For Wine, Old = Good . . . For Legal Claims, Not So Much.

A federal court just taught a valuable and expensive lesson to a wine connoisseur:  Unlike wine, legal claims age poorly.   In the late 1980’s, billionaire William I. Koch bought bottles of wine represented to have belonged to President Thomas Jefferson.  When he discovered that Thomas Jefferson actually had not owned the wine in question, he sued Christie’s Auction House for fraud in New York federal court.  However, the Second Circuit recently upheld the district court’s dismissal based on an expiration of the statute of limitations.  See Koch v. Christie’s Intern. PLC, — F.3d —-, NO. 11-1522-CV (2d Cir. October 04, 2012).

Koch’s argued  that Christie’s promoted as authentic a cache of wine that was supposedly bottled in the late 1700’s and linked to Thomas Jefferson.   Koch alleged that these “Jefferson wines” were, in fact, counterfeit, and that Christie’s knew or recklessly did not know of the wines’ dubious nature.  Koch purchased four bottles of the now discredited Jefferson wines from third-party dealers in November and December 1988, allegedly relying on promotional representations made by Christie’s.  In 2010, he brought suit on the issue alleging fraud and racketeering by Christie’s.

In 2011, a district court judge dismissed the case, finding Koch had missed the statute of limitations on the racketeering claim.  The heart of the issue was the operation and scope of “inquiry notice.”  Attorneys for Christie’s argued that news coverage of the Jefferson wine issue should have put Koch on notice at least ten years prior to his filing suit.  Koch argued that inquiry notice doesn’t trigger the running of the statute of limitations.  Instead, he said the statute doesn’t begin to run until a plaintiff has knowledge of a defendant’s scienter, as well as the alleged injury.

The Second Circuit agreed with the district court, holding that the statute of limitations began to run when there were “storm warnings” that should have prompted Koch to inquire into as to whether he has been injured.   It noted that the “storm warnings” need not spell out every aspect of the alleged fraudulent scheme.   The “warnings” will be sufficient to start the running of the statute of limitations when they would suggest to an investor of ordinary intelligence that he has probably been defrauded. Perhaps the District Court Judge, John Koeltl, put it best: “For wine, timing is critical, the same is true of causes of action.”

Starbucks Wins in a Case of Hot Tea Versus Old Lady

In honor of the Tea Party’s victory/destruction of the country as we know it, we here at Abnormal Use take this opportunity to write about tea. Not just any tea, mind you, but extremely, piping hot tea. Tea so hot, that if you removed the lid and poured it on your body, it would burn you just as if it were brewed in the fires of Hephaestus himself. A tea so destructive and ominous that it has earned the street name of “2012.” Notice that if you remove the “0” from 2012, you find yourself with 212, which is the Fahrenheit temperature at which water boils, so obviously, the imminent collapse of humanity has much to do with boiling hot tea.

Unfortunately, this is 2010, a time in which poor 76-year-old Plaintiff Rachel Moltner simply cannot subsidize her own negligence with the profits of the mega-corporation Starbucks. In yet another hot beverage case, we see a purportedly evil-beverage serving corporation forcing consumers to burn themselves and then legally smiting the innocent consumer via summary judgment, surely while the CEO lights his cigar with $100 bills and guffaws mercilessly.

On Tuesday of this week, the Second Circuit affirmed a grant of summary judgment to Starbucks against Moltner in Moltner v. Starbucks Coffee Co., No. 09-4943-cv, 2010 WL 4291299 (2d Cir. Nov. 2, 2010) [PDF]. After several months of ordering a weekly regular sized hot tea, Ms. Moltner upgraded to the “Venti,” a 20-oz behemoth of a beverage. The tea was double-cupped and sleeved, the purpose of which, was, of course, to protect the consumer from burning her hand on the very hot elixir. Moltner was handed the beverage, lid in place. She then ambled over to a table to pour some sugar into her tea. As she removed the lid, she poured some tea into her shoe, causing her burns necessitating skin grafts, as well as some secondary injuries related to her hospital stay, including bed sores, a fractured sacrum, and some herniated discs. (As an aside, Ms. Moltner’scoffee name” was Plaintiff Oldy McOlderton.)

Per the district court, however, at Moltner v. Starbucks Coffee Co., No. 08 Civ 9257, 2009 WL 3573190 (S.D.N.Y. Oct. 23, 2009), plaintiff’s counsel tried to spin this double cupping: “Plaintiff alleges that the double cup constitutes a dangerous defect . . . .” While a double cup may be inadvisable or ineffective in other walks of life, here, in fact, it was no defect. Furthermore, expert suppositions about grip positioning or finger size were likewise dismissed. (We’d like to see the CV of the tea cup grip positioning expert.). Plaintiff also tried to make some hay with an apparent directive from Starbucks to its employees that they not double cup because it changes the cup’s center of gravity. Seriously. I have never thought about ensuring that my beverages have a low center of gravity. Unfortunately for her, Ms. Moltner’s quest for not more than $3 million dollars ended in a sweet and frothy summary judgment. Pour some sugar in that.

Lest you think me heartless, I do empathize with Ms. Moltner. I don’t wish injury upon anyone, but spilling a hot beverage on yourself is not grounds for a cause of action. It wasn’t in 1992, and it isn’t 18 years later. It’s just carelessness or bad luck or the whims and caprices of the fates. Please just accept some responsibility and be careful when you double cup.

El lagarto es peligroso, but not compensable

We’ve all come to expect a certain level of cost-cutting with airlines. With that in mind, we offer our thanks to Gothamist, who provides this story about Plaintiff Monserrate Luna, who has appealed an order granting summary judgment against her in last year’s Luna v. American Airlines, 676 F. Supp. 2d 192 (S.D.N.Y. 2009). Ms. Luna seeks to protect the quality of airline food for all of us via a tort suit with a $15 million demand. Her complaint – she orally palpated “‘a chunk of lizard’ that was mixed in with her food.” Earlier this year, Ms. Luna appealed the federal district court’s grant of summary judgment, and the appeal is now pending before the Second Circuit. If Ms. Luna wanted a viable lawsuit, she should have just swabbed a few areas of the plane and cultured the innumerable diseases that live there. Nevertheless, Ms. Luna decided that food safety is a greater priority. Just ask Roger Murdock.

The lawsuit is what you would expect. Ms. Luna placed some of the chicken meal in her mouth, found that she could not chew or swallow part of it, and removed it from her mouth. Her five-year-old-son remarked that the removed portion looked like a small animal, surely along the lines of the how this pancake bears the images of Mary and Jesus (or perhaps a “bedouin and Santa Claus”). Ms. Luna then placed the reptilian regurgitant in a napkin to more fully discuss the matter with a crew member. There was some disagreement whether the partially masticated mess was a lizard or a feather. Nevertheless, the crew member offered to wrap the item for Luna so that she could preserve it and make a formal complaint. Luna apparently refused, and the crew trashed the lizard. Surprisingly, Luna claimed diarrhea and emotional distress.

You can read the rest of the summary judgment order yourself. I will note that valuable resources of the federal judiciary were occupied hearing the motions and writing the 41 page order in this case. Moreover, there was a fair amount of discovery taken in this case, with the plaintiff deposed not once but twice. Perhaps the airline’s attorney could not believe what he heard the first time. There was also some talk of Luna amending her complaint to add sasquatch fur as a second foreign object, and the airline was forced to conduct discovery on the existence of Bigfoot.

I now fear that someday I may be writing on discovery relating to sasquatch. After all, if Luna had alleged that she had sasquatch fur in her food (and had retained the fur), wouldn’t that be a cognizable claim? My hope is that the sasquatch case is filed in South Carolina, and I get to be a part of that discovery.

Judgment in Favor of Zyprexa Manufacturer Upheld in at least Two Matters

On October 4, 2010, Second Circuit Judges, John M. Walker, Jr., Jose A. Cabranes, and Chester J. Straub, upheld the decisions of the Eastern District Court of New York in two lawsuits filed against Eli Lilly & Company, manufacturer of Zyprexa. Belcher v. Eli Lilly & Co., No. 09-5004-CV, 2010 WL 3853003 (2d Cir. Oct. 4, 2010) and Gove v. Eli Lilly & Co., No. 10-216-CV, 2010 WL 3852840 (2d Cir. Oct. 4, 2010). Lawsuits against Eli Lilly & Company (“Eli Lilly”) began to be filed around the country by plaintiffs alleging that its anti-psychotic medication, Zyprexa, caused them to suffer from diabetes. Plaintiffs asserted that if Eli Lilly had properly warned of the drug’s dangers, they would have never been prescribed the drug and not developed diabetes. These similar lawsuits around the country were transferred to the Eastern District of New York pursuant to an order of the Judicial Panel on Multidistrict Litigation. The Belcher and Gove matters discussed here were both decided in favor of Eli Lilly on motions for summary judgment. Thereafter, these appeals were filed.

The Belcher matter was decided in favor of Eli Lilly solely on the ground that her claim was barred by the statute of limitations. Applying California’s discovery rule and its two year statute of limitations for product liability and personal injury actions, the Second Circuit upheld the decision of the Eastern District Court of New York. California was the applicable law since the matter was filed in California and the events giving rise the action occurred there. The Second Circuit found that the statute of limitations began to run in October 2001 when a physician who knew the association between the drug and increased weight gain and blood glucose levels prescribed Zyprexa. Her claim was barred as it was filed in February 2006. The decision of the District Court dismissing the action was upheld.

The Gove matter was also decided in favor of Eli Lilly on the ground that her claim was barred the by the statute of limitations as well as on the ground that Gove had failed to establish that Eli Lilly’s failure to warn was the proximate cause of her injuries. The Second Circuit upheld the District Court’s decision merely on the ground that Gove failed to establish proximate cause. The applicable law in this matter was Arizona’s substantive law because this matter was filed in Arizona and the events giving rise the action occurred there. The Second Circuit found that Arizona recognized the learned intermediary doctrine but applied the “heeding presumption” by shifting the burden of production to the manufacturer. If the manufacturer meets this burden, the burden shifts to plaintiff to show proximate cause. Applying these principles, the Second Circuit found Eli Lilly’s presumption satisfied by evidence that Gove’s nurse practitioner that prescribed the drug testified that an alternative warning would not have affected her prescribing habits. Further, because Gove’s practitioners were aware of the risks and would not have changed their treatment decisions, the Second Circuit found that Gove failed to establish proximate cause. The Court upheld the decision of the District Court.

Who was Leo Klugherz?

This past Tuesday, Orin Kerr of The Volokh Conspiracy remarked upon the case of United States v. Kirschenblatt, 16 F.2d 202 (2d Cir. 1926), a notable Fourth Amendment case in which future U.S. Supreme Court Justice John Marshall Harlan II – then an Assistant U.S. Attorney – argued before a Second Circuit panel which included the famed Justice Learned Hand, who ultimately authored the opinion in that case. Kerr noted playfully: “Counsel for the defendant, a Mr. Leo Klugherz, is slightly less known.” Perhaps so.

But that prompted our diligent researchers here at Abnormal Use to do a bit of cybersleuthing and investigation into the past of Mr. Klugherz. Who was this unsung participant in this case who once stood in a room with a future U.S. Supreme Court Justice and one of the most famous jurists never to serve on that Court? What’s his story, and what became of him?

All we know from the Kirschenblatt opinion is that he was a criminal defense lawyer who represented those accused of doing those things that were illegal during Prohibition.

Klugherz is certainly not remembered on the Internet. A simple Google search of “Leo Klugherz” reveals very little, and in fact, the most prominent result is Kerr’s post.

So we dug deeper, and we learned a bit more about this “slightly less known” attorney.

Leo Henry Klugherz attended law school at New York University and was admitted to practice law in 1904. According to this 1919 law directory, for at least part of his career, Klugherz practiced out of New York’s Liberty Tower at 55 Liberty Street. A Westlaw search of his name reveals that he was counsel of record in nearly 80 reported opinions from 1918 to 1941 (the first of those being People v. Smorack, 119 N.E. 1065 (N.Y. 1918) (per curiam)). He was described as a “splendid lawyer and delightful companion” in Norman Levy’s 1958 book, My Double Life: Adventures in Law and Letters. He would live another fifteen years after the Kirschenblatt case.

His two paragraph obituary, published in The New York Times on October 19, 1941 (and only available through The New York Times subscription paywall archive), noted:

Leo H. Klugherz, a member of the New York bar for thirty-five years who had specialized in criminal law, died yesterday at his home, 1937 Eighty-first Street, Brooklyn, after a day’s illness of heart disease, at the age of 58.

Mr. Klugherz leaves a widow, the former Stella Schoenfeld, a daughter, Marjorie, two sons, Richard and Daniel, and a sister, Mrs. Blanche Rosen.

His son, Daniel, apparently became a documentary film-maker.

Klugherz seems to have had quite the legal career. The same year Kirschenblatt was released, Klugherz squared off against Harlan in another appeal, that being Horowitz v. United States, 11 F.2d 1009 (2d Cir. 1926) (per curiam). However, the facts of that case may be lost to history, as the Westlaw entry is simply an affirmance without an accompanying opinion.

Of further interest, Klugherz was no stranger to Learned Hand.

Aside from Kirschentblatt and its companion case, United States v. Kirsch, 16 F.2d 204 (2d Cir. 1926), Klugherz appeared before Learned Hand in the following reported cases:

  • United States v. Adamowicz, 82 F.2d 288 (2d Cir. 1936)
  • United States v. Busch, 64 F.2d 27 (2d Cir. 1933)
  • Grossberg v. Mulligan, 48 F.2d 93 (2d Cir. 1931)
  • United States v. Auerbach, 47 F.2d 1086 (2d Cir. 1931)
  • United States v. Grossberg, 47 F.2d 597 (2d Cir 1931)
  • Maqueo v. Hecht, 32 F.2d 1021 (2d Cir. 1929)
  • Picker v. United States, 28 F.2d 1017 (2d Cir. 1928)
  • Rouda v. United States, 10 F.2d 916 (2d Cir. 1926)

Most were per curiam opinions or affirmances without opinion (and it’s unclear whether he participated in oral argument, if any, in the cases), but the Rouda case resulted in a full opinion authored by Learned Hand who once again addressed Prohibition era facts.

It gets better: Klugherz also appeared before Justice Augustus Hand, Learned’s first cousin, on at least two occasions, those being:

  • Guterman v. Moore, 46 F.2d 1022 (2d Cir. 1931) (per curiam)
  • United States v. Rosenstein, 34 F.2d 630 (2d Cir. 1929) (Manton, J.)

According to Westlaw, on at least three occasions, the U.S. Supreme Court denied his petitions for cert.

The full transcript of a 1921 assault case defended by Klugherz is available at the Lloyd Sealy Library’s “Trial Transcripts of the County of New York 1883-1927” collection at the John Jay College of Criminal Justice. Alas, that transcript is on microfiche and not online in any form.

Klugherz never lived to see Harlan become an Associate Justice of the U.S. Supreme Court, a position to which he was appointed in 1955. However, in that court room in the 1920s, Klugherz surely knew that Harlan, his opponent, was the grandson of a U.S. Supreme Court justice.

Though he is not remembered today, it certainly seems that he had a long and storied career.