In Johnson v. American Standard, Inc., 179 P.3d 905 (Cal. 2008), the California Supreme Court has given additional protections to manufacturers faced with products liability suits. Following the lead of other state and federal courts, California courts will now apply the “sophisticated user” doctrine. Under this doctrine, a manufacturer cannot be held liable when it fails to warn specialists about a product’s dangers when those dangers should be well known to such sophisticated users.

William Johnson is a certified HVAC technician who had received extensive training in the field of air conditioning repair. In particular, he had been certified by the EPA to work on large commercial air conditioning systems. Johnson filed suit against American Standard, air conditioner manufacturers, and various chemical manufacturers and suppliers after he developed pulmonary fibrosis. Johnson contended that the disease resulted from his exposure to phosgene gas. Large air conditioning systems commonly use R-22, a hydrochlorofluorocarbon refrigerant that, when exposed to light or flame, can decompose into phosgene gas. Johnson claimed that while maintaining and repairing air conditioning systems, he brazed refrigerant lines and was thereby exposed to phosgene gas. The trial court granted summary judgment in favor of the manufacturer, and the court of appeal affirmed, holding that the manufacturer did not have a duty to warn a sophisticated user like Johnson of such dangers which were well known in the industry.

The California Supreme Court agreed. The court adopted the sophisticated user doctrine, concluding that normally, there is no duty to warn professionals about commonly known hazards. This doctrine is an exception to the general duty a manufacturer has to warn consumers about potential risks and dangers. According to the court, “just as a manufacturer need not warn ordinary consumers about generally known dangers, a manufacturer need not warn members of a trade or profession (sophisticated users) about dangers generally known to that trade or profession.” In reaching this determination, the court cited decisions by other state courts, as well as federal cases, adopting the doctrine. The court also made it plain that the sophisticated user doctrine applies equally in strict liability and negligent failure to warn cases.

The court also rejected Johnson’s contention that even though he received training and held certifications, he did not remember hearing or reading about the dangers of phosgene. According to the court, “even if a user was truly unaware of a product’s hazards, that fact is irrelevant if the danger was objectively obvious.” The decision in American Standard will certainly make it more difficult for sophisticated consumers to hold manufacturers liable under a failure to warn theory.

The Texas Supreme Court has indicated that a party’s conduct in removing a case from state to federal court and later attempting to transfer the case to a multidistrict litigation panel did not constitute a waiver of its right to arbitration. With its decision in In re Citigroup Global Markets, Inc., 2008 WL 2069835 (Tex. 2008), the court continues to explore the question of what constitutes a waiver of arbitration rights.

The decision in Citigroup appears to allow a party additional leeway to pursue some litigation options before endangering its arbitration rights. Robert and Natalie Nickell had investment accounts with Citigroup and signed agreements to arbitrate any disputes concerning or arising from the accounts. The Nickells claim they lost more than $4 million invested in WorldCom, Inc. based on research reports prepared by a Citigroup analyst. The Nickells filed suit against Citigroup in Texas state court. Citigroup immediately removed the case to federal court on the ground that it related to WorldCom’s bankruptcy proceedings. While the Nickells moved to remand, Citigroup asked to have the case transferred to a federal multidistrict litigation court in New York that was managing similar WorldCom-related suits against Citigroup. Citigroup also asked to stay proceedings in the federal court pending a resolution of the issue by the multidistrict panel. In seeking a stay, Citigroup specifically reserved its defense that the Nickells were obligated to arbitrate their claims. In the multidistrict panel, the Nickells again moved to remand and Citigroup did not oppose the motion.

“…a party seeking to transfer or remove a case does not necessarily abandon arbitration. ”

After this seven-month process, the case returned to Texas state court. Citigroup filed an answer and moved to compel arbitration. The trial court denied the motion, and the court of appeals denied Citigroup’s petition for writ of mandamus on the ground that Citigroup had expressly waived arbitration by making statements in its motions to transfer suggesting that it was doing so for the purpose of litigating, not arbitrating.

The Supreme Court disagreed. According to the court, “Citigroup never opposed arbitration, nor did it expressly waive its arbitration rights.” The statements in its moving papers “were required by statute to justify transfer to the MDL court.” The court disagreed that Citigroup’s attempts to transfer the case to the multidistrict panel were necessarily inconsistent with seeking arbitration, noting that “arbitration is possible for consolidated actions as well as individual ones.” Accordingly, a party seeking to transfer or remove a case does not necessarily abandon arbitration. The court also concluded that Citigroup had not impliedly waived arbitration. While Citigroup’s actions in requesting transfer to the multidistrict panel were factors to be considered in a totality-of-the-circumstances analysis the court had announced in Perry Homes v. Cull, 2008 WL 1922978 (Tex. 2008), those actions were not determinative. Citigroup’s litigation conduct “was limited to jurisdictional transfers, not the merits.” Citigroup had not engaged in any discovery or filed any motions related to the merits before it sought arbitration. Because Citigroup had not waived its right to arbitration, the court granted its petition for writ of mandamus and directed the trial court to compel arbitration.

The New York Court of Appeals has recently emphasized the limits of liability for New York contractors, owners, and their agents involving elevation-related risks. Personal injury litigation involving construction sites in New York is often focused on Labor Law section 240(1), commonly referred to as the “scaffold law,” which provides for strict liability in certain cases. In Berg v. Albany Ladder Co., Inc., 2008 WL 2367415 (N.Y. 2008), the court made it clear that the scaffold law may not be invoked in every workplace accident and that a plaintiff bears the burden of demonstrating that the scaffold law applies.

Berg was working on a flatbed truck unloading steel trusses, and His coworker was operating a forklift. The bundles were piled up on the truck. While and Berg was standing on top of a pile of bundles about ten feet off the ground, another bundle became unstable and began to roll over on top of Berg. Instead of being crushed, however, Berg managed to climb into the bundle as it toppled to the ground. As a result, was injured, and he filed suit against, inter alia, the owner of the construction site under Labor Law section 240(1). The trial court granted summary judgment in favor of the defendants on the Labor Law section 240(1) claim, and the appellate division affirmed.

The Court of Appeals has previously indicated that the scaffold law applies in situations where a worker is exposed to the risk of falling from an elevated work site or being hit by an object falling from an elevated work site. Rocovich v. Cons. Edison Co., 78 N.Y.2d 509, 514, 577 N.Y.S.2d 219 (1991). But section 240(1) does not extend to all the hazards of an elevated worksite.

In Berg, the plaintiff alleged that he was a “falling worker” within the scope of section 240(1). But, as the court noted, Berg did not demonstrate the necessary requisites of a claim under the scaffold law: (1) the existence of an elevation-related hazard and (2) a failure to provide the worker with an adequate safety device. While Berg contended that the height at which he worked created an elevation-related risk, “he failed to adduce proof sufficient to create an issue of fact regarding whether his fall resulted from the lack of a safety device. In such circumstances, it was appropriate to grant summary judgment in favor of the defendants. The decision in Berg will make it more difficult for plaintiffs to invoke the scaffold law where they are unable to prove that a height-related hazard existed and a safety device that could have prevented the injury was not provided.

Success in copyright litigation may hinge on something that does or does not happen well before a lawsuit is filed – when the copyright was registered. While federal law recognizes the concept of “common law copyright,” by which works are considered to be copyrighted when created, registration of a copyright with the Copyright Office carries important benefits. But those benefits may be lost if the registration is not done promptly after the work is created. A recent Ninth Circuit decision establishes that to be entitled to statutory damages or attorney’s fees, a prevailing plaintiff under the Copyright Act must have registered its copyright with the Copyright Office before the alleged infringement commences. In Derek Andrew, Inc. v. Poof Apparel Corp., 2008 WL 2357378 (9th Cir. 2008), the court joined other circuits in holding that the first instance of infringement establishes the date on which infringement commences. If that occurred before registration, a court may not award either statutory damages or fees even though subsequent acts of infringement occurred after registration.

Both Andrew and Poof are engaged in the apparel business. The parties’ dispute arose over Andrew’s “Twisted Heart’ clothing line, a line of casual sportswear for women ages 17 to 70. The “Twisted Heart” line is sold at up-scale department stores such as Nordstroms, Neiman Marcus, and Saks Fifth Avenue, and the average piece of clothing sells for approximately $100.00. “Twisted Heart” line clothing is identified by hang-tags featuring its “Heart Design” and the “Twisted Heart” trademark. A tag hangs from the garments by a small satin ribbon, and the tag, including its configuration and the artwork on the label, were registered with the U.S. Copyright Office on June 15, 2005. Poof also sells women’s clothing to retail stores in the United States, but most of its clothes are manufactured abroad and shipped to lower-end retail stores. Affixed to some of Poof’s clothing are hang-tags that are nearly identical to the “Twisted Heart” tags used by Andrew, except the word “Poof!” is used in place of the words “Twisted Heart.”

On May 9, 2005, Andrew learned about Poof’s use of the hang-tags, and Andrew’s counsel sent a cease and desist letter to Poof. Although it had indicated it would stop using the hang-tags, Proof did not do so, and Andrew filed a complaint for copyright and trademark infringement. Poof did not make an appearance, and the district court entered a default. Poof then entered an appearance and moved to set aside entry of default, but the district court denied the motion. At a bench trial on the issue of damages, the court found that disgorgement of profits was the appropriate measure of damages for trademark infringement and awarded Andrew $685,307.70. With respect to copyright infringement, the court awarded $15,000 in statutory damages and $296,090.50 in attorney’s fees.

The Ninth Circuit held that it was error to award any statutory damages to Andrew. According to the court, 17 U.S.C. section 412(2) “leaves no room for discretion.” When the infringement begins before the copyrighted work was registered, statutory damages cannot be awarded. The only exception is when the registration is made within three months after the first publication of the work (or in some instances, when preregistration has occurred). Here, Andrew’s hang-tag was first published in August of 2003 but was not registered until June of 2005. The initial act of infringement occurred in May of 2005, and the post registration distributions did not constitute new acts of infringement for purposes of section 412.

According to the court, this result is consistent with Congress’s purpose in enacting section 412 – giving copyright holders an incentive to register their copyrights and encouraging potential infringers to check the Copyright Office’s database. “To allow statutory damages and attorneys’ fees where an infringing act occurs before registration and then reoccurs thereafter clearly would defeat the dual incentives of § 412.” In reaching this conclusion, the Ninth Circuit joined the Second, Fourth, and Fifth Circuits in expressly stating that infringement for purposes of section 412 commences when the first act in a series of acts constituting continuing infringement occurs.

The court also ruled that the district court “may have erred” by awarding attorney’s fees to Andrew. Section 412 does preclude such an award when the infringement commences before registration, and Andrew was therefore not entitled to an award of fees under the Copyright Act. With respect to the Lanham Act, attorney’s fees may be awarded in “exceptional cases” of trademark infringement and here, the entry of default sufficiently established Andrew’s entitlement to attorney’s fees. The court, however, remanded the case because the fee award “may have included fees related to Andrew’s Copyright Act claim.” On remand, the district court was directed to recalculate the fees award taking into account that Poof prevailed as a matter of law on the copyright claim.