Posts in "Jurisdiction"
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Contract Defeats Virginia’s Defense of Sovereign Immunity
A recent decision from the Supreme Court of Virginia established an important precedent for contractors doing business with the Commonwealth. The doctrine of sovereign immunity generally prevents parties from being able to sue the government when it is acting within the scope of its governmental authority, unless the government consents to suit. However, in Montalla, LLC v. Commonwealth, 303 Va. 150, 900 S.E.2d 290 (2024), the Court ruled that the Commonwealth cannot invoke sovereign immunity as a defense when the government enters into a valid contract through an authorized agent. This ruling affirms that when the Commonwealth enters into a legally binding contract, it must uphold its contractual obligations and allow contractors to pursue legal remedies, even without the government’s consent.
The dispute arose after a government contractor named NXL sought reimbursement for overhead costs under its contract with the Virginia Department of Transportation (“VDOT”). VDOT denied payment based on its interpretation of certain Federal Acquisition Regulations (“FAR”) provisions. NXL ultimately entered into an unfavorable settlement with VDOT based, in part, on this interpretation of the FAR. However, during settlement negotiations, VDOT received guidance from the Federal Highway Administration (“FHWA”) on the correct interpretation of the relevant FAR provisions. The FHWA’s interpretation confirmed that NXL was entitled to reimbursement. VDOT intended to adopt FHWA’s interpretation but withheld this information from NXL during settlement negotiations.
Thereafter, Montalla, LLC acquired NXL’s contracts with VDOT. Montalla, LLC discovered that VDOT withheld this information and sued VDOT seeking equitable rescission of NXL’s settlement agreement and recovery of contract damages. The trial court and Court of Appeals dismissed the case based on VDOT’s asserted defense of sovereign immunity. The Supreme Court of Virginia reversed. Although the Supreme Court noted that the doctrine of sovereign immunity is “alive and well” in Virginia, it ultimately found that the defense does not extend to actions based on valid contracts entered into by authorized agents of the government.
This decision strengthens protections for contractors and confirms that the Commonwealth of Virginia must uphold its contractual obligations. Moving forward, contractors should be cognizant of their ability to enforce their contractual rights against the Commonwealth.
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Moore & Lee Secures Significant Settlement for Global Design and Engineering Firm in Signature Bridge Project Litigation
Miami, Florida – Moore & Lee is pleased to announce a decisive victory for our client, a leading design and engineering firm, in a high-stakes dispute with a design-build contractor involving an +$800 million signature bridge project in Miami, Florida. The case, litigated in the United States District Court for the Southern District of Florida, involved several complex factual claims and legal issues.
The design-build contractor sought over $405 million in damages, while Moore & Lee—led by partners Thomas Wilson and Robert Windus along with associates Zackary Rogers, Brandon Lee, and Kenny Rafter—pursued a counterclaim for non-payment of fees in excess of $30 million. After the Court granted motions for summary judgment filed on our client’s behalf, the firm secured a favorable settlement for our client.
Moore & Lee obtained Court rulings on dispositive motions that clarified multiple areas of Florida law, including the enforceability of contractual limitation of liability provisions for claims against individual design professionals, the statute of limitations applicable to claims concerning pursuit-phase services on design-build projects, and the function of the independent tort doctrine in states like Florida that have curtailed the economic loss rule. These rulings establish important legal precedent for future design-build projects in Florida and beyond.
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Updates to FHWA’s Buy America Requirements for Manufactured Products
On January 14, 2025, the Department of Transportation’s Federal Highway Administration (FWHA) published a final rule erasing the long-standing Manufactured Products General Waiver to FHWA’s Buy America requirements. For more than four decades, the general waiver has allowed states and contractors to use foreign manufactured products on federally funded transportation projects. Under the FHWA’s new rule, (1) final assembly of manufactured products must occur in the United States (the “final assembly requirement”), and (2) components mined, produced, or manufactured in the United States must be greater than 55 percent of the total cost of the manufactured products (the “55 percent requirement”). FWHA will impose the new rule in two phases. The final assembly requirement will take effect for projects obligated on or after October 1, 2025. The 55 percent requirement will take effect for projects obligated on or after October 1, 2026.
During the rule’s public notice and comment period, commentators expressed concerns over increased cost and domestic availability of many manufactured products routinely used in federal-aid projects, such as lighting systems, Traffic Management Systems (TMS) equipment, Intelligent Transportation Systems (ITS) equipment, and rolling stock.
Going forward, contractors involved in federal-aid transportation projects should understand FHWA’s new rule and pay close attention to any updates to the rule. They should also discuss the new requirements with suppliers to ensure compliance with the requirements as they take effect on future federal-aid projects.
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The Recent Amendments to F.R.E. 702 for Expert Testimony
On December 1, 2023, the most significant changes in almost 25 years to the federal rule governing expert testimony (Federal Rule of Evidence 702) took effect. The changes to Rule 702 are shown below, with additions underlined and deletions indicated as strike-through text:
Rule 702. Testimony by Expert Witnesses
A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if the proponent demonstrates to the court that it is more likely than not that:
- the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;
- the testimony is based on sufficient facts or data;
- the testimony is the product of reliable principles and methods; and
- the expert has reliably applied expert’s opinion reflects a reliable application of the principles and methods to the facts of the case.
The first change clarifies that the proponent of expert testimony has the burden of establishing all four criteria by a preponderance of the evidence. “Some evidence” is not enough—the proponent must prove the expert’s methods are “more likely than not” reliable. As the Advisory Committee observed, “many courts have held that the critical questions of the sufficiency of an expert’s basis, and the application of the expert’s methodology, are questions of weight and not admissibility. These rulings are an incorrect application of Rules 702 and 104(a).” The second change requires that the opinions offered by an expert reliably follow from the expert’s methodology. This is designed to address the problem of expert’s overstating or exaggerating the conclusions that can be drawn from applying a given method.
Expert testimony is critical in most construction, class action, and healthcare litigation cases. Going forward, litigants should expect courts to have a renewed focus on expert admissibility issues and their critical gatekeeping role. Litigants should be prepared for increased attention by courts to threshold expert admissibility questions and be prepared to establish and/or challenge that admissibility. Litigants should also be wary of case law that incorrectly applied the prior version of Rule 702.
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Moore & Lee Delivers Defense Victory in Multibillion-Dollar Class Action for Outdoor Products Manufacturer, Dometic Corp.
Moore & Lee is pleased to announce a decisive victory for client Dometic Corp. Dometic is a leading manufacturer and distributor of outdoor living products, operating 25 manufacturing and assembly sites in 11 countries and conducting sales in approximately 100 countries. Among the products Dometic makes and sells are gas absorption refrigerators, which are uniquely suited for use in recreational vehicles. Over six years ago, multiple putative class actions were filed against Dometic alleging that all Dometic-branded gas absorption refrigerators sold in the United States since 1997 contain a common latent defect that causes them to fail and cause fires. The allegations encompassed millions of refrigerators and sought as much as $2 billion in damages. Led by partner Erica Rutner and associates Rachel Bauer and Zack Rogers, the firm took Dometic to a decisive victory that resulted in all plaintiffs voluntarily dismissing their claims with prejudice. The cases were litigated in trial and appellate courts around the country, including in the Northern and Central Districts of California, the Southern District of Florida, the Eleventh Circuit Court of Appeals, and the Judicial Panel for Multidistrict Litigation. Throughout the course of the litigation, Dometic prevailed at nearly every turn. These victories included entry of summary judgment in one of the first-filed actions, the denial of the plaintiffs’ request for a multidistrict litigation in an unfavorable forum, the granting of Dometic’s motions to transfer and consolidate all remaining cases in Florida, the denial of class certification, and finally the complete exclusion of the plaintiffs’ damages and liability experts. On the heels of the favorable rulings excluding plaintiffs’ experts, all remaining plaintiffs agreed to voluntarily dismiss their claims with prejudice. The final dismissal order came on November 14, 2022. The case is illustrative of the firm’s growing practice and expertise in consumer class actions.
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Virginia Enacts New Law Prohibiting “Pay-if-Paid” Clauses
Beginning January 1, 2023, “Pay-if-Paid” clauses will no longer be enforceable in public and private construction contracts in Virginia. “Pay-if-paid” provisions in construction contracts have long been enforceable under Virginia law. These conditional payment provisions are intended to protect general contractors from the risk of nonpayment by the owner by making the duty to make payment to subcontractors or downstream parties expressly conditioned on receipt of payment from the owner. Enacted on April 27, 2022, Senate Bill 550 is a bill that prohibits contractors on both private and public construction projects in Virginia from including provision in subcontracts that condition payment on the receipt of funds from the owner or high-tier contractor. SB 550 does not, however, prohibit a general contractor from issuing a back charge to a subcontractor for noncompliance with the terms of the subcontract as long as it notifies the subcontractor in writing of the intent to withhold and the reason for withholding payment. This new law is scheduled to take effect January 1, 2023.
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This Settlement Cannot Stand: Eleventh Circuit Rejects $35 Million Class Settlement Citing TransUnion and Article III Standing
In an opinion issued in July 2022, the Eleventh Circuit Court of Appeals vacated an order certifying a class and approving a class settlement after deciding, sua sponte, that the class lacked Article III standing. See Drazen v. Pinto, 41 F.4th 1354 (11th Cir. 2022).
The district court had approved a $35 million dollar class settlement between GoDaddy.com LLC and a putative nationwide class of consumers. GoDaddy sought to resolve allegations that it violated the Telephone Consumer Protection Act of 1991 by sending “robocalls”—automatic, unsolicited calls and texts—to market its services. The putative class was defined to include all persons in the United States who received a call or text message to their cell phone from GoDaddy from November 4, 2014 through December 31, 2016.
A relatively small number of absent class members—approximately 7%—fit within that definition but had received only one unsolicited text message during the class period. Under Eleventh Circuit precedent, however, receipt of a single unwanted text message was not a sufficiently concrete injury to give rise to Article III standing. See Salcedo v. Hanna, 936 F.3d 1162, 1168 (11th Cir. 2019). After ordering further briefing on this issue, the district court, relying on Cordoba v. DIRECTV, LLC, 942 F.3d 1259, 1273 (11th Cir. 2019), determined that only the named plaintiffs were required to have standing. The district court ruled that GoDaddy was, therefore, entitled to settle with the prospective plaintiffs, even if they lacked standing under Eleventh Circuit precedent, because they may have had viable claims under the law of their respective circuits (due to a circuit split). (In dicta, the Eleventh Circuit rejected this line of reasoning outright).
The Eleventh Circuit, citing TransUnion LLC v. Ramirez, __ U.S. __, 141 S. Ct. 2190 (2021), determined that it lacked jurisdiction because the class, as certified, was defined to include members who lacked Article III standing. Therefore, the court could not affirm the district court’s decision to certify the class or approve the proposed settlement. Acknowledging that Cordoba contemplates the possible certification of a class with putative class members who lack standing, the court pointed out that Cordoba also recognizes standing may, in some cases, be “exceedingly relevant” to the certification analysis and, in any event, must be established before relief is granted. Of course, in TransUnion, the Supreme Court ruled, inter alia, that class members must have Article III standing to recover individual damages. Reading those cases together, the Eleventh Circuit found that “[a]ny class definition that includes members who would never have standing under our precedent is a class definition that cannot stand.”
Drazen underscores the importance of analyzing whether the named plaintiffs and every absent class member has Article III standing at every stage of the litigation. This decision could have broad implications for not only TCPA class actions but any class action where Article III standing is in question.
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Moore & Lee Expands With New Office in California
Moore & Lee, P.C. is pleased to announce its expansion to the Southern California area, with a new office in downtown San Diego. The California team includes partner Michael P. West and several associates. Mr. West is an experienced and decorated trial lawyer with more than twenty-five years of practice. Moore & Lee, P.C. has decades of collective experience representing large public and private companies in the construction, engineering, government contracts, healthcare, senior care, insurance, gaming, and private equity fields. “We are excited to establish the firm’s California location to better serve and counsel our clients coast to coast prosecuting and defending cases, including class action and general corporate liability matters. Mike and our new team of lawyers bring great expertise within their disciplines and are excellent additions to our firm,” said Charlie Lee, founding and senior partner of Moore & Lee, P.C.. The firm now has offices in metropolitan Washington, D.C., South Florida, New York City, and Southern California.
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Moore & Lee Expands With New Office in Florida
Moore & Lee announced today that it is opening a new office in Fort Lauderdale, Florida. The new office will be located at 110 SE 6th Street, Suite 1980, Fort Lauderdale, FL.
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Attention Contractors – New Defense to Joint Liability Available
By now, most contractors are cognizant of the impact of Virginia Code § 11-4.6. Enacted in 2020, this statute allows general contractors to be liable if their subcontractors fail to properly pay their employees. In 2021, the General Assembly modified this statute and general contractors need to be aware of this revision.
The modified statute provides that a general contractor may provide a “certification” as evidence that they did not know, and had no reason to know, that their subcontractors were not paying their employees properly. The general contractor must obtain this certification, in writing, from their subcontractor, and the certification must be signed by the subcontractor under oath. The certification must also state that the subcontractor and its sub-subs, paid all of their employees all wages due for the work performed on the project. Construction companies should review this newly modified statute and update their subcontracts and lien waivers accordingly.