Thursday, March 19, 2009

No Malpractice For Reasonable, Tactical Litigation Decision

The District of Columbia Court of Appeals affirmed an order granting summary judgment to Finnegan Henderson LLP in a case where former client Biomet Inc. had sued for legal malpractice. Biomet, a manufacturer of orthopedic devices, alleged that the law firm had failed to preserve a constitutional challenge to excessive punitive damages resulting in waiver of the issue. The court agreed with the trial court's conclusion that the law firm had "made a reasonable, tactical litigation decision involving an unsettled point of law..."

The underlying case was a lawsuit against Biomet for patent infringement that resulted in a compensatory award of over $7 million and $20 million in punitives. Finnegan "did not appeal the punitive damage award as unconstitutional [in the initial appeal] because the ratio of punitive to compensatory damages after the initial trial was only 3-1; and the jury had found Biomet's conduct  to be particularly reprehensible making such an argument extremely difficult." 

The compensatory damages ultimately were reduced to $520, which persuaded the district court that a 38,000-1 ratio was unconstitutionally excessive. The district court thus  reduced the punitives to $52,000. On appeal, the full punitive damage award was reinstated based on the conclusion of the Federal Circuit that Biomet's right to seek relief from the punitive damages had been waived.

The court here explains and applies the "judgmental immunity" doctrine of legal malpractice law:

Because there was a substantial question, as to whether a constitutional challenge to punitive damages had to be raised during the initial appeal when the punitive damage award at that time was not unconstitutionally excessive when compared with the compensatory damage ward, and because there was no clear precedent one way or the other prior to the Federal Circuit's opinion in the underlying case, and thus, reasonable attorneys could disagree, we are satisfied that, as a matter of law, there was no legal malpractice in this case.

 (Mike Frisch)

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