Attorneys Javier Flores, Eric Skelly, and Thaddeus Lenkiewicz authored the appellate briefing. Attorney Flores presented oral argument.

The extent to which state and federal courts may exercise specific personal jurisdiction over foreign defendants has long been an area of ambiguity and disharmony. Notably, the U.S. Supreme Court’s two most recent attempts to address the issue both failed to produce a majority opinion. The lower courts have thus been tasked with delineating the boundaries of jurisdictional authority, armed only that the competing tests articulated in the Supreme Court’s fractured pronouncements. On January 30, 2019, the Court of Appeals for the First Circuit issued a decision in the matter of Knox v. MetalForming, Inc. and Schechtl Maschinenbau GmbH[1], which provides much needed clarity concerning the relevant factors and applicable standards for the exercise of personal jurisdiction over foreign product manufacturers.

  1. Case-Specific Jurisdiction Precedent and the Stream-of-Commerce Analysis

For the exercise of personal jurisdiction to be constitutional, a defendant must have “certain minimum contacts” with the forum state such that the maintenance of the suit does not offend “traditional notions of fair play and substantial justice.”[2] In the absence of general jurisdiction, a plaintiff must establish that the court has case-specific jurisdiction over the defendant, for which a three-part test applies. First, the plaintiff’s claim must directly arise out of, or relate to, the defendant’s forum-state activities. Second, the defendant’s forum contacts must represent a purposeful availment of the privilege of conducting activities in the forum state. Third, the exercise of jurisdiction must be reasonable.

While the test is well established, it is “’not susceptible of mechanical application” and requires a highly fact-specific inquiry.[3] Particularly, the Supreme Court’s efforts to provide guidance in the application of “purposeful availment” prong to foreign manufacturers has resulted in competing variations of the so-called “stream-of-commerce” test. The Supreme Court first set forth the “stream-of-commerce” standard in World-Wide Volkswagen v. Woodson, stating that a “forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State.”[4] In Asahi Metal Indus. v. Super. Ct., Justice O’Connor, writing for three other justices, stated that placing a defective product into the stream of commerce combined with “an intent or purpose to serve the market in the forum State” satisfied purposeful availment.[5] This “stream-of-commerce plus” standard, sought “[a]dditional conduct of the defendant” to “indicate an intent or purpose to serve the market in the forum State.”[6] Examples included designing the product for the market in the forum state, advertising in the forum state, establishing channels for providing regular advice to customers in the forum state, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum state.[7]

The Supreme Court revisited its stream-of-commerce precedent most recently in J. McIntyre Mach., Ltd. v. Nicastro.[8] There, the plaintiff was injured in New Jersey while operating a machine that was manufactured in England by J. McIntyre Machinery (“McIntyre”), sold to a U.S. distributor, who in turn sold and shipped the machine to New Jersey. In a split opinion, the Supreme Court ruled that the New Jersey courts lacked jurisdiction over McIntyre. Both Justice Kennedy’s plurality opinion and Justice Breyer’s concurrence emphasized that McIntyre did not have a single contact with New Jersey apart from the fact that the machine in question ended up there.[9] Justice Kennedy, joined by three other justices, stated the stream-of-commerce “metaphor” merely acknowledges the “unexceptional proposition” that “a defendant may in an appropriate case be subject to jurisdiction without entering the forum . . . as where manufacturers or distributors seek to serve a given State’s market.”[10] Justice Kennedy continued that jurisdiction is appropriate only where the defendant “can be said to have targeted the forum.”[11]

In a concurrence, Justice Breyer rejected the plurality’s “strict rules that limit jurisdiction where a defendant does not intend to submit to the power of a sovereign and cannot be said to have targeted the forum.”[12] He observed that the case could be decided merely by applying the Court’s existing precedents and did not require the Court to promulgate a new standard. Justice Breyer noted that the Court had never held that a single isolated sale is sufficient.[13] Thus, McIntyre was not subject to the court’s jurisdiction because there was no evidence of a “regular flow or regular course of sales in New Jersey” nor the examples of “something more” identified in Asahi.[14] Courts have subsequently recognized Justice Breyer’s opinion as the narrowest grounds for the Court’s decision, and thus the binding opinion.[15]
Continue Reading MG+M Prevails on behalf of a distributor before First Circuit and Overturns the District Court’s Dismissal of a Foreign Manufacturer for Lack of Personal Jurisdiction

MG+M Boston Attorneys Eric Skelly and Christos Koutrobis successfully obtained dismissals for two clients in James T. Casey, Jr. v. Apax Partners et al., 1:18-cv-11211-DJC, a case that was pending at the U.S. District Court for the District of Massachusetts. On behalf of MG+M’s foreign client, a motion to dismiss for improper service and lack of personal jurisdiction was granted by Judge Casper. MG+M navigated a voluntary dismissal for its other client through the discovery process by demonstrating, based on the evidence, that the client was not liable for the product at issue.

Plaintiff alleged in his lawsuit that he was ordered to wear an electronic monitoring bracelet as part of his pre-trial probation. In his complaint, he stated that the bracelet wrongfully indicated that he was outside of the approved geographic area, which resulted in two days of imprisonment. As such, he brought forth claims against the defendants under the Massachusetts’ consumer protection laws as well as claims for design defect and negligence.

In its decision on defendant’s motion to dismiss, the Court highlighted Plaintiff’s allegation that the defendant, a foreign entity, was liable because its unidentified affiliate assumed the rights and liabilities of the former manufacturer of the electronic monitoring bracelet. The Court noted that even if the Plaintiff established that this affiliate conducted activities in Massachusetts that would subject it to the Court’s jurisdiction, Plaintiff still would need to prove that the affiliate’s conduct could be imputed to the foreign entity by “piercing the corporate veil.” Under Massachusetts law, corporations are presumed to be separate entities. To ignore corporate separateness a party must demonstrate: 1) “active and direct participation by the representatives of one corporation, apparently exercising some form of pervasive control, in the activities of another and there is some fraudulent or injurious consequence of the intercorporate relationship;” or 2) “a confused intermingling of activity of two or more corporations engaged in a common enterprise with substantial disregard of the separate nature of the corporate entities, or serious ambiguity about the manner and capacity in which the various corporations and their respective representatives are acting.” My Bread Baking Co. v. Cumberland Farms, Inc., 353 Mass. 614, 619 (1968). Plaintiff attempted to satisfy these requirements through evidence that suggested the foreign entity merely advised its unidentified affiliate during the acquisition of the electronic monitoring business. The Court, however, held that this evidence fell short of the threshold to disregard corporate separateness and “pierce the corporate veil.” Accordingly, the Court held that it did not have personal jurisdiction over the foreign entity.

This decision reinforces the long-standing principle of corporate separateness and should be beneficial to foreign defendants challenging personal jurisdiction in the future.
Continue Reading MG+M Obtains Dismissals in the U.S. District Court for the District of Massachusetts for Two Clients in Defective Electronic Monitoring Bracelet Case

The overwhelming majority of courts (including all seven federal circuits that considered the issue) have rejected the so-called “innovator liability” doctrine.[1]  In 2017, however, the California Supreme Court in T.H. v. Novartis Pharm. Corp.[2] unanimously recognized the doctrine holding that brand-name prescription drug manufacturers owe a duty to warn to consumers who use generic drugs.[3]  In March of 2018, the Massachusetts Supreme Judicial Court (SJC) considered the issue, and took a middle ground.  Specifically, in Rafferty v. Merck & Co., Inc.,[4] the SJC held that plaintiffs who ingest the generic form of a drug may bring failure to warn claims against the brand-name manufacturer of the drug if the brand-name defendant acted recklessly by “intentionally fail[ing] to update the label on its drug while knowing or having reason to know of an unreasonable risk of death or grave bodily injury associated with its use.”[5]  In so doing, the SJC reasoned that a plaintiff is, in fact, injured by a brand-name product’s label despite never having used said product because statutes require identical labeling of the generically manufactured version.[6]

The Facts

In 2010, a physician prescribed Finasteride, the generic version of the brand name drug Proscar, to treat Rafferty’s enlarged prostate.[7]  Rafferty experienced anticipated temporary side effects from the drug, causing him to stop taking the medication.[8]  Rafferty, however, continued to experience these side effects and his physician informed him that they could actually continue “indefinitely.”[9]  The potential lifelong side effects of this drug were not disclosed within the brand-name manufacturer’s nor the mirrored generic manufacturer’s warning label.[10]  Rafferty presented evidence that the brand-name manufacturer became aware of these potential long-term side effects by 2008, when it updated Proscar’s warning label in select European markets to include this risk.[11]

Rafferty filed suit against the brand-name manufacturer in 2013, asserting a claim of negligence for, inter alia, failure to warn and for violation of the Commonwealth’s Consumer Protection Statute, G.L. c. 93A.[12]  The Superior Court dismissed Rafferty’s claims, “ruling that [the brand-name defendant] owed no duty of care to [him].”[13]  The SJC took over the case by its own motion from the Appeals Court.[14]

The SJC Weighs In

Traditionally, Massachusetts has not recognized liability for products manufactured by others.[15]  However, the SJC noted that The Restatement (Third) of Torts allows a modification to this general rule in exceptional cases.[16] The SJC considered innovator liability to require such a modification given the certainty that a user of a generic drug will rely on the label fashioned by the brand-name manufacturer and as state law shields failure to warn claims from generic manufacturers, leaving plaintiffs without recourse for their injuries.[17] However, the SJC also recognized that imposing innovator liability could impact the public policy of encouraging innovation in the drug market and a potential increase in drug pricing.[18]

Balancing these competing interests, the court held that, “a brand-name manufacturer
Continue Reading Massachusetts Stakes Out a Middle Ground and Allows Brand Drug Liability for Generic Drug Labeling Claims Upon a Showing of Recklessness and Serious Harm