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Archive for September, 2015

The Pros and Cons of Emerging Trucking Apps

Posted on: September 30th, 2015

option 1

By: Matt Grattan and Kevin Stone

Emerging smart phone apps promise to transform the trucking business by offering trucking companies and truck drivers opportunities to maximize capacity, minimize time spent at weigh stations and inspection sites, and improve navigational assistance.  Cargomatic—the Uber of trucking apps—allows local businesses to find trucks in their area that have free space and track delivery.  The benefits are obvious for small businesses that don’t have the time and effort to find trucks and for trucking companies that are seeking to fill empty space in their trucks.  Trucker Path—a Yelp for the trucking world—is an interactive app that provides up-to-date information to help truckers find truck stops, rest areas, parking, and more.  Users provide information and ratings for each location, allowing drivers to determine whether certain stops are open or closed, for example.

On the one hand, these apps promise to improve the day-to-day lives of truckers by offering time-saving services.  On the other hand, as with all mobile apps, there are safety/legal concerns as well.   The main concern for Ted Scott, the director of engineering for the American Trucking Association (“ATA”), is the potential for distracted driving, an issue that has plagued the trucking industry for years. A 2007 Federal Motor Carrier Safety Administration study revealed that in 81% of safety critical events (crashes, near-crashes, unintentional lane deviations) involving commercial motor vehicles, driver distraction was a contributing factor. Because most of the mobile apps will need to be on while a trucker is driving, the ATA is justifiably concerned about drivers taking their eyes off the road. Even though several laws and regulations addressing distracted driving currently exist, trucking companies and regulators have found it increasingly difficult to enforce them.

An additional benefit the trucking industry anticipates from these mobile apps—an increase in the number of truck drivers—may also exacerbate another existing problem: a shortage of parking for truck drivers. According to a study by the Federal Highway Administration, 75% of truck drivers and 66% of logistics personnel reported regularly having problems finding safe parking when it was time to rest. That number increases to 90% for truck drivers looking for available parking at night. The lack of parking may force truckers to exceed the maximum allowable amount of driving hours while searching for parking and even park (often illegally) on road shoulders, a dangerous practice that law enforcement and safety regulators cite as a critical issue facing the trucking industry. Trucker Path, however, could help with this, as it provides up-to-date information to help truckers find parking.

The potential problems associated with these mobile apps are nothing new—trucking companies have tried for years to prevent drivers from using cell phones and to provide better routes to improve a driver’s chances to find parking. But to benefit from these new technologies, while at the same time keeping safety as a top priority, trucking companies may need to look into utilizing voice recognition technology or preventing drivers from using these apps while their vehicles are traveling over a predetermined speed.

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Marc Bardack – Transportation Team Chair
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Wayne Melnick – Transportation Team Vice-Chair
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Abby Vineyard – Associate
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Matt Grattan – Associate
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When Kickstarters Stall: Liability for Failed Project Funding

Posted on: September 16th, 2015

 option 1By: Wayne S. Melnick

By now, most people are familiar with the concept of crowd funding. Sites like Kickstarter, Indiegogo, and Gofundme exist to allow people to alternative sources of funding that prior to the internet were simply unavailable.

In a nutshell, crowdfunding sites allow people to describe a project they are seeking funding to pursue, and post as much or as little information about how far the project has proceeded to date, while allowing people to pledge monetary amounts to fund the project in return for getting different levels of “rewards” related to the project.

Normally, if the project does not meet its funding goal, then the pledge is discarded and nothing happens. If the project meets its funding pledge goal, the contributors’ credit cards are charged and the money pledged goes to the project developer (with a cut to the funding site) to bring the project to fruition.

In theory and practice, this is a great idea. But what happens when a project successfully funds, but is never completed?

In 2014, the Washington State Attorney General filed a first-of-its-kind lawsuit against the creators of one such failed project. In that case, the Washington AG’s office sought to recover the pledged funds of people who backed the never completed “Asylum Playing Cards” game funded via a Kickstarter campaign in 2012. The AG’s office alleged the project creators took consumer money and failed to deliver the promised playing cards and other rewards to these project backers.

Recently, a Washington State Court ruled against the project creators and ordered that $54,851 be paid in civil fines, fees, and restitution back to the backers of the crowdfunding campaign. Specifically, the court ordered the project creators to pay to pay their 31 backers in Washington a total of $668 in restitution, as well as $23,183 in legal fees and  $31,000 (one thousand dollars for each Washingtong-pledge not met) in civil penalties for violating the state Consumer Protection Act.

The ramifications of this decision are not yet know. The complexities of personal jurisdiction were not even contemplated by the court because the AG’s office sought only to recover the pledges of Washington citizens. Even then, insurers and attorneys should take heed of this decision and crowdfunding is a multi-million dollar business and is only expected to grow. The potential liability for not only these sites, but the project creators who fail to deliver on their funded projects raise interesting questions related to the potential insurance coverage available for claims related to funded projects that are never delivered or completed.

Georgia’s Garnishment Statute is Seized by a Federal Court

Posted on: September 15th, 2015

option 3By: Brad Adler and Michael Hill

What happens when you obtain a money judgment against someone and they refuse to pay? Unfortunately, it is not that uncommon an occurrence. The good news for a long time has been that, if the losing party happens to have a bank account or earns wages in Georgia, the prevailing party could try and collect on the judgment by initiating garnishment proceedings for monies in the bank account or for wages paid to the debtor by his or her employer. Last week, however, a federal court in Atlanta held Georgia’s garnishment statute, which has been around for decades, to be unconstitutional on its face because, in the court’s view, it permits a state actor to take someone’s money without due process of law. See Strickland v. Alexander, No. 1:12-CV-02735 (N.D. Ga. Sept. 8, 2015).

            What exactly is wrong with Georgia’s post-judgment garnishment procedures? According to the court in Strickland: (1) there is no requirement that the debtor be informed that certain money or property may be exempt from garnishment; (2) there is no requirement that the debtor be given notice of the procedures available for claiming such an exemption; and (3) there is no requirement that the debtor be afforded a hearing on an exemption claim within a certain time frame. Tony Strickland, the plaintiff in the case, had his worker’s compensation settlement seized in a garnishment action after his credit card company obtained a default judgment on his unpaid credit card debt. The problem is that compensation funds are exempt from garnishment. Although Mr. Strickland’s money was eventually returned to him, the process took almost four months during which his account was frozen and he had to rely on the financial assistance of family members.

Interestingly, as the creditor pointed out to the court, there already exists precedent from the Supreme Court that due process does not require any notice or opportunity to be heard to be afforded the debtor before issuing a writ of garnishment because the debtor already had his “day in court” in the underlying action on the merits. See Endicott-Johnson Corp. v. Encyclopedia Press, Inc., 266 U.S. 285, 287, 45 S. Ct. 61, 62-63 (1924). But the Strickland court held that Endicott-Johnson had been effectively abrogated by more recent due process decisions that employ a “balancing analysis” before determining whether the deprivation of property violates due process. Essentially, the Strickland court found the balancing analysis to come out in Mr. Strickland’s favor. The court also noted that its decision was in line with rulings from the First, Second, Third, Fourth, and Tenth Circuit Courts of Appeals that addressed the same issues.

Now, as a result of the ruling in Strickland, the Gwinnett County Clerk of Courts (the defendant in the suit) is permanently enjoined from issuing any more garnishment summonses under the current state procedures. While this ruling technically applies only to Gwinnett County, there is an obvious risk that a similar legal challenge brought in another county will succeed on the basis of the federal court’s reasoning. Moreover, Gwinnett County is a favored garnishment venue for creditors in Georgia. While it may be just one of Georgia’s 159 counties, Gwinnett County has accounted for at least 20% of all garnishments in the state since 2010, reaching as high as 37% in 2013. In 2014, the total number of garnishments in Gwinnett County rose by 12%.

Right now, both creditors and the lawyers that historically have relied on garnishments to collect on judgments are scrambling to determine the next step.   Some commentators have opined that a temporary workaround is for the creditor, when pursuing a garnishment, to independently notify the debtor of the money or property that may be exempt, the procedures for claiming an exemption and offer to participate in a hearing if there is a dispute about the exemption. It is, however, uncertain whether such an action would cure the constitutional defects that the Strickland court identified so choosing this route is not without potential legal peril. Others have concluded that these defects only can be cured by action of the Georgia legislature and, thus, the Strickland decision has brought the garnishment process to a screeching halt.

The bottom line is that, unless the Strickland decision is overturned by the Eleventh Circuit Court of Appeals or until the Georgia legislature fixes the statute, we are in a legal quagmire.

Stall Protocol: What Employers Need to Know about Restroom Access To Transgender Employees

Posted on: September 15th, 2015

— Chris AyersBy: Jennifer L. Ward, Esq.

Under the Occupational Safety and Health Administration’s (“OSHA”) standards, employers are required to provide their employees with restroom facilities. Until recently, this requirement left employers wondering whether they could deny a transgender employee the right to use a bathroom that is consistent with their “gender identity.”

Quick answer: No.

On June 1, 2015, OSHA published a “Guide to Restroom Access for Transgender Workers.” The Guide provides that all “employees, including transgender employees, should have access to restrooms that correspond to their gender identity.” If a person identifies himself as a man, he should be allowed to use the men’s restroom. If a person identifies herself as a woman, she should be allowed to use the women’s restroom. In the alternative, an employer, for all of its employees (transgender or not), may provide for 1) single-occupancy gender neutral (unisex) facilities or 2) use of multiple-occupant, gender-neutral restroom facilities with lockable single occupant stalls.

Employers should be wary of restricting restroom access to a transgender employee. In April 2015, the Equal Employment Opportunity Commission (“EEOC”) ruled that denial of restroom access to a transgender employee constitutes sex discrimination under federal law. The EEOC ruled that, “a transgender employee cannot be denied access to the common restrooms used by other employees of the same gender identity, regardless of whether the employee had any medical procedure or whether other employees may have a negative reaction to allowing the employees to do so.”

            Stall Protocol: Employees, including transgender employees, should have access to restrooms that correspond to their gender identity. Employers should be guided accordingly.

Ashley Madison Hack Raises Questions of Insurable Loss

Posted on: September 10th, 2015

Woman Listening As Her Boyfriend Whispers SomethingBy: Jessica Samford

By now most everyone should be familiar with the frenzy surrounding the recent hacking of the Ashley Madison website, making headlines due to its risqué premise—adultery. Hackers known as the “Impact Team” made available for download account data such as email addresses associated with website accounts, and the full impact so far is yet to be determined. Not only are there personal and financial data breach concerns, but there is also significant potential for reputational and invasion of privacy harm. It has been reported that there was no verification of email addresses used to create accounts, so some email addresses may even be on the list as a result of identity theft. Further, there have been news reports of a significant number of resignations in religious communities, as well as some reports of suicides related to the incident. When and where will the impact end?

This brings us to the next installment of the insurance law blog’s glossary of key insurance concepts. The first installment explained the “fortuity” principle behind insurance policies in that there be risk of an unanticipated event and that normally there is no insurable risk if the loss is already known to have occurred. The example provided was a man who bought car insurance after he had a car accident. In exceptional circumstances, however, there can still be insurable risk subsequent to a loss when the risk is not of the occurrence of the loss itself, which already happened, but rather, the cost of remediating the loss is the unknown risk. The concept is embodied in “stop-loss” insurance policies and often comes up in the context of environmental spills with unknown impact and cost of cleanup. Usually the impact and cost are projected, and coverage is triggered if costs exceed estimated amounts.

Similarly, the impact and clean-up cost from the Ashley Madison data spill are not yet known and could give rise to continuing and significant loss exposures akin to risks insured against in “stop-loss” policies. Only time will tell how much more expansive potential liability could be, given the unusual privacy and reputational harm at stake. Currently, most cyber liability policies provide coverage based on the occurrence of loss itself (occurrence-based coverage) and cannot be triggered by a known loss. With data breaches on the rise, stop-loss policies may become a viable option or the costs associated with data breaches may become better understood in evaluating and protecting against insurable loss. When businesses are assessing and managing their risks, prevention and prospective insurance protection will always be a more cost-effective strategy.