Court Opinion

ID: 27623
Source: CourtListenerOpinion
Date Created: 2010-04-25 09:10:31+00
Date Added: 2024-06-11T09:38:01.725531
License: Public Domain

UNITED STATES COURT OF APPEALS
                       For the Fifth Circuit

                           No. 01-20292

            SUMER DISTRIBUTING CORP.; JONATHAN KATZEN,

                                            Plaintiffs-Appellants,

                              VERSUS

   PEPPER HAMILTON, LLP; RAMSEY COOK LOOPER & KURLANDER, LLC;
WILLIAM S. RAMSEY PhD; ERIC TUCKER; WILLIAM COOK

                                              Defendants-Appellees.

           Appeal from the United States District Court
                For the Southern District of Texas
                          (H-99-CV-4233)
                           May 14, 2002

Before DUHÉ, DeMOSS and CLEMENT, Circuit Judges.

PER CURIAM:*

      Sumer Distributing Corporation (“Sumer”) and Jonathan Katzen

(“Katzen”) (collectively, “Appellants”) appeal the district court’s

grant of a Rule 50 judgment as a matter of law in favor of

Appellees in this legal malpractice case. Because we find no

legally sufficient evidentiary basis for a reasonable jury to find

  *
    Pursuant to 5TH CIR. R. 47.5, the Court has determined that this
opinion should not be published and is not precedent except under
the limited circumstances set forth in 5TH CIR. R. 47.5.4.
legal malpractice, we AFFIRM the judgment of the district court.

                 FACTUAL AND PROCEDURAL BACKGROUND

      Katzen created Sumer in 1997 to distribute and sell a dietary

supplement (“the product”). The product was composed of various

fruit juices, tea and honey and, according to its inventor, Dr.

George Merkl (“Merkl”), is processed by a solar distillation

process which produces “bound” alcohol. Sumer retained the law firm

of Ramsey, Cook, Looper & Kurlander (“RCLK”)1 in December 1997 to

advise whether it was legal to distribute the dietary supplement,

and to review a mock-up label to determine whether alcohol content

should be disclosed. Sumer provided RCLK with a copy of a draft

label and a retainer check. The parties also signed an engagement

agreement stating that the attorneys were engaged to “provide legal

services   associated   with   reviewing   product   labels   and   other

documents for compliance with laws and regulations administered by

the Food and Drug Administration.”

      The draft label disclosed that the product contained 7%

alcohol by volume. William Cook (“Cook”), a partner at RCLK, raised

concerns about the alcohol content, which could have some effect on

how the product could be labeled and marketed. Katzen explained

that the alcohol is not intoxicating, and referred the attorneys to

Merkl for further explanation. Merkl assured the attorneys that

because the alcohol was chemically “bound,” consumption would not

  1
      The individually named Appellees were attorneys with RCLK.

                                   2
result   in    intoxication,      and   the   product    would    not   test   as

containing ethanol.2 Sumer did not ask its attorneys to have the

product independently tested. The attorneys then advised Sumer that

based on this information, alcohol content need not be disclosed,

and the product could be marketed as a dietary supplement. Based on

this advice, Sumer commenced packaging and marketing the product

throughout Texas and the United States in early 1998.

      In late December of 1998, RCLK dissolved and three members of

the   firm,    William   Ramsey    (“Ramsey”),    Cook,     and   Eric    Tucker

(“Tucker”), joined Pepper Hamilton. There, the individual attorneys

continued representing Sumer. All subsequent communications were

made on Pepper Hamilton letterhead.

      In April 1999, the Texas Department of Health (“TDH”), after

routinely     inspecting   Sumer’s      facilities,     decided   to    test   the

product.    Following    the   tests,    which   showed    that   the    product

contained 7% alcohol by volume, TDH embargoed all of Sumer’s

product. Ramsey, Cook and Tucker continued to represent Sumer,

giving advice on various issues until mid-June 1999. Upon learning

of the test results, Ramsey advised Sumer that its product had been

misbranded because it failed to disclose that the product’s alcohol

content exceeded 5% by volume. In addition, Ramsey advised Sumer

  2
    As Katzen acknowledged at trial, Merkl lied to the attorneys.
Later testing did indicate ethanol contained in the product.
Ethanol is the kind of alcohol that must be disclosed on labels,
and that precludes the marketing of a product as a dietary
supplement.

                                        3
that neither the Food and Drug Administration (“FDA”) nor the TDH

would permit a product to be marketed as a dietary supplement if

the product contained alcohol in excess of 5%.

          Thereafter,       Sumer      discharged    Pepper     Hamilton      and    the

individual attorneys as counsel. In September 1999, TDH filed suit

against Sumer seeking various relief including monetary damages,

penalties, injunctive relief and product destruction. Although

Sumer notified Pepper Hamilton of the litigation, the firm did not

join in or defend the suit. The state court approved a settlement

in       July   2000,    which    included    the    destruction       of   the   entire

inventory.

          Appellants filed this legal malpractice case in December 1999,

and moved for partial summary judgment seeking a declaration that

the       product     was   misbranded.       They   also     sought    dismissal     of

Appellees’ “failure to mitigate” affirmative defense. The district

court held that the product was misbranded, but declined to dismiss

the affirmative defense.

          Appellees moved for summary judgment on January 26, and for a

continuance of the trial so the court could consider the motions.

The court denied the continuance. Appellants did not respond to the

summary judgment motions by docket call on February 5.3 Prior to

the      start   of     trial    the   next   day,   the    court   granted       summary

judgment. Upon Appellants’ counsel’s urging, the court delayed the

     3
    They were not required to under the Federal Rules of Civil
Procedure.

                                              4
effect    of   summary   judgment   pending   submission   of   Appellants’

evidence at trial. At the close of Appellants’ case, the district

court granted Appellees’ motion for Rule 50 judgment as a matter of

law, finding that the evidence presented was legally insufficient

for a reasonable jury to find for Appellants.4 Appellants timely

appeal.

                            STANDARD OF REVIEW

      Appellants seek reversal of the district court’s grant of Rule

50 judgment. We review the grant of a Rule 50 motion de novo,

viewing the evidence in a light most favorable to the non-movant.

Insurance Co. of N. Am. v. Aberdeen Inv. Servs., Inc., 253 F.3d
878, 883-84 (5th Cir. 2001). Federal Rules of Civil Procedure, Rule

50(a) permits a trial judge to enter a judgment as a matter of law

even when the case is being tried to a jury. “If during a trial by

jury a party has been fully heard on an issue and there is no

legally sufficient evidentiary basis for a reasonable jury to find

for that party on that issue, the court may determine the issue

against that party and may grant a motion for judgment as a matter

of law against that party with respect to a claim...” Id.; see

Aguillard v. McGowen, 207 F.3d 226, 228-29 (5th Cir. 2000).

                                DISCUSSION

  4
    The district court also granted Sumer’s motion for summary
judgment on two factual issues; Tucker’s motion for summary
judgment that he, as an associate, did not commit legal
malpractice; and defendants’ motion to dismiss Sumer’s fraud and
misrepresentation claims; and dismissed Katzen as a plaintiff. None
of these decisions is appealed.

                                      5
     Sumer’s underlying suit sought a determination that Appellees

committed legal malpractice. Under Texas law, to recover on a claim

for legal malpractice, the plaintiff must prove that an attorney

owed a duty of due care to the plaintiff, he breached that duty,

the breach proximately caused the plaintiff’s injuries, and damages

resulted. Cosgrove v. Grimes, 774 S.W.2d 662, 664 (Tex. 1989). The

duty of due care is “the standard of care that a reasonably prudent

attorney would exercise.” Peeler v. Hughes & Luce, 868 S.W.2d 823,

827 (Tex. App. - Dallas 1993), aff’d, 909 S.W.2d 494 (Tex. 1995).

     Sumer argues that Appellees had a duty to investigate the

truth of Merkl’s statements, or to advise them to do so. Appellees

argue that they owed no duty to Sumer beyond that contracted for,

which was to provide correct legal advice. Furthermore, they argue

that they fulfilled that duty. Appellees informed Sumer that if the

product contained alcohol, it had to be declared on the label and

the product could not be marketed as a dietary supplement. Sumer,

Katzen and Merkl told Appellees that the product would not test as

containing alcohol. Based on this information, Appellees advised

Sumer that alcohol did not have to be listed on the label and the

product could be sold as a dietary supplement. This was correct and

adequate advice under the circumstances. Any mistake was made

because of inaccurate representations by Sumer, Katzen and Merkl.

     Sumer’s action fails as a matter of law because Appellees

breached no duty. The attorneys were asked for legal advice, and

the advice they gave was correct. We decline to find any duty to

                                6
independently test the product or verify the veracity of Merkl’s

statements, when such actions were not requested by Sumer. A

reasonably prudent attorney is only required to do that for which

he was retained. See McCarty v. Browning, 2001 WL 1041812 (Fla.

Dist. Ct. App. Sept. 12, 2001).

     Appellants further argue that the district court improperly

constructed inferences from the evidence in granting a Rule 50

judgment, and in so doing usurped the role of the jury. This

argument has no merit. Even during a jury trial, a court may grant

a motion for judgment as a matter of law, using the Rule 50

standard. Aguillard, 207 F.3d at 228-29.

     Appellants request that if we reverse the district court’s

judgment, we also reverse its denial of their motion to dismiss the

“failure to mitigate damages” affirmative defense. However, because

we affirm the district court’s judgment, we need not and do not

reach this issue.

                            CONCLUSION

     Because Appellees did not breach any duty owed to their

client, we find that the district court’s grant of Rule 50 judgment

was correct, and therefore AFFIRM.

                                  7