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Sticks and Stone Can Hurt People, But Disagreement Between NFL Players Is A Reminder That Words Also Can Hurt Us

Posted on: February 20th, 2020

By:  Jeffrey Hord

In the final minute of last November’s NFL game between the Cleveland Browns and the Pittsburgh Steelers, Browns defensive end Myles Garrett ripped off Steelers quarterback Mason Rudolph’s helmet and swung it at Rudolph, hitting him in the head. This attack drew national attention and resulted in an indefinite suspension for Garrett. Despite the shocking nature of the attack, some early speculation that Rudolph might sue Garrett for battery for the this on-field altercation showed no signs of spilling over into the courts…until now.

Last week, during an interview with ESPN’s Mina Kimes, Garrett repeated a claim that he first made in the days following the November brawl: specifically, that Rudolph had sparked the fight by calling Garrett a racial slur. Rudolph has emphatically denied the allegation and also notes that the NFL investigated Garrett’s allegation and concluded that there was “no evidence to support” his claim.

Now, Rudolph’s attorney has responded to Garret’s latest allegation by suggesting that his client may now sue Garrett for slander. In California – where the interview with Kimes took place – slander involves a false statement by one person about another person which tends directly to injure the victim with respect to his office, profession, trade or business. Rudolph essentially contends that his reputation has been damaged by the accusation that he used a racial epithet.

Interestingly, however, Rudolph may not prevail simply by proving that the allegation is false. Rather, if Rudolph is deemed a “public figure” in the eyes of the law, Rudolph then will have to prove that Garrett also acted with actual malice in making the allegation. Under California law, “actual malice” is a higher standard to meet as it must be proven that the false statement was made with actual knowledge that the statement is false or with reckless disregard for the truth. If the fight that started on the field leads to a legal fight off the field, it will be interesting to see if Garrett tries to push it into the NFL’s grievance system, what evidence Garrett relies upon in support of his allegation, whether a court finds that Rudolph is a “public figure” and how Rudolph may try and use the NFL’s report as evidence that he did not utter the alleged word.

If you have questions regarding defamation or other tort claims, feel free to contact Jeffrey Hord at [email protected].

Pre-Judgment Settlements with the Insured after Claimed Blown Policy Limit Demand

Posted on: February 20th, 2020

By: Tim Kenna

Every once in a while, an insurer contemplates settlement of the insured’s potential bad faith claim following allegations that a policy limit demand lapsed, and that the insurer is liable for any resulting excess judgment and bad faith damages. In Potter v. Alliance United Insurance Company, 37 Cal. App 5th 894 (2019), the trial court had sustained a demurrer to the personal injury judgment creditor’s complaint seeking to avoid a pre-suit settlement of the bad faith claim on fraudulent conveyance theories without leave to amend.  The Court of Appeal reversed finding that the complaint alleged a colorable claim under California’s Uniform Voidable Transactions Act (UVTA, Civ. Code. Section 3439 et sec.  Although there was also a common law claim it was not considered on appeal.).

The Court held that the complaint adequately alleged the elements of a UVTA claim because the bad faith claim was an asset of the insured he could have used to pay down his civil liability, that the complaint adequately alleged he did not receive a reasonably equivalent value for the claim released and that the transfer of the bad faith claim was made for the insurer’s benefit.  The court took the position that reasonably equivalent value is a question addressed in evaluating the merits of the claim against the payment. That can be definitively determined on a decision on the merits. Thus, it is a hurdle to the claim but it is very closely associated with proving the bad faith refusal to settle.

The case is an interesting twist on the judgment creditor’s voluntary and involuntary bankruptcy options in obtaining an assignment of rights from the judgment debtor’s trustee in bankruptcy.

If you have questions or would like more information, please contact Tim Kenna at [email protected]

States are Busy on the Cyber Front

Posted on: February 19th, 2020

By: Amy C. Bender

2020 is off to a busy start, with several states taking action on cybersecurity legislation and issuing other legal updates. Highlights include:

California – California’s Attorney General has issued revised proposed regulations regarding the California Consumer Privacy Act (“CCPA”), which creates consumer rights relating to the access to, deletion of, and sharing of personal information that is collected by businesses. The updates, which are aimed at providing more relief for consumers and clarity to covered businesses, include changes to definitions, notice and other requirements for covered businesses, and consumer rights and requests. The revised proposed regulations are available here and are currently under a public comment period.

Maryland – In the first decision of its kind under Maryland law, a federal court has ruled that a loss of software and data due to a ransomware attack was covered under a business owner’s property insurance policy. Specifically, the court found that the loss qualified as a “direct physical loss of or damage” to covered property (the affected computer server and networked computers) based on the loss of the data and software in the computer system and the loss of functionality to the computer system itself. The court reasoned that the policy did not limit covered losses to tangible property only or to total property losses. The decision is available here.

Massachusetts – The state’s legislature has stalled a proposed consumer data privacy law (available here) that would have imposed notice and disclosure requirements on businesses that collect consumers’ personal information, provided consumers the right to delete and opt out of third-party disclosure of collected personal information, and allowed consumers to sue for violations of the act without having to show any resulting damage. The bill has been sent to a “study order,” where a committee will study it and report its findings.

New York – The Stop Hacks and Improve Electronic Data Security Act (“SHIELD ACT”), available here, amends the state’s existing data breach notification law to require any person or business that owns or licenses computerized data that includes private information of New York residents to develop, implement, and maintain reasonable safeguards to protect the security, confidentiality, and integrity of the private information, including disposal of data. The data security provisions go into effect on March 21, 2020.

Virginia – Similar to Massachusetts, Virginia’s legislature has delayed and referred to study several privacy-related bills, including bills relating to consumer rights regarding access and sale of their personal data, destruction and disposal of records containing personally identifiable information, and collection and safekeeping of biometric data by employers.

Washington – The legislature has introduced a revised version of a proposed law, the Washington Privacy Act (available here), which would apply to certain private business that control or process consumer personal data and that are located within or targeted to residents of the state. The law would provide consumers rights regarding their personal data, impose responsibilities on covered controllers and processors, and regulate facial recognition services. The bill is now scheduled for a public hearing.

Freeman Mathis & Gary’s Data Privacy and Security Practice Group is here to help clients with policies and training. If you have any questions or would like more information, please contact Amy Bender at [email protected].

Striking a Balance: Motor Carriers, Insurers, and the Innocent Motoring Public

Posted on: February 17th, 2020

By: Mallory Ball

Some courts are striking a balance where innocent third parties are injured from the negligence of motor carriers by finding coverage despite the terms and conditions of the insurance policy.  For example, some insurance policies restrict the geographical limits for which coverage is provided.  Specifically, a limitation of use endorsement would provide that insurance applies only while the respective vehicles are operated within 50 miles from the garage location shown on the policy.  Other policies provide coverage for only certain vehicles, like only those autos you lease, hire, rent, or borrow, not including from any of your employees, or autos you do not own, lease, hire, rent or borrow that are used in connection with your business, including autos owned by your employees.

In cases where the geographical limitation was the reason for disclaiming coverage, courts voided the limitation as against public policy.  In one case, the insurer issued a basic automobile policy, instead of a motor carrier policy, with a 50-mile limitation for coverage to the motor carrier insured.  The court determined that because the insured identified as a motor carrier on its application for insurance, the insurer knew of should have known the insured was a motor carrier, and thus, the insurer assumed responsibility to indemnify the motoring public for injuries sustained by the motor carrier’s negligence.  On the other hand, where an insurer issued a motor carrier policy with a 50-mile limitation to a motor carrier, the court held that where the insurer executes the necessary documents to allow a carrier to obtain a certificate to operate as a motor carrier, the insurer is not allowed to deny coverage.

Likewise, some courts look for all ways a vehicle not listed on the policy may meet the policy’s definition of a covered auto in situations where the motoring public was injured by a motor carrier.  For example, at least one court found that the independent owner-operator of a leased tractor-trailer was both an independent contractor of the motor carrier and an employee of the motor carrier in order to find alternative means of coverage for the vehicle not listed on the motor carrier’s insurance policy.  There, the court was motivated by not allowing the motor carrier to escape liability for hiring an uninsured independent trucker.  Other courts are similarly motivated by protecting the innocent motoring public by rejecting arguments that Federal Motor Carrier Safety Administration’s (FMCSA) regulations require strict compliance when determining whether a valid lease agreement exists between a motor carrier and an independent owner-operator.  Those jurisdictions reason that strict compliance would allow the motor carrier to easily escape liability.

While some courts are not willing to find coverage under an insurance policy issued to a motor carrier where the policy’s terms and conditions exclude coverage, they strike a balance by finding coverage under the MCS-90 endorsement.  Where an insurance policy is issued to an interstate motor carrier, the MCS-90 endorsement is attached to the policy in order to show the motor carrier has met its financial responsibility under the FMCSA’s regulations.  The MCS-90 endorsement provides, in pertinent part, “[t]he insurer agrees to pay, within the limits of liability described herein, any final judgment recovered against the insured for public liability resulting from negligence in the operation, maintenance or use of motor vehicles subject to the financial responsibility requirements of the Motor Carrier Act regardless of whether or not each motor vehicle is specifically described in the policy and whether or not such negligence occurs on any route or in any territory authorized to be served by the insured or elsewhere.”  The MCS-90 endorsement also allows an insurer to recoup any money paid under the endorsement from the insured.

In cases where the MCS-90 endorsement is not triggered, some courts apply a “safety net” to the MCS-90 endorsement in order to trigger coverage where (1) the underlying insurance policy to which the endorsement is attached does not otherwise provide coverage, and (2) either no other insurer of the motor carrier is available to satisfy the judgment against the motor carrier, or the motor carrier’s insurance coverage is insufficient to satisfy the federally-prescribed minimum levels of financial responsibility.

Some states have endorsements similar to the MCS-90 that attach to policies issued to intrastate motor carriers.  In at least one case, the endorsement only covered vehicles listed on the policy.  However, the court found coverage under the endorsement for a vehicle not listed on the policy in order to balance fairness to the parties by satisfying public policy, such that the motoring public was compensated for injuries, while also having the insurer pay no more than the liability coverage it agreed to provide the motor carrier under the endorsement.

While not all courts are willing to find coverage under policies that otherwise exclude coverage for injuries arising out of the negligence of motor carriers, for the courts that do find coverage despite the terms and conditions of the policies, there are ways to address the courts’ construction.  It is also important for insurers to know their insureds so that they can anticipate such coverage and otherwise bargain for it.

If you have questions or would like more information, please contact Mallory Ball at [email protected]

EEOC Releases Charge Data And Guess What — Retaliation Is The Most Frequently Filed Claim with the EEOC in 2019

Posted on: February 14th, 2020

By: Brent Bean

The Equal Opportunity Employment Commission recently released its 2019 enforcement statistics.  The EEOC is the administrative agency and gatekeeper for employment law claims asserted under Title VII of the Civil Rights Act of 1964.  The EEOC receives charges of discrimination which typically allege such claims as race, disability discrimination or sex harassment.  Notable among the types of charges the Commission received last year, claims of retaliation were the most frequently filed.  Of the over 72,000 charges the EEOC received in 2019, 53.8% articulated claims for retaliation, the most of any type of claim made.

Awareness that retaliation claims are the most frequently filed charge is important for employers in not only fashioning their workplace policies and procedures, but also in implementing training to avoid such claims.  Retaliation occurs, generally speaking, when the employee engages in some type of protected activity, after which the employer takes adverse employment action again the employee.  Lastly, the employee has to show the adverse action would not have occurred but for the protected activity.  Employers’ procedures for investigating workplace claims of discrimination or harassment, along with their policies for documenting not only those investigations but also employee discipline, are key to defending and defeating retaliation claims.

Also noteworthy, the EEOC’s enforcement numbers decreased in 2019.  The Commission filed  157 lawsuits last year, down from 217 in 2018.  Despite the decreased number of actual lawsuits filed, the EEOC’s statistics indicate that enforcement activity continues at a steady clip.  The takeaway is that employers need to be diligent in implementing and updating their workplace training and management practices.

Finally, EEOC’s 2019 statistics show the number of charges filed alleging LGBTQ-based sex discrimination continues to increase.  These charges grew to 1,868 charges in 2019, up 3% from 2018. The Supreme Court heard oral argument on a trio of LGBTQ-based cases in October 2019 and a ruling on whether these claims are viable under Title VII is expected in late Spring or early summer this year.

If you have any questions about workplace training, handbooks and developing compliant policies and procedures, please contact Brent Bean at [email protected].