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Thursday, July 19, 2012

Suits Gets Fraud on the Court Right

I had one of those WTH moments while watching Suits recently. A lawyer with a grudge against Harvey shows up claiming he has evidence that a judgment Harvey obtained 5 years ago was done fraudulently. The evidence? He comes up with a memo he claims was hidden. In it, a company representative talks about the design defect the company denied existed in a products liability case. He claims Harvey hid it deliberately. He is suing the law firm for fraud and is going to move the court to set aside the judgment.

So I’m thinking, five years? How is he going to reopen a case that old? Does fraud on a court let you go back indefinitely in New York?

The answer is, maybe. If the judgment was entered in Federal court, the parties have only one year to seek relief based on fraud. Fed. R. Civ. P. 60 says:

(b) Grounds for Relief from a Final Judgment, Order, or Proceeding. On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
(6) any other reason that justifies relief.
(c) Timing and Effect of the Motion.
(1) Timing. A motion under Rule 60(b) must be made within a reasonable time—and for reasons (1), (2), and (3) no more than a year after the entry of the judgment or order or the date of the proceeding.
However, I don’t see a similar time limit under New York’s CVP. LAW § 5015 : Relief from judgment or order:

(a) On motion. The court which rendered a judgment or order may relieve a party from it upon such terms as may be just, on motion of any interested person with such notice as the court may direct, upon the ground of:

1. excusable default, if such motion is made within one year after
service of a copy of the judgment or order with written notice of its
entry upon the moving party, or, if the moving party has entered the
judgment or order, within one year after such entry; or

2. newly-discovered evidence which, if introduced at the trial, would
probably have produced a different result and which could not have been
discovered in time to move for a new trial under section 4404; or

3. fraud, misrepresentation, or other misconduct of an adverse party;

4. lack of jurisdiction to render the judgment or order; or

5. reversal, modification or vacatur of a prior judgment or order upon
which it is based.

The one year time limit only applies to excusable default, and not to the other grounds. So I’ll rate that plotline as plausible (NY civil procedure gurus, let me know if I missed something).

The next thing that happened is the lawyer tricked Harvey into doing his own investigation after the client fired the firm. Harvey found out that there was indeed fraud. The lawyer then announced that Harvey had to disclose the fraud to the court now.

If they were in Florida, that’s probably true. New York law isn’t so clear. NY DR 7-102(B)(1) provides that “[a] lawyer who receives information clearly establishing that . . .[t]he client has, in the course of the representation, perpetrated a fraud upon a person or tribunal shall promptly call upon the client to rectify the same, and if the client refuses or is unable to do so, the lawyer shall reveal the fraud . . . except when the information is protected as a confidence or secret.”

So while Harvey probably had to withdraw once he found out the client committed fraud, he probably can’t reveal it to the court. That’s because the fraud occurred while he represented the client, so most of his factual knowledge comes from attorney-client communications. If a person other than a client has committed the fraud, the lawyer must tell the tribunal. So the other lawyer probably has a duty to inform the court if he thinks Harvey’s client perpetrated a fraud.

On the other hand, NY law says a lawyer may reveal: “Confidences or secrets to the extent implicit in withdrawing a written or oral opinion or representation previously given by the lawyer and believed by the lawyer still to be relied upon by a third person where the lawyer has discovered that the opinion or representation was based on materially inaccurate information or is being used to further a crime or fraud.” So maybe he’s okay if he reveals the fraud, but he can only do it to the extent he announces to the court that he’s withdrawing his representation that the company produced all the relevant documents. He probably can’t say, “Oh, by the way, the client told me that he had produced everything but I found this document that wasn’t produced.”

Overall, although I initially thought the plotline wasn’t very plausible, I have to conclude that it is indeed plausible under New York law. While the writers took some liberties, I’ll concede that they did a good job overall. I wonder how Harvey will get out of this one?

Saturday, July 7, 2012

USA's Suits Gets Dangerous Employment Clause for Writers Right

Yes, yes, I know. I’ve been away, not blogging. I was in Italy for 3 weeks, so sue me. But I’m back, and am starting to catch up on my American TV.

In the first episode of season 2 of the USA show Suits, our hero and fake lawyer Mike had to deal with representing a publishing company against a former employee. The employee sued, saying she had pitched a book idea to her boss, wrote up a proposal, and it was rejected. Shortly after that, her book showed up under her boss’s name.

As part of her employment contract, she signed an intellectual property clause saying, essentially, that if she wrote it, thought it or sketched it while she worked for the company, it belonged to the company.

At first, Mike does the thing I always hate in these legal shows: he started to act against the interest of his client. He even convinced them to pay her off to the tune of $30,000. She didn’t take the deal. She should have.

Fortunately, Mike finally read the contract. Not only that, but he came up with two prior books the company published with similar ideas. “There’s nothing new under the sun,” he said. She ended up with nothing.

That brings up two key points for writers:
1. You can’t copyright an idea. If you put your idea out there to someone, you have very little protection if they run with it. Copyright protects the written expression of an idea, not the idea itself. If you have the greatest book idea in the world, write the book. Don’t blab and let someone else run with it.

2. You are probably bound by your intellectual property agreement. Remember the Bratz dolls? They disappeared off the shelves for awhile because their founder used to work for Mattel. He did some preliminary sketches while he still worked there, albeit on his own time. It took years of litigation and millions of dollars, losing a court case and the entire Bratz franchise, then appealing, to take it back. Most writers don’t have the kind of financial wherewithal to fight when their employer takes credit for their work. 
The whole inability to copyright an idea bit is scary. I write nonfiction, and when you do nonfiction you don’t write the whole book. You write a proposal with a few chapters and a pitch for the rest. There’s very little protection if a publisher says, “Wow, what a great idea! Let’s get one of our regular writers on this.”

So what do you do? Write the best, most professional proposal you can. Show them you’re the right person to do the book. Have your platform polished and prove to them you can sell the book.

As to employment contracts, always have an employee-side employment lawyer look at yours, especially if you do anything creative. Whether you are writing a novel that has nothing to do with work or writing a nonfiction book in your area of expertise, make sure you have a clause exempting any work you want to own before you sign. Otherwise, your employer just might own it.