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Takata: Company Behind Airbag Crisis Files for Bankruptcy

Takata has literally been sued out of existence. The Japanese based company is filing for bankruptcy in Japan and the United States after a series of product liability suits left them $10 billion in debt. The 80 year old company was determined to be liable for faulty airbags. In one suit, Takata plead guilty to a criminal charge of wire fraud. A competitor, Key Safety Systems, purchased a few departments from Takata, but Takata retains most of its massive debt.

takataWhy is Takata Taking Such a Hard Hit?

Normally, product recalls are cause for concern for a supplier like Takata, but such recalls are not usually fatal. In 2008, Takata and Honda issued a recall of affected vehicles, ultimately totaling 42 million vehicles. Takata airbags would rupture, spraying shrapnel and metal bits at the occupants. In the United States, the airbags were allegedly the cause of 11 deaths and 100 injuries. The defective airbags and recall was bad for Honda and Takata, but survivable for such large companies.

Shortly after though, the New York Times published a story claiming that Honda and Takata knew about the defects since 2004. Instead of ceasing production of the airbags and informing federal regulators, as required, the automakers ordered their engineers to destroy the data showing the faulty airbags. The subsequent Congressional investigations, criminal charges, and civil suits lead to $125 billion in damages and legal fees. Takata settled or paid off most of it debts, but it is still $10 billion in the hole.

If the allegations are true, and Takata has pleaded guilty to some of them, the massive bills are certainly warranted. Companies cannot knowingly release a defective product into the market, cause 11 deaths and a hundred injuries, and expect to walk away without consequences. The penalty is severe though, as these suits and investigations will likely mean the end of Takata itself. Takata employees who were not involved in the design of the faulty airbags don’t deserve to lose their jobs, but unless the bankruptcy can preserve Takata itself, there may be subsequent layoffs.

Could Bankruptcy Save Takata?

With a company of Takata’s size, laying off hundreds of employees is a very real possibility. Fortunately, U.S. bankruptcy is not always the corporate death sentence it appears to be. Bankruptcy does not always mean that creditors will come in and take everything. There are different types of bankruptcy in the United States. These “Chapters” – named after a specific Chapter of the Bankruptcy Code, range from the typical liquidation usually associated with bankruptcy (Chapter 7), repayment plans (Chapter 13) and restructuring (Chapter 11). Takata has taken advantage of Chapter 11 and theoretically should be able to preserve some of its assets.

Chapter 11 bankruptcy is typically used by businesses looking to recover from the bitter taste of bankruptcy. As stated, Chapter 11 is about restructuring the business so that it becomes profitable again. This usually involves selling off parts of the company that are losing money and then refocusing the business on products and services that will allow the company to pay off its remaining debts. In exchange, creditors are expected to forgive and write-off some of the debt owed. Chapter 11 is meant to salvage a failing business, although some Chapter 11 filings can be converted into a Chapter 7, whereby the assets are sold off and the company is basically dead.

Takata has already begun restructuring its debts. The sale of key assets to Key Safety Systems is akin to chopping off an arm to save the rest of the body. Of course, the Takada family remains in control of the company. It might seem unusual that the people who crashed the business would be allowed to remain in control. Unlike Chapter 7 and Chapter 13 bankruptcy, where a neutral trustee is appointed by the bankruptcy court, in Chapter 11 the debtor is allowed to retain control of its finances. This might be appalling to the creditors and victims, but allowing a debtor to remain in control of the company is often the incentive that debtors need to file for a Chapter 11 bankruptcy. This might not feel just, but the expediency of repaying people is more important in the law.

Montana Congressman Gianforte Pleads Guilty to Assault, but Can He Face a Lawsuit?

Montana Congressman Greg Gianforte may have won election on May 25th, but his actions the previous night have already cast a shadow on his victory. Newly elected Congressman Gianforte was at a campaign rally/barbecue addressing a news crew from Fox News. Guardian Reporter Ben Jacobs entered the room and inquired Gianforte about his stance on the healthcare bill in the Senate after the Congressional Budget Office had given its score on the bill.

After Jacobs pressed Gianforte three times for an answer, Gianforte attacked Jacobs. Audio recording reveals shows signs of scuffing, Gianforte yelling “I’m sick and tired of you guys!” followed by Jacobs accusing Gianforte of body-slamming Jacobs and breaking the reporter’s glasses. The Fox News crew in the room testified that Gianforte grabbed Jacobs by the neck, slammed him into the ground, and then proceeded to punch the journalist a few times. Jacobs was taken to the hospital, although his injuries were not severe.

Gianforte’s campaign denied the allegations, instead accusing Jacobs of being a “liberal” who agitated Gianforte with his questions. However, the witnesses clearly stated that “at no point did any of us who witnessed this assault see Jacobs show any form of physical aggression toward Gianforte.” After winning though, Gianforte apologized to Jacobs in his victory speech.

Gianforte was charged with misdemeanor assault a few hours after the attack. He has since pled guilty of assault and received 180-day deferred sentence, 40 hours of community service, 20 hours of anger management, $300 fine, and $85 court fee. The deferred sentence means that Gianforte will not be facing any time in jail. However, the victim himself, Jacobs, could also bring a civil suit against the Congressman to recover for his own injuries.

Can Jacobs Successfully Sue the Congressman?

Normally, a private citizen cannot sue a public official for decisions that the official makes while in office. However, the Constitution’s “speech and debate” clause would not apply to the Jacobs case because Gianforte was not yet a Congressman when he allegedly assaulted Jacob. Even if Gianforte had been elected at that point though, Gianforte would still be potentially liable because hitting reporters is not a function of Congress and not be constitutionally protected.

Proving assault (and battery) would actually be very simple in a case like this. Jacobs would have to prove that Gianforte intended to cause reasonable fear of imminent harm. The audio shows that that attack was very intention on Gianforte’s part, as the Congressman declared “I’m sick and tired of you guys!” while hitting the reporter.

It’s questionable whether Jacobs felt any fear before the attack, as the attack seems to have happened so quickly that Jacobs had little time to react other than comment on his injuries – “Did you body slam me?” and “You broke my glasses.” Nevertheless, these types of remarks would likely be used as a means of showing that Jacobs did fear for his safety. Witness testimony also points that Gianforte grabbed his victim by the neck, which would cause most people to be afraid for their lives. However, it’s important to note that Gianforte doesn’t have to actually touch Jacob’s person to involve fear. Simply grabbing an object close to Jacob, such as his clothing or the recorder in Jacob’s hand, would be enough to satisfy this element.

Many online commenters have attempted to defend Gianforte by claiming that Jacobs entered the room uninvited or that Jacobs “deserved” it because Jacobs is a “liberal journalist.” Neither of those defenses would hold up in a court of law. The former is excessive force that the law doesn’t allow. Gianforte could have simply answered or ignored the question. Gianforte could have threatened to call security or the police. Instead, a Congressman chose to use violence against a man who was simply doing his job.

The latter is commentary about political beliefs, but has zero relevance as to whether or not the reporter was assaulted. The law is the law regardless of whether a person is liberal or conservative. The fact that line of thought – “liberal journalist” was even used to justify the assault is appalling beyond words, as it dehumanizes a man merely for having opinions.

If Jacobs is successful in court, and assuming Gianforte doesn’t want to settle before trial, Jacobs would be owed his compensatory damages, including medical expenses, repair or replacement for his glasses, and compensation for time off or emotional trauma. The judge might also consider adding punitive damages, as this case must serve as an example that physical violence is not acceptable in the public discourse, not even from a sitting Congressman.

Starbucks is Found Liable for Yet Another Hot Coffee Case

A Jacksonville, FL jury has ordered Starbucks to pay $100,000 to Joanne Mogavero after Mogavero was burned by their coffee. In 2014, Mogavero purchased a 20 ounce Venti cup of coffee through the local Starbucks drive-through. After the cashier handed Mogavero the cup to her, the lid popped off as Mogavero was about to pass the cup to her son. The coffee spilled out and Mogavero was covered in 190 degree coffee. Mogavero visited a plastic surgeon to treat the first and second degree burns to her stomach, thighs, and groin, but the surgeon told her she would have to live with the scars.

After Mogavero filed suit, Starbucks attempted to have the case dismissed by arguing that since Mogavero had already accepted the cup from the cashier and was holding the cup when it spilled, that Starbucks could not liable for the accident. The judge allowed the case to proceed to trial. At trial, a Starbucks representative testified that the company received about 80 complaints a month about pop-off lids.

The jury found Starbucks to be 80% liable for the accident and the remaining 20% to be attributable to Mogavero herself.  The jury awarded $85,000 for the

Starbucks

physical impairment and pain and suffering as well as $15,000 for the plaintiff’s medical bills. Starbucks has denied any wrongdoing and has announced it is planning an appeal.The Evolution of Hot Coffee Cases

The Evolution of Hot Coffee Cases

Arguably the most famous personal injury suit is the 1992McDonalds “hot coffee” case.  In that case, an 80 year old woman received third degree burns after the coffee spilled on her.  Her attorneys were successful in arguing that coffee served at 180-190 degrees was unreasonably dangerous.

Over the decades, other hot coffee spill cases have been brought against large corporations such as McDonalds, In-N-Out, and Starbucks. The latest Starbucks case differs slightly from the original McDonalds case. Although the temperature of the coffee in both cases are the same, 190 degrees, Mogavero’s attorneys chose a different route.

Instead of focusing on the temperature of the coffee, the plaintiff’s attorneys here focused on the pop-off lids that caused the spill. Attorneys and judges prefer to focus on precedent, or prior cases, to argue a successful case. However, this successful departure from the norm will benefit consumers in the long run, as plaintiff lawyers now have more than one tool to strike coffee companies with. Conversely, defendants will have to prepare for this new line of assault.

Corporations Should Stop Using the “Control” Argument

On the defense side though, the arguments are parallel. In 1992 and 2017, the focus for the defense is that the customer had control and the corporation no longer did. Since the customer was holding the coffee cup, it was the customer’s fault and therefore McDonalds/Starbucks cannot be liable.

In both cases though, this argument is severally flawed.  First, most states have adopted comparative negligence, which means that juries can assign liability based on percentage.  Attacking the other side is not a good strategy if, at the end of the day, the company is still stuck with 80% of the bill. It’s less than 100%, but still a substantial amount to pay up.

The second flaw with this approach is that it doesn’t really stop the plaintiff from building up a potential case.  In a negligence suit, the customer must show that 1. the company had a duty to be careful, 2. that the company failed in that duty, 3. that failure caused the customer harm, and 4. the harm resulted in injury to the customer. Arguing that the customer had control and therefore the company is not responsible for its product afterwards would invalidate every defective product case. If a microwave burst into flames on its own accord shortly after a customer purchased it, the company selling the microwave would be potentially liable, regardless of whether the appliance burned in the parking lot or at home.

Both McDonalds and Starbucks relied on a “control” argument to dig themselves out of hot coffee cases. If consumers are adapting and winning, companies should avoid using losing arguments.

Trump, Tired of Losing, Focuses on Changing Libel Laws

President Trump has made no secret of his war on the media–repeatedly criticizing what he calls “fake news.”  His opinions on reporting are well documented. So perhaps it’s no surprise that his administration has come out against laws which protect both free speech and free reporting. The Trump Chief of Staff recently mentioned in an interview that the Trump administration has sought to change how defamation laws–and especially libel laws function.

As of now, there have been no concrete steps taken to do this beyond the statement that the administration has been considering how it could change these laws. This position is something many have seen coming. Trump has said, even before he was elected that he desired to “open up our libel laws so when [media] write purposely negative and horrible and false articles, we can sue them and win lots of money.”

This would certainly help Trump himself, as he is a frequent flier when it comes to bringing or threatening defamation lawsuits–especially unsuccessful ones. With 43 different threatened defamation lawsuits and 5 lawsuits which he has actual brought, he is no stranger to defamation law. His lawsuits cover a variety of situations but all have one thing in common–no court has ever ruled in his favor on a defamation lawsuit.

With his long losing streak, Trump now seeks to change the rules in his favor. However, as he has learned with many of his executive orders, without an act of congress it is unlikely that he has any power to make the changes he desires. What’s more, much of defamation law is based in state law which further complicates things for Trump’s would be changes. So, with the law in little danger of changing in the immediate future, let’s look at how defamation law currently works and a little bit of Trump’s history with defamation lawsuits.

TrumpHow Defamation Laws Work

Defamation itself is an enormous topic to cover, the law around it varies state by state and could fill volumes. However, we can at least give you a bit of a summary on the way it works. Defamation is a general term for a situation where somebody makes a false statement that damages your reputation. Slander can be generally understood as spoken defamation while libel can be understood as written defamation. A general claim of defamation requires the plaintiff to establish that a statement was made which: 1) negatively impacted the plaintiff’s reputation; 2) clearly referenced the party suing; 3) was communicated to at least one person who is not the plaintiff; 4) at least one person communicated the statement understood what the statement meant and who it referred to; 5) damaged the plaintiff’s reputation; and 6) wasn’t true.

In order to be defamatory, the statement must also be made as if it were factual as opposed to a opinion. This is because the truthfulness of an opinion is irrelevant if it is clearly the subjective opinion of just one person. However, where somebody says they have an opinion based on specific facts then the facts supporting their opinion can themselves be defamatory.

There are several situations where the requirements of proving defamation can be enhanced. Public officials, such as politicians, can only sue for defamation if the person making statements about them knew what they were saying was false. Public figures, celebrities and the like, can only sue if a person knew or should have known their statements were false. The statements must have been made with actual malice–purposefully made to harm the plaintiff’s reputation. Whether somebody is a public figure is generally based on their fame and notoriety. However, where somebody voluntarily puts themselves in the public eye on an issue–for instance by holding a press conference or bringing a lawsuit–they can make themselves a public figure for purposes of that particular topic.

There is a privilege, a sort of defense against defamation lawsuits, for statements published in a reasonable manner where there is public interest in the topic –often referred to as a newsworthiness exception. This means that the news can inaccurately report events–especially breaking news which has just come to light–so long as it doesn’t do so with the intent to harm a specific person’s reputation.  This is very hard to prove and is essential to the operations of quite a few news outlets.

There are a number of other defenses and privileges which protect a person from a defamation claim; as well as situations where something is more likely to be defamation based on the content of a statement; something known as per se defamation. However, they are too complex and numerous to fully discuss here. Suffice it to say, defamation is an area of law with substantial potential for misuse and abuse to attack the speech of others. It is crucial that people can protect their reputations. However, the law includes a great deal of protections against lawsuits encroaching on a person’s First Amendment rights. One of the most substantial of these is highlighted in a few of Trump’s own defamation lawsuits–Anti-SLAPP (Strategic Lawsuits Against Public Participation) laws.

Trump’s Use and Abuse of Defamation Lawsuits

As we’ve seen above, Trump loves to sue or countersue for libel However, he has never won any speech related lawsuit he has ever brought, never mind a libel case. The closest he’s ever come is an arbitration award after the opposing lawyer essentially committed malpractice in his poor handling of the case  One of the recent of these came up in the lawsuit brought against him for fraud over Trump University.

After the lawsuit was brought against him, Trump a counter claim of libel against those suing him. This claim was targeted by an Anti-SLAPP motion. Anti-SLAPP is a type of motion created in response to a trend of large corporations targeting critics with bogus defamation claims, knowing how costly the lawsuits were to defend these suits were brought essentially knowing they had no chance to win to chill speech. Thus, Anti-SLAPP was created to create a motion–before the expensive part of litigation–requiring a plaintiff to show that their lawsuit is brought with a reasonable probability of winning instead of being used to chill speech or make it hard for a plaintiff with less money to sue. After an appeal, Trump’s libel action was dismissed based on such an Anti-SLAPP motion.

This was the first time one of Trump’s defamation lawsuits was struck down on these grounds, but it does represent the culmination of a history of using defamation lawsuits in this manner. Previously, Trump unsuccessfully sued the Chicago Tribune and its architecture critic for–lo and behold–criticizing his decision to attempt to build the tallest building in the world and the design of his buildings. As a public figure, and one specifically famous for his buildings, the lawsuit had essentially no chance to begin with as there was absolutely no evidence of actual malice. What’s more, as a critique, the entire article was the opinion of the critic–once again making the lawsuit patently ridiculous. The court thoroughly dismantled Trump’s case. New York has no Anti-SLAPP laws outside of government proceedings, thus Anti-SLAPP wasn’t used although–under most statutes–it would have almost certainly won. Another lawsuit that smacks of Anti-SLAPP was when Trump sued an author for libel after he said in a book that Trump was not, in fact, a billionaire–although he himself completely failed to prove this an untrue statement in depositions on the case. In later interviews Trump told the press that he was happy to lose after five years in the courts, saying “I spent a couple of bucks on legal fees but they spent a whole lot more. I did it to make [the author’s] life miserable, which I’m happy about. This was basically an outright confession that he had abused defamation lawsuits to do the exact thing Anti-SLAPP prevents.

Trump has quite a history of frivolous lawsuits in general, but defamation has always been his weak point. It’s no surprise that he wants to target libel laws as weakening the protections against abusive defamation lawsuits would let him easily continue his current trend. Thankfully, such changes would require much more than he can accomplish on his own. For now, our speech is safe.

Can Trump Be Sued for Inciting Violence at a Rally?

TrumpTrump is in hot water yet again, but this time, for something he said during one of his campaign rallies before elected into office.

On March 1, 2016, Trump held a campaign rally in Louisville, Kentucky at the Kentucky International Convention Center. Three protestors were singled out during the campaign when Trump pointed to the protestors and instructed his supporters to “Get ‘em out of here,” which he repeated several times.  The three were then physically attacked. Trump then added, “Don’t hurt ‘em. If I say ‘go get ‘em,’ I get in trouble with the press.’” The protestors sustained personal injuries by being shoved and punched by Trump supporters. They sued Trump for incitement.

Trump’s lawyers filed a motion to have the case thrown out, arguing that what he said was protected free speech under the U.S. Constitution and that he wasn’t actually speaking to the crowd that night when he instructed them to “get ‘em out of here.” The Kentucky U.S. District Judge David J. Hale was unpersuaded and allowed the case to proceed.

What is Incitement?

In laymen terms, inciting violence means a person encourages, provokes or urges violence upon another. It requires somebody to actively urge violence against particular individuals.

The main question for incitement is whether the speech in question purposely and clearly directs others to commit an act of violence against another individual. The government can only punish speech if there is a “substantial likelihood of imminent illegal activity and if the speech is directed to causing imminent illegality.”

Incitement Analysis

To analyze what is incitement, we must first look to what it isn’t. Let’s take this scenario where three protestors interrupt one of Trump’s campaign rallies. Instead of directing the crowd to “get ‘em out of here,” he asks them, “Where’s the exit?” Would that be incitement?

In that scenario, no. While his intent may have been to encourage his supporters to find the exit and kick the protestors out, he would’ve simply asked a harmless question about the location of the exit. Since he wouldn’t have directed or urged them to act violently, incitement wouldn’t be found.

Let’s take the same scenario. What if Trump not only told his supporters to “get [the protestors] out of here,” but he said to a specific group of people in the crowd, “Kick [the protestors] in the stomach” and “Punch them in the face on the way out!” That would be a clear example of inciting violence. In this hypothetical, he would have told specific people in the crowd to act violently against the protestors.

Why the Judge Didn’t Dismiss the Case

Trump’s attorneys cited two main arguments for why the case should’ve been dismissed: Trump’s speech was protected free speech, and that he never directed the crowd to become violent. He argued that his insistence to “get ‘em out of here” was directed to his security guards. Judge Hale didn’t buy it.

Judge Hale looked at numerous Trump campaign speeches that were submitted into evidence by plaintiffs to demonstrate a pattern of Trump asking his audience to act violently.  Among the examples were pleas by Trump in a 2015 Alabama campaign rally that a protestor “maybe…should have been roughed up”  and a 2016 rally in Iowa when Trump instructed the crowd to “knock the crap out of” anyone getting ready to throw a tomato. In one rally in Michigan, he asked a protestor to be removed and urged the crowd not to hurt him, but then added, “If you do, I’ll defend you in court. Don’t worry about it.” This is our President, people.

Will Incitement be Found?

Procedurally, Judge Hale’s decision can be reversed on appeal. Trump’s attorneys would have to convince the appellate judge that Trump was not directing the speech at his campaign crowd. While that certainly may be true, Trump has teetered on the edge of encouraging violence at his rallies throughout his campaign. A judge could easily adopt Judge Hale’s thinking and reject Trump’s defense.

Whether incitement will ultimately be found would require a detailed analysis of the facts of this particular case. Either way, chances are this is not the last time we will see Trump in court for something he did or said during his presidency.