Thursday, October 27, 2011

Rajat Gupta: Agent for whom?

The indictment is available here.

MAI 13.01, 13.02, and 13.06 New Agency Law Instructions

Effective July 1, 2011

The Order is here.

UPL: Hargis v. JLB Corporation

Missouri has neglected to develop its law on the unauthorized practice of law.

Hargis v. JLB presents the question whether loan brokers have the duties of attorneys lawyers in that they might be said to be "procuring of or assisting in the drawing for a valuable consideration of any paper, document or instrument affecting or relating to secular right." RSMo 484.010.2

Arguments were heard on October 5, 2011.

The briefs are here.

Employee Duties to their Employer: Western Blue Print

Missouri's Supreme Court will hear Western Blue Print Co. v. Roberts on November 30, 2011 regarding the duties of a departing employee.

The briefs are here.

Emerson Electric Co. v March & McLennan, November 30, 2011

The court of appeals doesn't believe Emerson had the right to bargain with a fiduciary with the facts before it.  No thought there about whether fiduciary duties should be "a reflection of moral uprightness, of fundamental honesty, fair play and right dealing in the general and business life of members of society."

Hopefully the Supreme Court will read the abundant literature to the contrary (not cited by Emerson), including Judge Hand's belief that " he has suffered a wrong; he has lost his chance to bargain with the facts before him" United States v. Rowe

Samuel W. Buell also has insights in his essay  Novel Criminal Fraud which ought to guide the Court's thinking.

The court of appeals apparently forgot that fiduciary relationships do not fall from the sky; they are not defined by statute; they arise from facts.   Firms put trust and confidence in their insurance agents, expecting honesty, fair play, and right dealing. Fiduciary duties are implied from facts.  When courts say an insurance agent has a fiduciary duty that is a legal conclusion implied from the factual nature of the agent/insured relationship.

Both the trial court and the court of appeals deprived Emerson of a jury determination whether a fiduciary duty existed.

Marsh & McLennan made much of a red herring argument: that the General Assembly permitted agents to be paid commissions. That is irrelevant.  Under the Restatement of Agency (Third) Section 8.11 (2005) (not cited by Emerson) an agent a very broad duty to assemble information and to provide all information "the agent knows or has reason to know the principal would wish to have."

The briefs are here.

Important Cases: Linam v. Murphy, 232 S.W.2d 937 (Mo. 1950)

Was a simple case of liability but that never stops a Missouri trial judge bent on re-writing the law.

The plaintiff was a student passenger, injured when the flight instructor negligently flew into power lines over a river and plunged into the stream.

"Cooke circled, lost altitude and "buzzed" Rocky Beach, south of Ginger Blue, where people were swimming. The plane was 10 feet above the water. He then gained altitude and flew south of Noel. From the state highway bridge over Elk River he flew downstream, turned below the dam (about one-fourth mile below the bridge), lost altitude, flew upstream, and "buzzed" the dam, the bridge and the town of Noel. Between the dam and the bridge he flew at an altitude only a little higher than the tops of the trees at the ends of the dam. Plaintiff asked Cooke to "get up and fly at a higher altitude before we run into something," and said, "Let's get out of here and fly like we are supposed to." Cooke replied, "Don't worry; you know I am not going to hurt myself. Take it easy." Cooke regained altitude but was up only about 500 feet when "buzzing" the bridge and the town. He then again circled, flew downstream, turned around below the dam and flew upstream at an altitude lower than that of his first upstream trip. When he "buzzed" the dam the second time the plane was not over 40 feet above the structure. This time, before he reached the bridge, the plane struck the wires of a power line over the river."

The trial judge thought there was no liability for the plane owner because they had told the pilot "not to 'buzz' objects when he had the controls of a training plane with a student in the other seat."

Reversed.

First, "Defendants had not turned over the plane to Cooke for his personal use and pleasure. In taking over the controls he was acting within the scope of his employment, no matter what his motive may have been. He was still acting within the scope of his employment thereafter when he continued to operate the plane. Obviously, Cooke's duty to his employers (and his employers' duty to plaintiff) required him to operate the plane after he had exercised his authority in taking over the controls. His operation of the plane was "not clearly foreign to the nature and scope of his employment," as urged by defendants. See 35 Am.Jur. pp. 995, 996. There was no "direct route" from which he could deviate for his own purposes. See Sullivan v. Thurman, Mo.App., 266 S.W. 745."

"It does not suffice to say that Cooke took the controls for the purpose of "going on a frolic of his own" and then "did the buzzing" for his personal enjoyment. His motive is not material if he was still engaged in defendants' business and if his acts in taking the controls and thereafter operating the plane were part of his duties and within the scope of employment. Nor does it suffice to say that after he took the controls the subsequent "buzzing" was done for his own enjoyment. So long as the act or omission is done in the performance of the master's business as well as "for fun," such an act or omission is deemed to be within the scope of employment. 57 C.J.S., Master and Servant, § 574, pp. 328, 329. See Byrnes v. Poplar Bluff Printing Co., Mo.Sup., 74 S.W.2d 20.

Second, "Nor does it suffice to say that Cooke may have been violating defendants' instructions. We will assume that defendants had instructed Cooke not to "buzz" objects when he had the controls of a training plane with a student in the other seat. (We note that there was no evidence that defendants had so instructed Cooke nor any evidence of what instructions, if any, they had given him as to how he was to operate the plane. Plaintiff testified as to the type of instruction he was supposed to receive, and "buzzing" was not included. But there was no evidence that defendants had instructed Cooke not to "buzz" when he was in control and was not engaged in instructing a student.) Violation of the master's instructions does not relieve the master from liability for the negligent acts of the servant done within the scope of the latter's employment. 57 C.J.S., Master and Servant, § 570, pp. 312, 313. See Riggs v. Higgins, 341 Mo. 1, 106 S.W.2d 1; and Liberty Mutual Ins. Co. v. Boggs, Tex.Civ.App., 66 S.W.2d 787."

Cluck v. Union Pacific Railroad, Missouri Supreme Court, Nov. 2, 2011

The assault on respondeat superior continues before the Missouri Supreme Court in early November. 

The briefs are here.

The court of appeals opinion.