Commentary: Inadequate legal research as bad faith

Daily Record (Rochester, NY), Feb 24, 2009 by Joan Pedzich

A lawyer's obligations to clients include the duty to conduct thorough and competent legal research.

Failure to do so can result in disciplinary actions, sanctions or professional malpractice claims. Courts may take notice of less than stellar research and, in a few cautionary cases, inflict expensive consequences.

In Melissa Brown v. Nutrition Management Services, 2009 WL 159244 (E.D. Pa. 2009) the judge increased a jury award of $74,000 to $161,311 in a Family and Medical Leave Act case. Brown was an employee of a long-term care facility whose corporate parent contracted with Nutrition Management to run its food services. Brown then was hired by Nutrition Management and continued to direct food services at the facility. She was terminated after informing Nutrition Management of her pregnancy.

Nutrition Management's personnel director, a lawyer, advised the company that Brown could be terminated because she was a new employee. A jury disagreed, finding Nutrition Management to be a "successor employer" under the law. Judge Norma Shapiro added interest to the verdict, and doubled the amount because the attorney neglected to conduct research on Brown's entitlement to coverage under the FMLA. Shapiro reasoned that, under the Act, a defendant has to show it acted in good faith to avoid a liquidated damages assessment.

Following a motion for summary judgment in a copyright case, the court granted the defendants' motion for fees and costs. Tuff 'N Rumble Management v. Profile Records, 1997 WL 470114 (S.D.N.Y. 1997). In addition to the plaintiff's "consistently obstreperous conduct," Judge Stein found notable the plaintiff's failure to conduct proper re-search on the facts or law at the base of its claims. Such behavior increased the cost to the defendants and justified the award of $40,000 in fees.

A bankruptcy judge in Texas imposed a hefty sanction on an attorney who filed an involuntary petition for improper purpose after failing to fully research the basis for the petition. In Keiter v. Stracka, 192 B.R. 150 (S.D. Tx. 1996) the court applied the standards under Bankruptcy Rule 9011 and found that the attorney's reliance on a single, inapposite case to justify the petition subjected him to $26,371 in sanctions. The attorney argued that he need not guarantee the correctness of his research, however the court countered that relying on the one inapplicable case indicated a failure to meet the standard of conducting a reasonable inquiry into relevant law.

In Ohio, the son of a patient who died during dialysis when a power line failed sued the dialysis facility and the power company for negligence. His attorney was found to have engaged in frivolous conduct because Ohio law prohibits claims by non-customers against utilities when power failures occur. The judge found the attorney's legal inquiry insufficient and determined that his poor research, lack of awareness of the law and citation of inapplicable, out-of- state cases could establish subjective bad faith. An award of $12, 683 in fees to Ohio Edison was approved. Kozar v. Bio-Medical Applications, 2004 WL 2244482 (Ohio App. 9 Dist. 2004).

Under Pennsylvania law, an insurance company that makes an inadequate investigation or conducts insufficient legal research on a coverage issue may be found to have engaged in behavior constituting bad faith. In Corch Construction v. Assurance Co. of America (2003 WL 23473924 (Pa. Com. Pl. 2003) the court questioned Assurance's claims supervisor, apparently a non-attorney, and reviewed file documentation to determine what legal research was conducted that suggested a denial of coverage under a builder's risk policy is appropriate. The claims employee told the court that, during a review of the claim, applicable Pennsylvania law was discussed; however, on questioning, the employee was unable to reveal any such case law. In a review of the defendant's files, no such case research was found. The court stated, in fact, that there is no support in Pennsylvania law for Assurance's position. The plaintiff suffered drastic business injury and near financial ruin, and was awarded $2.46 million in punitive damages based, in part, on a failure to research.

Joan Pedzich has directed library services at Harris Beach PLLC for nearly 20 years. She holds a masters degree in library science and is active in the Association of Law Libraries of Upstate New York and the American Association of Law Libraries.