dr stacy gruber with us today in february of two thousand and thirteen after twenty six state trial when the jury returned verdicts for the plaintiffs on all counts they found not simply that sentence had violated their fight to sherry duty to the plaintiffs but that they had done so intentionally or willfully and wantonly disregarded the plaintiff's rights in other words the jury made a finding in the future to damages context of what is known as common law malice thirteen months appeal is there for address to answer several questions whether the court in appropriately interjected malice is part of the liability finding for breach if i do sherry duty there is no case anywhere in the country that we have located that indicates that there is a qualified privileged attached to for you sheri duty claims whether the court ignored the fact that privilege had been waived as a defense and whether the court disregarded the findings of the jury and substituted his own turning quickly to the issue of the substitution of fact finding key fact that the court found which was contrary to the jury's finding was that when the defendants reported campaign conduit scheme to the department of justice they did so as a self report that was the most hotly debated issue at the trial and a good portion of the trial was the contradictory evidence on that defendants claim they were so free porting their own principal evidence napper well plaintiff claimed they were falsely accusing her  directing the crime the conduit which is a felony we know that the jury found that this was not a self report and that it was a false accusation because in the or human to the punitive damages the only theory of damages or a huge it was the false report to the department of justice as i just indicated the courts indeed found that sorry the jury indeed found that there was an egregious and intentional breach there by doctoring the plaintiff's position that this was not a so report but a false report if we turn to the actual evidence on that point what we find is this defendant c e o frank ski tino also here today and made into that in the written submission to the department of justice they told the department that evan snapper quote had acted in a way that was illegal at the direction of patricia cornwell mr snapper himself testified that he quote told the department that he had orchestrated and carried out the scheme under the direction of ms cornwell exhibit two eighty one in this case the file of attorneys law firm brian k includes an opening letter from the prosecutors stating you will receive a subpoena that addresses the issues that you  brought to the attention of the acting director of the public integrity unit the subpoena deals with any and all documents relating to patricia cornwell her friends and family and her political contributions hence there was more than enough evidence for the jury to conclude as it did that anshan went to the department of justice within four weeks of this multimillion dollar complaint being filed against them did so not just so report mr snapped her or at very most to use that only as a vehicle to attempt to draw rail miss unwell and this lawsuit this cornwell herself testified that she did not direct the commission of this felony to the contrary she said she didn't even know about the reimbursements mr snacker had himself taken for contributions to james gilmore as to hillary clinton she received an invitation from mr snapper to purchase tickets for a concert within weeks of his having told her she was maxed to ms clinton and she to do this from that the tickets were ok she only permitted tickets to be purchased and reimbursed to meet family and friends because mr snapper and attorney assured her that that was permissible if we assume the privilege doesn't apply what would excuse the fight you cheri but i would point out to the court that actually isn't part of common law malice it doesn't require whether there's actual falsity or not but that issue aside the plaintiffs throughout this case have been consistent  a false allegation it was never a suggestion on our part that there was an innocent or inadvertent report indeed much of the case did relate to questioning the anshan officials as to whether they ever bother cornwell's version of events was before taking it to the d o j urging the convening of a grand jury which happened within two weeks of mr bowles report and proceeding from there i think that at very least if i do sherry must make every effort to ensure that the report made is truthful that would include obtaining the version of events that the client to whom the duty is owed and i think that it would have to be clear that the fight to sherry was acting in the client's best interests and not its own even under judge o'toole's ruling he noted that anshan had a motive to reporting contact not in the context of reporting allegedly false crime that doesn't come as a particular i'm not sorry but i just want to make sure there isn't done it may help as well let me put it this way we've been searching since two thousand and fourteen and have been unable to find anything nor has defendant reported anything else we are in a situation where the judge interjected malice as part of the liability not as part of the punitive damage assessment and use the defamation standard the problem with that is that if i do sheri has an added layer of duty to its client there is nothing that suggests that if i do sherry's duty to its client is lesser because the client has a public figure yet you see arguments in the defendant's brief that relate to the standard that's applicable in a defamation case to a public figure they flipped the analysis the focus should be on what the status of the puny damages aspect of it what would be the remedy that you would ask us for and does that depend on the correctness of his ruling on the statute of judy then we would ask you to read and cert the fight you sherry duty finding but of course if you haven't found the statute of limitations was applied in error that could turn out to be a problem and we would have to ask you for  i would point this out however on the statute of limitations while we've all spent a lot of times arguing it it may be a somewhat academic point the statute of limit sorry the fight to sherry duty claim in terms of how it was tried was focused on the department of justice that's not a statute of limitations problem because it occurred after the filing of the difficulty with that is that your pleading to the d o j of fans but the earlier claim seems to have drawn on all of your claims of misdoing and how much would that be affected by the statute of limitation question if the jury awarded any damages on statute of limitations that was longer than three years ago that would be effective i would point out however your honor that we actually play in the d o j only in connection with the statute of limitations and we tried it that way the court has also already noted in its decision that the missed deadline issue was only planned and tried on negligence we have t own at this point is that i misspoke deadline george judge has already found it it's footnote four i believe to his decision was a negligence issue that wasn't returned and plaintiffs favor because the judge charge them three times that on negligence and breach of contract they could only consider events within the last three years the jury also said that in entering there are three and a half million per addict on negligence of approximately two point four million dollar ticket on contract and then on their twenty two million dollars on creature by you sherry duty that they were not overlapping any of them they had separated so they did not carry over claims so respectfully i would suggest that as argued the statute of limitations applies to matters that are not probably at issue at this point but for purposes of determining what the remedy i take you're asking for a new trial if we have on th very breach but not on the claims thrown out on such limitations you're not asking us for us to reinstate any part of the damages award i think it's respect to produce your breach i'd love to ask you that but i in the judge's reversal on either creature like you sherry duty or if the older contract sorry for your sherry duty claim then we are asking that the liability finding made by the jury after six weeks stand and that we go back only on damages and what we're actually asking is of course that you reversed on both of those points and reinstate the jury it's morning autism it was the court let me start with the remedy issue although i'm loath to do that because it assumes something i don't want to assume which is that there is some basis for a personal but i do think it's important to put this in context which is that the plaintiff literally has to run the table in order to get anything other than a new trial as every aspect of this case she has to demonstrate that this record is completely wrong on every aspect of it not only including sexual imitations but also jeff place and her effort today to try to cleanly segregate out which the property involved in all these cases for the miss book deadline and every other facet of this could have been part of the fiduciary duty to hold the other three we simply don't know the answer to that all we know is that we have a general verdict on three different theories that there embrace at the only question there had to do with d o h a reporting suggesting to me that you need to have damages was part of their claims as well well there was certainly arguments was certainly evidence put forward of of inappropriate behavior by the defendants in this case in connection with more than simply the d o j report to be sure counsel focused exclusively on the d o j report  and her closing argument but that the wealthy typically that doesn't mean you wait every other argument you've presented to the jury takes really when you don't ask the jury to give you a special verdict with respect to every single element of the claims that you have now put a forward aspects of i want to go back to the d o j report because it was because you don't know what the basis for liability was the jury was simply told that it could find a breach if it finds a breach of fiduciary duty that it well we do think that they are part by the statue limitations to be sure your honor but it that's you know is the case was tried to the jury special limitations wasn't are under those circumstances so they could easily have included anything in there as a consequence of that and there's no way to undo it at this point and figure out exactly what the status of the cases have to say you simply have to start over again under the circumstances not be sure if your farm has to your it's aspects of it and obviously the issues that the pla if you find the defendant breached if you do sherry duty you may also consider whether the breach was intentional or deliberate occurred under aggravating route rages circumstances including a  equal motive or a conscious act that willfully and wantonly disregarded the plaintiff's rights that the district court now after the trial has set aside the jury verdict on saying i don't think there was any malice or well remember that's a jury instruction that's given only with respect to you know damages and his basic argument as that there that the flaw in the way the case was submitted on liability was that there should have been a heightened standard require a liability and unfortunately because of the a pillar of damages as russia has about six or seven different elements all separated by or we have no idea on what basis the jury determined it if there was as were appropriate under the circumstances so you don't know whether you can you cannot assume that the jury made a malice finding that would have sufficed to demonstrate breach about lack of evidence of falsity the argument that is made there is the breach of sherry duty was over with or anything to do cher relationship was over with before the d l each a god involved here it would be easy for me to say sorry guys you waived it is that all the information came from a subpoena and the sentence prior to that is that the fiduciary relationship was over so i agree with you if you hadn't have the word vos you might say there may have blanket argument that there was no breach this is the sense is thus by definition it seems like the only argument being made in the fifty eight motion is because all information came from subpoena or all all of the evidence of the relationship was over the loss there was no evidence of breach there's nothing in that that  judge lawyers pacifically what they argue with respect to the subpoena is that there was in response to that there was disclosure of very confidential information about e mail addresses etc which the players placed a great deal of reliance in trying to say that that was a i mean as a matter of law yeah well i mean i think that's by referencing the fact of it coming from a subpoena i think we have to technically identify the word privilege i mean i think that's the ultimate issue is is a fairly find that the judge was wrong because these arguments were waived and because we have a different view of whether the plaintiffs had enough evidence to connect to  vacate with respect to the to the department of justice issue and remained back for a trial limited exclusively through that particular issue yes now the next part of the question and i evidently you know we have other issues that we have damages and the compensatory damages i take it that's part of why you think it needs to be reminded for a whole but you have to be clear on what the exact nature of the tory award is or be able to remotely you want to make on the department of justice issue the most relit directly relevant law on this is the rules of new york board of regents section twenty nine point one of c which says for accounting firms that it is prohibited the simply by self reporting of circumstances and second credible important to remember that there is a constitutional avoidance problem a bit here making a representation to the government you are engaged in speech or has to be very very careful ought to make sure there is no false or false statement with respect to the argument before this case your honor if you are caught by surprise by anything this looky has to say will give you thank you i'll run through my points i hope quickly first let me be clear that punitive damages were never sought argued were referred to at any time in the trial or anything but the department of justice reports understand mr phillips was not at trial i lived through all twenty six days the only time the jury ever heard anything about punitive damages was in connection with a partner justice report as in the closing second as judge karen pointed out paragraph twenty six of a forty page seventy one paragraph fifty a motion was not intended to set or qualified privilege requiring a showing of malice that wasn't the theory under which trial counsel try the case and i'm sure that that was strategically intentional because there is no law to suggest that you would we never had any idea that there was a contention that the reports to the department of justice were in any way privilege you can read mr campbell's very capable closing and see that to be the case may i ask that is not the first circuit will but what would your response be if you were asked how were you prejudiced by not having the privilege assertion made that special verdict to which the finding is made that the conduct was intentional or willfully it was only ignored planers rights then we'd probably all be fine because that would mean that what judge o'toole really did was to say on taking away their finding i don't agree that it was willful or intentional and motive is the paradigm of the jury question how were you prejudiced by the fifty motion no the fifty evolution not including in reference either to falsify or privilege false yet you come back to because that was a matter of evidence parties were just diametrically opposed to how you prejudiced but not being had the right to prove either however on the faulty issue because we were contending this was a poultry or we proved it anyway our evidence was that the plaintiff said nothing to do i think i'm just asking for weaver purposes you're arguing that we can't look at anything other than what's in the fifty eight motion correct right no argument regarding the sufficiency of the evidence as to falsity or malice or anything is reference and how are you actually hurt by it because the falsity of the statements was central to your whole case you knew you had to prove that you had the whole trial to prove it so he didn't mention the fifty a big deal what's your answer to that well my answer to that is the very recent case you can't make up new grounds in the fifty motion it's a renewal all you're supposed to do all we used to do in fact was take our fifty eight motions and either state  or pick up the body and move it into the fifteenth be what was done here because it was a different law for it was a completely different mode and would you normally have a chance after a fifty a motion to make some requests to put in more evidence if you thought it was a pretty good fifty a motion that you'd like to respond to we would in this sense and that we would be deprived of we here in fact that although in this instance the judge was making it clear that he wasn't going to allow the fifty a motion that he told me not to henchmen to go a limb unaided competitor rate paid for aca directed the crime he didn't pull the trigger but he directed the crime that's what they told the department of justice that evan snapper was a pawn that he executed on the s but it was directed by mr cornwell and mr cornwell told the jury no i didn't i didn't even know what he was doing the jury believed in this cornwell now perhaps judge or told didn't believe it was cornwell but that isn't his role the fifty motion he should not have substituted his findings for the jury just what he did miss lucky you got through two of your points before i diverted you to the prejudice and i want to go quickly to the point about paragraph twenty six that judge karen raised that's absolutely right it is their arguments were we don't any longer have a fiduciary duty which is legally wrong it's a duty continues for the knowledge previously  d we produce documents pursuant to a subpoena contrary to what was said by mr philips we never contended that turning over documents was the issue we said you reported on december twenty ninth james hall reported raymond holzer that ms cornwell directed the commission of crime eight days later a grand jury was convened all of this was before the jury in this case that we were allowed to find out what happened only to know that the grand jury was terminated without indictment and mr snapper played guilty to the felony of filing false statements with the f t c so we are in a position now where  respectfully suggest that that language and paragraph twenty six about the subpoena which has an absolute privilege for the documents themselves has nothing to do with the argument that is being made they didn't raise it it wasn't inadvertent prior counsel didn't intend to attempt to pursue a claim that they acted with a qualified privilege it doesn't exist if i do share a duty law and they never made the claim it was out of the blue when we saw it on fifty p we didn't even think it would be taken seriously by the court but then with ten months after the motion was filed thirteen months after the verdict we got the judge's decision let me also say it was a quick reference on the statute of limitations the issue here is the ideal case which is the state case says in the context of the matter that's governed by c p l are two fourteen which is their three year statute of limitations for specific situations that in that kind of a case with a licensed professional that the conduct will be treated as if it's tied to the malpractise statute of three years the second circuit says after that in one scene and has been followed by a couple of federal district courts there are new york court as government in this case applying new york law but if we're talking about someone acting as a business manager even if they happen to be an accounting it's literally the same facts if we're talking about someone acting as a business manager that's not a licensed professional it baby a business person maybe a business professional but it's not a professional covered by the malpractise statute we had a malpractise claim against anshan for their handling of the accounting work the tax returns but the bulk of the case was about their business management mom steen says that's not tied to two fourteen so it's a six year statute yes in fact it's based on a contractual relationship and she had a contract that set forth the duties and that was at the central point of the case thank you you thank  and argue that that was that there would be a judgement basis for keeping punitive in this case of the idea that there's only one basis for punitive is simply not consistent with the way the record has played out in this case this court can and can't segregated out in the way that they that they in particular and case called hirst and any two f thirty two thirty two in which the court in which the court says that this standard of review of the term nation of whether fifty has been properly reserved in fifty b is one of the stuff which will to the district court because the district courts in the best position to judge that seems to me that would be particularly true with why is attached so why is that so if it is a comparison of the tax we can read out just as easily the district court can if you're looking at the question of what is subsumed what is fairly presented what the plaintiffs have notice of how is this case try and was there any prejudice is a consequence of that sees me the district judge far better position to make that determination than this court is or and the court ought to defer to the district judge one of those is that last part critical to your statement being commencing where you said prejudice  front fifty a motion yet because it gave almost it would be why file a rule fifteen emotion at all if you're saying anything that they're on notice they're just on notice though from the trial you could just file of you just say here's a fifty a motion  suspect that the place where it would be the strongest would be with respect to the prejudice component of this the argument that they never challenge the subpoena they specifically asked was cornwell you cannot this that you can't just a lemonade that was before the jury finally with respect to the special invitations i p t tells us as clearly as it can be said the issue is what is the remedy they sought compensatory award damages under those it's a three year especial imitation the suggestion that somehow you can you can carve us out because we're not professionals under these circumstances it's way too late to make that argument they are stopped at that they got a heightened jury instruction that said that we you we hope