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FMG Law Blog Line

Archive for June, 2012

Supreme Court Rules Pharmaceutical Sales Reps Are Exempt

Posted on: June 21st, 2012

By: Brad Adler 

Great news for employers with sales professionals in the pharmaceutical industry.  The Supreme Court ruled on Monday that pharmaceutical sales people are exempt from the FLSA’s overtime requirements under the “outside sales” exemption.

Previously, federal circuit courts which had ruled on the issue were split because it was not clear whether any product or service actually is “sold” by a pharmaceutical salesman.  The 5-4 decision was authored by Justice Alito.

A copy of the opinion may be found here:  http://www.supremecourt.gov/opinions/11pdf/11-204.pdf

Implications of Wisconsin Recall Vote on Public Sector Unions

Posted on: June 20th, 2012

By: Jason Mitchell

Governor Scott Walker survived June 5th’s recall vote by a margin of 7% or roughly 173,00 votes.  Because public sector union rights played an important role in the recall campaign, the outcome likely will carry significant implications for public sector unions in Wisconsin and, potentially, elsewhere in the United States.

Since legislation that, among other things, limited the collective bargaining rights of public sector unions was passed last year, public sector union membership in Wisconsin has declined sharply.  For example, the American Federation of State, County, and Municipal Employees, which is the largest and fastest growing public services employees’ union in the nation, saw its Wisconsin membership decline by 55% over the past year.

Similarly, the Wisconsin Education Association Council, a teachers’ union, has seen its membership drop from around 90,000 to 70,000.  These numbers appear to represent a departure from a trend in Wisconsin toward public sector union membership at the expense of private sector unions.  In fact, as of 2010, 36.2% of public workers were unionized while only 6.9% of private workers paid union dues.

Because the bargaining rights of public sector unions were central to the campaign, the race may have been an indication of  the role these unions will play in Wisconsin.  Given the outcome, it is reasonable to expect a continued decline in public sector union membership in Wisconsin.  The vote may also prompt other states to enact legislation similar to that enacted by Wisconsin in 2011.  If so, the vote may have similar implications for unions in other states as well.

Retaliatory Hostile Work Environment Claim Recognized by Eleventh Circuit

Posted on: June 18th, 2012

By: Joyce Mocek

In a case of first impression for the Eleventh Circuit, the Court in Gowski v. Peake held that a retaliatory hostile work environment was a viable claim.  The Court also noted that although discrete acts cannot alone form the basis of a hostile work environment claim, the jury could consider discrete acts as part of a hostile work environment claim.  This holding is significant for many reasons, not least of which because the number of retaliation claims continue to increase dramatically.

In its June 2, 2011 decision, the Eleventh Circuit noted in Gowski that it had not yet recognized a retaliatory hostile work environment claim, although every other circuit had.  Thus, the Court held recognizing such a cause of action was consistent with the statutory text, congressional text, and the EEOC’s own interpretation of Title VII.    

The defendants argued that discrete acts alone could not be considered as part of the hostile environment because, where the jury applied the same decision defense, the retaliatory intent was not the “but-for” cause.  The Court stated that although the defendants were correct that retaliation must be the “but for” cause, the same-decision defense did not eliminate causation in a hostile work environment claim.  It held that, although the same-decision defense eliminates but-for causation for each discrete action, it does not eliminate the but-for causation that matters in retaliatory hostile work environment claims.  The Court stated that “allowing the same-decision defense to eliminate but-for causation in a hostile work environment claim would essentially do away with the claim.”

This recent decision shows the continuing trend in the Eleventh Circuit and other circuits toward allowing retaliation claims.  We anticipate that employers will see more and more retaliation claims, and they must continue to properly investigate all allegations of discrimination, harassment, and retaliation.  Employers must also be mindful of the potential ramifications of not properly addressing these claims.

Multi-Million Dollar Jury Award Reduced Because Man Died While Having Sex with Multiple Partners

Posted on: June 15th, 2012

By: Scott Rees

A cardiologist was found liable for failing to warn his patient to avoid strenuous physical activity.  Shortly thereafter, the decedent engaged in strenuous activity — a “threesome.”  The patient died in the act.

The jury awarded the decedent’s family $5 million.  However, the jury decided that the decedent was 40 percent responsible for his own death by participating in the sex act, thereby reducing the award by $2 million.

Morals obviously still play an important and expensive role to juries here in the south, although less than some might have thought given the facts of this case.

Please visit the below link to read more about the trial.

 Jury Awards $3 Million in Man’s Sex Death

The Pitfall of Coverage by Estoppel in Georgia

Posted on: June 7th, 2012

By: Phil Savrin

The Supreme Court of Georgia swept aside many decades of case law recently when it decided that an insurer cannot rely on policy provisions to deny coverage if it defends its insured without reserving its rights.  Before the World Harvest decision, the cases seemed to require that the insured had to show that the insurer had prejudiced the insured’s rights in some fashion.

While the decision may seem harsh to insurers, the Supreme Court made clear that there are no formalities needed for an insurer to reserve its rights, which does not even need to be in writing.  There must be evidence, at a minimum, that the insurer “fairly informed” the insured of the possibility that the claim might not be covered by the policy so that the insured can decide whether to take steps to protect its interests apart from the insurer’s provision of a defense.

Indeed, reservation of rights agreements are just that:  an agreement between the parties that can be negotiated as to the terms of the insurer’s provision of a defense.  The agreement does not even need to be expressly accepted by the insured, as case law holds that the insured is “deemed” to have accepted the terms of the reservation of rights if it allows the insurer to control the defense after having been informed of the potential coverage issues.

A recent decision by a federal judge makes clear that the terms of the reservation of rights can be quite broad, as he enforced a provision that allowed the insurer to recover defense costs paid on the insured’s behalf, after a finding that the claim was not covered by the policy.

What this means is that, in Georgia at least, both insurers and insureds should consider the terms of the reservation of rights at the outset of the case.  For its part, the insurer should include terms that it believes are necessary and reasonable to protect its interests in the event the claim turns out not covered by the policy.  Insureds, on the other hand, should inform themselves of any potential downsides in accepting the terms of a defense under reservation of rights, and either reject or negotiate unwarranted terms before allowing the insurer to control their interests.  Once the defense is underway, the rights of both parties may be set with little relief available thereafter from the terms of the defense, with or without a reservation of rights agreement in place.