For The Defense, October 2010 - DRI Today

Representatives, from page 31leave to amend. The court reasoned that thecomplaint lacked “any facts that explainwhat [d]e fend ants’ representative did orfailed to do as part of his alleged duty,” sothat nothing “more than mere suspicion of acognizable right of action” existed. Adkins,2008 WL 2680474, at *3. Pleading only “thatdefendants’ agent failed to ‘take the necessarysteps’ to protect [the plaintiff] from the[] device” was insufficient because it left the“necessary steps… entirely to the imaginationof the [c]ourt.” Id.Therefore, even under Adkins, a plaintiffstill must pass an initial hurdle. Adkinssettled and was dismissed before theplaintiff filed an amended complaint, so thecase offers no guidance on what allegationsagainst the representative would be sufficient.Nonetheless, challenging such claimsat the pleadings stage regarding whetherthey allege sufficient facts against the representativespecifically may be the key todefeating representative- based claims whena court seems inclined to follow Adkinson preemption. Indeed, as Riegel preemptiondevelops, courts have grown accustomedto addressing preemption issues atthe motion- to- dismiss stage. See, e.g., Rileyv. Cordis Corp., 625 F. Supp. 2d 769, 789(D. Minn. 2009); Horowitz v. Stryker Corp.,613 F. Supp. 2d 271, 282–84 (E.D.N.Y. 2009).Thus, even if a preemption argument doesnot apply to the representative under Adkins,a court may still be ready to examinethe pleading of that claim while consideringand dismissing other claims.ConclusionNo matter how many claims a plaintiffmight allege involving a manufacturer’srepresentative, under whatever factual allegationsand asserting whatever theories ofliability, those claims almost inevitablyattempt to impose some requirement thatis “different from, or in addition to” federalrequirements. The claims also almostinvariably challenge some action “withrespect to” the device. As a result, no matterhow novel the claim itself, under Riegelfederal law should preempt it.Ethics, from page 81claimants have the ability to say “no” withoutaffecting other claimants, then there isno conflict because the claimants are notpitted against each other.Second, Comment 13 to Model Rule 1.8specifically exempts class and derivativeactions from the aggregate settlement rule,and Formal Ethics Opinion 06-438 effectivelyputs bankruptcy claims in the samecategory. The reason is that settlements inthese contexts all involve close court reviewand approval, which supplies the protectionotherwise afforded by the aggregatesettlement rule.Summing UpGroup settlements—whether “aggregate”or not—can offer important benefits toclaimants and defendants alike. But, counselneed to either carefully tailor multipleresolutions to avoid the aggregate settlementrule altogether or ensure complianceif it comes into play.FERA, from page 76defense counsel should consider takingappropriate and timely action based uponthe defense counsel’s own investigation,culpability assessment, and serious discussionswith the client. Depending uponthe timing and stage of the investigation,a meeting with the prosecuting or investigatingauthority may be useful. If the meetingoccurs pre- indictment when defensecounsel may not yet be entitled to full disclosureof all the facts and discovery, themeeting can provide potentially valuableinformation.Timing is crucial to obtaining the fullbenefit of cooperation for the client. Ifyour client has information that is usefulto the investigators and chooses to cooperateagainst other participants in a mortgagefraud scheme, then defense counselshould start that process as soon as possible.On the other hand, the longer a clientwaits to cooperate, the more likely it isthat other participants will meet with prosecutorsand the value of the client’s informationmay diminish. Additionally, it isnecessary to maintain a realistic approachwith the client and know that cooperationdoes not necessarily mean that the clientwill be exempt from punishment.PunishmentThe Department of Justice has sought significantjail sentences in mortgage fraudcases. On May 4, 2010, Assistant AttorneyGeneral Lanny Breuer, before theUnited States Senate Committee on theJudiciary Subcommittee on Crime andDrugs, stated “Our prosecutors and agentsare determined to ensure that wrongdoersare punished. This means seeking jailtime whenever appropriate. We believe thatthese efforts are critical to restoring investorconfidence in the markets and ensuringthat our corporate citizens play fair. Recognizingthe deterrent value of jail time, thedepartment has sought significant prisonsentences against white collar criminals.”Breuer went on to state that punishment forfraud can mean “significant statutory penalties,for example, up to 20 years for eachcount of wire fraud and up to 25 years foreach count of securities fraud.” Additionally,the Federal Sentencing Guidelinesallows for consideration of other factors,including the amount of loss, which canresult in significant guideline sentencingranges. Following the U.S. Supreme Court’sdecision in the Booker case, the FederalSentencing Guidelines are advisory. UnitedStates v. Booker, 543 U.S. 220 (2005). Therefore,sentencing judges are not required toimpose a sentence that falls within the FederalSentencing Guideline range, and mayresult in harsher sentences than those setforth in the Federal Sentencing Guidelines.In addition to seeking jail time in mortgagefraud cases, the Department of Justiceis also seeking substantial fines and forfeituresagainst individuals and corporationsinvolved in mortgage fraud schemes.ConclusionIt is troubling that many individualsbelieve that banks and lending institutionscannot be victims because the banksare considered to be alleged perpetrators.However, the unrelated wrongs of banksor lending institutions do not excuse thefraudulent acts of individual defendantswho engage in mortgage fraud schemesFor The Defense n October 2010 n 85