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Defense Digest

On the Pulse…Data Breaches and Ransomware Attacks: Getting to Know Marshall Dennehey’s Privacy and Data Security Practice Group

Defense Digest, Vol. 27, No. 4, September 2021

September 1, 2021

by David J. Shannon

Solar Winds, JBS, Kaseya…the list goes on and on each week, as more and more ransomware cyberattacks occur. The public is inundated with announcements of businesses being crippled by data breaches and ransomware attacks by foreign hackers and state-sponsored cyberterrorists. Here at Marshall Dennehey, our Privacy and Data Security Practice Group is focused on helping clients, large and small, in reducing their cyber risk exposures and guiding them through the inevitable incident response, containment and compliance measures that are needed after a data breach or ransomware attack occurs. Our firm is staffed to respond to time critical situations 24-7, and we work with clients to reduce their exposure to the risk and liability that happens when a cyberattack occurs.

Marshall Dennehey has been focused on data breach litigation since 2010, handling hundreds of data breaches and helping clients respond and recover. As we have seen, the rise of criminal ransomware and other data breach attacks can lead to crippling business interruption for businesses throughout the United States. Our ability to provide a customized approach is the key to our success in resolving all types of cyber incidents. We partner with each client, focusing on not only the future defense to litigation or regulatory action, but also the business’s ability to get back up and running as quickly as possible.

Our attorneys have assisted in corporate ransomware attacks where hundreds of thousands of dollars have been at stake. We have also helped smaller businesses, such as health care providers, with data breach mitigation to allow them to treat their patients in an uninterrupted environment.

In Philadelphia, Karen Grethlein and I handle a large portion of this litigation. Karen is a graduate of Johns Hopkins University and Drexel University Thomas R. Kline School of Law, and she has been with us since 2017. She is active in the Pennsylvania Bar Association and is the current president of the Philadelphia Chapter of the National Association of Women in Construction, where she has lectured on cybersecurity in the construction industry. Karen often advises clients of their statutory reporting obligations following a data breach and encourages them to adopt a proactive approach to data security.

R. David Lane, Jr., shareholder in our New York City office, devotes the entirety of his practice to privacy and data security, representing clients through all stages of data breach response, including investigations, compliance with data breach notification laws and regulatory investigations. Accredited by the International Association of Privacy Professionals as a Certified Information Privacy Professional CIPP/US, David routinely advises clients on legal compliance with state, federal, and international privacy and data security laws. He is a graduate of the University of Florida and the University of Florida Levin College of Law.

As chair of the practice group, I have been handling data breach litigation since the practice’s inception more than 10 years ago. When a breach involves the theft or disclosure of trade secrets, or the violation of a company’s social media policy, my experience as leader of the firm’s Technology, Media, and Intellectual Property Litigation Practice Group is put to good use. In this capacity, I am able to provide critical and immediate counsel, including assisting clients in appropriately and effectively communicating with employees who may be suspected of involvement with a breach incident. I am a graduate of Denison University and Widener University School of Law, and I frequently lecture on cybersecurity and data breach topics to insurance and legal audiences.

            As a full-service insurance defense firm, we have assisted health care, education, finance, banking, retail, energy and utility services throughout the United States in responding to data breaches. Our firm has handled these incidents in all 50 states, and also has handled international events. We work with the clients in notifying either a small number of individuals or hundreds of thousands of affected customers or patients. Working with our health care group, we are able to ensure that HIPAA/Hitech compliance occurs. We are able to ensure that educational FERPA regulations are complied with, as well as all financial and banking SEC and FINRA regulations.

Finally, we continue to assist retail entities in complying with the Payment Card Industry-Data Security Standards (PCI-DSS) compliance. With our extensive experience in defending business entities in consumer-related litigation, we have the attorney resources to manage every aspect of a data breach, from the initial scoping calls with forensic companies to class actions lawsuits that are filed by affected individuals.

If worries about cyberattacks keep you up at night, please don’t hesitate to get in touch. We are here to help and look forward to working with you.

*David, a shareholder, chairs the Privacy & Data Security Practice Group at Marshall Dennehey. He may be reached at djshannon@mdwcg.com or 215.5752615.

Defense Digest, Vol. 27, No. 4, September 2021 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2021 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.

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Ohio Supreme Court Holds That a Binding Appraisal Award May Not Be Set Aside Absent Specific Evidence of Manifest Mistake or Fraud

On July 23, 2026, the Ohio Supreme Court issued a rare opinion on the binding effect of an appraisal award in a property insurance policy.  The Court in One Church held: A binding appraisal award will not be set aside unless an error is so palpably wrong that it undermines the intent of the agreement, such as corruption or gross mistake, not a mere error of judgment—To plead a claim of mistake with particularity as required by Civ.R. 9(B), facts alleged in a complaint must constitute the elements of mistake—Allegation that additional, hidden damage was discovered after appraisal award failed to state a claim of mistake that could justify setting aside binding appraisal.  The case arose out of a claim brought by One Church against its insurer, Brotherhood Mutual Insurance Company for roof damage from a storm. Pursuant to the terms of the insurance policy, the parties agreed to submit the matter to appraisal. The two appraisers inspected the building, and both appraisers agreed that the damages were $313,271.98. The insurer paid the agreed appraised amount.  Thereafter, the insured submitted a claim for an additional $206,663.09 in damages. The insured argued that these additional damages were not discovered until after the repairs began, and that they should be permitted to submit an additional claim, even though there had already been a binding appraisal of damages. The insurer refused to pay the additional damages, and the insured sued for breach of contract and bad faith.  In the trial court, the insurer moved to dismiss for failure to state a claim, arguing that the binding appraisal award barred any further claims. The insured took the position that additional hidden damages could not be discovered until after the repairs began, and therefore there was a mutual mistake. The trial court dismissed the case on the insurer’s motion, because there was no “evidence of fraud, misfeasance, or mistake”. The Court of Appeals agreed that appraisal awards are generally binding, but noted that an appraisal award can be set aside for fraud or manifest mistake. The Court of Appeals reversed and remanded the case to the trial court, finding that the insured had pled mistake with sufficient particularity. The insurer appealed to the Ohio Supreme Court. On appeal, the Ohio Supreme Court reversed the Court of Appeals, and reinstated the trial court decision dismissing the case for failure to state a claim upon which relief can be granted. The Supreme Court found that since the insured had already demanded appraisal, and the appraisal award was binding, “something more than error of judgement, such as corruption in the arbitrator, or gross mistake” must be pled with particularity, and proven for the insured to override the appraisal award. Since the complaint did not allege fraud or manifest mistake with sufficient particularity, something more than a mere error of judgment, the complaint was insufficient to state a claim.  The complaint in this case did not challenge the appraisal award. It pled that additional damages were discovered that were not apparent when the appraisal was done. It did not specify “who discovered the damages, how they were discovered, where they were found, why they were previously hidden, or why they rise to the level of a manifest mistake that the “appraiser would have corrected...had it been called to his attention”. Id at ¶22 citing Lakewood Mfg. Co. v. Home Ins. Co. of New York, 422 F.2d 796, 798 (6th Cir. 1970). Cases deciding the effect of appraisal awards are unusual. The Ohio Supreme Court’s decision in One Church relies primarily on 19th century case law for its conclusion. This emphasizes the fact that there is minimal case law deciding the effect of binding appraisal clauses in property insurance policies, and makes this case all the more significant. A lengthy dissent was written by Justice Fisher, who would have affirmed the Court of Appeals decision reversing and remanding the case for a decision on the merits. Of course, the decision works both ways, and an insurer dissatisfied with a binding appraisal award will likewise be without further recourse absent evidence of corruption, fraud, misfeasance, or manifest mistake, which must be pled with particularity. To constitute manifest mistake, “the mistake must be of such character that the arbitrator or appraiser would have corrected it had it been called to his attention.”  Lakewood Mfg. Co. v. Home Ins. Co. of New York, 422 F.2d 796, 798 (6th Cir. 1970).  The majority opinion does not specifically identify what would have been sufficient to plead mistake with particularity, or if the insured could have amended the complaint to overcome the deficiencies. The dissent argues that this was not really a case alleging mistake, but rather a question of contract interpretation. The insured did not challenge the appraisal, but argued that the hidden damage was not part of the appraisal, and the appraisal only covered the known damages.  However, this argument did not carry the day with the majority. 

Thought Leadership

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Jack Slimm and Jeremy Zacharias obtained a favorable decision on behalf of their client in a case centering on the admissibility of expert testimony in legal malpractice actions. In Martin v. Loury, the New Jersey Appellate Division affirmed the exclusion of a plaintiff's legal malpractice expert, holding that the expert's opinions on causation and damages were too speculative to support the malpractice claim. The legal malpractice action arose from an underlying employment dispute involving claims for damages stemming from the breach of an employment agreement. The plaintiff alleged that defense counsel committed malpractice during a second trial by failing to recall the plaintiff as a rebuttal witness after the employer's CEO testified. According to the plaintiff's expert, additional rebuttal testimony would have bolstered the plaintiff's damages claims and led to a more favorable result. Both the trial court and the Appellate Division rejected that theory. The courts found that the expert could not explain how the proposed rebuttal testimony would have altered the outcome of the underlying case or resulted in any additional recoverable damages. Notably, the trial judge in the underlying employment matter had already rejected the CEO's testimony as not credible and had accepted the damages analysis advanced by the plaintiff. The court had also determined that the amount of damages was not genuinely disputed. As a result, the expert's opinion that additional rebuttal testimony would have produced a better outcome was unsupported by the record and based on speculation rather than evidence. The Appellate Division agreed that neither the plaintiff nor the expert could identify any actual damages attributable to the alleged malpractice or demonstrate the required element of proximate causation. The court further upheld the trial court's application of New Jersey's net opinion doctrine, finding that the expert failed to provide the necessary "why and wherefore" supporting his conclusion that the attorney's conduct caused a compensable loss. Because the opinions rested on unquantified possibilities rather than demonstrable facts, they were inadmissible. Key Takeaway for Legal Malpractice Defendants For attorneys and firms defending legal malpractice claims, Martin v. Loury underscores the importance of closely scrutinizing an opponent's expert report on the critical elements of proximate causation and damages. The decision demonstrates that a malpractice claim cannot survive where an expert merely speculates that different litigation tactics might have produced a better result. Instead, the plaintiff must present admissible expert testimony grounded in the record that explains how the alleged attorney error probably changed the outcome of the underlying matter and resulted in measurable damages.

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