EDWARD ROBERTS LLC v. SHIPMAN GOODWIN LLP (2026)

Order, Supreme Court, New York County (Jennifer G. Schecter, J.), entered on or about October 1, 2025, which, to the extent appealed from as limited by the briefs, granted defendant's motion for summary judgment to the extent of limiting plaintiff's damages to out-of-pocket losses associated with products subject to an embargo notice and the profits that might have been made reselling those products to customers other than Walmart or customers that canceled their purchase orders, and otherwise denied the motion, unanimously modified, on the law, to deny defendant's motion in its entirety, and otherwise affirmed, without costs.

In September 2020, during the first year of the COVID–19 pandemic, plaintiff engaged defendant, a law firm, to advise it on compliance issues concerning plaintiff's sale of disinfectant products.  Integral to this advice was guidance on the requirements of the Environmental Protection Agency with regard to disinfectant wipes — in particular, compliance with the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and EPA regulations promulgated under the act.  Plaintiff wanted to import and sell disinfecting wipes under the brand name “DisinfeX,” a name that defendant agreed was permissible.  However, defendant advised plaintiff that under the relevant regulations, products intended for a pesticidal purpose could not be sold with “kill language” — that is, language such as “kills 99.9% of germs” — until it had an EPA registration number.  Plaintiff submitted the paperwork to obtain the EPA approval.  While that approval was pending, plaintiff decided on a “dual track” strategy consistent with defendant's advice – namely, it would immediately begin to sell the wipes as multipurpose wipes, with no kill language, and when the EPA issued the registration number, plaintiff would sell the wipes as disinfecting wipes.

However, Walmart later cancelled its orders and returned the product.  The EPA eventually ordered an embargo of all of the wipes plaintiff had sold, directing plaintiff to recover all wipes and sequester them until exported or destroyed.  The embargo continued until plaintiff received EPA registration in June 2021, but by then, the inventory had either expired or was no longer sellable.  Plaintiff then commenced this action for legal malpractice against defendant, alleging that defendant had given it negligent legal advice concerning its compliance with FIFRA and caused it to suffer losses when Walmart canceled its orders.

Supreme Court should not have limited plaintiff's damages to “out-of-pocket losses associated with the products subject to the embargo notice and the profits that might have been made reselling such products to customers other than Walmart or those that canceled their purchase orders.”  Although defendant established prima facie that plaintiff deceived Walmart about the nature and the regulatory status of the DisinfeX wipes, and that Walmart rescinded its orders from plaintiff as a result of that deceit, plaintiff rebutted defendant's prima facie showing.

Defendant submitted documentary evidence in which plaintiff mischaracterized the regulatory status of the wipes — for example, an email sent to Walmart in September 2020 offering “EPA N Listed Disinfectant Wipes,” as well as later emails characterizing the wipes in the same way.  Moreover, defendant submitted email exchanges between plaintiff and Walmart in which plaintiff stated that the wipes “can” carry a kill claim that could be listed on Walmart.com. These emails prove that plaintiff represented that the wipes were presently able to include kill language, not that they would, in the future, include kill language.  Defendants also submitted a fact sheet given to Walmart, affirmatively stating that the DisinfeX product was “a disinfectant” that was “registered with the EPA.” There is no dispute that this statement was false when plaintiff made it.  Notably, Walmart stated in a February 9, 2021 email that it was returning the product “because of the breach in Representation for the product that we agreed to purchase ․ as well as the breach in the communicated EPA status of the product.”

However, plaintiff raised an issue of fact as to whether its deceit was an intervening, superseding act that severed the causal link between defendant's alleged malpractice — which defendant conceded solely for the purposes of its summary judgment motion — and plaintiff's loss with regard to the Walmart orders (see Hain v. Jamison, 28 N.Y.3d 524, 528–529, 46 N.Y.S.3d 502, 68 N.E.3d 1233 [2016];  Nomura Asset Capital Corp. v. Cadwalader, Wickersham & Taft LLP, 26 N.Y.3d 40, 49, 19 N.Y.S.3d 488, 41 N.E.3d 353 [2015] ).  Specifically, plaintiff's proof raised an issue of fact as to whether defendant's advice was the basis for the information provided to Walmart regarding the regulatory status of the wipes.

Supreme Court correctly denied summary judgment on plaintiff's claims for damages unrelated to the Walmart sales because the record presents issues of fact as to the cause of plaintiff's losses arising from its inability to resell returned products.  As a result of the EPA embargo, plaintiff could not resell some $40 million in inventory that it received back, and the inability to resell the inventory did not arise from its fraud on Walmart, but from the EPA embargo itself.  Furthermore, as already noted, defendant conceded for purposes of its summary judgment motion that its legal advice to plaintiff was negligent, and there is no dispute that the negligent advice caused the EPA embargo.  Thus, the question of causation as to the post-embargo losses is an issue properly left to the trier of fact (see Hain, 28 N.Y.3d at 528–529, 46 N.Y.S.3d 502, 68 N.E.3d 1233).

Finally, plaintiff's claim for lost future profits, based on two months of sales to Walmart, is not too speculative to support the claim as a matter of law (see Ashland Mgt. v. Janien, 82 N.Y.2d 395, 404, 604 N.Y.S.2d 912, 624 N.E.2d 1007 [1993] ).  Although defendant asserts that there are defects in the report of plaintiff's expert, those alleged defects need not be addressed at this stage of the litigation, as Supreme Court made its ruling without prejudice to a later motion in limine challenging the evidence or the expert report.

We have considered the remaining arguments and find them unavailing.