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Michael Daugherty.[/caption] Judicial bias is a tricky thing. Is the judge ruling against you because she doesn’t like your legal arguments? Or is it personal?Either way, it’s bold—and potentially risky—move to call on a judge to recuse for bias.Then again, Mike Daugherty is not one to shy away from a fight.The founder of now-defunct medical testing company LabMD, Daugherty last week asked Chief Magistrate Judge Maureen P. Kelly of the Western District of Pennsylvania to step down from his latest case—a lawsuit alleging abusive litigation and wrongful use of civil proceedings against defendants including Reed Smith and McGuireWoods partner Jarrod D. Shaw (a former Reed Smith partner who changed firms in 2016). “Why would a court make so many irrelevant, insulting and pejorative comments about plaintiffs, their counsel, their allegations, their drafting, their claims, their litigation strategy and their settlement strategy? It should be clear that a reasonable person would see it as bias,” wrote Daugherty’s lawyer, James W. Hawkins, a solo practitioner based in the Atlanta area. In the grand scheme of irrelevant, insulting and pejorative comments from judges, I’ve definitely heard worse. (Like the Florida judge in Broward County who recently “delivered a blistering, arm-waving, face-palming, tongue-lashing to a frail, out-of-breath woman—pushed into court in a wheelchair,” who then died, according to the Miami Herald.) Still, Daugherty raises some legitimate concerns. Like why did Kelly allegedly accuse Hawkins of breaching his duty of candor to the court without first letting him explain what happened? And why didn’t the judge seem to care that two defendants, Tiversa Holding Corp. and Robert Boback, failed to reveal highly relevant information about the extent of their liability insurance coverage? Plus, the lawyer representing Reed Smith and Shaw is Mark Shepard of Babst, Calland, Clements and Zomnir—Kelly’s former law partner, with whom she served on the management committee.“It was obvious that Reed Smith and Shaw chose Judge Kelly’s former firm and Shepard in particular because of their belief that those affiliations with Her Honor would be beneficial to them,” Hawkins wrote. In filing the motion for recusal, you get the sense the plaintiffs figured they don’t have much to lose. Kelly already hinted she may toss their newest complaint. When the defendants said they planned to file a Rule 12(b)(6) motion, she said, “That was what I expected, having read it.” And LabMD openly says it plans to appeal one of her prior rulings dismissing many of their claims in other litigation.The dispute underlying it all is something of a cause célèbre by those who feel the Federal Trade Commission has done a poor job in its self-appointed role as privacy cop. The FTC in 2013 sued Atlanta-based LabMD, which at its height had 30 employees, alleging that the company’s lax data security practices were unfair, in violation of Section 5 of the FTC Act.Most companies in the FTC’s data security crosshairs simply settle, but not LabMD. There was a lengthy trial before an agency administrative law judge, who dismissed the case in 2015, writing, “The record in this case contains no evidence that any consumer whose personal information has been maintained by LabMD has suffered any harm as a result of respondent’s alleged conduct.”But the agency’s commissioners overruled the ALJ and found against LabMD. That decision is currently on appeal before the U.S. Court of Appeals for the Eleventh Circuit, which heard oral arguments in June 2017 and has yet to issue a decision. But for Daugherty (who wrote a book about his case and the FTC called “The Devil Inside the Beltway”), that’s not the end of it. The FTC action destroyed his company, and in multiple lawsuits, he’s gone after those who got him in trouble with the agency in the first place: Tiversa Holding Corp. and its CEO, Robert Boback. According to LabMD, Tiversa “used FBI surveillance software … to enter into and take from a LabMD computer a 1,718-page LabMD file with personal health information on over 9,000 patients. This was a felony under 42 U.S.C. § 1320d-6 (Unlawful Possession and Use of Personal Health Information). Tiversa thereafter told LabMD that it found the 1718 File on the internet and threatened to report LabMD to the FTC if it did not pay Tiversa to ‘remediate’ the alleged leak.”LabMD refused to pay and Tiversa tipped the FTC.Tiversa and Boback dispute much of this, claiming they found the file in cyberspace on computers of known identity thieves, and sued LabMD and Daugherty for defamation. LabMD in turn sued them for defamation, as well as a host of other claims including fraud, theft, civil conspiracy and RICO violations. The two companies have been engaged in non-stop litigation on multiple fronts since 2011. Last fall, Tiversa said it was interested in a global resolution to all claims, and the parties scheduled a mediation. But before it happened, LabMD found out about the additional insurance coverage and filed the malicious process suit. “[T]he mediation would not have been successful because the parties would not have been able to settle all claims against one another. Other insurance carriers and other parties needed to be involved in order to achieve a global resolution,” Hawkins wrote.The judge didn’t see it that way. “Her Honor immediately expressed extreme anger at LabMD, Daugherty and their counsel, James W. Hawkins,” Hawkins wrote. “Her Honor expressly disagreed with Plaintiffs’ strategy and focused, instead, on her belief that the parties should have been able to settle the one remaining defamation count. But no party was interested in settling only one claim – it was too problematic given all of the other litigation.”At this point, the dispute seems as unlikely as ever to be resolved anytime soon. The question now is, who will be the judge?

Saw Makers Notch a Win in Antitrust Conspiracy Suit

A group of table saw makers cut off an antitrust suit seeking hundreds of millions of dollars in damages when the U.S. Court of Appeals for the Fourth Circuit last week ruled that the claims were time-barred. It’s a win for Axinn Veltrop & Harkrider name partner John Harkrider, who argued the appellate argument for Black & Decker, as well as co-counsel Layne Kruse of Norton Rose Fulbright for Bosch and Jim Kress of Baker Botts and Scott Hansen of Reinhard Boerner & Van Deuren for Ryobi. On the losing side: a team from Quinn, Emanuel, Urquhart & Sullivan. Government and regulatory litigation practice head Derek L. Shaffer handled the argument for plaintiff SawStop. SawStop’s founders invented a way to make table saws safer. According to a Consumer Product Safety Commission study, people accidentally cut off about 4,000 fingers a year using the saws. SawStop came up with a blade that “carries a small electrical signal. When skin contacts the blade, the signal changes because the human body is conductive … An aluminum brake springs into the spinning blade, stopping it in less than 5 milliseconds!” according to the company. Soon after SawStop debuted the technology in 2000, the big table saw makers expressed interest in licensing it. But by 2002, “each table saw manufacturer had walked away from the negotiating table, some for seemingly inconsequential reasons,” according to the Fourth Circuit opinion by Judge G. Steven Agee. Instead, under the auspices of trade group The Power Tool Institute, the saw makers “agreed to pool their test data and to work together to create a finger-sensing technology to rival” SawStop, Agee wrote. But they didn’t hide it. In 2003, the Antitrust Division of the Department of Justice published a public notice that the saw makers launched a joint venture to “share confidential information and intellectual property rights,” and that any resulting inventions would also be shared. There was evidence SawStop knew what they were up to at the time and suspected a conspiracy. In a 2004 newspaper article, for example, one founder said that the saw makers were “colluding to suppress” their technology. SawStop even consulted with Quinn Emanuel in 2006, asking the firm to take its antitrust case on a contingency basis. The firm declined, in part because of “potential statute of limitations problems.” SawStop didn’t actually file suit until February 20, 2014. The company argued that “the table saw manufacturers had fraudulently concealed their group boycott and, as a result, the limitations period was tolled” until SawStop learned about it in detail 2010. Before that, the company said, it “did not know enough facts to state an objectively valid claim—that is, enough to plead a claim that would withstand a motion to dismiss.” The Fourth Circuit said no. “SawStop’s principals were on actual notice of the table saw manufacturers’ alleged boycott by, at latest, December 2003,” Agee wrote. “Thus, the statute of limitations expired no later than 2007—nearly seven years before SawStop filed its complaint.”

What I’m Reading

DNC Files Civil Suit Against Trump, Russia Over Election Hacking Cohen Milstein Sellers & Toll represents the DNC in the matter. Oil Spill Lawyers Win Rare Disaster Class Certification for Coastal Property Owners In litigation over disasters, whether it’s oil spills or wildfires, pursuing a class action on behalf of those with damages to their homes and businesses has been tricky for the plaintiffs bar. Is this a template for how to do it? Judge Remands First Tezos Case, Splitting Pioneering ICO Securities Class Actions In 2 A federal judge ruled that one of the cases should be sent back to state court. Wells Fargo Turned to Sullivan & Cromwell Ahead of $1B Consumer Settlement The bank turned to lawyers including H. Rodgin Cohen, the firm’s senior chairman and a go-to adviser for financial institutions in trouble. Trial by Jury: An American Expert Tells Us What We’re Losing An interesting essay by a Cornell Law prof on the jury system’s ascendance in Argentina, and what lessons that may hold for the United States. Wisconsin AG Slams Award Given to Ex-Seyfarth Shaw Associate Stephan Addison won an award from the State Bar of Wisconsin for volunteer work, but previously pleaded no contest to charges stemming from an alleged sexual assault. Should the award be rescinded? Kushner Cos. Confirms Federal Subpoenas: 'Nothing to Hide' Of course not.