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Archive for the ‘Tort and Catastrophic Loss’ Category

United States Supreme Court to Decide Whether Georgia Law can be Copyrighted

Posted on: July 15th, 2019

By: Jason Kamp

The United States Supreme Court recently agreed to decide whether the annotations contained in the Official Code of Georgia Annotated (OCGA.) can be copyrighted by the state of Georgia, granting certiorari in State of Georgia, et al. v. Public.Resource.org, Inc., Case No. 18-1150 (S. Ct. June 24, 2019).

As explained by the 11th Circuit Court of Appeals, “In most states the ‘official’ code is comprised of statutory text alone, and all agree that a state’s codification cannot be copyrighted because the authorship is ultimately attributable to the People. Conversely, all agree that annotations created by a private party generally can be copyrighted because the annotations are an original work created by a private publisher. But the annotations in the OCGA are not exactly like either of these two types of works. Rather, they fall somewhere in between — their legal effect and ultimate authorship more indeterminate.” State of Georgia, et al. v. Public.Resource.org, Inc., 906 F.3d 1229, 1232 (11th Cir. 2018).

Unlike most official state codes, Georgia’s official code is annotated with non-statutory text.  This text includes summaries of judicial decisions, editor’s notes, research references, notes on law review articles, summaries of Attorney General opinions and other materials.  “The Code itself makes clear that these annotations are a part of the official Code, stating that the statutory portions of the Code ‘shall be merged with annotations… and [are] published by authority of the state …and when so published [are to] be known and may be cited as the ‘Official Code of Georgia Annotated.’ O.C.G.A. § 1-1-1.”  Id. at 1233.

The annotations are developed by a private party, LexisNexis, according to a contract with the State of Georgia. This contract specifies the type of annotations that appear with the statutory text and requires that LexisNexis present the content in a specific manner.  A state commission supervises the work LexisNexus performs and holds final editorial control. The Georgia legislature then adopts the annotations as their own, merging them with the statutory text in a process similar to passing the underlying laws. The State of Georgia holds the copyrights to the annotations LexisNexus creates.

Litigation over the copyrighted annotations began when a non-profit organization purchased and scanned all 186 printed volumes of the Official Code of Georgia Annotated and posted them to its free website.  The state sued and won in the district court.  Late last year the 11th Circuit Court of Appeals reversed, holding Georgia’s official code annotations are sufficiently “law-like” to be considered a work created by the state and outside the realm of copyrightable material.

The United State Supreme Court does not grant cert to affirm a lower court’s decision nearly as often as it does to reverse.  However, this case resides at the tension point between two American values: equal access to democratic institutions and private property rights.  Perhaps the Court merely wants to weigh in.

If you have questions or would like more information, please contact Jason Kamp at [email protected].

PG&E Reaches $1 Billion Settlement Following California Wildfires

Posted on: June 28th, 2019

By: Jenny Jin

Pacific Gas & Electric Co. recently reached a $1 billion settlement with 14 California local government agencies for the significant losses stemming from the 2015, 2017, and 2018 Northern California wildfires. The civil settlement was reached in a mediation based on allegations that PG&E’s equipment was the cause of the fires.

The 14 government agencies sought damages for destroyed municipal property, damage to infrastructure, and the overtime paid to all of the emergency personnel in response to the fires. The most recent 2018 fire destroyed Paradise, CA and killed 85 people. Paradise is expected to receive $270 million of the settlement, the largest of the 14 government agencies.

In January 2019, PG&E filed for Chapter 11 bankruptcy after it was facing more than $30 billion in potential liability, following the fires. At the time of its bankruptcy filing, PG&E was facing about 700 complaints, including at least five putative class actions for damages related to the fires. This $1 billion settlement payment will be incorporated into PG&E’s reorganization plan when it is filed.

If you have questions or would like more information, please contact Jenny Jin at [email protected].

Third Circuit Rules Against the City of Williamsport in Lawsuit Filed Against Insurance Companies Based on Law Enforcement Policy Coverage

Posted on: June 14th, 2019

By: Michelle Yee

In 2015, there was major news coverage that a former Williamsport police officer pled guilty to involuntary manslaughter and several other charges. This case stems from a fatal automobile accident that occurred between James David Robinson and a Williamsport police officer. The officer was traveling at 101 mph with emergency lights and sirens activated on East Third Street, which has a 35-mph limit. The officer then passed three vehicles, including Robinson’s, and crashed into Robinson’s vehicle which burst into flames when it struck against a utility pole. Robinson’s mother sued the City and the police officer for the officer’s negligence and recklessness, which caused the fatal collision and death of Robinson. After the City unsuccessfully moved to dismiss the constitutional claims, this matter settled for $1,000,000.

The City filed a lawsuit against CNA Insurance and National Fire Insurance Company of Hartford, both of which has a $1 million limit, for refusing to provide more than $500,000 in total to cover for the settlement. This case, City of Williamsport v. CNA Insurance Companies and National Fire Insurance Company of Hartford, was recently heard before the United States District Court for the Middle District of Pennsylvania. The Defendants argued that their liability under the Automobile Policy is limited to $500,000 because the policy covers the “sums [the City] legally must pay as damages” and Pennsylvania law caps the state law tort liability against local agencies at $500,000. The Court rejected this argument and ruled that Defendants cannot dismiss this matter based on the City’s Automobile Policy because the state tort law does not place a liability cap for federal claims against the officer, which must be indemnified by the City. The court agreed with the City.

The City of Williamsport then argued that the Law Enforcement Policy’s coverage for civil rights violation should apply to this settlement. On the other hand, Defendants argued that the policy’s automobile exclusion precludes coverage. The Court held for the Defendants. It reasoned that the City sought to hold the office liable for his conduct while driving and the city is responsible for its supervision and training of its officers. Further, the court interpreted the language of the Law Enforcement Policy, as excluding coverage for damages arising out of the operation of any automobiles in the course of employment. Therefore, the Court dismissed the City’s claims to seek recovery under this policy because the damages were proximately caused by an automobile.

The Court finally dismissed the City’s insurance bad faith claim holding that the City did not allege that the Defendants “knew or recklessly disregarded the lack of reasonable basis when denying the City’s claims,” as required by law. However, the Court noted that this dismissal is without prejudice and the City may amend its Complaint to cure this deficiency.

For more information, please contact Michelle Yee at [email protected].

California Court Rules That Payroll Companies Are Not Liable For Employer’s Wage And Hour Violations

Posted on: April 25th, 2019

By: Michael Shepherd

The California Supreme Court recently provided clarity to payroll companies in Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817. In Goonewardene, Plaintiff alleged claims of negligence and negligent misrepresentation against a payroll company based on wages due that the plaintiff claimed were not paid. The Court refused to impose a tort duty upon payroll companies, and emphasized five reasons for its decision:

First, the Court reasoned that California law already provides employees with a full and complete remedy for any wage loss an employee sustains as a result of the payroll company’s negligent conduct; an employee is entitled to recover in a civil action against the employer the full wages and other significant remedies authorized under the labor statutes.

Second, the Court reasoned that imposing tort liability on a payroll company is not necessary to deter negligent conduct because the payroll company is already obligated under its contract with an employer to comply with labor statutes and wage orders. Consequently, a payroll company would already be subject to liability for breach of its contract with the employer and tort liability would not appreciably increase the incentive for payroll companies to refrain from negligent behavior.

Third, payroll companies have no special relationship with an employer’s employees that would warrant the imposition of a duty of care.

Fourth, the Court reasoned that imposing a duty of care on payroll companies could distort the payroll company’s performance of its contractual obligations. The Court expressed the concern that where the meaning or scope of a labor statute or wage order is ambiguous or uncertain, a tort duty of care to an employee could adversely affect the payroll company’s fulfillment of its contractual obligations to the employer. The potential of greater tort liability may induce the payroll company to place the employee’s interest above those of the employer, to whom the payroll company has a contractual obligation.

Finally, the Court reasoned that imposing a tort duty of care on payroll companies would add an unnecessary and potentially burdensome complication to California’s increasing volume of wage and hour litigation. If a tort duty were imposed, then payroll companies would likely be joined as an additional party in every wage and hour lawsuit. The Court did not find such an increased burden was justified given that an employee can obtain a full recovery for his or her economic loss in a wage and hour action against an employer alone.

Thus, while the Court made clear that payroll companies can be liable to employers if they breach their contractual obligations, they cannot be sued by employees in tort for an employer’s obligations under California’s wage and hour laws.

For any questions, please contact Michael Shepherd at [email protected].

Georgia Court of Appeals Provides Guideline for Drafting Enforceable Exculpatory Clauses in Georgia

Posted on: April 23rd, 2019

By: Bart Gary and Jake Carroll

Exculpatory clauses are terms in a contract that shift the risk of loss to the other party or a third-party, or attempt to limit one’s obligations under a contract. A typical exculpatory clause is a “limitation of liability” provision, which is commonly used in agreements for services—especially professional services, rendered by accountants, architect, engineers and consultants.

Attempts to limit one’s liability to agreed amounts are sometimes challenged in court on the ground that they violate “public policy,” but are nevertheless generally enforceable in Georgia, provided such clauses are “explicit, prominent, clear and unambiguous.”

While these requirements have been addressed in prior appellate decisions, in Warren Averett, LLC v. Landcastle Acquisition Corp.[1] the Georgia Court of Appeals discussed in detail the “prominence” requirement for limitation of liability clauses in a contract for accounting services. The Court observed that a number of factors are considered when evaluating the enforceability of an exculpatory clause or limitation of liability clause:

  • Font. The clause should not be in the same font size used throughout the contract. It should be “capitalized, italicized, or set in bold type for emphasis.”
  • Setoff. The clause should be set off in a separate section that specifically addressed liability or recoverable damages, with a bold, underlined, capitalized or italicized specific heading, such as “Limitation of Liability” or “DAMAGES.”
  • Location. The clause should be in a prominent place within the contract to emphasize the importance of the clause’s limitation on recoverable damages, such as being adjacent to another similarly significant provision or being next to the parties’ signature lines.[2]

These factors should be used as a guide for parties when drafting and negotiating contracts with exculpatory clauses. For example, in construction contracts, the parties should pay close attention to the font and location of indemnity and no-damage-for-delay clauses. In commercial and professional services contracts, common exculpatory clauses that merit close scrutiny address indemnity, limitation of lability, waivers of certain types of damages, and insurance terms.

Finally, while the opinion is helpful as concerns what is not prominent, it does not offer a clear statement of what is prominent. For example, does the font need to be bold, capitalized, and italicized, or will one choice work? In light of the Warrant Averett decision, it would seem that the more factors met, the less risk the clause is found unenforceable.

If you have questions regarding this decision, or any other contract drafting questions, please contact Bart Gary at [email protected] and Jake Carroll at [email protected]. Mr. Gary and Mr. Carroll practice construction and commercial law as members of Freeman Mathis & Gary’s Construction LawCommercial Litigation, and Tort and Catastrophic Loss practice groups as well as representing business and commercial entities in a wide range of disputes and corporate matters involving breach of contract, business torts, and products liability claims.

[1] Warren Averett, LLC v. Landcastle Acquisition Corp., 2019 Ga. App. LEXIS 178, Case no. A18A2117, March 13, 2019. (physical precedent only). Because one judge of the three-judge panel concurred in the judgment, the opinion is limited, physical precedent.
[2] 2019 Ga. App. LEXIS 178 at 9-10 (emphasis by the Court) (internal citations omitted).