USC Notches Important Courtroom Victory

Just days after ending a disappointing football season, USC scored a major legal victory in the California Supreme Court.  In Sargon Enterprises v. University of Southern California, 2012 DJAR 15846, a Court of Appeals ruling permitting expert testimony on potential lost profits was reversed.  This case is significant as it brings California law on the admissibility of expert testimony more in line with the federal standard. 

The case involved a small dental implant company suing USC for breaching a contract to clinically test a newly patented product.  The Supreme Court held that the trial judge had a duty as a “gatekeeper” to exclude speculative expert testimony that the dental implant company suffered more than $1 billion in lost profits had USC properly completed the clinical testing.  The Court’s rationale for excluding such speculative expert testimony was explained by distinguishing what would have happened, as opposed to what might have happened.  In the spirit of the holiday season, the decision may be summarized as follows-“if ands or buts were candy and nuts, every day would be Christmas.”      

 

Evidence Disposal: Your Trash May Be Someone's Treasure

A California court recently held that an insurer had a duty to preserve an allegedly defective tire for use as evidence in the insured's product liability case.  Cooper v. State Farm Mutual Auto. Ins. Co., 177 Cal.App.4th 876 (2009,  4th Dist., Div. 2).  Plaintiff Bryan Cooper, an insured of State Farm, was involved in a single car accident allegedly caused by tread separation of a tire.  State Farm acquired possession of the vehicle and tire after the claim was paid to Plaintiff.  State Farm's expert concluded that the tire was defectively manufactured.  State Farm notified plaintiff of its expert opinion and promised Plaintiff it would retain the tire.  Plaintiff sued the tire manufacturer.  Before Plaintiff's litigation against the manufacturer was resolved, State Farm disposed of the car and tire.

The appellate court held that Plaintiff could legally bring an action against State Farm for the destruction of the tire.  The court concluded that Plaintiff set forth a case because he relied on State Farm's promise to preserve the tire, the expert opinion created an inference that the tire was defective, and Plaintiff's damages could be reasonably ascertained.

California does not recognize an independent tort for intentional spoliation of evidence. Cedars-Sinai Medical Center v. Superior Court (1998) 18 Cal.4th 1, 74 Cal Rptr.2d 248 and Temple Community Hospital v. Superior Court (1999)20 Cal.4th 464, 84 Cal.Rptr.2d 852.  The Cooper court shows that an insurer may still be liable for destruction of evidence on theories of promissory estoppel or voluntary assumption of a duty.  In other words, the Court is not saying an insurer, in general, must preserve evidence.  But, it is saying that once the insurer promises to preserve evidence it may be liable for breaking that promise.