CLOSE X
RSS Feed LinkedIn Twitter Facebook
Search:
FMG Law Blog Line

Archive for November, 2012

Supreme Court to Rule on Significant Class Action Waiver Case

Posted on: November 20th, 2012

By: Marty Heller

The Supreme Court granted certiorari in an important case with significant implications for the FLSA.  As you may recall, two years ago in AT&T Mobility LLC v. Concepcion, the Supreme Court enforced arbitration agreements that included class action waivers.  Employers hailed this decision, particularly because it allowed employers to avoid FLSA collective actions through the use of arbitration agreements in which employees waive their right to file a collective action.

This month, by granting certiorari in the American Express Co. v. Italian Colors Restaurant case, the Supreme Court will revisit this issue.  The Court will decide whether a plaintiff may avoid enforcement of an arbitration agreement by showing that his or her federal claims cannot be vindicated without the use of a class action case.

This case will allow the Court to review the Second Circuit’s decision in In re American Express Merchants’ Litigation, where the court refused to enforce an arbitration agreement because the plaintiff showed that it was “economically irrational” to bring their federal claims without the use of a class action.

We will keep an eye on this case and keep you informed when the Court rules on this issue.  Justice Sotomayor will not be involved in the Court’s review of this issue because she sat on the Second Circuit panel during the first appeal of this case.

Do You Have a Constitutional Right to Smoke on Public Property?

Posted on: November 9th, 2012

By: Sun Choy

According to the United States Court of Appeals for the Eighth Circuit, there is no constitutional right to smoke on public property.  In Gallagher v. City of Clayton, Missouri, the court rejected plaintiff’s request to declare smoking “a new fundamental right ‘because of tobacco’s ancient traditions in American history’” as well as his other constitutional challenges.  Last month, DeKalb County, Georgia passed a similar ban on smoking in public parks.  Are we seeing a national trend?  If so, will there be more constitutional challenges?  Given the Eighth Circuit’s decision, future plaintiffs who also “ecstatically enjoy[] smoking tobacco products” while on public property will be hard pressed to survive a motion to dismiss.

Statutes Affecting Indemnification Agreements in Construction Contracts

Posted on: November 6th, 2012

By: Kamy Molavi

It is quite common for parties involved in construction projects to include indemnity provisions within their construction contracts. In recent years, a majority of states have enacted anti-indemnity statutes that restrict, modify, or invalidate indemnification agreements in construction contracts. With respect to the degree of fault against which indemnity may be barred, two types of anti-indemnity statutes have emerged across the nation. We refer to them as “sole negligence” statutes and “any negligence” statues.

Nearly half of the state anti-indemnity laws void provisions that attempt to require the indemnitor to indemnify the indemnitee for the indemnitee’s sole negligence or willful misconduct. Indemnity in “sole negligence” states is allowed when the indemnitor and indemnitee are each partially at fault, or a portion of fault can be attributed to a third person. Stated another way, under these statutes an indemnitor may have to pay for the injury even if the indemnitee is 99 percent responsible for the injury. Further, in most states that only invalidate “sole negligence” provisions in indemnity contracts, workers compensation and insurance agreements are not affected by the “sole negligence” indemnity prohibition in the statute. However, several state statutes are silent on these issues. Examples of typical “sole negligence” anti-indemnity statutes are those enacted in Alaska and Georgia.

Several states have enacted versions of a different variety of anti-indemnity statute, referred to as “any negligence” states. This type of anti-indemnity statute voids contract provisions that require indemnification for losses or damages arising out of the indemnitee’s negligence, whether sole or partial. Thus, this type of anti-indemnity statute would necessarily include “sole negligence” prohibitions.  In states that have “any negligence” anti-indemnity statutes, the indemnitee is more restricted from shifting the risk onto a non-negligent party than in “sole negligence” states.

Recent case law addressing anti-indemnity laws has highlighted some of the fine points in the statutes and public policies of the states. One current issue is whether the contract qualifies as a “construction contract” and thus is subject to the state’s anti-indemnity statute.  All of the states that have analyzed this issue recently have decided that the term “construction contract” in the anti-indemnity statutes should be interpreted broadly. Georgia courts, for example, have interpreted the anti-indemnity statute broadly to apply to assignment agreement transferring the maintenance and repair of a residential subdivision to the homeowners association. Likewise, New Mexico has interpreted the applicability of its anti-indemnity statute to encompass maintenance activities in improving a property and agreements for rental equipment to be used in construction activities.

Another recent trend involves the interplay between indemnity and insurance, and specifically those statutes which contain an “insurance savings” clause. These situations arise in states where the anti-indemnity statute expressly prohibits contractual provisions that require the indemnitor to indemnify the indemnitee for the indemnitee’s negligence, and also expressly state that the code section does not affect the validity of an insurance contract and/or any other agreement issued by an insurer. An example of an insurance savings clause is in the Alaska statute that states it does not affect the validity of insurance policies. The interplay between these two statutory provisions has not uniformly interpreted among the various jurisdictions. As one example in a coverage dispute, the Delaware Supreme Court found that despite the public policy against indemnification for someone else’s negligence, whether the indemnification is direct or indirect, the “insurance savings provision” is enforceable. The Delaware Supreme Court stated that insurance companies are sophisticated and should not be able to use the anti-indemnity statute as a shield to decline coverage after it is purchased.

Some states are statutorily silent with respect to the validity of indemnity agreements in construction contracts, but their courts recently have addressed the issue. For example, the Nevada Supreme Court recently found that a party can be contractually required to indemnify another for the indemnitee’s negligence, but only if the contract for indemnity contains “an express or explicit reference to the indemnitee’s own negligence.” Thus, a general statement requiring the indemnitor to indemnify the indemnitee for “any and all claims” is not sufficient in Nevada.

In summary, if a loss arises and any applicable contract contains an indemnification clause, it is imperative for construction contractors and designers, as well as their claims adjusters and attorneys, to carefully review governing statutes and court opinions in order to determine whether the indemnification clause is enforceable, and if so, to establish the types of claims and damages to which the clause may apply.

This article is excerpted from materials for a Defense Research Institute seminar presented in Phoenix, AZ, in September of 2012. For a copy of the complete article, including a chart of various statutes, click here.

When is Medical Care Not an Emergency? Clever Lawyering Finds a Loophole in the Stringent Gross Negligence Standard

Posted on: November 5th, 2012

By: Mike Flint and Laura Broome

In 2005, the tort reform passed by the Georgia legislature included a statute that changed the standard for suing emergency room health care professionals in medical malpractice actions. The statute in essence states that no health care provider who provided emergency medical care in a hospital emergency department, or surgery suite, etc., after the patient has been treated in the emergency room, shall be held liable for an action in medical malpractice unless it is proven by clear and convincing evidence that the physician or health care provider’s actions showed gross negligence. The standard for liability of emergency medical care personnel was changed thereby from ordinary negligence by a preponderance of the evidence to gross negligence by clear and convincing evidence.

Case law further defines the new gross negligence proven by clear and convincing evidence standard as “that degree of care which every man of common sense, however inattentive he may be, exercises under the same or similar circumstances.” In other words, gross negligence has been defined as “equivalent to [the] failure to exercise even a slight degree of care.” “Clear and convincing evidence” is “a more stringent standard than ‘preponderating’ and requires a greater quantum and a high quality of proof in plaintiff’s favor.” As a result of this higher standard, there has been far fewer malpractice lawsuits filed against emergency room professionals.

Despite these hurdles, a recent trial suggests that a jury may be allowed to determine whether emergency medical care was provided in the emergency room, thereby triggering the higher standard in the first place. In the recent case, the plaintiff was presented to an emergency room with severe leg pain, but was sent home with a diagnosis of a skin rash, despite not being able to walk. The plaintiff later returned to the emergency room by ambulance after she was found unresponsive, and was determined to have severe blockage in her leg arteries. The plaintiff’s legs were both amputated below the knees a few days later.

Plaintiff’s counsel argued that the lower standard of ordinary negligence under a preponderance of the evidence standard should apply because the legal definition of emergency medical care does not include non-urgent patients in stable condition. Plaintiff’s counsel claimed that this plaintiff was considered to be a non-urgent patient in stable condition during her first trip to the emergency room.

The judge allowed the jury to decide whether the plaintiff received emergency medical care, and thus whether the gross negligence standard or ordinary negligence standard applied. The jury determined that the care the plaintiff received in the emergency room during the initial visit was not emergency medical care, and thus applied the ordinary negligence standard in the case.  In doing so, the jury further decided the emergency room defendants were negligent in failing to diagnose the plaintiff’s blocked arteries during the initial emergency room visit, and awarded $5 million to the plaintiff in damages.

It will certainly be interesting to see if other courts follow this lead in allowing juries to decide which standard applies.

EEOC to Continue Focus on Systemic Discrimination

Posted on: November 5th, 2012

By: Ben Mathis and Marty Heller

Over the last few years, in both formal policy statements and in many public presentations, the EEOC has emphasized that it’s investigative and litigation focus is on cases involving “systemic discrimination.” In other words, the EEOC has focused on cases where there are “widespread” or “institutional” discriminatory practices. Most often, the EEOC has been very aggressive in cases concerning facially neutral policies which it believes have a discriminatory effect on minorities and individuals in protected classes or in cases where statistical evidence shows that the outcome in hiring or termination cases suggests a practice and pattern of discriminatory decisions. In this regard, the EEOC’s recent interpretive guidance regarding the use of background checks in hiring, released last April, is a concrete example of its efforts to address common employer practices which the EEOC contends lead to a “systemic” discriminatory hiring practice.

The EEOC now has taken another significant step toward implementing its systemic initiative with release of a new “Draft Strategic Enforcement Plan.” The SEP reemphasizes that the EEOC’s “number one” priority will be on systemic recruiting and hiring discrimination. The SEP notes that the EEOC believes it is better positioned to bring claims alleging systemic discrimination than private attorneys because of the EEOC’s access to data and documents regarding hiring and recruiting throughout the country. The EEOC says that it will be taking particular interest in common hiring and recruiting tools such as pre-employment tests, background screens and date of birth screens in online applications.

This renewed emphasis on systemic hiring, and the EEOC’s clear directive that it will devote significant resources to the effort, is clearly a reaction to last year’s Supreme Court decision of Wal-Mart v. Dukes, which ruled that class action bars in arbitration agreements may be enforceable. Many employers following Dukes have instituted arbitration provisions which require all employees to forego civil lawsuits and bring any claims, including class claims, in arbitration instead of court. Thus, the SEP recognizes that the Plaintiff’s attorney bar may well lessen, or in many instances, abandon systemic class claims because they may be subject to a class action bar.

The practical effect of the SEP is that employers can expect to see even more requests from the EEOC for additional information that focus on overall hiring and termination practices. These requests often include statistical information that seems far broader than might be expected in a single employee case and are being seen in many cases where a charging party does not even make such a “class” allegation. In addition, the EEOC expressly has stated that it will begin opening nationwide investigations, with offices from Georgia and the southeast cooperating with other offices in an effort to identify what it believes is systemic discrimination. There is little doubt that the EEOC will continue to increase its “company-wide” investigations.

The SEP also provides for new and additional areas of focus of the EEOC in the coming years, including protecting immigrant and migrant workers in disparate pay, segregation and discriminatory practice claims, and “emerging issues” including ADA issues and coverage of lesbians, gays, bisexuals and transgender individuals under Title VII’s sex discrimination provisions. The EEOC also will increase focus on pregnancy related issues, including refusing accommodations to pregnant women that may be offered to other employees.

Overall, the SEP provides a road map for what employers can expect in the near future with respect to both investigation and litigation. The SEP also likely will result in even bigger changes on the local level for your area EEOC office, because it directs all district offices to develop their own plans by March 31, 2013, identifying their own enforcement priorities. Charges that fall within the national and district plans will then be given “priority” and will be investigated with more emphasis and resources.