Virginia Business Litigation Lawyer Blog

"Grandma Got Run Over by a Reindeer" is one of the most popular holiday songs around and is played on radio stations across the country every Christmas season. It is also now the subject of contentious copyright litigation after a federal judge ruled recently that litigation over an allegedly unauthorized YouTube video containing audio of the song can continue despite the absence of a co-owner of the copyright.

Elmo Shropshire owns the copyright to the song along with Patsy Trigg d/b/a Kris Publishing. The copyright was registered with the U.S. Copyright Office on December 27, 1979. The defendant posted a video on YouTube--which has since been removed due to the pending litigation--which combined Christmas-related pictures with audio of a Canadian musical group, "The Irish Rovers," singing the Grandma song. Shropshire contacted the poster and requested that he either pay the licensing fee or immediately remove the video. The poster refused.

Shropshire filed a copyright infringement suit in federal court, but his first (amended) complaint was dismissed because, among other reasons, Shropshire did not name Trigg or Kris Publishing in the lawsuit. The court gave him permission to amend, however, and the second time around, Shropshire named Kris Publishing as a defendant, but Kris Published settled out and was promptly dismissed. The defendant then filed a motion to dismiss, claiming that Patsy Trigg d/b/a Kris Publishing was a necessary and indispensable party and thus the suit could not go forward without her. The Court disagreed.

In order to determine whether a party is "necessary" to the case under Federal Rule of Civil Procedure 19, the court held, courts must follow a three-pronged analysis. "First, the Court must determine whether an absent nonparty should be 'required to be joined if feasible' under Rule 19(a). . . .The Court 'must determine whether the absent party has a legally protected interest in the suit,' and if so, whether 'that interest will be impaired or impeded by the suit.'" Next, the Court has to make a determination about the feasibility of joining the absent party. The third and final step occurs only if joining the party is not feasible. In that case, the court must determine "whether in equity and good conscience, the action should proceed among the existing parties or should be dismissed."

The court ultimately found that Kris Publishing was not an "indispensable party" and allowed the suit to continue in its absence. The purpose of the joinder rule had already been satisfied by joining it to the case, despite the fact that it was later dismissed upon settlement.

A Swedish law firm has failed in its effort to sue a director of a former client for "misrepresentation" in Virginia federal court after the court ruled the claim was barred by Virginia's two-year statute of limitations applicable to negligence claims. The law firm had conceded that it would be unable to maintain a cause of action for fraud under the laws of Virginia, and the court opted to analyze the viability of the claim as a negligence action.

The law firm, Andersson Gustafsson Advokatbyra KB, sued eSCRUB Systems, Inc., a Virginia company, and three people associated with the company, claiming that eSCRUB had failed to pay the firm's legal bills after it hired the law firm in 2007 to help it resolve a dispute. The law firm alleged that John Packard, a former director of eSCRUB, committed fraud in that he breached a "continuing obligation to notify Andersson of the risks of non-payment it ran in performing services for eSCRUB." The allegation was essentially that Packard was part of a scheme to induce the law firm to provide legal services to eSCRUB with the full knowledge that the company would never pay the firm's legal fees.

In Virginia, negligence claims carry a two-year statute of limitations. Virginia follows the general rule that the event that starts the limitations clock ticking is the negligent act itself. There is no "discovery exception" that starts the clock at a later date, such as the date the plaintiff actually discovers that the alleged negligence occurred or that he has been damaged. Statutes of limitation can expire before a potential plaintiff even learns of the grounds for a lawsuit.

The judge found that the alleged injury occurred in December 2007, when the law firm's invoices first came due and eSCRUB refused to pay. The law firm contended that the injury occurred even earlier, in November 2007, when the law firm first started working for eSCRUB. The judge said that an alternative date would be May 8, 2008, when the law firm terminated its services to eSCRUB. But any of those dates are more than two years before the lawsuit was filed on June 8, 2010, so the claim was deemed time-barred and the court entered summary judgment for the defendant.

United States District Judge John A. Gibney, Jr., sitting in Richmond, Virginia thought so little of the well-publicized shakedown tactics of the new wave of "copyright troll" lawyers--in this case practiced by Richmond lawyer Wayne O'Bryan--that he took it upon himself (without any Defendant asking for it) to issue a show-cause order against the lawyer demanding that he explain why his conduct should not be punished with Rule 11 sanctions.

The subject of the lawsuit at issue is Gangbang Virgins, a pornographic film allegedly downloaded by 85 unnamed "John Doe" defendants using popular peer-to-peer network BitTorrent. The Court initially granted the plaintiff permission to issue subpoenas to Internet Service Providers to learn the identities of the people behind the accused I.P. addresses. Later, however, Judge Gibney was apparently moved by some of the letters he received from the John Doe defendants. Several of the defendants, for example, notified the Court that the plaintiff made harassing telephone calls to them as soon as their identities were revealed, asking for a payment of $2,900 to end the litigation.

What the Court found particularly troubling was the lawyer's behavior after certain defendants filed motions challenging their inclusion in the case. Rather than proceed to argue the merits of the motions in court, he routinely dismissed them, apparently to ensure the Court did not actually rule on any of the motions so that he could continue to threaten others. That, the Court found, amounted to nothing more than a "shake down" and an abuse of the Court's resources.

"The plaintiffs have used the offices of the Court as a means to gain the Doe defendants' personal information and coerce payment from them," the judge wrote. "The plaintiffs seemingly have no interest in actually litigating the cases, but rather simply have used the Court and its subpoena powers to obtain sufficient information to shake down the John Does."

Accordingly, the judge issued an order asking the plaintiffs' lawyer to show cause why his behavior did not violate Rule 11 of the Federal Rules of Civil Procedure, which specifies that anyone filing a complaint in federal court certifies that the complaint "is not being presented for any improper purpose, such as to harass."

Judge Gibney also rejected the plaintiff's attempt to join 85 unrelated defendants to a single piece of litigation. Rule 20 of the Federal Rules of Civil Procedure permits a plaintiff to sue multiple defendants in a single proceeding if their behavior arises out of the same transaction, occurrence, or series of transactions or occurrences. Here, the only thing that the 85 had in common was that they all had allegedly downloaded the same movie using the same peer-to-peer network and the same protocol. Accordingly, Judge Gibney ordered that only the first defendant remain in this case, while all others be severed.

"The mere allegation that the defendants have used the same peer-to-peer network to copy and reproduce the Work - which occurred on different days and times over a span of three months - is insufficient to meet the standards of joinder set forth in Rule 20," the judge found.

The United States Supreme Court recently held that a foreign manufacturer that places a product into the stream of commerce in the United States does not automatically subject itself to jurisdiction in each of the states where the product might foreseeably end up. Relying on this decision, a Roanoke Circuit Court judge has dismissed a Japanese manufacturing company from a product-liability case brought against it in Virginia.

Janet May was employed by Progress Press in 2006 and was operating a stitching machine made by Osako & Co., a Japanese company. She alleged that she was injured because the machine had an improper conveyor belt. She sued Osako and others for negligence and breach of warranty.

Osako sold its products in the United States through Consolidated International Corp., its exclusive distributor, which was a company independent of Osako. Osako knew that its products would be sold in the United States generally and made some product changes for the U.S. market but did not take any actions to specifically target Virginia. Osako has no physical locations in the United States. On these facts, Osako moved to dismiss May's suit for lack of jurisdiction.

Judge Charles N. Dorsey of the Circuit Court granted the motion. He relied heavily on J. McIntyre Machinery v. Nicastro, a U.S. Supreme Court ruling that was decided June 27, 2011. In the Nicastro case, which was a product-liability case with very similar facts to this one, the Supreme Court reversed the New Jersey Supreme Court and found that New Jersey lacked jurisdiction over a British company that sold a piece of machinery in that state. The high court rejected the New Jersey court's theory that placing the product into the "stream of commerce" conferred jurisdiction on that state's courts.

May had relied heavily on the Nicastro case - before it was reversed. Indeed, she had contended that her case and that case were "so similar that this Court has no way to find differently than the New Jersey court," Judge Dorsey wrote. In view of the reversal in Nicastro, the judge concluded, he had no choice but to apply the U.S. Supreme Court's ruling and to find that Virginia courts lack jurisdiction over Osako.

Once a plaintiff has introduced evidence to establish a "badge of fraud," a prima facie case of fraudulent conveyance is established and the burden shifts to the defendant to establish that the transaction was not fraudulent. So held the Virginia Supreme Court, in reversing the Henrico County Circuit Court's decision to strike the plaintiff's evidence and enter judgment in favor of the defendant.

Fox Rest Associates, L.P. v. Anne B. Little involved a dispute between George B. Little, an attorney and the general partner of Fox Rest Apartments, and the limited partners of Fox Rest Apartments, arising out of an alleged sale of the apartments by the general partner without the consent or knowledge of the limited partners. After learning that the limited partners planned to sue him, Mr. Little made various transfers, including transfers into an account at SunTrust Bank held jointly with his wife. The limited partners filed a derivative action against Fox Rest for malpractice, double billing, and other claims. The limited partners obtained a judgment but were unable to collect approximately $856,400. They then proceeded to file a fraudulent conveyance action to attempt to set aside various transfers as fraudulent.

The trial court struck the limited partners' evidence, finding that they had produced insufficient evidence of fraudulent intent. The Supreme Court, however, reversed. Under Virginia law, it pointed out, to survive a motion to strike, a plaintiff need only introduce evidence of "badges of fraud." Badges (or presumptions) of fraud include:

(1) retention of an interest in the transferred property by the transferor; (2) transfer between family members for allegedly antecedent debt; (3) pursuit of the transferor or threat of litigation by his creditors at the time of the transfer; (4) lack of or gross inadequacy of consideration for the conveyance; (5) retention or possession of the property by transferor; and (6) fraudulent incurrence of indebtedness after the conveyance.

Here, the court found, the limited partners had proved the existence of several of these badges of fraud. First, Little maintained an interest in the funds deposited in the SunTrust account since it was a joint account. Second, the transfers were made after the dispute arose over his management of Fox Rest, the dispute that led to the derivative suit. Additionally, the Supreme Court found that it was fair to assume that Little's wife knew of his fraudulent intent since she was aware of the problems between her husband and the limited partners and of the lawsuit. An accountant testified at trial that Mrs. Little received a minimum benefit of $940,000 from the challenged transfers. This, the court said, established a prima facie case of fraudulent conveyance.

Virginia courts will not necessarily rule on the enforceability of a restrictive covenant in an employment agreement without first examining the facts. In a recent federal-court decision from Roanoke, Judge Wilson denied a defendant's motion for judgment on the pleadings in a case involving an alleged assignment of patent rights in violation of various contractual restrictions, finding that the factual record wasn't sufficiently developed to permit a ruling.

Travis Mickle, President of KemPharm, Inc., a small early-phase biopharmaceutical company, was working as a senior research scientist for Lotus Biochemical Corporation (which became New River Pharmaceuticals ("NRP")) in 2001. At that time, he entered into an employment agreement with Lotus. In 2005, he left the company and entered into a settlement agreement governing various post-employment responsibilities.

Shire LLC, a subsidiary of NRP, sued Mickle for breach of both the original employment agreement and the settlement agreement. Shire pointed to paragraphs in the employment agreement that make all discoveries or inventions made by Mickle the property of the company; that prohibit Mickle from disclosing company confidential information for his own benefit; and that require that all patents and other intellectual property developed by Mickle be assigned to the company.

Shire asserted that Mickle breached all these provisions by developing new intellectual property based on the assigned patents after he left NRP and by assigning his interests in those new patents to KemPharm, his new company, rather than to NRP.

Mickle and KemPharm, which was also a defendant, moved for judgment on the pleadings, contending that the contract provisions in question were restrictive covenants which, on their face, were unenforceable under Virginia law. Their lawyers argued that restrictive covenants will be enforced in Virginia only if they are narrowly drawn to protect the employer's legitimate business interest, if they are not unduly burdensome on the employee's ability to earn a living, and if they are not against public policy.

Judge Wilson held, however, that ruling on the case at this early stage would be premature. He found that the determination of whether such an agreement should be enforced in equity depends on the specific facts of the case. He also noted that while courts have found broadly worded noncompete agreements without express geographic limitations facially invalid, the Virginia Supreme Court has not held that the absence of those express limitations renders confidentiality clauses or assignment agreements invalid per se.

In a case that turns on a law firm's ethical obligations to avoid conflicts of interest, a large D.C. law firm has once again been procedurally rebuffed in its effort to have a federal judge in the District of Columbia declare that it has not violated any ethics rules in a high-profile environmental case.

Patton Boggs, a major D.C. firm, represents various parties in Ecuador that are involved in high-stakes environmental litigation against Chevron. A lobbying subsidiary of Patton Boggs, the Breaux Lott Leadership Group, has done work on behalf of Chevron on similar issues. Gibson Dunn, the law firm representing Chevron, is taking the position that Patton Boggs has a conflict of interest and has tried to have Patton Boggs removed from the case.

Patton Boggs moved in U.S. District Court for the District of Columbia for a declaratory ruling that it does not have such a conflict. Last April, however, U.S. District Judge Henry Kennedy dismissed this case, finding that the courts that are actually hearing the environmental cases against Chevron are best equipped to handle that issue. Judge Kennedy also ruled that Patton Boggs could not amend its complaint to allege that Chevron and Gibson Dunn had tortiously interfered with its contract with the Ecuadorian plaintiffs and had engaged in a civil conspiracy, since Patton Boggs had not alleged facts suggesting that they had caused any actual breach of the contract.

Patton Boggs moved for reconsideration of the dismissal and sought leave to add new claims to its complaint. On July 8, 2011, however, Judge Kennedy denied this reconsideration motion as well. The judge restated his prior ruling that other courts, not his, were best situated to resolve the issue of whether Patton Boggs had a conflict of interest and that it would be prudent for him to abstain from deciding that issue.

In response to Patton Boggs' contention that he had applied the wrong standard for tortious interference, Judge Kennedy found that the law firm's new theory of tortious interference was not viable because at no point did the firm assert that it had suffered any pecuniary loss from the actions of Chevron or Gibson Dunn. "Damages are an essential element of any tortious interference claim," Judge Kennedy wrote.

Courts don't often grant requests to "pierce the corporate veil" - in other words, to disregard the existence of a corporation and to hold a shareholder personally liable for the corporation's debts - but in a recent Virginia case, a judge did just that, entering a personal judgment against a corporation's sole shareholder for nearly $140,000. His mistake? Failing to observe corporate formalities, and arranging for the corporation to enter into a contract while grossly undercapitalized.

Advance Technologies, Inc., had been hired as a sub-subcontractor by subcontractor ACE Electric Company on a boiler maintenance project for the University of Richmond. ACE, however, soon terminated Advance from the project, and Advance went out of business. In December 2009, a default judgment was entered against Advance for more than $137,500. ACE was unable to recover any of this money from Advance, so it sued Erik Butler, the sole shareholder, officer, and director of Advance, in an attempt to pierce the corporate veil and recover funds from Butler's personal assets to satisfy the judgment. ACE's lawyers also invoked a "reverse piercing" theory by seeking to impose liability against Butler's wife, DeAnne Butler, and from another corporation, ADVTEC, Inc., of which she was the sole officer, shareholder, and director. ACE claimed that ADVTEC was created by DeAnne Butler in a fraudulent attempt to avoid the debts incurred by Advance.

In an opinion handed down on April 29, 2011, Judge Gary A. Hicks of the Circuit Court of Henrico County wrote that piercing the veil and permitting a plaintiff to recover from the personal assets of a shareholder is "an extraordinary remedy that is infrequently granted." The judge pointed out that there are generally sound legal and economic reasons for granting immunity to shareholders. However, the judge noted, exceptions do exist. In this case, the judge wrote, the evidence was "sufficient to pierce the corporate veil as to Erik Butler." The court found that Butler failed to adhere to corporate formalities (such as conducting annual meetings and maintaining separate books for the corporation), and that when Advance entered into the contract with ACE, Advance was "grossly undercapitalized." It had only between $10,000 and $15,000 in the bank, and owed back taxes both to the IRS and to Virginia authorities. Under these circumstances, Judge Hicks wrote, it would be a "profound injustice" not to permit ACE to go after Erik Butler's personal assets to satisfy the default judgment.

Judge Hicks rejected, however, the attempt to reverse-pierce by holding the newly formed ADVTEC liable for the judgment against Advance. He wrote that although trial evidence "creates a suspicion that ADVTEC is nothing more than the alter ego of Advance," ACE did not prove by clear and convincing evidence that this is the case. Both Erik and DeAnne Butler testified that DeAnne, not Erik, was the ultimate decision maker at ADVTEC and that there were legitimate business reasons for the creation of that company. Accordingly, the judge declined to pierce that particular corporate veil.

In a memorandum opinion dated April 27, 2011, United States District Judge T.S. Ellis, who sits in the Alexandria Division of the Eastern District of Virginia, taught plaintiff Stephanie Holmes that it was not a good idea to change her story multiple times during her deposition. Finding that she had "perpetrated a fraud on the court," Judge Ellis affirmed the magistrate judge's recommendation to strike Holmes's claim for compensatory damages for pain and suffering.

Holmes, who had worked as a stocker at a Wal-mart in Alexandria, Virginia, for four years, filed a complaint with the Equal Employment Opportunity Commission (EEOC), alleging that Walmart had failed to make reasonable accommodations for her hearing impairment. She alleged that Walmart had refused to provide her with an interpreter and with comprehensive notes of meetings and instructions, all of which she needed to perform her job properly. She sought compensation for pecuniary losses, an injunction, punitive damages, and back pay.

The EEOC filed suit on Holmes's behalf. During Holmes's deposition in 2010, Walmart's attorneys asked her about whether she had received any treatment from a mental health provider for emotional distress caused by her employment at Walmart. First, she said, "I don't need therapy, and I don't see doctors." Then she said she saw a therapist just once in 2007. She later changed her story again and said she saw one doctor three times a week from March 2004 through February 2005. Finally, at the end of her deposition, she acknowledged that she had received therapy for anxiety and depression in a 13-year period from 1994 to 2007 and that some of the treatment related to her work at Walmart.

Walmart moved to dismiss Holmes's entire complaint on the grounds that she had lied in her deposition and had failed to provide relevant documents in discovery. Rather than dismiss the complaint in its entirety, however, Judge Ellis decided that the appropriate course was to affirm the recommendation of the magistrate judge to strike only Holmes's claim for pain and suffering damages.

Judge Ellis found that Holmes's untruths at her deposition "prevented Walmart from adequately preparing its defense, particularly its defense against her claim for compensatory damages for pain and suffering." Accordingly, the appropriate action was to strike that claim. Judge Ellis noted that although a federal judge has the inherent power to dismiss a case in its entirety, the U.S. Court of Appeals for the Fourth Circuit "has emphasized that courts must exercise this authority with restraint."

"The partial dismissal ordered here must stand as a beacon to warn and deter others from engaging in similar conduct," Judge Ellis wrote.

Lacoste Alligator, S.A., which sells tennis shirts and other apparel with the distinctive green crocodile logo in high-end stores like Nordstrom and Saks Fifth Avenue, will get a chance to find out, through discovery in a lawsuit, which of its distributors (if any) have been selling its products to Costco and other warehouse stores without its express permission, in violation of its trademark rights and in breach of contract.

Lacoste, a Swiss company, is attempting to prevent its clothing from being sold in big-box and other unauthorized retail locations. The first problem facing Lacoste, however, was that although it believed that some distributor was making sales to those stores, it didn't know who it was. Accordingly, it filed a "John Doe" complaint in Arlington County Circuit Court on trademark-infringement, breach of contract, and other grounds, hoping to use discovery in the case to ferret out the identity of the distributor responsible for the unauthorized sales. After filing the "John Doe" suit, Lacoste promptly served a subpoena on Costco Wholesale Corp., trying to ascertain the source from which it was receiving Lacoste products for resale in its stores. Costco objected to handing over any documents, and Lacoste filed a motion to compel compliance with the subpoena.

Judge Joanne F. Alper overruled most of Costco's objections and held that Lacoste was entitled to the discovery subject to the entry of an appropriate protective order to prevent misuse of the information.

Costco had raised three objections to turning over the requested documents to Lacoste. First, Costco contended that the court lacked jurisdiction because it was pursuing a "John Doe" action without naming the defendant, a type of case that it asserted is permitted in Virginia only in uninsured motorist or "cybersmear" cases. Judge Alper, however, found nothing in Virginia law to bar the use of a "John Doe" suit in a commercial case like this one. Lawyers frequently use the "John Doe" lawsuit mechanism, in fact, when a defendant's identity is unknown.

Second, Costco contended that the identity of its suppliers is a protectable trade secret. The court agreed, but noted that trade secrets are not automatically insulated from discovery. Rather, courts should examine whether the desired information is relevant to the lawsuit and must consider whether the information can be disclosed while minimizing the risk of disclosure to third parties. Judge Alper found that the information was unquestionably relevant and that it could be disclosed within the confines of a protective order preserving its confidentiality.

The protective order also disposed of Costco's third argument: that the subpoena was overly broad and burdensome. The protective order limited Costco's obligation to comply with the subpoena to documents relevant only to the determination of John Doe's identity. Therefore, subject to the limitations provided in the protective order, the court ordered Costco to comply with the subpoena.

A U.S. district judge in Virginia has ruled that a restaurant chain operator is liable for breach of contract and is obligated to pay a franchise consulting company for sales and marketing services that the consultant performed for the chain under the contract between the two companies. Rejecting the contract defenses of lack of standing, fraudulent inducement, lack of specificity, lack of mutuality, and unconscionability, U.S. District Judge T.S. Ellis, III, of the Eastern District of Virginia, granted summary judgment in favor of the consultant.

The case arose from a 2008 contract between Freshii Development, LLC, which owns a chain of healthy fast-food restaurants, and Fransmart, LLC, an Alexandria, Va.-based company that agreed, in exchange for a percentage of franchise fees and revenues, to help Freshii expand by finding appropriate franchisees for its restaurants. In early 2010, Fransmart restructured its business and set up a new company to which it assigned its contracts and transferred its assets and liabilities. Freshii then stopped paying Fransmart under the contract, and Fransmart sued for breach. Freshii asserted five defenses to the lawsuit, all of which Judge Ellis rejected.

Freshii first argued that Fransmart lacked standing because the 2008 agreement was a personal services contract and therefore not assignable to a separate entity (such as the "new Fransmart") without Freshii's consent. Judge Ellis rejected this defense, noting that many aspects of the agreement led to the conclusion that it was not a personal services contract. For example, the agreement was between two corporate entities, it was for a duration of ten years, and it did not identify any individual as being material to performance. In any event, the judge wrote, it was not necessary to reach that issue because the contract contained a "successors and assigns" clause, stating that "the provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and to their successors and assigns." This language, the court found, demonstrated that the parties intended the agreement to be assignable to a successor entity like the new Fransmart.

Next, Freshii argued that Fransmart fraudulently induced it to enter into the contract by misrepresenting its business model for marketing franchises and its financial strength. The judge found, however, that under Virginia law, promises regarding future actions such as promised marketing activities don't constitute fraud. In addition, there was insufficient evidence that Freshii relied on these statements. The claims regarding Fransmart's financial condition also didn't constitute fraud because there wasn't clear and convincing evidence that Fransmart was actually in financial trouble and because its opinions about its future viability can't be the basis of fraud claims in Virginia.

Freshii also asserted that the contract was unenforceable for lack of specificity regarding Fransmart's obligations. Judge Ellis ruled that the marketing and sales contract contained "all the essential terms required for a services contract under Virginia law," and that contractual terms requiring "marketing" and "selling" were specific enough to be enforceable.

Freshii asserted that the contract was invalid for lack of mutuality because its only recourse in the event of breach was termination of the contract. Judge Ellis found, however, that nothing in the contract prohibited Freshii from suing for breach of contract and damages.

Finally, Freshii argued that the agreement was unenforceable because it contained unconscionable terms. Judge Ellis replied that these were sophisticated businessmen entering into an arms-length deal and that there was insufficient evidence of unconscionability. Freshii may have been unhappy with the deal, but that didn't constitute grounds to void it.

During discovery, an examining party has the power to compel the deposition of a corporate defendant's "managing agents." If the plaintiff's lawyer designates an individual to testify who is not an officer, director, or managing agent of the corporate defendant, the lawyer must resort to Federal Rule of Civil Procedure 45, which governs subpoenas issued to third parties. For that reason, there is often a lot of disagreement among litigants regarding whether a particular individual qualifies as a managing agent of the corporation. Another common point of contention is whether foreign managing agents must come to Virginia for their depositions.

In DuPont v. Kolon Industries, a trade secrets case involving alleged misappropriation of confidential commercial information relating to Kevlar, Judge Payne of the Eastern District of Virginia (Richmond Division) utilized a four-factor test to determine whether employees could be classified as "managing agents," adopting a test laid out in a 1996 Maryland case. Judge Payne wrote that courts faced with the issue should consider:

1. 1. the discretionary authority that the corporation vests in the employee;
2. 2. the employee's dependability in following the employer's directions;
3. 3. whether the employee is more likely to identify with the corporation or the adverse party in the litigation; and
4. 4. whether the employee had a certain amount of supervisory authority in areas relevant to the litigation.

Applying these factors to each of the eight Kolon employees whose depositions DuPont sought, the Court determined that at least five were managing agents and ordered Kolon to produce them for deposition in Virginia. Most of these employees were long-time employees of Kolon, which demonstrated to the Court that they had discretionary authority, that they followed Kolon's directions, supervised several employees or an entire department, and that they identified with Kolon rather than DuPont.

The Court noted that there are exceptions to the general rule that a defendant's deposition is to be taken where the defendant resides or maintains a principal place of business. Consideration of the following factors might lead a court to compel the deposition in Virginia, even for foreign defendants:

1. 1. location of counsel for the parties in the forum district;
2. 2. the number of corporate representatives a party is seeking to depose;
3. 3. the likelihood of significant discovery disputes arising which would necessitate resolution by the forum court;
4. 4. whether the persons sought to be deposed often engage in travel for business purposes; and
5. 5. the equities with regard to the nature of the claim and the parties' relationship.

Ultimately, Judge Payne determined that the third factor was the most significant factor in choosing Virginia over Korea due to the gamesmanship and conflict that had characterized the discovery process to date. The Court ordered the depositions to take place in Virginia so the Court could be on hand to resolve the anticipated disputes.

To survive the early stages of litigation in federal court, you need to ensure your complaint not only alleges facts that, if proven true, would support a legal cause of action, but that present a plausible claim for relief. While you are far more likely to win your case at trial if you are represented by an attorney, one of the few situations in which your task may be easier without a lawyer is surviving an initial motion to dismiss. This is because the United States Supreme Court has held expressly that a "pro se" plaintiff (i.e., a litigant not represented by a lawyer) must be held to less stringent standards than those who have legal representation and are more familiar with the rules of formal pleadings.

Michael Bogan is representing himself in a Title VII employment-discrimination action against The Roomstore in Richmond, Virginia. Judge Henry E. Hudson recently denied The Roomstore's motion to dismiss for failure to state a claim, finding that Mr. Bogan alleged "scant but marginally sufficient" factual allegations to support a claim for discriminatory discipline, an employment practice prohibited by federal employment laws. Had an attorney drafted the complaint, the result might have been different.

Mr. Bogan, an African-American, alleges that his Caucasian supervisor at The Roomstore demanded that he undergo a drug test even though a similarly situated white employee was not required to submit to the test. He claimed the white employee was involved in illegal activity and had missed several days of work. The complaint alleges that The Roomstore terminated his employment for refusing to submit to the test.

Mr. Bogan did not identify which form of employment discrimination he was relying on, so the court gave him the benefit of the doubt and analyzed his claim under the two most likely theories, disparate treatment and discriminatory discipline.

To properly state a claim for disparate treatment, a plaintiff must allege facts demonstrating that: (1) he is a member of a protected class; (2) he has satisfactory job performance; (3) he was subjected to adverse employment action; and (4) similarly situated employees outside his class received more favorable treatment. Mr. Bogan failed to sufficiently plead this theory because he had not pled any facts to support that his job performance was satisfactory.

However, Judge Hudson found that Mr. Bogan did sufficiently plead discriminatory discipline. For that theory, it is necessary to allege: (1) he is a member of a protected class; (2) his prohibited conduct was comparably serious to misconduct by employees outside the protected class; and (3) the disciplinary measures taken against him were more harsh than those enforced against other employees. The facts alleged in the complaint were found to present a plausible claim that The Roomstore is liable if it engaged in the alleged conduct.

Windows 7 was not my idea. But the new amendments to the Federal Rules of Civil Procedure? Maybe! A few years ago I received a stern reprimand from a federal judge in the Eastern District of Virginia for supposedly filing a brief past the 5-day deadline. I respectfully explained to the court that, under the Rules then in effect, because weekend days are not counted in time periods of less than 11 days, and because additional days are added to the deadline when papers are served by facsimile, and because if a deadline expires on a Saturday then the deadline is extended to the following Monday--or Tuesday if Monday happens to be a national holiday--then a "5-day deadline" can actually allow up to 147 days! The judge was not impressed. But I was right (up to a point), so now the Rules have been amended to prevent this sort of nonsense.

Effective today, "days" means days. For lawyers who practice in federal court, this is a radical concept. Perhaps even more radical, defendants now have 21 days in which to respond to a lawsuit rather than merely 20. I pity those about to take the bar exam. In any event, here is a summary of what are, in my view, the most significant changes to the Federal Rules of Civil Procedure:

Rule 6. Computing and Extending Time; Time for Motion Papers
No longer are intermediate weekend and holiday days excluded from the computation for periods of less than 11 days. Every day is counted. This means that 10-day deadlines will no longer (in some circumstances) result in time periods longer than those permitted by 14-day deadlines. Additionally, what was once a 5-day deadline for noticing hearings has been converted to a 14-day deadline. Supporting affidavits must be filed with the motion and any opposing affidavits are now due a full 7 days before the hearing instead of just 1 day as under the previous Rule.

Rule 12. Defenses and Objections: When and How Presented; Motion for Judgment on the Pleadings; Consolidating Motions; Waiving Defenses; Pretrial Hearing
Hold onto that motion for default judgment! Defendants now have 21 days in which to serve an answer, as they do in Virginia state court, rather than 20 days. The new 21-day period also applies to counterclaims and cross-claims.

Rule 13. Counterclaim and Crossclaim
In the past, negligent lawyers who failed to file a compulsory counterclaim could turn to Rule 13(f), which permitted a late counterclaim if its omission was the result of "oversight, inadvertence, or excusable neglect." That Rule is gone! However, not all hope is lost: Rule 15 still provides a procedure for adding an omitted counterclaim.

Rule 15. Amended and Supplemental Pleadings
Under the former Rule, a plaintiff had a right to amend its complaint once, as a matter of course, only before being served with a responsive pleading. That right has been extended, presumably to encourage the informal resolution of early motions to dismiss without burdening the court's docket. Now, a plaintiff may amend its complaint (without leave of court) a full 21 days after service of a responsive pleading or Rule 12(b) motion.

Rule 56. Summary Judgment
The procedure for obtaining summary judgment in federal court has historically been very complicated, requiring numerous calculations. Under new Rule 56, the procedure is streamlined. Absent a local rule to the contrary, any party may now move for summary judgment at any time until 30 days after the close of discovery. The party defending against summary judgment then has 21 days in which to file a responsive brief. The movant has 14 days after that to file a reply brief.

Numerous other amendments were made to the Federal Rules, but I am not going to discuss them all here. A useful generalization (not without exceptions) is that most deadlines throughout the Rules have been converted to multiples of 7: previous deadlines of 1, 3, or 5 days are now 7 days; periods of 10 or 11 days are now 14 days; and 20-day deadlines now allow 21 days. Most discovery deadlines, however, remain unaffected. Litigants still have 30 days in which to respond to document requests and interrogatories.

The discovery process, the primary fact-finding tool available to litigants, has always been contentious. Parties are loathe to hand over potentially embarrassing or incriminating documents, and the costs involved can be staggering. The information age has only served to make things more complicated. As the Northern District of Illinois observed in the 2002 case of Byers v. Illinois State Police, "[m]any informal messages that were previously relayed by telephone or at the water cooler are now sent via e-mail." Now that so many casual conversations are documented in e-mail and are, therefore, potentially subject to discovery, the discovery costs in the typical case have skyrocketed . Two recent United States District Court Cases, one out of Minnesota, Kay Beer Distributing, Inc. v. Energy Brands, Inc., and the other out of Florida, Kilpatrick v. Breg, Inc., provide a window into just how daunting electronic discovery can be, how judges are adapting traditional discovery rules to deal with these new problems, and how parties can do their part to avoid potential problems.

Information is generally discoverable if it is non-privileged and either directly relevant to a party's claim or reasonably calculated to lead to the discovery of evidence that is directly relevant. In the Kay Beer case, Kay alleged that an oral contract gave it the exclusive right of distribution for Energy Brands' products. Energy Brands claimed that by its understanding of the agreement, Kay's distribution rights were limited. This was essentially a run-of-the-mill contract dispute. What made the case unique, however, was the plaintiff's demand that the defendant hand over five DVDs containing nearly 13 gigabytes (between 650,000 and 975,000 pages) of e-mails and other documents. Each of the documents had been identified as referencing "Kay Beer", "Kay Distributing", or simply "Kay" by a keyword search of Energy Brands' archives. Kay Beer argued that the documents might contain discoverable evidence showing that Energy Brands originally shared Kay's understanding of their agreement.

The court's approach to the discovery contest was to weigh Kay Beer's interest in obtaining the documents against the burden Energy Brands would experience in turning them over. The court found that just because a document references a party does not support the conclusion that it contains relevant evidence. It further reasoned that in contract litigation, the only relevant statements are those made between the representatives of the companies involved; statements made by lower-level employees not empowered to speak for the company are not relevant to the official understanding of the contract. The court concluded that Kay Beer's interest in the documents was relatively minor.

Turning to an examination of Energy Brands' burden, the court noted that before the documents could be produced, Energy Brands would have to review each one for privilege and relevancy. The company estimated that the time involved in examining 650,000 to 975,000 would cost $120,000. The court found the cost unduly burdensome, and after weighing this burden against the slim possibility that relevant evidence might be discovered, held that Kay was not entitled to the requested discovery.

Kilpatrick differed slightly in fact but was consistent in outcome. Kilpatrick, the plaintiff, claimed that the pain pump manufactured by the defendant, Breg, and used in his October, 2004 shoulder surgery gave him a condition called chondrolysis. Kilpatrick's suit alleged that Breg knew of the risk of chondrolysis but marketed the product regardless of the dangers and without warning. Just weeks before trial, Kilpatrick demanded the production of nearly 6 years' worth of Breg's archived, intra-office e-mails. In depositions, several Breg employees testified inaccurately that they learned of the risk of chondrolysis in March of 2006, when documents obtained by Kilpatrick indicated clearly that the risk was known as early as December of 2005. Kilpatrick theorized the misstatements were part of a cover-up and sought extensive discovery to substantiate the theory.

Performing a balancing test similar to that in Kay Beer, the court first looked to the likelihood that relevant evidence would be discovered in the requested e-mails. The court acknowledged that the inaccurate testimony did raise some suspicions, but noted there was no evidence in the record indicated Breg knew of the chondrolysis risk prior to December 2005. The court found the misstatements were likely honest mistakes, reasoning that the depositions occurred nearly three years after the events in question and that the deponents were only off by about three months in their statements.

The court then took into account the significant burden such extensive, last-minute discovery would place on Breg. It denied the requested discovery in light of this burden, but granted Kilpatrick a limited right to further explore the Breg employees' misstatements by allowing discovery into a sampling of the archived e-mails, at Kilpatrick's expense.

This balanced approach to electronic discovery shows that seemingly antiquated discovery rules are still applicable in this new age. While some flexibility is required, a little common sense can make a complicated scenario a little more manageable. That being understood, a party, when making discovery requests, would be wise to be mindful of the opposing party's position and attempt to curb any burden the request might impose. Such a measured approach can help tip the balancing test in your favor.