Facebook Swing at DLA Piper Misses

DLA Piper was one of several law firms involved in representing a now-fugitive-from-justice who sued Facebook and Mr. Zuckerberg, claiming that Zuckerberg had contracted to develop “The Face Book” as a work for hire. Zuckerberg contended that the purported contract was a forgery. The proponent of the contested document, Paul Ceglia, was ultimately indicted for mail and wire fraud.

Facebook’s subsequent complaint for malicious prosecution was dismissed today by the New York Appellate Division, First Department. The court noted that the authenticity of the contract was disputed by experts for both sides in the original lawsuit, and that Facebook failed to allege, in other than conclusory terms, facts sufficient to show actual malice and lack of probable cause.

Facebook, Inc., v DLA Piper LLP (US) (Dec. 29, 2015)

NY CPLR TO PERMIT MAIL SERVICE FROM OUTSIDE OF STATE

Ch. 572 of the Laws of New York, 2015 (signed 12/22/2015), amends CPLR 2103(b) (2) to allow mailing of interlocutory court papers from outside of New York State, effective January 1, 2016. Six days must be added to any time periods measured from the out-of-state mail service. The mailing must be done within the “geographic boundaries of the United States”.

This comes after a new push to expand the use of e-filing (L. 2105, Ch. 237), which over time should make mail less relevant, and while the Second Circuit is considering whether New York’s local office requirement is constitutional (Schoenefeld v New York, 748 F3d 464 [2d Cir 2014] certified question accepted, 23 NY3d 941 [2014] and certified question answered, 25 NY3d 22 [2015]).

NYAD1: WRONGFUL BIRTH CLAIM FOR GENETICALLY DEFECTIVE EGGS ACCRUES AT BIRTH

A child, conceived after implantation of a donor egg, was born with fragile X syndrome. The egg donor had, but was not screened for, this abnormality. After the pregnancy was established, the fertility group was no longer involved and the care was handled by a regular obstetrician.

The parents sued, alleging “wrongful birth” damages for themselves arising from medical malpractice.

The statute of limitations expired if the time was measured from the end of fertility treatment. The Appellate Division held, however, that that the claim did not accrue until the child was born alive. The court reasoned that the parents were not damaged, and thus did not possess any claim, before the moment of birth.

The panel also dismissed various claims for ordinary negligence, fraud, misrepresentation and breach of contract. The claim bore a substantial relationship to medical treatment and was, therefore, a medical malpractice claim. The additional theories were redundant.

B.F. v Reproductive Associates (Dec. 17, 2015)

2ND CIRCUIT: NON-PROFIT SAME AS ANY OTHER CORP FOR TAX REFUND INTEREST

In 2005, the IRS resolved a long running dispute with teaching hospitals by promulgating a reg stating that anyone who works more than 40 hours per week – a category that clearly includes medical residents – is not a student for purposes of FICA tax.

Maimonides Medical Center had been paying FICA on residents long before the effective date of the reg, and sued for a refund. Fast forward to 2015, and the only question left was the interest rate. Maimonides argued that since it is a not-for-profit corporation, it should get the higher rate available to ordinary taxpayers, and not the lower rate applicable to corporations.

The Second Circuit held that Maimonides gets the lower rate : a corporation is a corporation. As to the IRC definition of “corporation” at IRC § 7701(a)(3) , says the panel: “that language is not technically a definition”.

Maimonides Medical Center v USA (Dec. 18, 2015)