Pretrial Practice and Civil Procedure Category Archives — Page 3 of 10 — The Virginia Business Litigation Blog Published by Virginia and Washington, D.C. Litigation & Appeals Attorney

August 31, 2018

Dismissals With Prejudice vs. Without Prejudice

When a Virginia court dismisses a case, the dismissal order may state that the dismissal of the case is either “with prejudice” or “without prejudice.” In this context, prejudice has nothing to do with racism or discrimination. Rather, it’s simply an indication of whether the case is permanently ended, with no possibility of finding its way back onto the court’s docket, or merely removed from the docket in such a way as to permit its refiling upon the satisfaction of certain conditions. Sometimes it will be up to the judge to decide whether to dismiss a case with or without prejudice; other times (particularly when the defect in the case cannot be fixed), the law will dictate the form of dismissal.

The Virginia Supreme Court explained the distinction in Primov v. Serco, Inc., decided just a few days ago. There, the court noted that a dismissal of a suit “without prejudice” means that the court is not deciding the controversy on its merits, and that the whole subject of litigation will remain as much open to another suit as if no suit had ever been brought. (See Newberry v. Ruffin, 102 Va. 73, 76 (1903)). In other words, dismissing a case without prejudice terminates the action but does not prohibit its refiling.

January 5, 2018

How a Strategic Counterclaim Can Backfire

by Lee E. Berlik

Nobody likes to get sued. It can be an expensive and soul-draining proposition, even if you win. Under the so-called “American Rule,” litigants are responsible for paying their own legal fees, regardless of which party wins the case. Obviously, this system engenders some abuse, as crafty, litigious plaintiffs can file frivolous lawsuits knowing that–at the very least–they will cause the defendant to incur large sums of attorneys’ fees. As a defendant in American litigation, a victory at trial merely means you don’t have to pay the plaintiff any money. But you do you have to pay your own attorneys for their time and effort. So even a “win” is often viewed as a net loss in financial terms. One common way to turn the tables on plaintiffs is to file a counterclaim. Assuming the counterclaim itself isn’t completely groundless, it can put the parties on equal footing: if both parties have claims against the other, then both parties have something to lose beyond mere legal fees. Now, even the plaintiff can be liable for a money judgment.

If you file a counterclaim, however, you better mean it. The court may not allow you to withdraw it later if you decide your claims should have been brought as a separate action in a different jurisdiction. If the case has progressed to the point where trial is imminent, you may be forced to litigate the claim or lose it forever.

November 1, 2017

Determining Validity of Noncompete Requires Evidence

by Lee E. Berlik

Restrictive covenants in employment agreements (e.g., noncompete and nonsolicitation clauses) are enforceable in Virginia if they are (1) narrowly drawn to protect the employer’s legitimate business interests, (2) not unduly burdensome on the employee’s ability to earn a living, and (3) are not against public policy. There was once a time when litigation brought to enforce noncompete and nonsolicitation agreements would be routinely dismissed at the outset of a case based on a finding that one of these elements was lacking. For example, a noncompete provision restricting a former employee from taking a similar job with a nearby competitor for five years might have been quickly dismissed based on the judge’s quick determination that five years is simply too long.

This changed with the 2013 Virginia Supreme Court decision in Assurance Data, Inc. v. Malyevac. There, the court pointed out that every case is different, and held that an employer seeking to enforce a restrictive covenant must be given the opportunity to present evidence demonstrating reasonableness. Since this decision, some judges–like Fairfax County Circuit Court Judge John M. Tran–have opined that in appropriate cases, courts can still dismiss noncompete cases without an evidentiary hearing, such as when an employer fails to even proffer a legitimate business interest. Others hold that Assurance Data forecloses facial attacks on restrictive covenants. This appears to be the more common interpretation of the case.

February 6, 2017

Public Disclosure of Discovery

by Lee E. Berlik

If you look up “deposition” on YouTube, you’ll likely find over 200,000 videos to choose from. Many include graphics and commentary that the uploader added after the deposition was taken, usually with the aim of mocking the witness being deposed. The purpose of the discovery process is to require witnesses and corporations in possession of information potentially relevant to a case to divulge information to the requesting party for the purpose of assisting in the preparation of a litigated dispute for trial. Depositions are a specific form of discovery designed to allow litigants to obtain sworn testimony from witnesses in advance of the trial date and to get that testimony in a video format suitable for presenting to a jury. With the soaring popularity of video-sharing social-media sites, the temptation can be great to humiliate your opponent in litigation by posting embarrassing video depositions (or other discovery responses) on Facebook or YouTube, either during the pendency of the litigation or after it has ended. Is this permissible in Virginia?

There are authorities coming out on both sides of this question. On the one hand, “pretrial depositions and interrogatories are not public components of a civil trial.” (See Seattle Times Co. v. Rhinehart, 467 U.S. 20, 33 (1984)). Thus, while the public generally has a common law right of access to court orders and legal proceedings, information collected through discovery is not a matter of public record to which that right extends. In other words, regardless how entertaining it might be to watch a celebrity make a fool of himself at a deposition, it’s really nobody’s business outside of the confines of the court proceeding. On the other hand, dissemination of pretrial discovery materials by the receiving party is not automatically prohibited absent a protective order.

August 9, 2016

Fairfax Circuit Court Procedure for Motions Day

by Lee E. Berlik

Suppose you find yourself involved in litigation in Fairfax County, Virginia, and you want the court to take some kind of action. Perhaps you want the judge to order the plaintiff to attach a copy of the contract to the complaint. Maybe it’s a libel case and you want to ask to court to dismiss the case for failing to plead the requisite elements of defamation. Or maybe the statute of limitations has passed and you want the court to dismiss the case for that reason. If you want the court to do something, you need to file a motion. And the procedures for bringing that motion to the attention of the court differ from county to county.

This article deals with the local rules in Fairfax County only. (Technically, they’re not “rules,” but “guidelines.”) Procedures in neighboring jurisdictions like Loudoun County, Prince William County, and Alexandria differ slightly but share most of the basic framework. If there is sufficient interest among the subscribers to this blog, I may cover those jurisdictions in future posts. This is also not a tutorial about how to draft persuasive motions. Rather, it is intended as a guide to the procedural considerations in bringing your motion before the court. Of course, if you are an out-of-state attorney representing a client with a pending case in Fairfax County, your best best is to retain and work with local counsel.

July 14, 2016

Not All Contractual Interference Is Tortious Interference

by Lee E. Berlik

Legal claims are made up of elements. To sue somebody and win, you need to allege and eventually prove each element that makes up the legal theory on which you’re suing. And oftentimes, those elements have distinct legal meanings that differ from their dictionary definitions. Failure to pay close attention to the requirements of each separate element can result in dismissal of the case before it even gets started. Last month, a Virginia court summarily dismissed an IT consulting company’s claims for tortious interference for failing to allege the facts necessary to support such claims.

The case–Forsythe Global, LLC v. QStride, Inc.–was decided under Michigan law. Michigan, like Virginia, recognizes separate torts for tortious interference with contract, and tortious interference with prospective business relationships or expectancies. Under both the law of Michigan and the law of Virginia, tortious interference requires more than mere “involvement in the activities and concerns of other people when your involvement is not wanted.” (See Merriam-Webster’s definition of interference). There’s no law that requires people to mind their own business. To prevail in court, the interference must approach a specific threshold–meddling in other people’s affairs won’t satisfy the claim if the interference does not reach this level.

January 31, 2016

New Proportionality Requirement in Rule 26 Not that Big of a Deal

by Lee E. Berlik

Much has been made of the latest amendments to the Federal Rules of Civil Procedure, effective December 1, 2015, some going so far as to call them “the most significant change to federal civil practice in the last decade.” In particular, Rule 26 has been amended to include a new “proportionality” provision. Rule 26(b)(1) now limits discovery to “any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case,” apparently imposing an enormous limitation on the scope of permissible discovery.

The concept of proportionality, however, is nothing new. Even before the 2015 Amendments, Rule 26 provided that discovery should be limited if it “is unduly burdensome or expensive, taking into account the needs of the case, the amount in controversy, limitations on the parties’ resources, and the importance of the issues at stake in the litigation.” The Eastern District of Virginia recently had a chance to grapple with the new rule in a defamation case, and the implication of the court’s holding is essentially that not much has changed, but that litigants and the court should pay a little extra attention to proportionality as they deal with discovery issues.

September 17, 2015

Claim Preclusion, Issue Preclusion, and the Various Forms of Res Judicata

by Lee E. Berlik

This isn’t what I was taught in law school 20 years ago, but res judicata comes in many flavors. I was taught that there were only two doctrines relating to re-litigating civil claims: claim preclusion, known as res judicata, and issue preclusion, known as collateral estoppel. That’s wrong, at least here in Virginia. In an opinion published earlier today by the Virginia Supreme Court, the court describes in detail how there are actually four different types of res judicata: two types of claim preclusion (“bar” and “merger”) and two types of issue preclusion (“direct estoppel” and “collateral estoppel”). All four of these concepts fall under the res judicata umbrella.

The case is Paul Lee v. Lisa Spoden, originally filed in Fairfax County Circuit Court. Lee formed Strategic Health Care Company, Inc. (“SHC”), a consulting company providing services to healthcare organizations and professionals, in 1994, and gave Spoden (his wife–or maybe fiancee–at the time) a 50% ownership interest the following year. When they divorced in 2009, the parties entered into an agreement in which Spoden agreed to give up her 50% interest in exchange for a number of things, including the right to “direct use” of certain real estate owned by the company, and to receive all proceeds when the property was sold. In 2013, Spoden filed an action against Lee for breach of contract and breach of fiduciary duty, claiming that he had listed the property for sale without her knowledge or permission and that he had violated various other provisions of the property settlement agreement, which was incorporated (but not merged) into the final divorce decree.
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August 17, 2015

Derivative Actions Carry Heightened Pleading Standard

by Lee E. Berlik

Derivative actions are a mainstay of modern business litigation. They allow a shareholder of a corporation to enforce a right the corporation has but is wrongfully refusing to enforce. Normally, corporate management would be responsible for deciding whether to pursue litigation against someone, but sometimes it’s the management itself–such as an officer or director–that is causing the problem. In such situations, the board of directors may be reluctant to initiate a lawsuit against one of their own, so allowing a shareholder to bring the suit in the name of the corporation can be the only practical way to protect the interests of the corporation. Still, derivative suits are considered an extraordinary procedural device, permitted only when it is clear that the corporation will not act to enforce its rights. The pleading requirements are laid out in Federal Rule of Civil Procedure 23.1.

Because it’s normally up to the board of directors to decide whether to pursue litigation in the interest of the corporation or shareholders, it’s necessary to plead both the plaintiff’s demand on the corporation and the corporation’s refusal to comply. Under Rule 23.1, any complaint purporting to be a derivative action must state with particularity (a) any effort by the plaintiff to obtain the desired action from the directors or comparable authority and, if necessary, from the shareholders or members; and (b) the reasons for not obtaining the action or not making the effort. The reason for this requirement is that derivative suits may proceed only if the shareholder shows that the board’s refusal was wrongful. If the board’s refusal to pursue litigation is justified, there will not be grounds for a derivative action.
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April 20, 2015

Virginia’s Subpoena Power Does Not Extend Beyond Its Borders

by Lee E. Berlik

Back in 2012, the Alexandria Circuit Court ruled in an Internet defamation case that discovery could be obtained from a nonresident third party by serving a subpoena on the company’s registered agent in Virginia. That decision was reversed last week by the Virginia Supreme Court in an unambiguous ruling that is going to force a lot of Virginia attorneys to make greater use of the Uniform Interstate Depositions and Discovery Act.

I had been following this case–Yelp, Inc. v. Hadeed Carpet Cleaning, Inc.–over the past few years with great interest, not because of the subpoena-power issue, but because the case involved some fascinating First Amendment issues and promised to offer some guidance on the correct application of Virginia’s “unmasking” statute, Section 8.01-407.1. For example, would an interactive computer service like Yelp have standing to object to complying with an enforceable subpoena by invoking the First Amendment rights of its users? Does a plaintiff need to produce evidence to meet 8.01-407.1’s “showing” requirement or can it make the required showing merely by by alleging a prima facie cause of action for defamation? In a case involving online negative reviews phrased as non-actionable statements of opinion but written anonymously by competitors hiding behind a pseudonym, how can a plaintiff demonstrate falsity (i.e., that the reviewer was not an actual customer) without an opportunity to use discovery to ascertain the poster’s true identity? The justices showed keen interest in questions like these at oral argument, but ultimately decided to save addressing them for another day.
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