In a significant ruling on July 9, 2026, the Appellate Division of the Supreme Court of the State of New York addressed a legal malpractice case involving Edward Roberts, LLC and Shipman & Goodwin LLP. The court's decision impacts how damages are assessed in legal malpractice claims, particularly in cases involving regulatory compliance and product sales. This ruling could influence future legal strategies for businesses navigating complex regulatory environments.
The case, Edward Roberts, LLC v. Shipman & Goodwin LLP, originated when Edward Roberts, a company that sells disinfectant products, sought legal advice from Shipman & Goodwin, a law firm. The company engaged the firm in September 2020, during the COVID-19 pandemic, to ensure compliance with regulations regarding the sale of disinfectant wipes. The advice was crucial as it pertained to the Environmental Protection Agency (EPA) and the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA).
Edward Roberts aimed to market disinfecting wipes under the brand name "DisinfeX." Shipman & Goodwin advised the company that it could not use "kill language" on its products until it received an EPA registration number. Following this guidance, Roberts decided to sell the wipes as multipurpose products without any claims of disinfectant properties while awaiting EPA approval. However, complications arose when Walmart canceled its orders and returned the wipes after the EPA ordered an embargo on the products, leading to significant financial losses for Edward Roberts.
The legal dispute escalated when Edward Roberts filed a lawsuit against Shipman & Goodwin, claiming that the law firm provided negligent legal advice that led to the company's losses when Walmart canceled its orders. The case was brought to the Supreme Court, New York County, where Judge Jennifer G. Schecter initially ruled on the matter.
The court ruled on several key points regarding the damages that Edward Roberts could claim. The initial ruling limited the damages to out-of-pocket losses associated with the embargoed products and potential profits from reselling those products to customers other than Walmart or those who canceled their orders. However, Edward Roberts appealed this decision.
In its ruling, the Appellate Division modified the lower court's decision. The court denied Shipman & Goodwin's motion for summary judgment in its entirety, stating, "Supreme Court should not have limited plaintiff's damages to 'out-of-pocket losses associated with the products subject to the embargo notice.'" The judges emphasized that there were unresolved issues regarding the cause of the losses incurred by Edward Roberts.
The court found that while Shipman & Goodwin established that Edward Roberts misrepresented the regulatory status of its products to Walmart, the company raised a valid argument regarding the causation of its losses. The ruling noted that the legal advice provided by Shipman & Goodwin was indeed negligent, which contributed to the EPA's embargo on the products. This negligence was a significant factor in the losses that Edward Roberts faced.
Additionally, the court highlighted that the inability to resell the returned products was primarily due to the EPA embargo, not solely due to the misrepresentation to Walmart. The ruling stated, "the inability to resell the inventory did not arise from its fraud on Walmart, but from the EPA embargo itself." This distinction is crucial as it underscores the complexity of causation in legal malpractice cases.
The ruling also addressed Edward Roberts' claim for lost future profits based on sales to Walmart. The court determined that this claim was not too speculative to support the case. The judges noted that while Shipman & Goodwin pointed out defects in Edward Roberts' expert report, these issues could be addressed later in the litigation process.
The implications of this ruling extend beyond the parties involved. Businesses seeking legal advice on regulatory compliance can take note of how damages are assessed in malpractice cases. The court's decision reinforces the importance of clear communication and accurate representation in legal and business dealings.
Moreover, this case highlights the potential consequences of legal advice in high-stakes situations, particularly during a public health crisis like the COVID-19 pandemic. Companies must be diligent in ensuring compliance with regulations to avoid costly mistakes.
Looking ahead, the ruling sets a precedent regarding the assessment of damages in legal malpractice cases, especially those involving regulatory compliance. It emphasizes the need for courts to carefully evaluate causation and the impact of negligent legal advice on business operations.
As for the future of this case, it remains to be seen whether Shipman & Goodwin will seek further legal recourse or if Edward Roberts will proceed with its claims for damages. The court's ruling leaves open the possibility for further litigation, as the issues of causation and damages will need to be resolved in the lower court.
In conclusion, the Appellate Division's ruling in Edward Roberts, LLC v. Shipman & Goodwin LLP represents a critical moment in legal malpractice law. The decision clarifies how damages can be assessed and highlights the importance of accurate legal guidance in navigating complex regulatory landscapes.