(~

.~LITIGATION NEWS . ," . - - ,-; , ,

~ PUBLISHED BY THE LitiGATION SECTION OF THE VIRGINIA STATE'SAR FOR ITS MEMBERS.

VOU1ME X NUMBER 2 SPRING 2003

The Work Product Privilege - Don't

Waive It; Don't Lose It by Philip G. Gardner

T he Work Product Doctrine protects from disclosure certain information created or produced in anticipation of litigation.

Restatement (Third) of Law Governing Lawyers, Section 136. The qualified privilege created by the Work Product Doctrine is codified in Rule 26(b)(3) of the Federal Rules of Civil Procedure and Rule 4:1(b)(3) of the Rules of Court of the Supreme Court of Virginia. Generally, the doctrine protects from disclosure materials prepared in anticipation of litigation or for trial either by a party or by a party's representative. The federal and state codifications of the doctrine have left for the courts a determination of what constitutes "in anticipation of litigation," and the rules are silent altogether on the critical issue of waiver of the privilege. This article will deal with the issue of waiver and related issues. The question of what documents meet the definition of prepared "in anticipation of litigation" and thus qualify for the privilege has been the subject of extensive litigation. There are numerous Virginia Circuit Court decisions exploring this issue, and they can be found in Thomas Spahn's excellent, "must have/must read" book, Virginia's Attorney Client Privilege and Work Product Doctrine (4th edition, Virginia CLE Publications, 1999).

The issue of waiver by inadvertent disclosure presents a difficult legal and ethical question. Communication by fax and e-mail has significantly increased the risk and incidence of negligent or inadvertent disclosure of materials intended to be

Philip G. Gardner is a partner with Gardner, Gardner, Barrow & Sharpe, P.e. in Martinsville, Virginia.

1

protected by the Work Product Doctrine. As read­ers of Virginia Lawyers Weekly know, a lawyer's duty as the recipient of inadvertently disclosed work product is a subject of hot debate. Such issues were squarely presented to the Circuit Court for the City of Martinsville in Davidson v. Byrd, CLOO-42, Opinion dated November 13, 2000, Geronimo at 21st Va. Cir. CLOO-42.

The Davidson case was simple enough. The plaintiff's vehicle was rear-ended by a vehicle whose driverapparenrly fell asleep. Even though the crash Was severe, the plaintiff did not think he was injured. He quickly {lttended to the injured defen-

Work.Product Privilege - cont'd on page 23

Table of Contents ,

The Work Product Privilege -Don't Waive It; Don't Lose It ............ 1

by Philip G. Gardner

Letter from the Chair .................. 2 by Thomas E. Albro

I Want It, and I Want It Now! -Obtaining a Temporary Injunction in Covenant Not To Compete Cases· ...... 3

by Francis H Casola & Ellen S. Moore

An Analysis of the Impact of the Dead Man's Statute in Medical Malpractice Cases· . 5

by Walter H Peake, III & Katherine Cabell Londos .

Recent Law Review Articles ............ 11 by R. Lee Livingston

View from the Bench: Top Ten Common Mistakes ............ 12

by Hon. Paul M. Peatross, Jr.

Litigation Section Board of Governors .... 26

Young Lawyers Committee ............. 27

Ethics at a Glance: Ethics in the Information Age ..... back cover

by Thomas E. Spahn

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LITIGATION NEWS " SPRING 2003

Letter from the Chair " I

Looking Back, with Thanks

~ my tenure as Chair ends, I would be

remiss if I did not thank those who elped the Board make contributions

to the trial bar this year. Sam Meekins has taken meticulous care of our budget and finances. We achieved a surplus again this year, which we will return to the Virginia State Bar. No doubt we are one of the few government entities that return a portion of our budget.

Paul Black performed a commendable job working with the Bench/Bar Committee in preparing our annual CLE offering at the con­vention, which should have broad appeal. The topic is, "Winning the Battle of Experts without Losing the 'Civil' in 'Civil' Discovery." I am leaving this post in good hands, with Paul assuming the chairmanship for the coming year.

Kevin Mottley successfully reinvigorated the Young Trial Lawyers Section by putting on an excellent CLE deposition workshop that was not only informative, but innovative in its pedagogy. Kevin is moving on to edit Litigation News, no small task. Lee Livingston concluded seven years of outstanding service

LITIGATION NEWS is published by the Virginia State Bar Litigation Section.

Newsletter Editor R. Lee Livingston

Statements or expressions of opinion or comments appearing herein are those of the editors, authors and contributors and not necessarily those of the Virginia State Bar or its Litigation Section.

2

as editor for Litigation News by keeping our publication on track for another year. He will be missed, and I thank him for a job well done.

The judges who serve our Board deserve special recognition. Judge Lydia Taylor offers valuable insights and demonstrates a willing­ness to serve at every opportunity, and Judge William Ledbetter, in his first year on the Board, has been a positive contributor whose service is of great value to our work. These judges who serve in courts with heavy dockets are demonstrating exemplary selflessness in working with us.

Patricia Sliger, our staff liaison, facilitates all of our logistics with a learned hand. Her long­standing service to the Board is exceeded only by her availability and courteous service.

Finally, I am in debt to the immediate past chair, Frank Friedman, who set a high bar for this position and graciously assisted in Board affairs even after his obligations to do so expired.

We had an opportunity to contribute to important issues facing trial lawyers, and in every instance, members of your Board took that opportunity seriously and devoted appro­priate time and energy to accomplish the task at hand. For example, when asked to comment on the merger of law and equity in Virginia, Board members took a keen interest in researching both points of view and several discussions focused on our desire to adequate­ly represent the views of members of the Litigation Section, rather than our individual points of view.

Thank you for the opportunity to serve. Thomas E. Albro Chair, Litigation Section

SPR INC 2003 LITIGATION NEWS

"I Want It, And I Want It Now!" -'Obtaining

A Temporary Injunction In Covenant Not To Compete Cases

by Francis H Casola & Ellen S. Moore

Introduction When a client calls to tell you a former employee is violating her covenant not to compete and is steal­ing customers, one of the first things that comes to mind is injunctive relief. What are the issues; what law applies; what court should I be in; how should I plead the claim; what obstacles do I face, and how do I prove my client is entitled to the relief requested? Usually there is not a lot of time to consider these issues in light of the relief request­ed. This article discusses these and other issues under federal and Virginia state procedures for obtaining injunctive relief in the context of covenant not to compete litigation, where injunc­tive relief often plays a vital role.

Threshold Considerations One of the first considerations is whether to be in federal or state. court. Temporary injunctive relief is available in federal court under Rule 65 of the Federal Rules of Civil Procedure ("FRCP"). Virginia's Code provides for injunctive relief as well under Sections 8.01-620 et seq:

Federal or State Court? The availability of injunctive relief in federal court typically is controlled by the court's diversity juris­diction under 28 U.S.C. § 1332,1 as these cases rarely involve federal questions. Plaintiffs, as such, may have no choice but to resort to state court in the absence of diversity. Where a choice does exist,

Francis H. Casola is a partner, and Ellen S. Moore is an associate, with Woods, Rogers & Hazlegrove, P.L.C. in Roanoke, Virginia.

3

however, factors influencing one's decision to apply for relief in federal versus state court include the availability of judges to hear the motion on an expedited basis, the need for ex parte relief, the court's experience with commercial and employ­ment matters, and the general hostility of the court to noncompete covenants. These concerns are in addition to the usual procedural and eviden­tial concerns relating to such a decision. In each of these areas, recourse to federal courts, when avail­able, may provide the employer with an advantage.

Authority for Federal Injunctive Relief - FRCP 65

Operpiew QfFederal Rules

Authority for federal injunctive relief comes from FRCP Rule 65. Under Rule 65, a party may obtain a temporary restraining order ("TRO") with or without notice to the opposing party or that party's att()ftiey(see below for a discussion of the ~vai1ability of a TRO without notice). The TRO may last for·as long as 10 days, but may be extend­ed "for good cause shown" for another 10 days or by the consent of the opposing party) If the TRO is awarded without notice, the motion for a pre­liminary injunction must be set for hearing at the earliest possible tirrie. The applicant must file a bond in an amount to be determined by the court to be sufficient to cover the "costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained. "3

A preliminary injunction, in contrast, may not be obtained without notice to the adverse party.4 The court may consolidate the hearing on a pre­liminary injunction motion with the trial of the action on the merits, even if the hearing already has commenced.s In any event, "any evidence received upon an application for a preliminary injunction which would be admissible upon the trial on the merits becomes part of the record on trial and need not be repeated upon the trial."6 This does not, however, affect any rights the par­ties may have to trial by jury.7

Convenant Not To Compete - cont'd on page 4

LITIGATION NEWS SPRING 2003

Covenant Not To Compete contJd from page 3

If the trial on the merits has not been consoli­dated with the hearing on the preliminary injunc­tion motion, as discussed above, a full evidentiary trial on the merits is held to determine the avail­ability of a permanent injunction. Even where the preliminary injunction has been denied, the employer may offer additional evidence at trial and thereby attempt to persuade the court to come to a different conclusion.8

Availabilit,y of Ex Parte Relief in Federal Courts

As mentioned above, under Rule 65, a party may obtain a TRO without notice to the opposing party or that party's attorney. This is true, howev­er, only if:

(1) it clearly appears from specific facts shown by affidavit or by the verified com­

determination of the propriety of giving such notice. ll The applicant must file a bond with the court for the injunction to take effect.l2 The court must state in the injunction order the time during which the injunction will be effective.l3 The court, of course, may extend that time frame or grant a further injunction, but only "after reasonable notice to the adverse party, or to his attorney of record of the time and place of moving for the same. "14 The court also may dissolve the injunc­tion, again after reasonable notice to the opposing party or his attorney.l5

As in the federal courts, a permanent injunc­tion may be awarded after a full trial upon the merits. Sometimes referred to as "perpetual" injunctions, these injunctions may remain in force indefinitely.l6

Apaitabilit,y of Ex Parte RelieOn State Courts .

plaint that immediate and iqeparable injury, loss, or damage will result to the applicant before the adverse party or that party's attorney can be heard in opposition, and (2) the applicant's attor­ney certifies to the court in writing the efforts, if any, which have been made to give the notice and the rea­sons supporting the claim that notice should not be required. 9

If the TRO is awarded without notice, the motion for a preliminary injunction must be set for hearing at the earliest . possible time.

Given Virginia courts' ready willingness to invalidate

covenants that they view as overbroad, the choice of a

state's law that permits blue penciling or other reformation

of the covenant should the court find it overbroad could

be the difference between vidory and defeat

As noted above, an applicant may obtain a temporary injunction with or without notice to the opposing party, in I

the court's discretion. 17 In these writers' experience, how­ever, state courts are more reluctant than their federal counterparts to award injunc­tive relief in the absence of notice. "The cases are rare indeed which justifY the award­ing of a preliminary injunction without notice to those affect­ed there by. 18 As the Cohen court noted, applications made

Authority for State Temporary Injunctive Relief- Va. Code §§ 8.01-620, et seq.

Operview of Vir9inia State Law

Under Virginia state law, a party may obtain injunctive relief under Virginia Code §§ 8.01-620, . et seq. The Code explicitly confers jurisdiction on every circuit court to award injunctive relief. lO The injunction may be obtained with or without notice to the opposing party, depending on the court's

4

without notice are to be scrutinized with greater . care, "so as to avoid abuse of the power."19 Except in those few cases of the utmost urgency, good practice dictates that notice be provided.

Other Threshold Issues The contract itself containing the covenant not to compete may contain clauses affecting where and whether injunctive relief may be obtained, and

Convenant Not To Compete - contJd on page 14 <

SPRIN(~ 2003 LrrIGATI0N NEWS

An Analysis of the Impact of the Dead

Man's Statute in Medical Malpractice

Cases by Walter H. Peake, III & Katherine Cabell Londos

Acontinuing issue confronting both plaintiff and defense attorneys in medical malprac­ticecases is the impact and application of

Virginia's "Dead Man's Statute. "1 In particular, to the defense attorney in medical malpractice cases, the Dead Man's Statute frequently presents a sig­nificant obstacle to the introduction of important defense evidence. The purpose of this article is to analyze the Dead Man's Statute, the applicable law and, in particular, the two Virginia Supreme Court cases that have analyzed the application of the statute in a medical malpractice setting. 2 The statute and the case law are best discussed through the application of the law to actual factual scenar­ios that occur in practice.

The operative language of the Dead Man's Statute in a practice setting is as follows:

In an action by or against a person who, from any cause, is incapable of testifying ... no judgment or decree shall be rendered in favor of an adverse or interested party found­ed on his uncorroborated testimony.3

This language often comes into play in a wrongful death medical malpr,actice action because the patient, as a result of the alleged neg­ligence of the defendant physician or health care provider, is deceased and thus incapable of testify­ing. Thus, the practical operation of the statute is that the physician or health care provider cannot offer "his uncorroborated testimony" where that uncorroborated testimony would result in a judg-

Walter H. Peake, III is a partner, and Katherine Cabell Londos is an associate, with Frith, Anderson & Peake, P. C. in Roanoke, Virginia.

5

ment in favor of the defendant physician or health care provider.

Of course, a discussion or analysis of the Dead Man's Statute must be considered 'within the con­text of its purpose. That purpose is to prevent a party - for our purposes, a physician/health care provider - from having the benefit of his or her own testimony when due to the death of the patient, the personal representative of the adverse party has been deprived of the testimony of the decedent [the patient of the defendant physician/ health care providerJ.4 The statute substitutes a requiremeiu that testimony be corroborated in place of the harsher common law rule which dis­qualified the surviving witness for interest.s

The statute itself does not define the term "uncorroborated testimony." The analysis of what is or is not uncorroborated testimony has been left to case law. The Court has repeatedly explained that "[tJo be deemed sufficient under § 8.01-397, the corroboration must at least tend, in some degree, of its own strength and independently, to support some essential allegation or issue raised by the pleadings and testified to by the surviving witness which allegation or issue, if unsupported, would be fatal to the case."6 Another significant point is that the statute specifically references "uncorroborated testimony," as opposed to the more comprehensive term "uncorroborated evidence."

The statute also does not define or address how a party may establish corroboration. The Court has repeatedly held that no hard and fast rule determines whether the requirement of cor­roboration has been met? Instead, each case must be decided upon its own facts and circumstances.S

The corroborating evidence need not be provided by witnesses, but may be furnished by surrounding circumstances adequately established.9

The sufficiency of the corroboration offered is usually a question for the jury. The trial court must consider the sufficiency of the corroboration in light· of all the trial testimony or evidence on the point in issue in order to determine whether there is "more than a scintilla of corroborative evidence upon which the jury may determine sufficiency."

Dead Man's Statute - cont'd on page 6

LITIGATION NEWS SPRING 2003

Dead Man's Statute contJd from page 5

Whether there is sufficient corroboration may not be answerable until the close of all the evidence "because only at that point can all the evidence be surveyed to determine if sufficient corroboration exists." 10

There is a substantial body of case law in civil cases other than medical malpractice cases analyz­ingthe Dead Man's Statute. ll Nonetheless, it has only been in the last five years that the Virginia Supreme Court considered the statute in a medical malpractice case. In both recent cases - Diehl v. Butts, 255 Va. 482, 499 S.E.2d 833 (1998)12, and Johnson v. Raviotta, 264 Va. 27, 563 S.E.2d 727 (2002)13 - the Court ruled that the trial courts erred in allowing defendant health care providers to testify to certain facts related to their treatment of the plaintiffs' decedents, because such testimony was not corroborated, as required by Virginia Code § 8.01-397.

In Diehl v. Butts, the first of the two recent Virginia Supreme Court cases interpreting the Dead Man's Statute in the context of a medical malpractice action, the Court imposed a higher standard on defendant health care providers when offering corroborating evidence:

... [W]hen, as here, a confidential relation­ship existed between the parties at the time of the transaction which gave rise to the cause of action, a higher degree of corrobo­ration is necessary to satisfY the requirements· of [8.01-397].14

Mter concluding that the defendant physician failed to offer the higher degree of corroboration required by Virginia Code § 8.01-397, the Court ruled that on remand the trial court could not admit any opinion testimony from the defendant's expert witnesses that relied upon conversations between the plaintiff's decedent and the defendant physician unless such conversations were corrobo­rated to the higher degree.

More recently, the Court in Johnson v. Raviotta addressed additional issues presented by the Dead Man's Statute in medical malpractice cases:

6

• First, the Court explained that the Dead Man's Statute does not require corrobora­tion of a party's testimony regarding certain facts if another interested party testified to a version of the facts on behalf of the dece­dent. Thus, because the administrator of the estate (who the Court determined to be an "interested party") testified to an encounter between the deceased and the defendant physician, the corroboration requirement of § 8.01-397 did not apply to the defendant physician's testimony concerning his version of the subject encounter.

• Second, the Court found that testimony subject to the corroboration requirement is that which is offered by the adverse or interested -party [for our purposes, the physician/health care provider], and pre­sents an essential element that, if not cor­roborated, would be fatal to that party's case.l5

• Third, habit evidence consisting only of the 4 defendant physician's testimony cannot \li corroborate other testimony from the defendant physician. In other words, cor­roboration for purposes of the Dead Man's Statute cannot come "from the mouth of the witness sought to be corroborated. "16

• Finally, the general rule that one adverse witness cannot corroborate the testimony of another adverse or interested party only applies when the corroborating witness has a pecuniary interest in common with the person whose testimony needs corrobora­tion in the judgment or decree sought to be entered based on that testimony. Thus, defendant A can corroborate the testimony of defendant B if such testimony would be against the pecuniary interest of defendant A and that testimony would operate to leave defendant A with the sole liability for plaintiff's damages.

Thus, the primary intent and purpose behind 0."; the Dead Man's Statute would appear to be to level the playing field and .erevent self-~ervit1.g !es- _

SPRING 2003 LITIGATION NEWS

timony. The Dead Man's Statute often serves as a powerful tool for the plaintiff in wrongful death medical malpractice cases. Some of that impact is, however, nullified by case law holding that cor­roboration is not required of the party's [physi­cian/health care provider] testimony about facts in issue where another interested party has testi­fied to a version of the facts on behalf of the dece­dent [patient].l7 The practical effect is that once

providers observe Patient B)s condition and wish to testify about those observations beyond the written documentation in the chart.

Scenario I This scenario can present in a number of ;Situa­tions. A patient may call the physician's office fol­lowing an operation to report a number of symptoms and complaints. This is precisely what

such testimony is offered by interested parties on behalf of the decedent, as defined under the case law, the right to invoke the prohibitions of the statute is waived.

occurred in Roanoke City Thus, the primary intent Circuit Court case of Horner v.

d b h• d th Dunker.IS Following a

The potential factual scenar­ios that trigger the application of the Dead Man's Statute in a

an purpose e In e laminectomy, on a Saturday Dead Man's Statute would afternoon, the patient called

appear to be to level the the defendant physician who was on call for his partner, the

playing field and prevent neurosurgeon who had per-

self-serving testimony. formed the operation. As con-medical malpractice case are tained in the dictated and many. The following three scenarios are offered as typed note prepared on the following Monday, the being representative of situations that may occur in patient reported symptoms of pain in her bilateral practice and for illustrative purp=o=se=s~: -~~-----ll-~h'-;i~p~s -=-:a--=-n-=;d--=-p~o-s-t-er--;-io-r-'-.-le~g-s-. MT:;;-h-e-p--;h~y-s-;-ic-;ia-n-a·d-vl;-· se-d-.----:-th.--e-

Scenario I - During the course of treat- patient to lie down, "take it easy," use ice on her ment following surgery or a procedure) dis- back and take Ibuprofen. The note was silent on cussions take place in which the patient the issue of whether the patient had given the criti-provides information to the physician about cal information, as defined by the expert witnesses his or her condition) and in which the physi- as the critical standard of care issue, that there was cian/health care provider offers advice to the ongoing drainage from the wound site. Following patient. The patient subsequently dies. At the telephone call on Saturday afternoon, the trial) the physician seeks to offer testimony patient continued to deteriorate over the weekend about those discussions and/or his dictated and was taken by emergency rescue squad to the and typed office note about those discussions. hospital on Monday morning. The physician testi-Scenario 2 - A wrongful death case fied that he likely dictated the note on Monday alleging a claim of failure to provide morning, and at that time knew nothing of the informed consent by the physician to the change in the patient's condition. patient about the procedure at issue. At trial, The trial court ruled that the note was admis-the physician seeks to offer testimony about sible under the business records exception of the the oral discussions beyond the matters that hearsay rule, but that the note provided insuffi-are documented in either the written cient corroboration to allow testimony from the informed consent and/or other medical physician beyond those matters contained in the records touching on the informed consent. note.

In such a situation, plaintiff's counsel is left Scenario 3 - In a nursing home. setting, with a dilemma. The note establishing the critical a temporary nurse administers Patient A's

medications to Patient B) who she has facts will be introduced, and thus, unless plaintiffis misidentified. Some discussions surround these willing to call the physician as an adverse witness

events. Thereafter, nurses/other health care Dead Man's Statute - cont'd on page 8

7

LITIGATION NEWS SPRING 2003

Dead Man's Statute contJdjrom page 7

to cross-examine him about the note, plaintiff is stuck with the information contained in the note. H plaintiff's counsel calls the physician as an adverse witness and cross-examines him about matters that would normally be excluded under the Dead Man's Statute - that is, the facts sur­rounding the telephone call and his recollection -then the defense can argue that any prohibitions under the Dead Man's Statute have been waived. Thus, it is fair game on cross-examination during the plaintiff's case, or in direct examination on the defense case in chief, to illicit oral testimony on the subject.l9

Scenario 2 The specific procedure at issue concerns the type of anesthesiology offered to the patient, an elderly gentleman undergoing an orthopedic procedure, a knee replacement. The defendant anesthesiologist asserts that he discussed at length with the patient the two options for anesthesia, a spinal block and general anesthesia. A note prepared prior to the procedure, known as a perioperative note, contains the notation "SAB" [which the anesthesiologist will testify stands for "spinal anesthetic block"]. In addition, the note also stated "PT request. Discussed RlB/O," [which the defendant will tes­tify means that the patient requested the spinal block, and that the risks, benefits and options were

. discussed]. Following the procedure, the patient experi­

ences an epidural hematoma resulting in paralysis. The next day the anesthesiologist prepares a com­prehensive progress note detailing his discussions on the day of the surgery with the patient. Included in the progress note is the fact that there

. was a slight risk for bleed, and that the patient advised that he had experienced some problems with general anesthesia in the past and thus had a preference for spinal anesthesia. The patient's lab values and clinical condition were within accept­able limits for either type of anesthesia.

Several issues are presented. The original peri­operative report prepared in advance of the

8

surgery should be admissible as a business record under the shop book or business records exception to the hearsay rule.2o As established in Horner v. Dunker, the Dead Man's Statute applies only to testimony, and not to documentary evidence and other evidence. The issue presented in this scenario is whether the record alone is sufficient for defense purposes to establish the necessary elements of informed consent in light of the abbreviations/ shorthand that is so often contained in medical records.

Certainly, in this scenario, the defense would appear to have some good arguments that the record, made before knowledge of the events at issue, the epidural bleed, is sufficient corroboration to allow testimony from the defendant physician explaining aspects of the note itself.

The fact that the corroborating evidence - the peri operative note - was prepared by the witness whose oral testimony is sought to be corroborated should make no difference. Neither Diehl nor Raviotta considered these specific facts where the defendant physician's records prepared before the events at issue offer corroboration. No blanket rule in either case was set out expressly providing that the corroboration must come from an inde­pendent source, and not an interested party, under these circumstances, where the corroboration is provided by some other source, that is, documen­tary evidence, not testimony.2 l

The defense will also argue that the progress note made the day following the surgery is admis­sible as a business record, and that the periopera­tive note offers corroboration about the authenticity of the matters contained in the progress note. The defense will also argue that the progress note provides sufficient corroboration to allow testimony from the physician about the mat­ters contained in the note, along with further explanation beyond the note. The plaintiff will, of course, argue that the progress note is self-serving, and that the corroborating evidence is insufficient.

Scenario 3

A te~pohrary nurse unhfamiMliar wSi~ Phatiednts in a ( nursmg orne approac es rs. mIt an states, , "Mrs. Jones, I have your medications for you."

o ... ·-~ ... · -0/

. i '< •• ..:.-?

SPRING 2003 . LITIGATION NEWS

Mrs. Smith do~s not inform the nurse that she is not Mrs: Jones and the nurse gives her Mrs. Jones' medications. The nurse then approaches Mrs. Jones and states, "Mrs. Smith, I have your·medications for you." At that point, Mrs. Jones states, "I am not Mrs. Smith, I am Mrs. Jones." The nursing home's standard of care expert witness intends to testify at trial that the nurse met the standard of care if she addressed the patient by name (albeit the wwng name) and the patient did not correct her .

. The nursing home seeks to introduce testimo­ny from the nurse that she addressed the patient by name (albeit the wrong name) and that the patient did not correct her. The defense offers three pieces of evidence as corroboration:

1. A signed statement that the nurse prepared for the facility immediately after the inci­dent, which sets forth the events described above.

2. The procedure of the facility that requires that all patients be addressed by name when administering medication. Unlike a hospital setting where the patient has an identifying wristband, the nursing home does not provide wristbands to its resi­dents.

3. Testimony from the patients' sitters (nei­ther of whom are employed by the nursing home) that they heard the temporary nurse call the second patient by the plaintiff's decedent's name (thereby making it more likely that she called the plaintiff's dece­dent by the roommate's name). The sitters were uncertain wheth~r the nurse addressed the plaintiff's' decedent verbally prior to administering medication.

The signed statement prepared by the nurse after the medication error likely would not qualify as a business record because it was not kept in the ordinary course of business, but was instead an extraordinary transaction.22 Business records are considered to have the "guarantee of trustworthi­ness" because of the regularity of their preparation and the fact that the records are relied upon in the transaction of the business by the persons for whom they are kept. "23 In this scenario, the state-

9

ment prepared by the nurse immediately following the medication error was not generated in the ordinary course of the nursing 'home's business, but was instead an extraordinary transaction.

A trial court may, however, conclude that the corroboration requirement is met by testimony (from someone other than the nurse) that the nursing home's standard pro<,:edure requires prior to administering medication that nurses address each patient by name, and by testimony from the sitters that the nurse addressed the second patient by the plaintiff's decedent's name. As discussed above, corroborating evideJ?ce need not be provid­ed by witnesses, but may be furnished by sur­rounding circumstances adequately established.24

Corroborating evidence may also be circumstantial evidence.25

In conclusion, the Dead Man's Statute may serve as a useful device for plaintiff's counsel in excluding evidence that the defense seeks to offer in wrongful death medical malpractice cases. To avoid the exclusion of what is often key defense testimony, defense counsel must marshal and develop corroborating evidence. If the defendant is unable to develop and present sufficient corrob­oration, the defense may be limited to the intro­duction of documentary evidence, rather than testimony from the defendant physician/health care provider, or the defense may be completely barred from introducing the desired evidence.

IVA. CODE § 8.01-397, CODE OF VIRGINIA, 1950, as amended.

2 See Diehl v. Butts, 255 Va. 482,499 S.E.2d 833 (1998); Johnson v. Raviotta, 264 Va. 27, 563 S.E.2d 727 (2002).

3VA. CODE § 8.01-397 contains a second provision which states: "In any such action, whether such adverse party testifies or not, all entries, memoranda, and declarations by the party so incapable of testifying made while he was capa­ble, relevant to the matter in issue, may be received as evi­dence in all proceedings including without limitation those to which a person under a disability is a party. The phrase 'from any cause' as used in this section shall not include situations in which the party who is incapable of testifying has rendered himself unable to testify by an intentional self-inflicted

Dead ManJs Statute - contJd on page 10

LITIGATION NEWS SPRING 2003

Dead Man's Statute cont1d from page 9

injury." While this article will not address this part of the statute, this provision may be applicable in certain medical malpractice cases where the plaintiffs decedent made entries, memoranda or declarations relevant to the issues in the litiga­tion.

4 Diehl v. Butts, 255 Va. 482, 488, 499 S.E.2d 833,837 (1998).

5 Diehl v. Butts, 255 Va. 482, 488, 499 S.E.2d 833, 837 (1998).

6 Hereford v. Paytes, 226 Va. 604, 608, 311 S.E.2d 790, 792 (1984).

7 Diehl v. Butts, 255 Va. 482,489,499 S.E.2d 833, 838, quoting Everton v. Askew, 199 Va. 788, 782, 102 S.E.2d 156, 158 (1958).

8 Diehl v. Butts, 255 Va. 482, 489, 499 S.E.2d 833, 838, quoting Everton v. Askew, 199 Va. 788, 782,102 S.E.2d 156, 158 (1958).

9 Penn v. Manns, 221 Va. 88, 93, 267 S.E.2d 126, 130 (1980).

lOJohnson v. Raviotta, 264 Va. 27, 33, 563 S.E.2d 727, 731-32 (2002). See also Brooks, 206 Va. 352 , 357, 143 S.E.2d 841 , 845 (2002) ; Taylor v. Mobil Corp., 248 Va.l0l, 110,444 S.E.2d 705,710 (1994).

11 For a complete discussion on the history of the Dead Man's statute, see Epes1 Administrator v. Hardaway, 135 Va. 80, 115 S.E. 712 (1923).

12 In Diehl v. Butts, supra, the Virginia Supreme Court held that the trial court erred in allowing certain testimony from the defendant/ physician concerning an alleged conver­sation between the plaintiffs decedent and the defendant physician. The plaintiff's decedent sustained a head injury and was referred to the defendant physician, a neurosurgeon. The defendant physician testified, over plaiJ?tiff's objection, to a specific conversation that he had with the plaintiff's decedent in which the defendant physician allegedly told the plaintiffs decedent to monitor for certain "warning signs" or symp­toms, that he should not return to work, and that he should return in one-and-one-half weeks for another evaluation. The

. defendant physician's expert witness predicated his opinions, in part, upon the defendant physician's testimony about this alleged conversation. The Virginia Supreme Court concluded that the trial court erred in allowing the defendant physician to testify about the alleged conversation with the plaintiffs decedent, as the testimony violated VIRGINIA CODE § 8.01-397.

13In Johnson v. Raviotta, 264 Va. 27, 563 S.E.2d 727 (2002), the Virginia Supreme Court held that the trial court erred in allowing certain testimony by the defendant physi­cian and the nurse/ employee of the defendant hospital in

10

violation of the Dead Man's Statute. Dr. Raviotta provided ~ ..•.• prenatal care to plaintiffs decedent. Following a Cesarean \ .. section delivery of the child, the plaintiffs decedent was mon-itored in the hospital by the hospital nursing staff and Dr. Raviotta. The plaintiffs decedent suffered seizure activity in the hospital and subsequently died. Plaintiff alleged medical malpractice by both Dr. Raviotta and a hospital nurse. The plaintiff objected to testimony from Dr. Raviotta that he checked the plaintiff's decedent's blood pressure during an earlier check up and that he checked on the plaintiffs dece-dent in the hospital shortly before she suffered the seizure activity. The plaintiff also objected to testimony from the hospital nurse that she monitored the plaintiffs decedent shortly before the seizure activity.

The Court concluded that Dr. Raviotta did not offer suffi­cient corroboration regarding his treatment during the earlier check up. With regard to the alleged negligence by Dr. Raviotta shortly before she suffered the seizure activity, Johnson, the administrator of the plaintiff's decedent's estate, refuted Dr. Raviotta's testimony that Dr. Raviotta did not check on the plaintiff's decedent during the relevant time period shortly before the seizure activity. The Court conclud­ed that because Johnson, as the administrator, had a direct pecuniary interest in the outcome of the litigation, he was an interested party for purposes of the statute. Thus, the corrob­oration requirement of § 8.01-397 did not apply to Dr. Raviotta's testimony that he visited the plaintiffs decedent prior to the seizure activity.

Plaintiff also objected to testimony from the defendant ( nurse that she monitored the plaintiffs decedent's vital signs ' in the hours before the seizure activity. The sister of plaintiffs decedent testified that the defendant nurse did not monitor the vital signs of the plaintifPs decedent during this period. The Court concluded that the sister was not an interested party because she did not have a pecuniary interest in the liti­gation; the blood relationship alone did not make her an "interested party" under the statute. Thus, the defendant nurse's· testimony was subject to the corroboration require­ment.

14 Diehl v.Butts, 255 Va. 482,489,499 S.E.2d 833, 838 (1998).

15Specificaliy, in Raviotta, the Court found that Dr. Raviotta's testimony that he took a second blood pressure reading at the end of the decedent's/patient's November 10, 1997 appointment was an essential element of his defense because that action was offered to show that he met the stan­dard of care on that visit.

16Left unanswered is whether habit testimony from some­one other than the defendant physician can provide the required corroboration.

17 Johnson v. Raviotta, 264 Va. 27, 34, 563 S.E.2d 727, 732 (2002); Paul v. Gomez, 118 F.Supp.2d 694 (W.n.Va. 2000). In both Raviotta, supra, and Paul, supra, the personal representative of the decedent patient's estate, as well as the (

Dead Man1s Statute - cont1d on page 22

SPRING 2003 LITIGATION NEWS

Recent Law Review Arti,cles

by R. Lee Livingston

The following are recently published Law Review articles that may prove useful to you in your practice:

Computer Law Arent, Lisa M., Robert D. Brownstone and William A. Fenwick. Ediscovery: Preserving, Requesting & Producing Electronic Informa­tion. 19 SANTA CLARA COMPUTER & HIGH TECH. L.J. 138-180 (2002).

Contracts Robertson, Melissa. Comment. Is Assent Still a Prerequisite for Contract Information in TodayJs Economy? 79 WASH. L. REv. 265-296 (2003).

Employment Practice Bucholtz, Barbara K. Employment Rights and Wrongs: ADA Issues in the 2001-2002 Supreme Court Term. 38 TULSA L. REv. 363-383 (2002).

Kohn, Brian T. Note. Contracts of Conve­nience: Preventing Employers from Unilaterally Modifying Promises Made in Employee Hand­books. 24 CARDOZO L. REv. 799-847 (2003).

Rosenthal, Lawrence D. Motions for Summary Judgment When Employers Offer Multiple Justifications for Adverse Employment Actions: Why the Exceptions Should Swallow the Rule. 2002 UTAH L. REv. 335-379.

Evidence Combs, Huston. Note. Dangerous Patients: An Exception to the Federal Psychotherapist-Patient Privilege. 91 KY. L.J. 457-476 (2002-2003).

11

Easton, Stephen D. Irving YoungerJs Ten Commandments of Cross-Examination: A Refresher Course, with Additional Suggestions. 26 AM. J. TRIAL Anvoc. 277-324 (2002).

Solan, Lawrence M. and Peter M. Tiersma. Hearing Voices: Speaker Identification in Court. 54 HASTINGS L.J. 373-435 (2003).

Virga, Gerard M. Comment. United States v. Grieco: Expert Testimony Concerning Handwriting Analysis - Science or Junk? 26 AM. J. TRIAL Anvoc. 433-447 (2002).

Jurisdiction Bales, Richard A. and student Suzanne Van Wert. Internet Web Site Jurisdiction. 20 J. MARSHALL J. COMPUTER & INFO. L. 21-5 5 (2001).

Medical Jurisprudence Jannsson, Roger L. Comment. Researcher Liability for Negligence in Human Subject Research: Informed Consent and Researcher Malpractice Actions. 78 WASH. L. REv. 229-263 (2003).

Torts Pearson, Shanda K. Case Note. Lack of Special Relationships Not Special Enough to Relieve Landowners from Duty in Premises Liability Actions. (Louis v. Louis, 636 N.W. 2d 314, Minn. 2001.) 29 WM. MITCHELL L. REv. 1029-1046 (2003).

LITIGATION NEWS . SPRING 2003

View from the Bench

Top Ten Common Mista1,es

by Hon. Paul M. Peatross, Jr.

P ractice! Practice! Practice! This old . saying applies to trial lawyers, unless,

of course, they are practicing bad habits rather than good ones. Here is my list of ten common mistakes I see frequently in circuit court. Even experienced attorneys can fall into these bad habits.

Ir!:l .. ·.nn at Counsel Table which side of the courtroom does

e plaintiff/prosecutor sit and on . ch side does the defendant sit?

Traditionally, the plaintiff/prosecutor is on the judge's left, and the defense is on the right. The relative positions may vary from court to court, so it is impor­tant for attorneys to find out the con­vention of a particular court. To conduct the hearing efficiently and identify the participants quickly, judges want to see consistent courtroom arrangements when they enter the courtroom.

t appropriate to ask potential consider a damage award for

a sum than the amount sued for in the Motion for Judgment. An objec-

Hon. Paul M. Peatross, Jr. is the presiding judge of the Albemarle County Circuit Court.

12

tion should be voiced by opposing counsel.

is to advise the judge or jury intended to be shown by·the

........... u. ....... , and a great opportunity is lost if law is discussed or argument is made about how the case should be decided. Tell the jury the identity of the witnesses by name and what they will say, so the jury can listen for those facts presented in the testimony of the witnesses. A fact is not a fact until the jury finds it to be one. Facts will persuade - conclusions do not.

Questions I •• a ...... Examination

needs to be the center of to tell his or her story. A wit­

ness will be believed and remembered because of the manner and content of his or her testimony - not because of the questions asked by the attorney. Leading questions are permissible for foundation questions, transition questions, adverse witnesses, and child witnesses. Attorneys lose their effectiveness by using leading questions to present evidence on issues for the jury or judge to decide.

t words out of the attorney's ... u.'V ............ be "I object," followed by legal reason the objection should

be sustained. Many times there is a short recitation why the attorney does not think the witness should give the objec­tionable testimony. The court cannot rule on a statement without being told there

c

c

SPRIN(3 2003 LITIGATION NEWS

is an objection. Oftentimes, the court may sustain the objection without requir­ing the legal basis being stated.

hing Recollection the attorneys do not know

mechanics on how to refresh recollection of a witness. If a witness

has a memory lapse, a document may refresh his memory. The document is marked for identification, given to the witness, who reads it and refreshes his memory. The document is returned to the attorney, and the question can be asked without the aid of the document. Common mistakes made in court are counsel's failure to have the exhibit marked, shown to opposing counsel, and failing to retrieve the document from the witness after refreshing his or . her recollection.

udion of Exhibits roper procedure is to have the

bit marked by the court reporter, it to opposing counsel, and ask per­

mission of the court to approach the wit­ness with the document to be identified.

most challenging part of the the witness is adverse and

to be controlled to help your case. The most common mistake is the cross­examiner asking non-leading questions that have the witness repeat his or her direct testimony. The purpose of cross­examination is to elicit favorable facts to your case and/or to discredit the witness by effective impeachment showing prior inconsistent statements, bias, etc. Impeachment of a witness by using a

13

prior inconsistent statement made in a deposition is frequently appropriate, but often done improperly,' which results in loss of effectiveness on the issue of credi­bility of the witness.

Arguments mistakes are: expressing per­

pinions to the jury; failing to '-'A~JHUU and apply instructions to the evi­dence; failing to use demonstrative exhibits to argue damages; and the fail­ure to tell the jury what facts they should find as the true facts in the case on which to render a verdict. A fact becomes a fact only when a judge or jury accepts it as true.

when addressing tanding, the judge's

attention IS to the lawyer whether it be an objection, argument on a motion or other matter. It also demonstrates courtesy and professionalism, which makes a favorable impression upon jurors, court staff, and members of the public. Finally, it enables the lawyer to be heard and understood more clearly.

Remember, falling into bad habits makes an attorney less effective in the courtroom. With a little thought and adequate preparation on proper procedures, the case is presently more clearly for the judge or jury to under­starid. An excellent reference book is Trial Techniques, Sixth Edition, by Thomas A. Mauet, published by Aspen Law & Business.

LITIGATION NEWS SPRING 2003

Covenant Not To Compete contJd from page 4

could be critical to the merits of your case. Choice of law and arbitration provisions are recognized and upheld by Virginia courts, but generally do not. affect the ability of the court to award injunc­tive relief. A Virginia court may, however, divorce itself of jurisdiction where a foreign venue is named in a valid choice of venue provision.

Choice of Law and Forum Selection Provisions Many employment and other contracts containing covenants not to compete set forth the forum aqd/ or law to be applied to actions arising under

Trade Secrets Act24 empowers a court to grant preliminary injunctive relief in instances of actual or threatened misappropriation of trade secrets,25 Even in the absence of other statutory authority, there is case law that supports the conclusion that a court in equity may issue injunctive relief in the face of a mandatory arbitration clause to maintain the status quo pending arbitration.26

"Pleading" Your Case Mter thinking through the threshold issues, the focus turns to the causes of action available, and assembling the necessary pleadings. Assuming you are in state court, in addition to the verified bill of complaint, you will need to draft a motion for tem­porary injunction, and a formal notice to be served

the\ contract. In such cases, " Virgin~a courts recognize the

enforceability of forum selec­tion/ choice of law clauses,

. unless such provisions are "unfair or unreasonable, or are affected by fraud or unequal bargaining power. "20 Thus, if the forum selection clause names a jurisdiction outside Virginia, a Virginia court will have no jurisdiction over the matter.21 A choice of law provi­sion could also be critically

... the employee's alleged condud ... often includes,

though, not only violation of the noncompete, but the misappropriation of trade

secrets, and dired interference with

contradual relations and existing clients.

on th-e opposition. It is also good form to file with the court a legal memorandum outlining the issues, with rele­vant case law, and a draft decree setting out the relief requested so the court can consider it while reviewing your other papers.

The following are some of the more typical causes of action pled in covenant not to compete cases. The range of theories available will depend,

important given that the states vary in their treat­ment of covenants not to compete. 22 Given Virginia courts' ready willingness to invalidate covenants that they view as overbroad~ the choice of a state's law that permits blue penciling or other reformation of the covenant should the court find it overbroad could be the difference between vic-tory and defeat.23

Arbitration Provisions The presence of a mandatory arbitration clause generally speaking is not a bar to obtaining injunc­tive relief pending the outcome of the arbitration. For example, an employer bringing an action based upon a covenant not to compete oftentimes also will have a cause of action based on violations of the Uniform Trade Secrets Act. The Uniform

14

of course, on the employee's alleged conduct. It often includes, though, not only violation of the noncompete, but the misappropriation of trade secrets, and direct interference with contractual relations and existing clients. If your agreement is silent on the subject, those causes of action such as under the Trade Secrets Act and the Virginia Business Conspiracy Act that provide for the award of attorneys' fees are worth considering.

Breach of Contract The central basis for an employer's action based on a former employee's violation of a covenant not to compete or other non-solicitation or confidentiali­ty clause of an employment agreement is the employee's breach of contract. In determining whether a breach of contract has occurred, courts

(ji)

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SPRING 2003 LITIGATION NEWS

look for "a legal obligation of a defendant to a plaintiff, a violation or breach of that tight or duty, and a consequential injury or damage to the plain­tiff. "27 Here, the legal obligation is contained in the employment agreement and the injury to the plaintiff comes from the loss of clients and good­will because of the competition from the former employee.

Business Conspiracy The employer may seek to bring an action against the former employee for business conspiracy where the former employee conspires with another to violate the provisions of his covenant not to com­pete and misappropriate the trade secrets of the former employer.28 This may be particularly apt where a group of employees leave en masse to compete. 29 A business conspiracy under §§ 18.2-499 and -500 arises when two or more persons "combine, associate, agree, mutually undertake or concert together for the purpose of ... willfully and maliciously injuring another in his reputation, trade, business or profession by any means whatever .... "30 A plaintiff is not required to prove that "the conspirators' 'primary and overrid­ing purpose is to injure another,'" but only to show that the defendants acted "intentionally, pur­posefully, and without lawful justification. "31

Injuries merely to one's el11ployment or personal interests are not covered by this statute, but the Act does protect individuals who own or operate a business.32 Also, as the Supreme Court of Virginia stated:

It is well settled that the right to perfor­mance of a contract and the right to reap profits therefrom are property rights which are entitled to protection in the courts. Consequently, suits for procuring breach of contract pr,oceed on this basis. Code § 18.2-499 provides criminal penalties and Code § 18.2-500 provides civil penalties for such conspiracies. 33

Tortious Interference with Contract Where the employee has improperly recruited clients of the employer, or even recruited co­employees to breach their non-competes together, the employer may wish to add a count for tortious

15

interference with contract. The elements of a cause of action for tortious interference with contract rights are: (1) the existence of a valid contractual relationship or business expectancy, (2) knowledge of the relationship or expectancy on the part ofthe defendant, (3) intentional interference causing breach of the relationship or expectancy, and ( 4) damage resulting to the party whose arrange­ments were disrupted.34

Where the contract is terminable at will, the court requires a plaintiff to allege and prove that the defendant's interference was not only inten­tional, but that she also used "improper" methods.35 "Improper methods" are "those means that are illegal or independently tortious, such as violations of statutes, regulations, or recognized common-law rules. "36 Examples ofimproper meth­ods "may include violence, threats or intimidation, bribery, unfounded litigation, fraud, misrepresenta­tion or deceit, defamation, duress, undue influence, misuse of inside or confidential information, or breach of a fiduciary relationship. "37

Conversion An employee who wrongfully exercises authority over an employer's confidential information, depriving the employer of its possession, also may be subject to an action for conversion. Conversion is any wrongful exercise or assumption of authori­ty, personally or by procurement, over another's goods, depriving him of their possession.38 It must be noted, however, that this cause of action may not be available in all instances.39

Uniform Trade Secrets Act One of the more useful causes of action for employers faced with the misappropriation of com­mercially-valuable confidential and proprietary business information by a former employee who is violating their noncompete is found under the Uniform Trade Secrets Act, adopted by Virginia.40

Under the Act, a "trade secret" is defined as: [I]nformation, including but not limited to, a formula, pattern, compilation, program, device, method, technique, or process, that:

Convenant Not To Compete - cont)d on page 16

_ _ ___ • __ • ____ • ___ •••• ___ ~~_'.> __ ~.~.~2-: .. ;~:·~~3;1~;~!2·}'i\!C'*i

LITIGATION NEWS SPRING 2003

Covenant Not To Compete contJd from page 15

(1) Derives independent economic value, actual or potential, from not being gen­erally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and

(2) Is the subject of efforts that are reason­able under the circumstances to maintain its secrecy.41

Consistent with the Uniform Trade Secrets Act and analogous Restatement standards, courts throughout the country repeatedly have accorded such items as customer lists and customer informa­tion trade secret status.42

The Act specifically provides for the injunctive relief for "actual or threatened" misappropria­tion,43 punitive damages,44 and attorneys' fees. 45

Proving Your Client Is Entitled to Injunctive Relief Virginia courts have been very clear that the enforceability of noncompete covenants turns on the specific facts of each case.46 The courts do not look at covenants in a factual vacuum just to deter­mine whether they are facially reasonable. 47

Therefore it is vitally important to be familiar with Virginia noncompete law and to tailor your evi­dence to that law to demonstrate that you are enti­tled to injunctive relief.

Bases for Injunctive Relief Enforcing Covenants Not To Compete The factors for obtaining injunctive relief and upholding covenants not to compete have been well-established by federal and Virginia courts. A court's examination of the injunctive relief factors necessarily requires an examination of the covenant not to compete factors, for the two tests are inter­related when it comes to obtaining relief. Moreover, as discussed further below, a court's examination of each individual factor may not be . determinative of a case so much as its weighing of all of the factors as a whole.

16

Factors for Obtaining Injunctive Relief on a Noncompete Covenant While apparently uncited by the Virginia Supretpe Court,48 the Fourth Circuit's decision in Blackwelder Furniture Co. v. Seilig Mfg. Co.,49 is generally accepted as the touchstone for injunctive relief. To obtain a preliminary injunction, the Court must weigh (i) the likelihood of irreparable harm to the plaintiff without the requested injunc­tion; (ii) the likelihood of harm to the defendant with an injunction; (iii) the plaintiff's likelihood of success on the merits; and (iv) the public inter­est. 50 It is also accepted that "[ w ]here multiple causes of action are alleged, plaintiff need only show likelihood of success on the merits on one claim to justify injunctive relieE "51

The Blackwelder factors meld with the ele­ments, set out by the Virginia Supreme Court, for determining whether a noncompete agreement is valid and enforceable. Those factors are:

• Is the restraint, from the standpoint of the employer, reasonable in the sense that it is no greater than is necessary to· protect the employer in some. legitimate business interest?

• From the standpoint of the employee, is the restraint reasonable in the sense that it is not unduly harsh and oppressive in cur­tailing his legitimate efforts to earn a liveli­hood? and

• Is the restraint reasonable from the stand­point of sound public policy?52

The burden is on the employer to demonstrate the validity and enforceability of the restrictive covenant at issue.53

Convincing the Court that Your Client Meets these Standards While the tests set forth above may seem straight­forward, the application of these factors by courts varies widely depending on the facts of each case. The Virginia Supreme Court recently explained:

[T]his Court [does] not limit its review to considering whether restrictive covenants· [are] facially reasonable. The Court exam­ine[s] the legitimate, protectable interests of

SPRIN(32003 LITIGATION NEWS

the employer, the nature of the former and subsequent employment of the employee, whether the actions of the employee actually violated the terms of the non-compete agree­ments, and the nature of the restraint in light of all the circumstances of the case. The lan­guage of the non-compete [is] considered in the context of the facts of the specific case.54

It takes careful examination and application of pertinent case law, therefore, to persuade the court that enforcement of the covenant fits within the parameters of the courts' prior determinations in such cases. The following disctlssion focuses on each element. Note though that the courts them­selves rarely divide their analysis so neatly, instead focusing in immediately on a combination of facts or factors they find trouqling.

Likelihood of Irreparable Harm to the Plaintiff

raises the prospect of such harm. Other evidence of irreparable harm might include confusion among your customers if your fprmer employee has begun a competing business. If the former employee is not involved in sales, it may be more effective to focus on the training and trade secrets to which she had access as an employee, and the likely prospect she will make use of that informa­tion in her new job. Do not overlook offering actual evidence of the difficulty of putting a mone­tary value on the employee's breach of the covenant ..

Likelihood 'of Harm to . Defendant from the Iniunction

... co. ..

The likelihood of irreparable harm to the employer without the injunction is weighed against the like­lihood of harm to the employee from the imposi­

Without the I niunction . Often the covenant not to compete itself contains lan­guage noting the parties' agreement that violation of its terms would cause irreparable harm to the employer, justify­ing injunctive relief. Where such language is not included in the agreement, courts look to whether an adequate reme­dy exists at law.55 In Christian Defense Fund, the Fairfax County Circuit Court found that a damage remedy was available by imposing a con-

virgitlia COUrts have been very cI~ar that the enfotceability of.

noncompete covenants turns on the specific factS of each case. The courts do not look at covenants in a

fadual vacuum just to determine whether they are.

facialiy reasonable.

tion of the injunction. Courts reviewing the likelihood of harm to the defendant employ­ee from the injunction general­ly are concerned by the impact on the defendant's ability to earn a living should the terms of the noncompete be upheld. The courts thus often lump this prong with analysis of the merits of the noncompete itself, especially the scope of activities sought to be prohibit­ed by the covenan t. These issues are discussed next.

structive trust on all profits derived by the defen­dant's violation of the restrictive covenant, and thus found no irreparable injury to the plaintiff warranting injunctive relief. 56 However, that is the unusual case. In contrast, the Fourth Circuit in Multi-Channel TV Cable Co., albeit not in the context of a covenant not to compete, found that a plaintiff's loss of customers and goodwill raised the likelihood of irreparable harm, for which dam­ages were incapable of calculation.57

If you do not have evidence of lost sales or cus­tomers, offer evidence that the former employee has been calling on his former accounts, which

17

Plaintiffs Chance of Success on the Merits of the Noncompete

The plaintiff's chance of success on the merits of the noncompete often is the main focus of the courts' analysis. To show the employer's chance of success on the merits, the employer first must prove the existence of a valid agreement with the employee. Here, the employee may allege that the agreement itself was fraudulently induced or was breached first by the employer. Overcoming such allegations will depend upon the facts of the case at hand. The employee also may attack the non-

Convenant Not To Compete - contYd on page 18 .

LITIGATION NEWS SPRING 2003

Covenant Not To Compete contJdfrom page 17

compete as void due to lack of consideration. Generally, where the covenant not to compete is entered into as part of the employment contract,

. courts find sufficient consideration to support the covenant.58 The courts are split, however, where the covenant is signed as a condition of continued employment. 59

The Employer's Legitimate Business Interest and the Harshness of the Restraint on the Employee

Assuming the employer can show that the contract overall is likely enforceable, it then has the burden

closer at the geographic and functional restrictions of the covenant.

Generally, though, restrictions lasting from one to three years often have been held to be reason:­able, when balanced against the covenant's geo­graphic scope and prohibited activities. 64

Geographical restrictions of 50 or more miles from an employer's offices worldwide have been upheld where the restrictions reasonably related to the type of business engaged in by the employer and where the time frame and activities prohibited were narrow.65 Moreover, courts have given special scrutiny to the function or activities barred by the covenant not to compete. Courts have upheld

of proving the likelihood of the covenant's enforceability. The analysis therefore turns to an examination of the reasonable­ness of the covenant from the . employer's and employee's per­spectives in light of the facts of the individual case.60

For its part, the employer must show that the scope of the covenant is "no greater than is necessary to protect the employer in some legitimate business interest. "61 The employer's interest includes protection of its client base, confidential information and goodwill. 62 At the same time, it must show that the restraint is not unduly harsh and oppressive in curtailing the employee's legitimate efforts to earn a livelihood.

A court's examination of the injundive relief fadors necessarily

requires an examination of the covenant not to

compete fadors, for the two tests are interrelated

covenants that bar former employees from engaging in activities that are reasonably related to the activities they once engaged in as an employ­ee. 66 They also have struck down those that reach beyond that scope,67 Where the employee's activities were broad, the courts tend to uphold similarly broad non­compete prohibitions.68 when it comes to

obtaining relief .... [A] court's examination of

each individual fador may not be determinative of a

case so much as its weighing of all of the

fadors as a whole.

Be sure then that you offer evidence supporting the rea­sonableness of the covenant's restrictions. For example, if the geographic restriction is fifty miles, offer evidence that the employee's/employer's sales territory and customer base extend that far, or that there is some other logical relationship between the restriction and the

The Supreme Court analyzes these factors by examining the temporal, geographic and function­al restrictions of the covenant.63 Generally speak­ing, courts balance the restrictions as a whole in light of the specific facts of each case to determine their reasonableness. As a result, the cases appear to reflect a sliding scale. For example, as the tem­poral restriction increases, the courts will look

employer's business such as the distance traveled by the broadcast signal in New River Media. As for the temporal restriction, consider tying it to the "shelf-life" of the trade secrets to which the

18

'- .

employee had access, or the period of time it might take to find a replacement employee, fully train that person (including on-the-job training) and for that person to develop relationships with

f). r ". "\ ,~

~-~--

)

SPRINt; 2003· LITIGATION NEWS

your accounts. If the covenant broadly restricts function, offer evidence, if any, of the former employee's broad involvement in a wide range of aspects of the employer's business (e.g., sales, mar­keting, managerial, administrative, etc.).

Finally, do not overlook evidence that mitigates the harshness of the covenant's restrictions, such qS

those indicating the emplo)1:ability of the former employee. This might include the person's educa­tional background, employment history and job openings outside the covenant's geographic limits.

The Public Interest

The courts consider the public interest inexamin­ing both the merits of the covenant and the avail­ability of injunctive relief. Public policy concerns generally relate to the public's interest in uphold­ing agreements, safeguarding confidential informa­tion and not allowing competitors to profit. from ill-gained proprietary information. Courts though will consider public policy to the extent it weighs against the enforcement of non competes as a potential restraint of trade. 69

Salvaging the Overbroad Agreement Through Severability As discussed above, a Virginia court generally will not enforce an agreement it finds to be overbroad. Nevertheless, at least one court has severed an offending portion of an agrt;ement, enforcing only the portion found not to be overbroad.7o In that case, however, the court only salvaged portions of the agreement containing non-disclosure and non­solicitation provisions.71 Where possible, be certain to take advantage of any choice of law clause con­tained in your agreement that selects a "blue pen­cil" jurisdiction.

Affidavits as Evidence? In both federal and state court, evidence may be submitted in support of the application for injunc­tive relief in many different forms. One issue that arises routinely is whether injunctive relief may be based on affidavits. This arises because of the inconvenience in requiring witnesses to testify on short notice, or the unwillingness of witnesses to otherwise "get involved." Employers also may be

19

less squeamish about asking a solicited customer to sign an affidavit than appear in court to testify.

Federal court ,rules are clear that TROs may be based on affidavit or verified complaint.72

Mfidavits also appear admissible in support of pre­liminary injunctions. 73 State courts also should accept affidavits in support of an application for temporary injunctlon. 74 This only makes sense given that, at this stage, the court, sitting in equity, is only weighing the likelihood of success. Nevertheless; there is general hostility to affidavits even at this ,stage of the proceeding, so educate yourself about the particular idiosyncracies of your judge.

Appeal of Grant or Refusal of Injunction The grant or denial of a request for preliminary or temporary injunctive relief does not require the aggrieved party to ride out the litigation until a final order is entered ona fully developed record. The aggrieved party has the option of an interlocu­tory appeal. In federal court, the refusing or grant­ing of an injunction is an appealable order under 28 U.S.C.A. § 1292(a)(1). Under Virginia law, the aggrieved party may appeal to the Virginia Supreme Court; but needs to act quickly.75

Conclusion When an employer asks for legal assistance in enforcing a covenant not to compete, it usually wants the injunction yesterday. If you ever expect to handle one of these cases, it is wise to be gener­ally familiar with the issues that can arise. While it will payoff to spot and address legal issues up front,· it is also vitally important to present evi­dence that supports the reasonableness of the covenant at issue, and the appropriateness of injunctive relief, As a review of the case law quickly reveals, every case stands on its own set of facts. Now that you are armed with an overview of the case law, the process and the type of evidence the courts may consider, you will be ready to deal with that next breathless call you get from a client.

Convenant Not To Compete - contJd on page 20

LITIGATION NEWS SPRING 2003

Covenant Not To Compete contJd from page 19

1 Where only injunctive relief is sought, "the test for determining the amount in controversy in a diversity pro­ceeding is 'the pecuniary result to either party which [a] judg­ment would produce.'" Dixon v. Edwards, 290 F.3d 699, 710-711 (4th Cir. 2002) (quoting Gov't Employees Ins. Co. v. Lally, 327 F.2d 568, 569 (4th Cir. 1964)). Thus, under the

. "either-party rule," the focus is on the injury to be prevented by the injunction, or, if that cannot be measured, the mone­tary value to the party to be enjoined of continuing in her employment. See Dixon v. Edwards, 290 F.3d at 710-1l.

2FED. R. CIV. P. 65(b).

3Id.

4FED. R. CIV. P. 65(a)(1).

5FED. R. CIV. P. 65(a)(2).

6Id.

7Id.

8 See 42 AM. JUR. 2d Injunctions § 264 (West 2000).

9FED. R. CIV. P. 65.

lOVA. CODE ANN. § 8.01-620 (Rep. Vol. 2000).

11 VA. CODE ANN. § 8.01-629 (Rep. Vol. 2000).

12VA. CODE ANN. § 8.01-631 (Rep. Vol. 2000).

13VA. CODE ANN. § 8.01-624 (Rep. Vol. 2000).

14Id.

15VA. CODE § 8.01-625 (Rep. Vol. 2000).

16 See Friend, FRIEND'S VIRGINIA PLEADING AND PRACTICE vol. 2, § 33-2 (1998).

17VA. CODE ANN. § 8.01-629 (Repl. Vol. 2000).

18 Cohen v. Rosen, 157 Va. 71, 160 S.E. 36 (1931).

19Id. at 76-77.

20 Paul Business Systems, Inc. v. Canon U.S.A., Inc., 240 Va. 337, 397 S.E.2d 804 (1990).

21Id.

22See Malsberger, COVENANTS NOT To COMPETE: A STATE-By-STATE SURVEY, ABA Section of Labor and Employment Law (3d Ed. 2002).

23 See Reddy v. Community Health Found. of Man, W. Va., 298 S.E.2d 906, 914 (W. Va. 1982) (holding that employer is entitled "to that limited measure of relief within the terms of the noncompetitive agreement which is reasonably neces­sary .... "); and Knowles-Zeswitz Music, Inc. v. Cara, 260 A.2d

20

171 (Del. Ch. 1969) (applying a variant of the "blue pencil rule" by enforcing covenant not compete only to the extent reasonable to do so).

24 VA. CODE. §§ 59.1-336 et seq.

25 See VA. CODE § 59.1-337.

26 Merrill Lynch v. Bradley, 756 F.2d 1048 (4th Cir. 1985) ("arbitration process would be a hollow formality where me award when rendered could not return the parties to the sta­tus quo ante;" interpreting the Federal Arbitration Act). See also Hart Conover, Inc. v. Hart, 47 Va. Cir. 135 (Fairfax County 1998) (noting that a request for injunction was previ­ously granted on the basis that the plaintifPs business would be injured, even though the parties' noncompete contract contained an arbitration agreement).

27 Westminster Investing Corporation v. Lamps Unlimited, Inc., 237 Va. 543, 379 S.E.2d 316 (1989); Caudill v. Wise Rambler, Inc., 210 Va. 11, 168 S.E.2d 257 (1969).

28 See, e.g., Catercorp, Inc. v. Catering Concepts, Inc., 246 Va. 22, 28, 431 S.E.2d 277,282 (Va. 1993).

29 See, e.g., Advanced Marine Enterprises, Inc. v. PRC, Inc., . 256 Va. 106,501 S.E.2d 148 (1998). .

30VA. CODE §§ 18.2-499 and 500 (1996); Eshbaugh v. Amoco Oil Co., 234 Va. 74, 360 S.E.2d 350 (1987).

31Feddeman & Co., C.P.A., P.c. v. Langan Assoc., 260 Va. 35,44,530 S.E.2d 668,674 (2000) (citations omitted).

32Moore v. Allied Chem. Corp., 480 F. Supp. 364, 374 (E.D. Va. 1979); Welch v. Kennedy Piggly Wiggly Stores, Inc., 63 B.R. 888 (W.D. Va. 1986).

33 Chaves v. Johnson, 230 Va. 112, 335 S.E.2d 97 (1985) (citation omitted).

34Id.

35Duggin v. Adams, 234 Va. 221, 360 S.E.2d 832 (1987).

36Duggin, 234 Va. at 227, 360 S.E.2d at 836; See also Perk v. Vector Resource Group, 253 Va. 310, 314-15, 485 S.E.2d 140,143 (1997).

37Id. r

38 T;niversal c.I.T. Credit Corp. v. Kaplan, 198 Va. 67,92 S.E.2d 359 (1956).

39 But see VA. CODE § 59.1-341 which holds that Virginia's Uniform Trade Secrets Act "displaces all conflicting tort, restitutionary, and other [state] law ... providing civil remedies for misappropriation of a trade secret, and NSW Corp. v. Ferguson, 49 Va. Cir. 456 (Roanoke City 1999) (applying same).

40 See VA. CODE ANN. §§ 59.1-336 etseq.

41VA. CODE ANN. § 59.1-336.

42 See, e.g., IDS Life Ins. Co. v. SunAmerica, Inc., 958 F. Supp. 1258, 1279-80 (N.D. Ill. 1997) ("In this case, plain-

~'.'." ~ ," ]1

<, ..

SPRINt; 2003 . LITIGATION NEWS

tiffs claim that defendants are in possession of plaintiffs' records of customer names, addresses, and investment charac­teristics and are using that information to solicit and serve plaintiffs' customers. We find that plaintiffs' customer lists and files are likely to constitute trade secrets."), affd in rele­vant part, vacated in part, 136 F.3d 537 (7th Cir. 1998); IDS Fin. Svcs. v. Smithson, 843 F. Supp. 415, 418 (N.D. Ill. 1994) ("An injunction is therefore appropriate to protect IDS' proprietary interest in these secrets and to prevent the secrets from being disclosed to competitor or unjustly used by.Smithson for his own benefit.").

43VA. CODE ANN. § 59.1-337.

44 VA. CODE ANN. § 59.1-338.

45 VA. CODE ANN. § 59.1-338.l.

46Modern Environments, Inc. v. Stinnett, 263 Va. 491, 561 S.E.2d 694 (2002).

47Id.

48Virginia's circuit courts, however, have applied the Fourth Circuit's standard. See, e.g., Seniors Coalition, Inc. v. Seniors Found., Inc., 39 Va. Cir. 344, 349 (Fairfax County 1996) (applying Fourth Circuit's standard for preliminary injunctions to state suit for temporary injunction). In any event, there is no substantial difference between the Virginia standard and the federal standard for temporary injunctions. Both courts draw upon the same equitable principles. Capital Tool & Mfg. Co. v. Maschinenfabrik Herkules, 837 F.2d 171, 173 (4th Cir. 1988).

49550 F.2d 189, 193-96 (4th Cir. 1977).

50 Blackwelder, 550 F.2d 189, 193-96 (4th Cir. 1977).

51McNeil-PPC, Inc. v. Granutec, Inc., 919 F. Supp. 198, 201 (E.D.N.C. 1995).

52 New River Media Group, Inc. v. Knighton, 245 Va. 367, 369, 429 S.E.2d 25, 26 (1993); Roanoke Eng. Sales v. Rosenbaum, 223 Va. 548, 552, 190 S.E.2d 882, 884 (1982).

53Richardson v. Paxton Co., 203 Va. 790, 795, 127 S.E.2d 113,117 (1962).

54Modern Environments, 263 Va. at 494-95, 561 S.E.2d at 969.

55 Christian Defense Fund v. Stephen Winchell & Associates, Inc., 47 Va. Cir. 148 (Fairfax County 1998).

56Id.

57 Multi-Channel TV Cable Co. v. Charlottesville Quality Cable Operating Co., 22 F.3d 546, 552 (4th Cir. 1994) (holding that possibility of loss of customers or goodwill sat­isfies the irreparable injury prong).

58 See Paramount Termite v. Kiehna, 13 Va. Cir. 193,194-95 (Spotsylvania 1988).

59 Compare Paramount Termite Control Co. v. Rector, 238 Va. 171, 380 S.E.2d 922 (1989) (finding sufficient consider­ation for the noncompete covenant) with Mona Electric

21

Group, Inc. v. Truland Service Corp., 193 F. Supp. 2d 874 (E.D.Va. ?002) (finding continued employment did not con­stitute sufficient consideration for the covenant).

60See New River Media Group, Inc., 245 Va. at 369, 429 S.E.2d at 26.

61Id.

62Roto-Die, Inc. v. Lesser, 899 F.Supp. 1515, 1518 (W.D. Va. 1995) ("Information such as customer lists, exact market share, market size, current technology, technological projects and progress, and plans for market expansion, if disclosed to competitors, would destroy a company's ability to com­pete.").

63 Worrie v. Boze, 191 Va. 916, 62 S.E.2d 876 (1951).

64Blue Ridge Anesthesia & Critical Care, Inc. v. Gidick, 239 Va. 369, 389 S.E.2d 467 (1990) (holding that three­year prohibition on employment with competitive firms was reasonable where the geographic scope included only the ter­ritories serviced by former salesmen and only those activities were prohibited that would compete with the plaintifFs busi­ness); Paramount Termite Control Co. v. Rector, 238 Va. at 175, 380 S.E.2d at 926 (holding that a two-year time restric­tion and a geographic limitation based upon the counties "in which the Employee was assigned" was reasonable); Roanoke Eng. Sales v. Rosenbaum, 223 Va. 548, 290 S.E.2d 882 (1982) (finding a period of three years and a geographic limit defined by the "territory covered by Roanoke [Engineering Sales Company] to be reasonable). But see Simmons v. Miller, 261 Va. 561, 544 S.E.2d 666 (2001) (declining to enforce three-year restriction where the activities restricted were deemed to be broader than the plaintifFs business activity and the geographic scope was not limited).

65 See Advanced Marine Enterprises, Inc. v. PRC, Inc., 256 Va. 106, 501 S.E.2d 148 (1998) (upholding a noncompeti­tion and nonsolicitation restriction on marine engineers with­in 50 miles of any of the employer's 300 offices located worldwide where the time period was limited to eight months and the activities restrained were narrowly defined); New River Media Group, Inc. v. Knighton, 245 Va. 367, 429 S.E.2d 25 (1993) (upholding twelve- month restriction on radio disc jockey from engaging in competing business within 60 air miles of former employer's radio station where the radius of the station's signal strength was 60 air miles).

66 See generally New River Media Group, Inc., 245 Va. at 368,429 S.E.2d at 26 (upholding covenant which prohibited employee from "engag[ing] in a business that competed with [his former employer]"); Blue Ridge Anesthesia & Critical Care, Inc. v. Gidick, 239 Va. 369, 370-71, 389 S.E.2d 467 (1990) (upholding three year covenant prohibiting employ­ment by "any competitor" "which renders the same or similar services as Employer," with the exception that covenant does not preclude working "in some n?le which would not com­pete with the business of Employer."); and Roanoke Eng. Sales Co., Inc., 223 Va. at 552, 190 S.E.2d at 884 (upholding covenant barring subsequent employment activities "similar

Convenant Not To Compete - contJd on page 22

LITIGATION NEWS . SPRING 2003

Covenant Not To Compete contJd from page 21

to the type of business conducted by [the employer] at the time of the termination").

67 Seegeneralty Simmons, 261 Va. at 581-82, 544S.E.2d at 678 (noncompete drawn too broadly where it prohibited employment in capacities unrelated to or beyond the scope of services and duties in which the employee previously was engaged, was without geographical limitation and was for three years); Richardson v. Paxton Co., 203 Va. 790, 794, 127 S.E.2d 113 (1962) (noncompete too broad where it prohibited employment in any branch of marine or industrial supplies, encompassing activities in which the employee had not been previously engaged).

68 See Roanoke Eng. Sales Co, Inc., 223 Va. at 552, 190 S.E.2d at 884 (enforcing a noncompete entered by a business owner/officer/director/manager of a building supply busi­ness which prohibited him from "directly or indirectly, own, manage, operate, control, be employed by, participate in, or be associated in any manner with the ownership, manage­ment, operation or control of any business similar to the type of business conducted by Roanoke .... ").

69 See Blue Ridge Anesthesia & Critical Care, Inc., 239 Va. at 373-74, 389 S.E.2d at 470 (finding that the restraint did not violate public policy as a restraint of trade or promotion of monopoly because of the presence of a number of other competitors in the field).

70Roto-Die, Inc., 899 F. Supp. at 1518 (severing over­broad portions of employment agreement and enforcing those not overbroad, but refusing to "blue-pencil" agree­ment). But see, No. Va. Psychiatric Group, P.G. v. Halpern, 19 Va. Cir. 279 (1990) (declining to sever or blue-pencil offend­ing terms and sustaining defendant's motion to dismiss).

7lId.

72 See FED. R. Crv. P. 65 (b) (referring to use of verified complaint and affidavit to show irreparable injury for purpos­es of obtaining TRO).

73See Ty, Inc. v. GMA Accessories, Inc., 132 F.3d 1167, 1171 (7th Cir. 1997) ("Affidavits are ordinarily inadmissible at trial but they are fully admissible in summary proceedings, including preliminary-injunction proceedings.")

74 See VA. CODE ANN. § 8.01-628 ("Equity of prayer for temporary injunction to be shown by affidavit or otherwise"). Depositions or testimony, however, are required for the hear­ing on the permanent injunction. Virginian Ry. v. Echols, 117 Va. 182,83 S.E. 1082 (1915).

75VA. CODE Section 8.01-626 (permitting aggrieved party to file petition for review with a justice of the Supreme Court within fifteen days of court's order).

22

Dead Man's Statute cont'djrom page 10

statutory beneficiaries, were found to be interested parties for purposes of finding that the Dead Man's Statute did not apply.

An interested party is "one, not a party to the record, who is pecuniarily interested in the result of the suit." Johnson v. Raviotta, supra, citing Merchants Supply Co., Inc. v. Ex'rs of the Estate of John Hughes, 139 Va. 212, 216, 123 S.B. 355, 356 (1924). Moreover, the Court has explained that "we have never held that blood relationship alone makes a witness an 'interested party' under the statute. Johnson v. Raviotta, 264 Va. 27, 36, 563 S.E.2d 727, 733 (2002).

18Horner v. Dunker, CL 9800068-00, Roanoke City Circuit Court (J. Apgar) (January 9, 2001).

19 See Brown v. Metz, 240 V~. 127, 393 S.E.2d 402 (1990) (dead man's statute is inapplicable in instances where a plain­tiff offers an adverse party's testimony in his case and that tes­timony is not contradicted or inherently improbable). Balderson v. Robertson, 203 Va. 484, 125 S.E. 180 (1962) (rule not applicable where plaintiff called defendant as an adverse witness and plaintiff was bound by the testimony of the defendant insofar as it was uncontradicted and not inher­ently improbable).

20 Kettler & Scott v. Earth Technology Cos., 248 Va. 45.0, 457, 449 S.E.2d 782 (1994); Automatic Sprinkler Corp. v Coley & Peterson, Inc., 219 Va. 781, 793, 250 S.E.2d 765, 773 (1979).

21 As the Court noted in Johnson v. Raviotta, supra, "cor­roboration for purposes of the dead man's statute cannot come 'from the mouth of the witness sought to be corrobo­rated.'" Johnson v. Raviotta, 264 Va. 27, 36, 563 S.E.2d 727 (733 (2002), citing Varner's Ex'rs. v. White, 149 Va. 177, 185, 140 S.E. 128, 130 (1927). Such documentary evidence does not come "from the mouth" of the witness and thus can operate as corroboration.

22 Ford Motor Co. v. Phelps, 239 Va. 272, 389 S.E.2d 454 (1990).

23 Automatic Sprinkler Corp of Am. v. Coley & Petersen, Inc., 219 Va, 781,793,250 S.E.2d 765 (1979).

24Penn v. Manns, 221 Va. 88, 93, 267 S.E.2d 126, 130 (1980).

25 Johnson v. Raviotta, 264 Va. 27, 32, 563 S.E.2d 727, 731 (2002).

S 2()03 LITIGATION NEWS PRIN(; , ,

Work Product Privilege contJdjrom page 1

dant and called for help. About twenty minutes after the wreck, the plaintiff started having shortness of breath while talking to the investigating officer. As his breathing became more difficult, the officer insisted that Davidson go to the hospital emergency room where he was diagnosed with a heart attack. The plaintiff was a trim, fit, 50-year-old man who led a quiet, conservative lifestyle. He neither smoked nor drank and had no significant family his­

origin of the document. The first assumption was that the plaintiff's health care insurer was Trigon and that such insurer had acquired an independent records review for subrogation purposes. This proved incorrect, as the plaintiff's insurer was Aetna. A secretary solved the mystery when she recognized the name of an Allstate adjuster on the cover letter's distribution list. Allstate insured the defendant. Plaintiff's counsel immediately notified counsel for the defendant. The salient facts were these: Allstate, apparently like many insurers, has a relationship with Trigon, whereby Trigon will

tory of heart disease. In fact, just a few months before the wreck, the plaintiff underwent a complete physical. which he passed with flying colors.

.. . the point of this article - how to avoid waiver.

assist Allstate in obtaining med­ical advice and opinions to help Allstate make coverage and payment determinations. In the Davidson case, Allstate (not its counsel) asked Trigon to obtain a cardiology opinion. After Trigon 0 btained the opinion, Trigon negligently mailed it to counsel for the plaintiff. Because no prior dis­closure of the fact of th~ records review had been made to plaintiff, plaintiff did not

The issue, of course, was whether the wreck caused the heart attack. Both sides found allies in unexpected places. The on-call cardiologist who per­formed the initial catheteriza­tion and found the coronary artery blockage stated that the car wreck could not have

Courts are obviously going to look at the degree of

care, coneem, and control given by the asserting

party to the preservation of the privilege.

caused and did not cause the heart attack. Likewise, the treating cardiologist who performed the angioplasty stated that the wreck did not cause the heart attack. The plaintiff's internist who had given him the physical ex-amination before the wreck and was his admitting physician when he went to the hospital emergency room opined that the wreck clearly did cause the plaintiff's heart attack.

Mr. Davidson got help from an unexpected corner. One day, while op~ning his mail in routine fashion, the plaintiff's attorney opened an enve­lope addressed to him. The envelope showed a return address for Trigon and the letter was on Trigon letterhead and specifically addressed to counsel for the plaintiff. The letter simply stated that enclosed was a report from an independent cardiologist who had reviewed Mr. Davidson's records and was of the opinion that the wreck "clearly" caused the heart attack. While he was glad to receive it, counsel had no clue as to the

23

know, until too late, that he was reading Allstate's claimed work product. Because the opinion of the reviewing cardiologist was favorable, the plaintiff noticed his deposition for trial. Allstate's counsel moved to quash the deposition on the grounds that Dr. Zeevi's records and his opinion were pro­tected by the Work Product Doctrine. The plaintiff countered that the privilege did not exist for the defendant and that, if it did exist, it had been waived.

In a thorough and well-reasoned opinion, the Court considered first whether the document was work product. The Court rightly observed that, barring well-known exceptional circumstances, the plaintiff could not discover the opinions of a defense expert not expected to testify. [See Rule 4:1(b)(4)(B)] The Court saw the issue as whether the defendant can assert the privilege and bar the plaintiff from using the doctor's testimony after

Work Product Privilege - contJd on page 24

LITIGATION NEWS SPRING 2003

Work Product Privilege contJd from page 23

Trigon negligently gave the material to plaintiff. The Court reasoned that the Trigon document (the medical report) is work product only if the doctor is an agent or consultant for the defendant or her insurer or attorney. In the instant case, the doctor was a consultant for Trigon, not Allstate and not the defendant and not her counsel. Accordingly, the Court ruled that the document was not work product.

The more interesting question was the issue of waiver. The judge ruled that even if the document were subject to the work product qualified privi­lege, the privilege had been waived. (Query: If Trigon is too removed to create work product for the defendant, how can Trigon waive it for the defendant or Allstate?) The Court observed that most courts find that work product protections are waived when the disclosure is to an adversary or its conduct has substantially increased the opportunities for an adversary to obtain the information. This brings us, perhaps belatedly, to the point of this article - how to avoid waiver.

Courts are obviously going to look at the degree of care, concern, and control given by the asserting party to the preservation of the privilege. In the instant case, the Court found Trigon negli­gent. But, how would Allstate have fared in a "due diligence" inquiry? What had Allstate done, if any­thing, to protect and preserve the privilege? (Allstate's counsel, trial counsel, was not involved in the chain of acquisition and dissemination of the information.) While this article is not intended to be an exhaustive treatment of waiver prevention, the case at hand suggests some precautions and protec­tive measures:

1. There is probably a level of security in some cases that precludes the use of e-mail for the acquisition and dissemination of certain information. The use of e-mail in and of itself can suggest to a court a decreased level of care and concern about the secrecy and security of the information so conveyed. Law offices should have a written policy with respect to this, and

24

clients should be advised of it. Sloppy use of e-mail and e-mail distribution by clients must be a concern to the lawyer, and clients must be educated with respect to this issue. Your author has received sensi­tive e-mails from defense lawyers intended for adjusters and e-mails from adjusters intended for defense counsel. It is hard to stop reading mid-message but ethically that is what is arguably required - or arguably not.

2. E-mails intended to be subject to the privi­lege should carry a warning similar to those used on fax communications.

3. Correspondence from lawyers to experts should proclaim in bold headings, the privi­leged nature of the correspondence, and experts should be educated and warned that correspondence to lawyers should bear the same prominent markings and warn­ings.

4. Law offices should have a published policy for staff with training at reasonable inter­vals on identifYing and protecting the privi­lege. (Given the fact that the work product privilege is harder to waive than the attor­ney / client privilege, it is certainly possible that a judge could find that a secretarial mistake in a law firm did not constitute waiver of the· privilege if the firm could show that it had taken serious measures to prevent inadvertent disclosure. If the answer to the question "what has the firm done to prevent inadvertent disclosure" is "nothing," don't expect a trial judge to treat the privilege more seriously than counsel for one of the parties.)

5. "In-house" lawyers (e.g. corporate counsel) should develop privilege waiver avoidance guidelines and regularly train staff in "waiv­er dangerous" areas, such as personnel who obtain outside opinions as Allstate did from Trigon.

6. Consider making the subject of lawyer/ client cooperation on maintaining privilege a matter addressed in a retainer agreement.

SPRINt; 2003 LITIGATION NEWS

7. Plaintiff should make some effort in appro­priate cases to discover the undiscoverable. For example, when the defense discloses an expert whom the defense does not intend to use, make the defense identify those per­sons in the chain of information dissemina­tionand acquisition so that a pursuit of the expert's opinion can be launched if the party asserting the privilege is not in a posi­tion to assert it - as was the case in Davidson. Make the defense identify experts consulted bl].t whose opinions they do not intend to use. It may well be that there are lots of Davidson-like situations that never come to light. Would the doc­tor's opinion have been discoverable if not inadvertently disclosed in Davidson? Under Judge Stone's analysis, maybe yes, since the document was generated by a party too removed from the defendant to assert the privilege.

S. When serious questions of inadvertent dis­closure come up, counsel should seek an opinion from an outside ethics "expert." If you rely on your gut reaction on the ethical issues, you might well get gutted. The issues are being hotly debated at this very moment, and some of the most respected lawyers in the Commonwealth vehemently disagree on the duties of the lawyers involved in an advertent disclosure of privi­leged matter.

How did the Davidson story end? Counsel for the plaintiff "chickened out" and did not depose the doctor. Instead, he found an expert to testify that the car wreck caused the accident. Focus group work showed that a very high percentage of jurors were going to believe that the car wreck caused the heart attack no matter what the doctors said, so the plaintiff wanted an error-free trial. Judge Stone's opinion plowed essentially new ground in Virginia; and the likelihood of a trip to the Supreme Court seemed high. The plaintiff only wanted the money; he had no interest in contributing to the clarifica­tion of the law of waiver in Virginia.

25

Ethics at a Glance (conf'd) I

Hypothetical situation is presented on the outside back coper

4.2, a lawyer cannot lIUl.U\..<lL\.. about the subject of the repre-

with a person the lawyer knows to

be represented by another lawyer in the mat­ter; unless the lawyer has the consent of the other lawyer or is authorized by law to do so.

The Bar takes this rule very seriously, and applies it with surprising strictness.

In addition to the ethics risks involved, some courts have also punished lawyers for engaging in this conduct. Violating this rule can have drastic effects. In In01;ganic Coatings, Inc. v. Fatbet;g, 926 F. Supp. 517 (B.D. Pa. 1995), for instance, a lawyer for Inorganic Coatings sent a letter to an International Zinc official (Falberg) threatening to sue his company for certain conduct. Inorganic's lawyer later spoke with International Zinc's lawyer about a possible settlement, but the conversation was unsuccessful. Later in the same day, the lawyer received a telephone call from Falberg. Inorganic's lawyer advised Falberg that "it would be best" if the communication took place between the lawyers, but did not terminate the conversation. The lawyer spoke with Falberg for about ninety minutes and took twenty-four pages of notes. Among other things, he used the information to revise his draft complaint.

The court found that Inorganic's lawyer had violated the ethics code's prohibition on such ex parte contacts, and disqualified the lawyer and his firm from representing Inorganic even though they had been engaged for over one year in investi­gating and preparing the lawsuit.

Therefore, the best answer to this hypothetical is NO.

LITIGATION NEWS SPRING 2003

Virginia State Bar Litigation Section Board of Governors·

Thomas E. Albro Chair Tremblay & Smith, L.L.P. 105-109 East High Street P.O. Box 1585 . Charlottesville, VA 22902-1585

434/977-4455 Fax: 434/979-1221

Paul Markham Black Vice Chair Wetherington Melchionna, et al. 310 First Street, Suite llOO Roanoke, VA 240ll

540/982-3800 Fax: 540/342-4480

Robert Emmett Scully, Jr. Secretary Rees, Broome & Diaz, P.c. 8133 Leesburg Pike, Ninth Floor Vienna, VA 22182

703/790-1911 Fax: 703/848-2530

Frank Kenneth Friedman Immediate Past Chair Woods, Rogers & Hazlegrove, PLC 10 S. Jefferson Street, Suite 1400 P.O. Box 14125 Roanoke, VA 24038-4125

540/983-7692 Fax: 540/983-7711

R. Lee Livingston Newsletter Editor Tremblay & Smith, L.L.P. 105-109 East High Street P.O. Box 1585 Charlottesville, VA 22902

434/977 -4455 Fax: 434/979-1221

Vicki Hansen Devine Furniss, Davis, Rashkind, et al. P.O. Box 12525 Norfolk, VA 23541-0525

757/461-7100 Fax: 757/461-0083

Jacqueline G. Epps Morris and Morris, P.C. P.O. Box 30 Richmond, VA 23218-0030

804/344-8300 Fax: 804/344-8359

Philip G. Gardner Gardner, Gardner & Barrow 1st Citizens Bank Building, 4th Floor 231 East Church Street Martinsville, VA 24ll2-2840

276/638-2455 Fax: 276/638-2458

Harry Margerum Johnson, III Hunton & Williams 951 East Byrd Street Richmond, VA 23219-4074

804/788-8200 Fax: 804/344-7999

Samuel W. Meekins, Jr. Wolcott, Rivers, Wheary, et al. One Columbus Center, Suite llOO Virginia Beach, VA 23462

757/497-6633 Fax: 757/497-7267

Jennifer Lee Parrish Roberts, Ashby & Parrish 701 Kenmore Avenue, Suite 100" Fredericksburg, VA 22401-5737

540/373-3500 Fax: 540/899-6394

Michael G. Phelan Cantor, Arkema & Edmonds, P.C. 823 East Main Street ' P.o. Box 561 Richmond, VA 23218-0561

804/644-1400 Fax: 804/644-9205

Colin James Steuart Thomas, III Timberlake, Smith, Thomas & Moses P.O. Box 108 Staunton, VA 22402-0108

540/885-1517 Fax: 540/885-4537

Hon. William H. Ledbetter, Jr. Ex-Officio Judicial Spotsylvania County Circuit Court P.O. Box 1179 Spotsylvania, VA22553-1179

540/582-7229 Fax: 540/582-7973

26

Hon. Lydia Calvert Taylor Ex-Officio Judicial Norfolk Circuit Court Fourth Judicial Circuit 100 St. Paul's Boulevard Norfolk, VA 23510-2721

757/664-4593 Fax: 757/664-4581

Kevin Walker Holt Co-Chair - Litigation YLC Gentry, Locke, Rakes & Moore 10 Franklin Road S.E. P.O. Box 40013 Roanoke, VA 24022-0013

540/983-9300 Fax: 540/983-9400

Kevin Wayne Mottley Co-Chiir - Litigation YLC Troutman Sanders LLP 1111 East Main Street P.O. Box 1122 Richmond, VA 23218-ll22

804/697-1263 Fax: 804/697-1339

Ann Kiley Crenshaw Computer Task Force Liaison Suite 103 160 Exeter Drive Winchester, VA 22603

540/665-0050 Fax: 540/722-4051

William H. Shewmake . Chair - Appellate Practice Subcommittee Shewmake & Baronian, P.C. 5413 Patterson Avenue, Suite 101 Richmond, VA 23226

804/282-8800 Fax: 804/285-4542

Patricia Sliger Liaison Virginia State Bar 707 East Main Street, Suite 1500 Richmond, VA 23219-2803

804/775-0576 Fax: 804/775-0501

William Brice Smith Liaison Fine, Fine, Legum & Fine, P.A. Pavilion Center 2101 Parks Avenue, Suite 601 Virginia Beach, VA 23451

757/422-1678 Fax: 757/422-0865

SPRING 2003 LITIGATION NEWS

~.' .

Virginia State Bar Litigation Section Young Lawyers Committee

Kevin W. Holt Co-Chair - Litigation YLC Gentry, Locke, Rakes & Moore 10 Franklin Road S.B. P.O. Box 40013 Roanoke, VA 24022-0013

540/983-9421 Fax: 540/983-9400

Kevin Wayne Mottley Co-Chair - Litigation YLC Troutman Sanders LLP llll East Main Street P.O. Box ll22 Richmond, VA 23218-ll22

804/697-1263 Fax: 804/697-1339

Sandra Chinn-Gilstrap 520 Piney Forest Road Danville, VA 24540-3352

434/797-9681 Fax: 434/797-1488

Mary Catherine H. Gibbs Hart & Calley, P.C. 307 North Washington Street Alexandria, VA 22314

703/836-5757 Fax: 703/548-5443

Christopher J. Robinette Tremblay & Smith, L.L.P. 105-109 East High Street P.O. Box 1585 Charlottesville, VA 22902-1585·

434/977-4455 Fax: 434/979-1221

Calvin Spencer Harris, Matthews & Crowder P.O. BoxG Kenbridge, VA 23944

434/676-2405

Michael Alex Wasylik The Law Office of

Michael Alex Wasylik 7918 Jones Branch Drive, Suite 600 McLean, VA 22102

703/287-8741

If you are a young trial lawyer under the age of

36 and are interested in joining the litigation

Section Young lawyers Committee, please contact

either KeJlin, Wayne I~toiftl,ey;;or ~eJlin W. Holt,

Co-Chairs, litigati0!1'("Y;~C,; at th~jr respective

addresses above.

27

LITIGATION NEWS SPRING 2003

(gj(gj[Q](gj[Q][Q][Q][Q][Q][Q][Q][Q][Q][Q][Q][Q] (gj [Q] (gj Publish Your Work [Q] [Q] Litigation News welcomes the sub- ~ (gj mission of litigation-oriented articles. If aQ (gj you have researched or argued an [Q] (gj interesting point of Virginia law, or [Q] (gj have practice tips to share, consider [Q] (gj condensing them into an article for [Q] rr=il Litigation News. The contact for sub- [Q] is:! mission of these articles is: [Q] (gj Kevin Wayne Mottley, Esq. [Q] I[jl Troutman Sanders LLP. [Q] ~O 1111 East Main Street I[j1 I!;;;;!I PO Box 1122 ~ (gj Richmond, VA 23218-1122 [Q] (gj 804/697-1263 [Q] I[jl fax 804/697-1339 I[j1 I!;;;;!I e-mail ~ (gj kevin.mottley@troutmansanders.com [Q] (gj [Q] (gj[Q][Q](gj[Q][Q][Q][Q][Q][Q][Q][Q][Q][Q][Q][Q]

If\17T\LITIGATION N'EWS - ...L.. - Virginia State Bar

Eighth & Main Building 707 E. Main Street, Suite 1500 Richmond, VA 23219-2803

Ethics at a Glance

Ethics in the Information Age

by Thomas E. Spahn

handling a number of commercialliti-for your company, most of which involve

software vendors. You just received an e-mail the president of one of the software com­panies against which your company has been litigating for six months. The president tells you that he wants to "cut through the bull" and try to resolve the dis­pute. You quickly send an e-mail back to him, indicat­ing that you cannot deal with him but must instead deal with his lawyer. Within just a few minutes the president sends you an e-mail back, indicating that he wants to resolve the case without his lawyer.

May you continue to communicate with the soft­ware company president?

(Analysis inside on page 25)

PRST STD

PAID PERMIT NO. 709

RICHMOND

'II','"',',,, ''',,' ",',',' ',II", '"111,"" 11",'.111",111

Mr. Robert Emmett Scully Rees,Broome & Dlaz, P.C. 8133 Leesburg Pike steg V/enna r VA 22182-2706

28