Featured Articles

by Luke Dalton

Elements of basic technology were introduced into our vehicles decades ago. Over time, the adapting and interfacing of technological modalities have been slowly, even incipiently, integrated into our vehicles.

Today, many of our vehicles utilize both short-range and long-range connectivity through wireless interfaces to support features such as tire pressure monitoring, telematics and Smart Key keyless entry/ignition start. These interfaces include Bluetooth, Wi-Fi, radio frequency, Global System for Mobile Communications/Code Division Multiple Access and Universal Mobile Telecommunications System.

For some time, our vehicles have also used several self-driving technologies, including collision avoidance, drifting warning, blind-spot detectors, enhanced cruise control and self-parking. Still, not many years ago, the thought of driverless vehicles seemed like a remote and distant possibility. However, the technology that will be utilized in our vehicles has progressed rapidly, more so than many in the legal community previously thought possible.

From recent news, society is learning more about the future of technology in our vehicles, and the resulting legal issues that may arise. In late 2015, Tesla released a self-driving feature called Autopilot to customers in a software update. Through outlets such as The Wall Street Journal, we are now learning about Uber’s plans to utilize self-driving vehicles as soon as this month to transport passengers around Pittsburgh.

The Federal Government seems to be encouraging the development of self-driving automated/autonomous vehicles. The U.S. Department of Transportation John A. Volpe National Transportation Systems Center prepared a preliminary report in March 2016 identifying instances where existing Federal Motor Vehicle Safety Standards may impede the introduction of automated/autonomous vehicles. More recently, during his remarks at the 2016 Automated Vehicles Symposium, Mark Rosekind, Administrator of the National Highway Traffic Safety Administration (NHTSA), outlined many benefits of technology in our vehicles. He spoke of a future “where vehicle automation and vehicle connectivity could cut roadway fatalities dramatically.” Further, the technology will assist disabled and elderly people in reclaiming the independence and freedom allowed by a personal vehicle.

However, as we have also seen in recent news, there are potential dangers associated with connected and automated/autonomous vehicles. For example, the U.S. Government Accountability Office (GAO) has noted that researchers found our vehicles’ wireless interfaces—if not properly secured—may be exploited to gain access to in-vehicle networks, and to take control of brakes and other safety-critical functions. After widespread news coverage of an accident in Florida involving a Tesla Model S using the Autopilot feature, we have also seen that automated/autonomous vehicles will be involved in catastrophic events. Governmental agencies and members of the legal community have been working to keep pace with technological innovation in order to anticipate and address these dangers, while still embracing the use of technology in our vehicles.

In 2014, the NHTSA issued a summary of cybersecurity best practices to address the growing cybersecurity risks associated with vehicles equipped with advanced electronic control systems. The SPY Car Act of 2015 was introduced in the U.S. Senate, which would have directed the NHTSA to issue motor vehicle cybersecurity regulations. Some have called for governmental agencies to take further actions. The GAO recently called for the Department of Transportation to define its role in responding to vehicle cyber-attacks.

This year the NHTSA announced its belief that it retains authority over automated vehicle technologies, systems, equipment, software and after-market software updates, such as Tesla’s Autopilot feature, as “motor vehicle equipment.” The NHTSA noted that a defect in a vehicle’s hardware, software, and other electronic systems “may be considered a defect of the motor vehicle itself,” and that unique safety risks are presented by software installed in or on a vehicle.

According to the NHTSA, a software failure or safety-risk constitutes a defect when the software has manifested a safety-related performance failure, or otherwise presents an unreasonable risk to safety. The NHTSA noted:

To avoid violating Safety Act requirements and standards, manufacturers of emerging technology and the motor vehicles on which such technology is installed are strongly encouraged to take steps to proactively identify and resolve safety concerns before their products are available for use on public roadways.

Issues caused by connected and automated/autonomous vehicles will likely raise novel issues under current state laws. According to the National Conference of State Legislatures, as of 2015, sixteen states introduced legislation related to autonomous vehicles.

In 2015, legislation was introduced in North Carolina that would have directed the NCDOT to study how to implement autonomous vehicle technology on the roads and highways of North Carolina. Is it now time for North Carolina to analyze its criminal and civil laws and regulations in preparation for the expected widespread introduction of automated vehicles?

Some of the legal issues that courts will be presented with because of connected and automated/autonomous vehicles may include how coverage under North Carolina’s vehicle liability policy will be interpreted when accidents are caused by software in vehicles. Courts may be called upon to address novel issues when analyzing the applicability of North Carolina’s product liability law to accidents caused by software that was downloaded as a software update after the sale of the vehicle. Moreover, products liability and personal injury litigants will face new and likely costly challenges when addressing whether software was the actual and proximate cause of any vehicle accident.

It appears that the Internet of Things and the widespread use of technology in our vehicles will continue to be an integral element of our society. The legal community and lawmakers in North Carolina should take note and prepare to address issues that will arise from the use of highly utilitarian, but sometimes risky, technology in our vehicles.

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by C. Rob Wilson, Hedrick Gardner Kincheloe & Garofalo, LLP

a. The Old Standard - Howerton v. Arai Helmet

Until recently, North Carolina Rule of Evidence 702 stated that “[w]hen "scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion." In the 2004 case Howerton v. Arai Helmet, the Supreme Court of North Carolina established a three step test to determine the admissibility of expert testimony: (1) whether the expert's proffered method of proof sufficiently is reliable, (2) whether the witness presenting evidence is qualified as an expert, and (3) whether the expert evidence is relevant. N.C.440, 597 S.E.2d 674 (2004). The Howerton court clarified that North Carolina did not adhere to the federal Daubert standard and that North Carolina followed a liberal approach which was "decidedly less mechanistic and rigorous than the ‘exacting standards of reliability’ demanded by the federal approach."

b. Rule 702(a) Amendment

Rule 702(a) was amended, effective October 1, 2011 and applicable to causes of action arising on or after October 1, 2011. The amended Rule 702 (a) added language stating that a qualified witness may only testify as an expert if all of the following apply: (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case. This language brought North Carolina's rule in line with Rule 702 of the Federal Rules of Evidence.

c. State v. McGrady

It did not take long for North Carolina's appellate courts to take up the issue of whether the 2011 amendment to Rule 702 effectively adopted the federal standard set forth in Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579, 597, 113 S.Ct. 2786, 2798-99, 125 L.Ed. 469, 485 (1993). The first case to bring this issue in front of the North Carolina courts was State v. McGrady, which arose from defendant McGrady's first-degree murder conviction for the shooting death of his cousin. The central issue at Mr. McGrady's trial was whether he shot his cousin in defense of himself and his son. McGrady attempted to introduce expert testimony on this issue through a "use of force" expert, but the trial court excluded this expert testimony pursuant to the amended Rule 702 and the standard set forth in Daubert. Specifically, the court decided to exclude the expert's testimony regarding reaction times insofar as it did not satisfy the Rule 702 reliability test because the expert could not provide error rates for the reaction time studies on which he relied and because he did not consider certain variables, such as McGrady's physical disability, in reaching his conclusions. The trial resulted in a unanimous jury verdict finding McGrady guilty of first-degree murder and a life sentence.

McGrady appealed to the North Carolina Court of Appeals, arguing that Rule 702 should still be applied as a liberal standard even in light of the 2011 amendment. State v. McGrady, 232 N.C. App. 95, 753 S.E.2d 361 (2014). The Court of Appeals disagreed, holding that the 2011 amendment effectively adopted the standard set forth in Daubert, meaning the trial court did not abuse its discretion in applying the Daubert standard to the use of force expert.

The Supreme Court of North Carolina then allowed McGrady's petition for discretionary review and heard the appeal on March 17, 2015. The Supreme Court issued its opinion on June 10, 2016, affirming the Court of Appeals and holding that the 2011 amendment to Rule 702 did adopt the federal standard for admission of expert witness testimony articulated in Daubert, largely because the General Assembly amended North Carolina's rule in 2011 in virtually the same way that the corresponding federal rule was amended in 2000. -- N.C.--, 787 S.E.2d 1 (2016). In the words of the N.C. Supreme Court, "the General Assembly has made it clear that North Carolina is now a Daubert state." However, the 2011 amendment to Rule 702 did not abrogate all North Carolina precedents interpreting that rule, so long as those precedents do not conflict with the Daubert standard. To that end, interpretation of Rule 702 remains a state law issue and any future federal court decisions will not dictate the meaning of North Carolina's Rule 702.

d. Where do we go from here?

In McGrady, the N.C. Supreme Court underwent an extensive analysis of how the as-amended Rule 702 should be applied. As a baseline, the McGrady court recognized that Daubert interpreted Rule 702 as requiring the trial court to serve a "gatekeeping role," ensuring that expert testimony is reliable before it is admitted by conducting "a preliminary assessment of whether the reasoning or methodology underlying the testimony is scientifically valid and of whether that reasoning or methodology properly can be applied to the facts in issue." The McGrady court then considered the three separate requirements of the amended Rule 702(a):

1. The area of proposed testimony must be based on “scientific, technical or other specialized knowledge” that “will assist the trier of fact to understand the evidence or to determine a fact in issue." To “assist the trier of fact,” expert testimony must provide insight beyond the conclusions that jurors can readily draw from their ordinary experience.

2. The witness must be “qualified as an expert by knowledge, skill, experience, training, or education." The expert witness must be competent in his purported field, although that competence can come from practical experience as much as from academic training, as long as the expert has enough expertise to be in a better position than the trier of fact on the subject.

3. The testimony must meet the three-pronged reliability test set forth in Rule 702(a): (1) The testimony must be based upon sufficient facts or data. (2) The testimony must be the product of reliable principles and methods. (3) The witness must have applied the principles and methods reliably to the facts of the case. The primary focus of the inquiry is on the reliability of the witness's principles and methodology, not on the conclusions that they generate. In the context of scientific testimony, Daubert articulated five factors from a non-exhaustive list that can have a bearing on reliability: (1) “whether a theory or technique ... can be (and has been) tested”; (2) “whether the theory or technique has been subjected to peer review and publication”; (3) the theory or technique's “known or potential rate of error”; (4) “the existence and maintenance of standards controlling the technique's operation”; and (5) whether the theory or technique has achieved “general acceptance” in its field. The trial court is free to consider other factors, and the federal courts have articulated additional reliability factors which may be helpful in certain cases, including (1) whether experts are proposing to testify about matters growing naturally and directly out of research they have conducted independent of the litigation, or whether they have developed their opinions expressly for purposes of testifying, (2) whether the expert has unjustifiably extrapolated from an accepted premise to an unfounded conclusion, (3) whether the expert has adequately accounted for obvious alternative explanations, (4) whether the expert is being as careful as he would be in his regular professional work outside his paid litigation consulting, and (5) whether the field of expertise claimed by the expert is known to reach reliable results for the type of opinion the expert would give. The factors articulated in Howerton may also still be relevant: use of established techniques, expert's professional background in the field, use of visual aids to help the jury evaluate the expert's opinions, and independent research conducted by the expert).

The McGrady court recognized that a similar three-step inquiry was already recognized via Howerton. Although the 2011 amendment to Rule 702 did not change the structure of this inquiry, it did change the level of rigor that North Carolina's courts must use to scrutinize expert testimony before admitting it.

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by Scott S. Addison, Lincoln Derr, PLLC

In June, Judge Robert Ervin granted Directed Verdict in favor of our physician client at the close of Plaintiff’s evidence. Because a Directed Verdict is a white whale in medical malpractice cases (and in many others), we felt the story bore telling. First, it must be said that all counsel involved were highly competent, and the trial was well-fought and contested. The issue boiled down to interpretation of the Continuing Course of Treatment Doctrine, even at the time of trial.

Our case involved an alleged delay in diagnosis of a salivary gland tumor by an otolaryngologist who was also fellowship-trained in head and neck cancer. The patient first presented to a different physician in the same practice with a mass under her chin in May 2009. She returned to that physician for several visits until June 25, 2009. Fifteen months then passed when the patient returned to the practice, this time to see the physician who we represented at trial (the other physician was originally named in the lawsuit but was dismissed due to the statute of repose). The patient visited the practice in September and October 2010; and did not return until January 2012 (despite instructions to do so earlier). The diagnosis of cystic adenocarcinoma of the submandibular gland was made in April 2012.

The lawsuit was filed on May 30, 2014, approximately two years after the cancer was diagnosed. In the Complaint, Plaintiff alleged that Defendant physician was negligent at each of the 2010 visits for not performing an incisional biopsy and in 2012 for not referring her in an expedient fashion. She alleged that even in January 2012, a timely referral would have made a difference in her outcome.

When Plaintiff’s expert was deposed, he was asked if a more expeditious referral in January 2012 would have made any difference in the patient’s staging and outcome. The expert’s testimony was somewhat equivocal, and a jury could have inferred that diagnosis and treatment in January 2012 could have made some amount of difference in her ultimate outcome.

At trial, however, the expert never testified that the physician was negligent during the January 2012 visit or that a different outcome would have been achieved if the patient had been immediately referred. The only criticism related to the care and treatment in September and October 2010.

At the close of Plaintiff’s evidence, we moved for Directed Verdict on the grounds that the lawsuit was filed more than three years after the negligent act(s) giving rise to the cause of action and that the Continuing Course of Treatment Doctrine did not apply to extend the statute of limitations.

As you likely know, the Continuing Course of Treatment Doctrine is “an exception to the rule that ‘the action accrues at the time of the defendant’s negligence.” Webb v. Hardy, 182 N.C. App. 324, 327, 641 S.E.2d 754, 756 (2007) (quoting Locklear v. Lanuti, 176 N.C. App. 380, 384, 626 S.E.2d 711, 715 (2006)).

The doctrine applies to situations where a doctor continues a particular course of treatment over a period of time. The underlying theory of the doctrine is that so long as the doctor/patient relationship continues, the doctor is guilty of malpractice during the entire relationship for not repairing the damage he did and therefore, the cause of action arises at the conclusion of the contractual relationship. In order to benefit from the continuing course of treatment doctrine a plaintiff must show both a continuous relationship and subsequent treatment from that physician. It is insufficient to show the mere continuity of the physician/patient relationship. Rather, the subsequent treatment must be related to the original act, omission or failure to act that gave rise to the original claim.

Whitaker v. Akers, 137 N.C. App. 274, 278, 527 S.E.2d 721, 724-25 (2000)

When the Continuing Course of Treatment Doctrine applies, the statute of limitations is tolled for the period of time between the alleged negligent act “and the ensuing discovery and correction of its consequences”; and “the claim still accrues at the time of the original negligent act or omission.” Horton v. Carolina Medicorp, Inc., 344 N.C. 133, 137, 472 S.E.2d 778, 781 (1996). To take advantage of the Continuing Course of Treatment Doctrine, the patient must allege that the defendant “could have taken further action to remedy the damage occasioned by its original negligence.” Id. at 140, 472 S.E.2d at 782). In addition to the pleading requirements, “there must be some forecast of evidence that the injury occasioned by the original negligence could be remedied by the treating physician.” Webb, 182 N.C. App. at 328, 641 S.E.2d at 757. In Webb, the Court granted summary judgment when it determined that the doctrine did not apply because the plaintiffs had not “forecast any evidence that defendant could have taken any action to remedy the damage occasioned by the alleged original negligence,” despite the fact that the defendant had continued to treat the patient for a year after the injury, and the patient did not learn of the cause of the injury until more than a year after the negligent act. Id.

Taking all of these cases together, the Continuing Course of Treatment Doctrine, has three main elements that must be satisfied in order to apply: 1) a negligent act; 2) a continued physician-patient relationship where the continued care relates to the original care giving rise to the cause of action; and 3) the ability of the defendant at the later encounters to remedy the original negligent care. Failure to establish all three elements defeats the Continuing Course of Treatment Doctrine and the statute of limitation is not tolled. Moreover, and most importantly to our case, the elements of the doctrine must be established at each phase of the litigation: pleadings, summary judgment, and trial.

In our case, Defendant doctor treated the patient in September 2010, October 2010, and January 2012. The patient discovered her injury in April 2012, and she filed suit in May 2014. Therefore, the critical date for purposes of the Continuing Course of Treatment Doctrine was January 2012. If the doctor could have done something to “remedy” his earlier alleged negligence, the doctrine would apply, and the case would have been timely filed. If, however, the die was cast and nothing could have been done in January 2012, then the Continuing Course of Treatment Doctrine would not apply according to Webb and Horton. Plaintiff had satisfied the elements in the initial pleadings and, arguably, to overcome summary judgment. At trial, however, Plaintiff’s sole expert witness did not give any testimony that either (1) the care in January 2012 was negligent or (2) diagnosis and treatment in January 2012 would have changed the patient’s outcome. Therefore, we argued, the Continuing Course of Treatment Doctrine did not apply as a matter of law, and the case was not timely filed.

Judge Ervin heard our arguments on Monday afternoon. He then asked opposing counsel to provide any case law or arguments the following day, and he, too, performed additional research that night. After listening to further argument Tuesday morning, Judge Ervin very carefully and graciously stated: “In every criminal and civil case I preside over, part of my instructions to the jury always is that they are to take the law as I give it to them and not as they think it is or think it should be. Today, I find myself in the same position, where I have to take the law as it is and not as I think it should be. If I require a jury to follow the law as it is, then I have to do the same. I have doubts about the state of the law in Webb and I do not really agree with what it says. However, I have to follow that law. And so I am going to grant the Defendant’s Motion for Directed Verdict.”

The Plaintiff has decided not to appeal the decision. We captured our white whale.

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by Lori Keeton, Lincoln Derr, PLLC

In North Carolina, footage from a law enforcement officer’s body or dashboard cameras is not considered a public record or personnel record according to a recently passed law that goes into effect October 1. North Carolina joins five other states—Florida, Georgia, Illinois, Oregon, and South Carolina— in making this determination.

Prior to the passage of the new law, such footage was often shielded from release to the public because it was considered part of a criminal investigation or personnel file.

Under the new law, anyone captured in police video or audio can make a written request to the head of the custodial law enforcement agency to see the relevant footage. The agency may consider any of the following in deciding whether to grant the request:

• If the person requesting disclosure of the recording is a person authorized to receive disclosure.
• If the recording contains information that is otherwise confidential or exempt from disclosure or release under State or federal law.
• If the release would reveal information regarding a person that is of a highly sensitive personal nature.
• If the release may harm the reputation or jeopardize the safety of a person.
• If the release would create a serious threat to the fair, impartial, and orderly administration of justice.
• If confidentiality is necessary to protect either an active or inactive internal or criminal investigation or potential internal or criminal investigation.

If the request is approved, the applicant will be allowed to view the relevant footage but will not be provided with a copy without a court order. If the request is denied, the applicant can appeal to the superior court for review of the agency’s decision.

Anyone else who wishes to obtain footage must file an action in the superior court in any county where any portion of the recording was made for an order releasing the recording. In determining whether to order the release of all or a portion of the recording, the court must consider the factors set forth above as well as the following:

• Release is necessary to advance a compelling public interest.
• The person requesting release is seeking to obtain evidence to determine legal issues in a current or potential court proceeding.
• There is good cause shown to release all portions of a recording.

North Carolina Governor Pat McCrory says the new law is an attempt to strike a balance between transparency and prudence. The ACLU and others have criticized the law as granting law enforcement agencies such broad discretion that it hinders the very purpose of the cameras (i.e. to build trust and enhance accountability).

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by Beth Stanfield, Lincoln Derr, PLLC

Since 2013, when the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) issued its Final Rule implementing revisions to the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the potential for business associates to be sanctioned for privacy breaches has been a concern to law firms that regularly handle protected health information (PHI). A recent settlement involving a business associate brings that concern into sharper focus.

But first, a brief HIPAA refresher . . .

The 2013 revisions to HIPAA, which were mandated by the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH Act), extended the privacy and security requirements originally focused on healthcare providers (or “covered entities”) to business associates. In recognition of the fact that most healthcare providers rely on outside providers to carry out various healthcare functions, the definition of “business associate” encompasses a wide variety of outside providers, such as third party administrators, CPAs, transcriptionists, and attorneys. In fact, the website for HHS provides several examples of groups that would be considered business associates under the HITECH Act, including “[a]n attorney whose legal services to a health plan involve access to protected health information.”

Given the high stakes associated with a potential privacy breach, law firms have been working to solidify their security measures and protocols both internally and with outside contractors to comply with all HIPAA and HITECH Act requirements. However, the recent business associate settlement published on the website for HHS provides greater insight into the potential for a HIPAA violation and the degree of security measures necessary to remain in compliance.

The subject of the settlement was Catholic Health Care Services of the Archdiocese of Philadelphia (CHCS), a non-profit organization providing management services to six nursing homes. In February 2014, OCR was notified by each of the nursing homes regarding a breach of unsecured electronic PHI (ePHI). The potential breach arose from a stolen iPhone, which contained ePHI of nursing home residents. Specifically, the phone contained social security numbers, information regarding diagnosis and treatment, medical procedures, names of family members and legal guardians, and residents’ medication information.

After investigating the incident, OCR determined that CHCS (1) failed to conduct an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of ePHI held by CHCS; and (2) failed to implement appropriate security measures sufficient to reduce the risks and vulnerabilities to a reasonable and appropriate level. The investigation revealed that the phone, which was issued by CHCS to an employee, was not encrypted or password protected. In addition, CHCS did not have any policies addressing removal of devices with PHI or what to do in the event of a security incident. Finally, OCR determined CHCS did not have a “risk analysis” or “risk management plan.”

As a part of the settlement, CHCS agreed to pay $650,000.00 and entered into an “Agreement and Corrective Action Plan” on June 24, 2016.

The corrective action measures outlined in the Agreement are instructive for business associates. For example, CHCS was required to promulgate numerous policies addressing the following items:

• encryption of ePHI;
• password management;
• security incident response;
• mobile device controls;
• information system review;
• security reminders;
• log-in monitoring;
• a data backup plan;
• a disaster recovery plan;
• an emergency mode operation plan;
• testing and revising of contingency plans;
• applications and data criticality analysis;
• automatic log off;
• audit controls; and
• integrity controls.

The Agreement further required CHCS to review its policies at least annually (if not more often) and distribute them to its workforce. CHCS was also required to obtain “signed written or electronic initial compliance certification from all members of [its] workforce” and provide security training.

In addition to the financial and administrative implications of OCR’s investigation, perhaps of even greater concern to business associates is the negative exposure associated with such a well-publicized settlement arising from a fairly common occurrence – theft of an iPhone. While the Agreement and Corrective Action Plan disclaims any admission of liability on the part of CHCS, the Agreement is fully accessible to the public and available here.

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by Lori Keeton, Lincoln Derr, PLLC

What should law enforcement officers do if faced with a “a non-criminal” “mentally ill man being seized for his own protection, [who is] seated on the ground… hugging a post to ensure his immobility… surrounded by three police officers and two Hospital security guards, [who has] failed to submit to a lawful seizure for only 30 seconds”?

What should they do if faced with a 260-pound, strong, unrestrained, mentally ill man who refuses to comply with their attempts to arrest him and is trying to kick them who moments earlier had been walking erratically near a busy road and “is a danger to himself having been off his medication for several days and [is] engaging in self-destructive behaviors…” and a possible danger to others and the officers do not know if he is armed and have tried to use lesser force in the form of verbal commands and soft hands techniques without success?

And what would you expect them to do if these two scenarios described the same individual?

These are the types of perplexing questions that law enforcement officers are called upon to answer every day and that the Fourth Circuit recently grappled with in Estate of Armstrong ex rel. Armstrong v. Vill. of Pinehurst, 810 F.3d 892 (4th Cir. 2016).

In Armstrong, the police were called to assist with a subject suffering from bipolar disorder and paranoid schizophrenia who had gone off his medication. His sister had convinced him to go to the hospital after watching him engage in erratic and self-injurious behaviors. While they were in the process of obtaining involuntary commitment papers, Armstrong ran away. The police were called. When Armstrong learned about the commitment papers, he wrapped himself around a sign and refused to leave. In the course of trying to effectuate the commitment, officers utilized their Taser/electronic control device (“ECD”) five times in drive stun mode, but it did not stop Armstrong from resisting. Ultimately, the officers and two hospital security guards physically removed him from the post, laid him face-down on the ground and cuffed both his arms and his legs. Soon after, the officers saw that Armstrong was unresponsive. He was pronounced dead shortly after arrival at the nearby hospital.

The family sued the Village of Pinehurst and TASER International in the Middle District of North Carolina alleging violations of the decedent’s Fourth and Fourteenth Amendment rights by using excessive force. The United States District Court for the Middle District of North Carolina granted summary judgment for the officers based on qualified immunity. 

On appeal, the United States Court of Appeals for the Fourth Circuit upheld the granting of summary judgment, finding that the ECD usage was excessive force but the officers were nonetheless entitled to immunity because it was not clearly established at the time of this incident that Mr. Armstrong had the right “not to be tased while offering stationary and non-violent resistance to a lawful seizure.”

Ironically, however, it isn’t the Court’s ruling per se that has garnered national attention, but rather the Court’s use of the opinion to put officers “on notice” of the limited situations in which they may lawfully use ECDs in the future.

In particular, the Fourth Circuit characterized the use of ECDs- in either probe mode or drive stun mode- as “[p]ainful, injurious [and] serious” and advised that the level of resistance required to justify use of an ECD must rise to the level of a “risk of immediate danger.”

The obvious question thus becomes what is a “risk of immediate danger”? Rather than providing examples of what would satisfy this standard, the Court offered guidance as to what would not be sufficient:

• The fact that a subject is unrestrained.
• The fact that a subject is actively resisting.
• The fact that a subject is noncompliant.
• The fact that a subject is unrestrained, actively resisting AND noncompliant.

We can also extrapolate some guidance from the Court’s application of the Graham v. Connor factors in analyzing the reasonableness of the force at issue:

FACTORS THAT FAVOR ECD USAGE

• The subject is believed to have committed a serious/violent crime.
• The subject is advancing towards the officers (or someone else).
• The subject is/could be armed.
• The subject is violently resisting.
• The subject is a danger to others.
• The danger the subject poses could be mitigated by ECD usage.
• Lesser uses of force have been unsuccessful.

FACTORS THAT WEIGH AGAINST ECD USAGE

• The subject is mentally ill.
• The subject is stationary or being restrained.
• The subject is non-violent.
• The number of officers on the scene outnumbers the number of subjects.
• The subject is only a danger to himself.
• The proposed use would be contrary to manufacturer’s instructions.
• The officers have only been working to restrain the subject for a brief period of time.

Justice Wilkinson wrote a concurring opinion for the case joining in the decision of the majority but differing in its analysis. “The majority… left it all up in the air” according to Wilkinson.

What is clear is that while ECDs have been marketed as an alternative to deadly force since their inception, the Fourth Circuit has significantly narrowed the gap between when an officer can lawfully use an ECD versus when an officer can use deadly force and more or less abolished any legal difference between the use of ECDs in drive stun mode versus probe mode.

And the fight isn’t over yet. The defendants have recently petitioned the United State Supreme Court to review the case and TASER International, the National Fraternal Order of Police and the Southern States Benevolent Association have submitted amicus briefs joining in the request. Stay tuned….

To read the opinion, click here. 

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by Noelle C. LeBlanc, Lincoln Derr, PLLC

Paralegal?

Exactly what is a paralegal? Why should you care? Interesting question. Intriguing answer.

If you Google, “What is a paralegal?” you would come across the following:

“The American Bar Association (ABA) defines a paralegal as: A person qualified by education, training or work experience who is employed or retained by a lawyer, law office, corporation, governmental agency or other entity and who performs specifically delegated substantive legal work for which a lawyer is responsible.”

The definition doesn’t sound important or glamorous; honestly it sounds pretty blah and boring. Either way, lawyers who partner with paralegals, clients who reap the benefits, and paralegals who are recognized as valuable team members know the truth.

In case you don’t…

Remember the classic story “The Wizard of Oz?” Dorothy and Toto navigating the harrowing Land of Oz in their quest to go home; banking on the hopes that “the Wizard” can make it all happen. Dorothy finally gains an audience with the “Great and Powerful Oz” only to uncover the mighty wizard is actually just an ordinary man “working magic behind the curtain.” Ironically, in spite of his ordinary appearance and limited magical abilities, he is the catalyst for Dorothy and Toto’s return home.

In the litigation world, paralegals are the “mighty wizards behind the curtain” working magic with education, training, skills and abilities to bring a litigation case “home.” To emphasize a few areas- paralegals handle the day-to-day progression of the case from inception to conclusion. Paralegals confirm the attorneys are on task, responsive, meeting deadlines, and prepared for any situation be it conferences with opposing counsel or ready for battle in the courtroom. Paralegals take on tasks (under the strict supervision of their attorneys) like communications with clients, court personnel, opposing counsel, experts and witnesses. Paralegals draft key pleadings for review by the attorneys. Paralegals perform important research and make sure that adherence to civil rules are being followed. N.C. Certified Paralegals, must meet high standards of education, experience and complete continuing legal education requirements annually. Furthermore, N.C. Certified Paralegals must adhere to the same ethics and professional conduct as their attorneys.

Best part of all… paralegal rates are substantially less than attorneys. Paralegals afford the attorney the ability to focus their talents on more complex legal work while providing their clients with exceptional, affordable services when they utilize paralegals to complete tasks that need only minimal review and supervision.

Bottom line: The answer to this question is paralegals are indeed the “magic behind the curtain” and they afford the client the security in knowing they are not only receiving exceptional client service but also receiving the most “bang for their buck!”

So my question to you…. Does your legal team include skilled paralegals? If not, you might be missing out on the “magic.”

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by Jonathan Reich, Womble Carlyle Sandridge & Rice, LLP

Representing clients with dormant or long-tail claims can be a challenge for a number of reasons. Long-tail claims – think asbestos, pollution, sexual molestation, and (increasingly) wrongful convictions – often take decades to develop from the initial tort into the subsequent lawsuit. Sometimes these are products liability lawsuits, where memoranda from the 1960s and 1970s is sought to be admitted at trial. Sometimes these cases are post-exoneration wrongful convictions matters, where the underlying conviction was obtained decades ago. And, sometimes, any of these fact patterns can also initiate bet-the-company insurance coverage litigation. Whether facing a barrage of products liability lawsuits, an alleged civil rights/wrongful conviction from the 1980s, or an insurance coverage matter arising from either, the ability admit into evidence original documents may play a critical part of obtaining summary judgment or a favorable jury verdict. Under both North Carolina Rule of Evidence 803(16) and its federal counterpart, statements in a document which is at least 20 years old and whose authenticity is establish are an exception to the general prohibition against the admissibility of hearsay under Rule 802. This exception is titled “Statements in Ancient Documents” in both the state and federal rule, and has come to be known as the ancient documents exception to the hearsay rule.

Over the last several years, the Judicial Conference Advisory Committee on Evidence Rules has begun the process of removing the ancient documents exception from the Federal Rules of Evidence. This body has proposed amendments to Federal Rule of Civil Procedure 803(16) and has initiated the process of accepting public comments and taking testimony regarding the deletion of the ancient documents rule. This rather innocuous proposal may have major ramifications for tort lawyers generally, including defense lawyers and insurance coverage lawyers.

Although the underlying rationale for this hearsay exception stands on a shaky foundation – a document does not become more reliable when it ages an additional year from being 19 years old to being 20 years old – the rule serves a pragmatic purpose. In many cases with long-tail claims, it is simply impossible for the plaintiff or defendant to locate witnesses which can lay the proper foundation and testify based on personal knowledge about a document which may have been created decades ago.

Under current Federal Rule 803(16), if a document is more than twenty (20) years old, and appears authentic, it is admissible for the truth of its contents. Under the Advisory Committee on Evidence Rules’s pending proposal, Rule 803(16), would be deleted entirely. The Advisory Committee on Evidence Rules reasoning is that the growing presence of ESI – electronically stored information – will lead to an abuse of Rule 803(16) in the future because of the relative ease of retaining documents in excess of 20 years. As a result, the drafters fear an abuse of this hearsay exception in the future.

These future fears have everyday, real-world implications for practicing defense lawyers and insurance coverage lawyers. Clients with long-tail claims, be they asbestos, other products liability, pollution, insurance coverage, or any other, often must rely to some degree on ancient documents. For example, insurance coverage disputes involving insurance policies from the 20th century sometimes rely on fractions of a complete insurance policy. In those cases, specialized insurance expert witnesses (known as “insurance archeologists”) are sometimes used to “reconstruct” the material terms and material exclusions of policies. This process is usually done with a mix of secondary evidence and ancient documents from either the policyholder or the insurer. See, e.g., Dart Industries, Inc. v. Commercial Union Ins. Co., 28 Cal. 4th 1063 (2002).

As clients defending claims well-know, the simple commercial reality is that they will sometimes not be able to produce a records custodian who can testify regarding ancient company documents. Similarly, it is a simple commercial reality that insurance companies and insurance agents (and even law firms!) are usually not required by law to keep every piece of paper generated for an indefinite period of time. With regard to insurance coverage actions for long-tail claims, this is particularly true. In those cases, the defendant in the tort lawsuit often becomes the policyholder-plaintiff in the related coverage action. As plaintiff, it will carry the burden of proof with regards to establishing that a policy of insurance existed.

Under current practice, a witness with personal knowledge can who can testify about company records is often unavailable. It may be because that particular manager of the company has died, cannot be located, is outside the jurisdiction, or has a lack of memory. As a result, Rule 803(16) allows for the admissibility of ancient company documents, if, in conjunction with Rule 901(b)(8), they appear in a condition that creates no suspicion of authenticity and they are simply found in a place they would likely be. If the proposed abrogation of the ancient documents hearsay exception is approved and then incorporated into the Federal Rules of Evidence, any party attempting to prove the contents of an internal memo or ancient insurance policy will be required to produce a witness or additional business records which confirm that the proffered policy is a business record which was made at or near the time indicated on the document in the regular course of that enterprise’s business. Federal Rule of Evidence 803(6).

This proposed amendment to the Federal Rules of Evidence will also raise the stakes in forum battles. Removing the ancient documents hearsay exception from the federal rules will have a major impact in certain types of cases. Cases litigated in North Carolina state courts, where the ancient document rules will continue to apply, will be able to present additional evidence to the trier of fact.

Because long-tail claims will continue to be litigated in our court system, all participants should acknowledge that there remains a role for the ancient documents exception in the Rules of Evidence. Although the period for public written comment has closed, public testimony will be taken. Additionally, a number of lawyers and seven sitting United States Senators have written to oppose the abrogation of the ancient documents exception. Be on the lookout towards the end of the year to see whether the proposed amendment to Federal Rule 803(16) is adopted.

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by Michael P. Thomas, Patrick Harper & Dixon, LLP

Those of you paying even the least bit of attention to the relationship between Congress and the President (not to mention within Congress) for the last few years will be surprised to learn that, on May 11, 2016, President Obama signed a bill that passed the Senate 87-0 and the House 410-2. It’s the “Defending Trade Secrets Act” and it contains some new tools that many lawyers who work for business and industry will find appealing in protecting our client’s intellectual property.

Before I get to that, however, most of the other write-ups I have seen on the DTSA have buried the lead, at least from an employment lawyer’s perspective. The DTSA contains significant new whistleblower protection for disclosure of trade secrets and notice requirements that must be included in employee contracts in order for employers to take full advantage of the benefits of the statute in the event of misappropriation.

The DTSA provides for complete immunity from criminal or civil prosecution for the disclosure of a trade secret either made either (1) “in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney… solely for the purpose of reporting or investigating a suspected violation of law” or (2) “in a … document filed [under seal] in a lawsuit or other proceeding….” 18 USC §1833(b). A whistleblower who files a retaliation suit is permitted to disclose the trade secret to her attorney, to use the trade secret in the proceeding, to file papers containing the trade secret under seal, and to seek and obtain a court order setting terms for disclosure of the trade secret. 18 USC §1833(c). To the extent trade secret information is related to any alleged wrongdoing by an employer, these whistleblower protections are robust.

The whistleblower protections go one step further, however, and provide a cause for immediate action by all employment attorneys. Employers who ask employees to sign any “...contract or agreement with an employee that governs the use of a trade secret or other confidential information…,” 18 USC §1833(b)(3), must now provide explicit notice of the whistleblower protections set forth in the DTSA in any such contract after May 11, 2016. Id. The notice can be in the contract or the contract can refer to the employer’s compliance policies. Id. “Employee” includes employees and independent contractors. 18 USC 1833(b)(4).

The penalty for failure to include the notice language is the inability to utilize the exemplary damages and attorney’s fee provisions of the DTSA in a suit for misappropriation – even if the defendant was not a whistleblower. 18 USC §1833(b)(3)(C).

So, at a minimum, it is time to revise any and all forms which employment lawyers use as a basis to draft non-compete, non-solicitation, confidentiality or other similar agreements with employees so that, going forward, agreements will contain such notices. You may also want to confer with your clients about revising existing agreements, though that has broader implications. A process for updating evergreen agreements that would otherwise automatically be renewed is worth discussing with your clients, too.

In substance, the DTSA provides a federal cause of action for trade secrets misappropriation claims where the products or services affect interstate commerce. The claims may be brought in state or federal court. The DTSA provides for general injunctive relief. Damages may be calculated either as actual loss plus disgorgement of unjust enrichment OR application of a reasonable royalty. Willful and malicious misappropriation justifies an award of exemplary damages up to 2 times the actual damages or royalty. Attorney’s fees are permitted to a prevailing party upon a showing of bad faith or willful and malicious action by the other party. The limitations bar is three years from actual or constructive discovery. 18 USC §1836.

The DTSA contains an elaborate provision for obtaining an ex parte order of seizure for products manufactured using misappropriated information. The procedure is analogous to the procedures for obtaining seizure of counterfeit goods or copyright infringing material. It permits a court to impound the products derived from misappropriated trade secrets based on a credible threat the products will be destroyed or hidden. Rigorous procedural and factual hurdles are set up by the statute. If you believe you might have the opportunity to put this provision to work, read the statute in detail.

The DTSA contains a precise definition of misappropriation and revises the definition of trade secret to focus on the economic value of having the secret information not be known to others who could derive economic value from knowing the information, rather than being secret from the public. 18 USC §1839.

With the exception of the immunity provision, the DTSA does not purport to preempt state law.

One final note for employment lawyers, the DTSA does not permit a judge to enjoin a person who is alleged to have misappropriated a trade secret from taking any particular employment and limits conditions which can be placed on employment in an injunction. Such limits must be based on evidence of actual threats of misappropriation and not merely on the fact that the individual knows the secret information. 18 USC §1836. Such an injunction cannot override other state or federal law limiting restraints on employment. Id. These requirements, on their face, however, do not appear to block a court from enjoining employment based on other factors, such as a non-compete agreement.

Mike Thomas is the 2015-2016 chair of NCADA's Employment Law Practice Group

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by Bob Meynardie, Meynardie & Nanney, PLLC

A new federal private cause of action to protect trade secrets appears imminent. Since North Carolina already allows private parties to bring a civil action to protect their trade secrets, we compare the two statutes and answer several practical questions related to the dual protection.

1. Do the statutes protect the same things?

The North Carolina Trade Secrets Protection Act (“NCTSPA”) defines a trade secret as business or technical information, including but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process that derives independent actual or potential commercial value from not being generally known or readily ascertainable through independent development or reverse engineering by persons who can obtain economic value from its disclosure or use and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

The Federal Defense of Trade Secret Act (“FDTSA”) defines a trade secret as all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if the owner thereof has taken reasonable measures to keep such information secret and the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by the public.

Though the federal definition is much wordier, the two definitions are very similar. Essentially both statutes protect financial or technical information that has economic value because it is not generally known and the owner has taken reasonable steps to protect the secrecy of the information.

2. Does the same conduct constitute a misappropriation or violation of both statutes?

The Federal statute defines a misappropriation as the “acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means or disclos[es] or use[s] a trade secret of another without express or implied consent.” Improper means includes, among other things, acquisition “under circumstances giving rise to a duty to maintain the secrecy of the trade secret.” Notably, reverse engineering is not improper.

The NCTSPA defines misappropriation as “acquisition, disclosure, or use of a trade secret of another without express or implied authority or consent, unless such trade secret was arrived at by independent development, reverse engineering, or was obtained from another person with a right to disclose the trade secret.” Reverse engineering is lawful under the State statute as well.

In contrast to the FDTSA, the NCTSPA does not make knowledge or reason to know that the information is a trade secret an element of misappropriation. However, as discussed below, knowledge or reason to know significantly impacts the remedies available under the State statute.

3. Do the statutes offer the same remedies?

Damages are available under both the State and federal statutes. Under the State statute actual damages are measured by either the economic loss to the owner or unjust enrichment of the defendant. Punitive damages are available if the misappropriation was willful or malicious.

Under the FDTSA, damages are available measured by damage to the owner, unjust enrichment to the defendant, or as a reasonable royalty. If the misappropriation is willful and malicious exemplary damages are available in an amount up to three times (House version; two times in the Senate version of the Bill) the amount of compensatory damages awarded.

Both the State and federal statute provide for injunctive relief to prevent the use or disclosure of trade secrets. The State statute provides that an injunction may condition use of the trade secret on the payment of a reasonable royalty. Under the State statute, the knowledge or reason to know that the information is a trade secret has significant effects on the remedies available.

For instance, no damages are available for use prior to the time the defendant knew or had reason to know it was a trade secret. If the defendant has materially changed its position prior to knowledge then she cannot be enjoined but may be required to pay a royalty. Further, if the defendant has acquired inventory without knowledge he may dispose of the inventory without payment of a royalty.

Preservation of Secrecy: The NCTSPA explicitly allows the court to take steps to preserve the secrecy of the trade secret. Since by definition, the secret derives value from not being publicly known anything less would be self-defeating. Under the State statute, this includes:

• sealing the record
• in-camera proceedings and
• protective orders.

In addition to the means of preservation available under the NCTSPA, the federal statute also provides for “civil seizure” of the trade secret. In some cases, this may be a very important remedy but there is a heightened threshold to be met before it is available. The details of civil seizure under the FDTSA is beyond the scope of this post but will be discussed in a subsequent blog post.

4. Can the prevailing party recover attorneys’ fees?

Under the FDTSA, reasonable attorneys’ fees are available to the Plaintiff where the trade secret is willfully or maliciously misappropriated or where a motion to terminate an injunction is made in bad faith. Fees are available to the defendant when the claim of misappropriation or an opposition to a motion to terminate the injunction is made in bad faith.

Likewise, under the NCTSPA, attorneys’ fees are available to the prevailing party if the claim of misappropriation was made in bad faith or if the misappropriation was willful or malicious.

5. When must the action be brought?

A claim under the North Carolina statute must be brought within three years of the misappropriation or within three years of when it was or reasonably should have been discovered.

The Senate and House versions of the FDTSA have different statutes of limitation. The Senate version allows three years but the House would allow five years. Although a five year statute of limitations in some cases may make a difference, waiting five years to protect a valuable trade secret may impact the determination of how valuable a secret it is in the first place.

This article was originally posted on Mr. Meynardie's blog: http://www.businesslawyer-nc.com/blog/ 

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