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

Archive for the ‘Tort and Catastrophic Loss’ Category

Coffee, Water, Less Than 20 Minutes

Posted on: June 19th, 2018

SCOTUS KICKS THE CAN ON SHORT BREAKS COMPENSATION

By: John McAvoy

On June 11, 2018, the U.S. Supreme Court refused to entertain the appeal of a Pennsylvania employer that could have resolved the emerging split of authority between the federal appellate courts and the U.S. Department of Labor (DOL) as to the compensability of employees’ short rest breaks.

In American Future Systems, Inc. d/b/a Progressive Business Publications v. R. Alexander Acosta, Secretary, U.S. Department of Labor, the Secretary of Labor filed suit against Progressive Business Publications, a company that publishes and distributes business publications and sells them through its sales representatives, as well as the company’s owner, alleging they violated the Fair Labor Standards Act (FLSA) by paying their salespeople an hourly wage and bonuses based on their number of sales per hour while they were logged onto the computer at their workstations, and by not paying them if they were logged off for more than 90 seconds.

The U.S. District Court for the Eastern District of Pennsylvania previously found that the employer’s policy had violated the FLSA, relying on a DOL regulation which states that “[r]est periods of short duration, running from 5 minutes to about 20 minutes, are common in industry.  They promote the efficiency of the employee and are customarily paid for as working time.  They must be counted as hours worked.”  In so holding, the District Court found that the employer was liable for at least $1.75 million in back wages and damages.

On appeal to the Third Circuit Court of Appeals, the employer argued that that it provided “flex time” rather than “breaks,” which allowed workers to clock out whenever they wanted, for any reason.  In other words, that the employees were not “working” after they logged off of their computers since they could do anything they wanted, including leaving the office.  The appellate court rejected this argument, reasoning that to dock the pay of employees who can’t manage a bathroom sprint is “absolutely contrary to the FLSA,” and affirmed the lower court’s decision.

The Third Circuit’s reliance on DOL regulation was contrary to the holdings of some of the other circuit courts which opted to assess the circumstances of the break in lieu of interpreting the DOL regulation as a bright-line rule that fails to take into consideration the facts of a particular situation.

The employer asked the U.S. Supreme Court to clarify how compensability for breaks should be determined.  Citing the circuit split, the employer posited that the question of break pay should be determined by assessing the circumstances of the break, rather than adopting the DOL regulation as a bright-line rule.  In its reply brief, the DOL fervently defended its regulations and denied the existence of the alleged circuit split, arguing that “hours worked [are] not limited to the time an employee actually performs his or her job duties.”  Unfortunately, this remains an issue for another day as the Supreme Court refused to hear the case and/or resolve the alleged split.

Absent a decision from the Supreme Court to the contrary, employers in Pennsylvania, New Jersey, and Delaware are bound by the Third Circuit’s decision. As such, employers in these states must continue to comply with DOL regulations with respect to the compensability of short breaks.

Fortunately, the applicable DOL regulations are designed to protect employers’ rights. For starters, the regulations recognize that meal periods serve a different purpose than coffee or snack breaks and, as such, are not compensable.  Second, an employer need not count an employee’s unauthorized extensions of authorized work breaks as hours worked when the employer has expressly and unambiguously communicated to the employee that the authorized break may only last for a specific length of time, that any extension of the break is contrary to the employer’s rules, and any extension of the break will be punished.

Although an employer will have to compensate an employee who repeatedly takes unauthorized breaks lasting less than 20 minutes in order to comply with the Third Circuit’s ruling and the applicable DOL regulations, the employer is nevertheless free to discipline the employee for such indiscretions by whatever means the employer deems appropriate, including termination.

Prudent employers should prepare themselves to address such issues through smart planning and proper training of employees, including managers, supervisors and HR personnel to ensure the employer’s break, discipline, and termination policies and procedures comply with all applicable DOL regulations.

Want to know whether your company’s break, discipline, and termination policies and procedures comply with DOL regulations? Let me help. Please call or email me (215.789.4919; [email protected]).

Something Rotten: Spoliation Claims Against a Plaintiff

Posted on: June 15th, 2018

By: Sean Ryan

The Georgia Supreme Court recently clarified that same duty and standard applies to a plaintiff as to a defendant in assessing potential spoliation claims. In Cooper Tire & Rubber Co. v. Koch, 303 Ga. 336 (2018), the Georgia Supreme Court stressed that the duty to preserve relevant evidence is “defined the same for plaintiffs and defendants” and “arises when the alleged spoliator actually or reasonably should have anticipated litigation.” While a plaintiff’s duty to preserve relevant evidence may more often revolve around the actual knowledge of litigation because a plaintiff largely controls when to bring a lawsuit, a plaintiff still “must act reasonably in anticipating whether litigation arising from an injury will occur.” In addressing reasonableness, a court should consider a non-exhaustive list of factors such as the type and extent of the injury, whether fault for the injury is clear, the level of sophistication of the party and familiarity with the likelihood of litigation is similar situations, and whether the party has hired an attorney, expert, or investigator.

In Koch, plaintiff’s husband died following a car accident where a tire tread, manufactured by Cooper Tire, separated from the left rear tire of the husband’s vehicle, allegedly causing the vehicle to strike a guardrail and overturn. The plaintiff allowed the vehicle and three tires without tread separation to be destroyed, saving only the allegedly defective tire. In the ensuing litigation, Cooper Tire moved to dismiss the lawsuit or impose sanctions against the plaintiff for spoliation of evidence.

Using the standard outlined above, the Supreme Court held the trial court did not err in finding the plaintiff did not actually contemplate litigation at the time the car was destroyed and should not reasonably have contemplated litigation. The Court cited the plaintiff’s lack of previous litigation experience, the belief by plaintiff and her husband that he would recover from his injuries, the plaintiff’s lack of investigation into the accident, and the plaintiff’s decision to retain counsel after the vehicle was destroyed. The Supreme Court also credited the fact that plaintiff’s counsel took steps to preserve evidence, albeit fruitless, once hired several weeks later.

What does this mean for defendants in tort cases moving forward? While the Court in Koch did not find the plaintiff’s conduct sanctionable, the case clarifies that a plaintiff must conform to the same standard as a defendant in preserving evidence relevant to their case and that this duty arises independent of the defendant’s duty. The case also sends a clear signal that a plaintiff will be expected to preserve evidence following consultation with an attorney or expert. Such consultation is a fair indicator that plaintiff anticipated or reasonably should have anticipated litigation. Armed with this case law, defendants are in a strong position to demand preservation of relevant evidence, including data from vehicles, cell phone data, and social media data.

If you have any questions or need more information, please contact Sean Ryan at [email protected].

Colorado Limits Risk Transfer for Snow and Ice Management Services

Posted on: June 13th, 2018

By: Josh Ferguson

Colorado becomes the second state to recently pass an anti-indemnity bill regarding snow and ice management service contracts.  The Snow Removal Service Liability Limitation Act has passed in Colorado and been signed into law by the Governor. The Act provides that it is against public policy and void for a snow and ice removal contract to require a snow and ice management service provider or receiver to: (1) indemnify the other for their own acts or omissions; (2) hold the other harmless for their own acts or omissions; or (3) impose a duty to defend the other for their own acts or omissions. Similar legislation is pending in many other states as indicated by Accredited Snow Contractors Association President Kevin Gilbride.

The Accredited Snow Contractors Association has noted several anticipated benefits to this legislation for the snow and ice management contractors. First, prohibiting transfer of contractual defense and indemnity for a property owner or manager’s own negligence, the property owner and/or manager has an increased reason to make sure the roadways and sidewalks are adequately treated.  Additionally, a potential side effect this statute could have is lowering ever increasing insurance premiums for snow and ice removal contractors by avoiding those tenders of contractual defense and indemnity.

For further information or for further inquiries involving hospitality or premises liability law, you may contact Josh Ferguson of Freeman Mathis & Gary, LLP, at [email protected].

Independent Contractor vs Employee Status in the Gig Economy

Posted on: May 31st, 2018

By: Daniel Walsh

As recently noted by FMG’s Connor Bateman, Courts across the country are now reexamining coverage issues stemming from auto insurance policies held by drivers working with Transportation Network Companies (“TNCs”) such as Lyft and Uber.

In Dynamex Operations W. v. Superior Court, 2018 Cal. LEXIS 3152, the California Supreme Court set forth a refined and more inclusive standard on the classification of employees vs. independent contractors in the “gig economy” commonly associated with Lyft and Uber but also extending to various delivery services.   An underappreciated side effect of this decision is the effect upon coverage issues that have been litigated for years throughout California courts.  With a robust gig economy in California, the Courts have seen a high number of general liability cases that have turned upon the Trial Court’s interpretation of employee vs independent contractor status.  This, in turn, has created a high volume of declaratory relief lawsuits centered upon liability coverage for the actions of a gig economy participant, as most insurance policies grant coverage to an employee but deny it to an independent contractor.  With the Court clarifying that distinction in Dynamex, California insurance coverage opinions regarding personal injury liability in the gig economy will now require a new focus and analysis.

If you have any questions or would like more information please contact Daniel Walsh at [email protected].

A House of Cards: Stacking Inferences to Prove Liability

Posted on: May 10th, 2018

By: Melissa Santalone

A Florida appellate court recently reaffirmed Florida’s state law prohibition against stacking inferences in personal injury cases with a reversal of a $1.5 million verdict in a slip-and-fall case against Publix.  In Publix Super Markets, Inc. v. Bellaiche, 2018 Fla. App. LEXIS 4233 (March 28, 2018), the Third District Court of Appeal reversed a trial court’s denial of a directed verdict to Publix at the trial of a case involving slip-and-fall accident at a Miami-Dade County store, holding that proof of liability via the stacking of inferences is impermissible, in contrast to federal case law.

The plaintiff in the case, a 70-year-old woman, alleged she slipped and fell on water in an aisle at a Publix store that she did not observe before the fall.  After she fell, she testified she saw a Publix employee holding a mop nearby, but no evidence was offered that the mop was wet or that water from the mop ever made contact with the ground.  The manager of the store testified the employees at the store used dry rayon mops to clean the floors, and not pre-soaked cotton ones.  Video evidence also showed the only janitor on duty at the time, the only employee whose duty it was to mop the floors, was using a broom and dust pan just prior to the plaintiff’s fall.  The Third DCA noted in its decision that the plaintiff had the burden to prove that Publix either created the dangerous condition that caused her fall or had actual or constructive knowledge of it, an opportunity to correct it, and it failed to do so.  At trial, the plaintiff acknowledged she was not proceeding on a constructive knowledge theory, but on the theory that Publix created the dangerous condition or had actual knowledge of the water on the floor via its employee with the mop.  The jury sided with the plaintiff at trial and awarded her more than $1.5 million, and the trial court denied Publix’s motion for a directed verdict.  In Bellaiche, the Third DCA reversed the lower court’s denial of the motion for directed verdict.  The Third DCA held that “[a] jury may not stack inferences to determine that a party had actual knowledge of a dangerous condition, nor is the mere possibility of causation sufficient to establish liability.  If the only way that a jury can find that a party was negligent is by stacking inferences, ‘then a directed verdict is warranted.’”

In other forums, however, the stacking or pyramiding of inferences is permissible, including in the courts of the Eleventh Circuit, the federal courts in Alabama, Georgia, and Florida.  In Daniels v. Twin Oaks Nursing Home, 692 F.2d 1321 (1982), the Eleventh Circuit found that “[a]ccording to federal law there is no prohibition against pyramiding inferences; instead all inferences are permissible so long as they are reasonable.”  Moreover, in Daniels, the Eleventh Circuit further noted that a directed verdict is not required in instances where the jury may choose between allowable inferences including instances where the inference championed by the plaintiff is no more likely than other possible inferences.  The takeaway here is that litigants in personal injury cases must consider the inferences they or their opposition will ask a jury to draw and whether their chosen forum will allow the stacking of inferences to prove liability.  In some venues, like in Florida state courts, more concrete proof of liability is required.

If you have any questions or would like further information, please contact Melissa Santalone at [email protected].