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Archive for April, 2014

Marijuana Laws Leave Employers Dazed and Confused

Posted on: April 22nd, 2014

By: Frank Hupfl 

Although marijuana remains illegal under federal law, 21 states and the District of Columbia have passed laws permitting marijuana use for medicinal purposes.  Two states, Colorado and Washington, have gone a step further, and legalized the sale and use of recreational marijuana to adults 21 and older.  In just a few short months, Alaskans will have the chance to make their state the third to legalize marijuana.  Whatever your position on the issue might be, the recent trend raises significant issues and questions for employers.

Employers in states allowing marijuana use have been struggling with whether these statutes impact employer policies concerning drug testing and maintaining a drug-free workplace.  The conventional wisdom is that employers are free to prohibit their workers from using marijuana.  Courts in California, Oregon, Washington and Montana—all states that allow medicinal marijuana use—have upheld employer decisions to discharge employees that were medical marijuana patients and failed a drug test.

A plaintiff in Colorado recently argued that his employer’s decision to discharge him for failing a drug test violated the state’s Lawful Activities Statute.  The plaintiff was licensed by the state to use medical marijuana and alleged that he was never under the influence at work.  Colorado, like many states, prohibits employers from taking action against an employee for engaging in lawful activities outside of the workplace.  The state court of appeals rejected the plaintiff’s argument, and held that the state’s “lawful activities” statute does not bar an employer from discharging an employee for failing a drug test, even if the employee uses marijuana for medicinal purposes.  In support, the court found that the Colorado statute did not specify whether an activity’s “lawfulness” was determined by state or federal law, and since marijuana is illegal under federal law, employees that use medical marijuana are not protected from the risk of termination.  This past January, the Colorado Supreme Court granted certiorari.

Notably, Arizona, Connecticut, Delaware, Illinois, Maine and Rhode Island have all placed limits on an employer’s ability to take adverse action against employees based on the employees’ medical use of marijuana.  For example, Delaware prohibits an employer from taking adverse action against a registered medicinal marijuana user for failing a drug test, unless the employee used, possessed, or was impaired during working hours.

Given the relative infancy of decriminalized marijuana laws in most states, very few courts have confronted the issue and it is unclear how courts will treat these cases.  We will, however, continue to keep employers apprised of any developments in this “hazy” area of employment law.

The Flight Level Change Trap: NTSB Cites Boeing Design as Possible Cause of Asiana 214 Crash

Posted on: April 16th, 2014

By: William Ezzell 

Boeing’s 777 is regarded by many as one of, if not the safest commercial airliner ever produced. Up until the tragic accident of Asiana 214 at San Francisco last year, it’s safety record was nearly spotless. On that unfortunate day, a Boeing 777-200ER crashed short of the runway.  181 were injured.  Three lost their lives.  Last month, the NTSB released its Accident Investigation Submission and attributed the crash in part to an autoflight (aka the autopilot) mode known as Flight Level Change. The 777 offers pilots many ways to fly – including descend – the plane. One common mode is LNAV/VNAV – the 777 descends pursuant to the plane’s flight management computers, calculating and executing a descent rate and speed to hold in order to hit certain waypoints at speeds and altitudes input by pilots.  Another way is called Flight Level Change, or FLCH. More on that in a minute.

Commercial airliners’ autoflight systems are made up of two basic components: the autopilot and the autothrottle. Although they are used in tandem, they are two separate systems. Autothrottle does exactly what it says, providing automated control of the engines and throttles to maintain desired speeds and most airlines require that their 777’s have the autothrottle armed at all times. So if the pilot is flying manually, the autothrottle system remains engaged and the 777 in effect tells the pilots “you handle the yoke, I’ll handle the throttle.” Keeping the autothrottle engaged reduces workloads for pilots, lowers fuel costs, and provides an envelope of protection from stalls.  In most of the autoflight modes, if the speed of the 777 drops too low, the autothrottle will “wake up” and through a series of motors (“servos”) and push the throttles forward, increasing thrust and helping the airplane recover. However, there is one mode that does not offer stall protection: FLCH. In FLCH, the 777 will not “wake up” from a slow speed. FLCH is used in the initial descent phase or at times where the plane’s altitude is high. It is an idle thrust pitch mode, generally used to change the 777’s altitude while in cruise, not approach, and is the recommended technique for rapid descents.

Enter Asiana 214. That day, the 777 was a little high above its desired altitude just before entering final approach. The flight data recorder showed that the FLCH mode was then activated. The appropriateness of this action aside, the mode caused the engines to idle and allowed the 777 to descend as quickly as possible. The pilots believed the autothrottle would function through the entire approach to touchdown, meaning that once the 777 reached its desired altitude path (glideslope), the throttles would reengage and provide enough thrust to maintain the landing speed. This is commonly referred to as at “FLCH trap.” When a plane is descending in FLCH mode, if the throttle levers are moved to idle by pilots or computer, the autothrottle goes into a “HOLD” mode and will not move the throttles from the idle position – the servos are disconnected from the throttle levers. So when Asiana 214 approached the runway, its speed kept decreasing, as the throttles were trapped in idle. By the time the pilots realized the problem (or as many argue, their blunder), it was too late and the plane collided with the sea wall.

Make no mistake, the claims against Boeing fall squarely within product liability and this is therefore a case we are following closely here at FMG. There are many questions, for example, is there a better design alternative to this mode? Did Boeing adequately warn pilots and airlines about the potential danger? These questions alone have already garnered significant debate in the aviation industry and will only become more heated as the lawsuits progress. The NTSB report lends significant credence to the core of some of plaintiffs’ claims: design defect and failure to warn. Boeing, rightly so, has strongly denied the claims and placed the blame solely on the shoulders of Asiana’s 214 crew, a subject for a post some other day. In the meantime, this case raises a number of product issues and reignites the ever-present debate human control versus automation.

New Executive Order and Memorandum Regarding Pay Discrimination Enforcement for Federal Contractors

Posted on: April 14th, 2014

By: Joyce Mocek 

Recently, to honor Equal Pay Day, President Obama amended Executive Order 11246 to further prevent workplace discrimination and empower workers to take control over negotiations regarding their pay.   The Amendment is intended to prohibit discrimination or retaliation against “any employee or applicant because such employee or applicant has inquired about, discussed or disclosed the compensation of the employee or applicant or another employee or applicant.”  The Administration has maintained that this Amendment is to create more transparency for federal employees, and to ensure that federal contractors and subcontractors may discuss their compensation without fear of adverse action.

Additionally, on the same day, the President issued a Memorandum directing the Department of Labor to publish proposed regulations within 120 days that will require federal contractors and subcontractors to submit data to OFCCP on their employees relating to pay, race and gender.  The President’s directive is intended to result in the OFCCPs ability to access pay data from contractors and then use the data to conduct focused compliance audits and investigations for potential discrimination.   It is also argued that this will help employers take proactive efforts to ensure fair pay for all their employees.

These developments continue to illustrate the Administration’s focus and support of discrimination enforcement efforts, and reinforces the need for employers to conduct internal in-depth analysis and reviews of their pay systems for potential discrimination so as to avoid future potential liabilities and issues.

NOT IT! The Ability to Apportion Fault Just Got a Little Easier in Georgia

Posted on: April 7th, 2014

By: Katie Dod

“NOT IT!” can be a great childhood (or even adult) phrase to avoid chores or other unpleasantries of life, but it can also be a critically important concept for defendants in premises liability cases when non-party entities may be fully or partially at fault for a plaintiff’s damages.  In the recent case of Double View Ventures, LLC v. Polite, 2014 WL 1227777, the Georgia Court of Appeals clarified the circumstances when defendants can ask a jury to apportion fault to non-parties under Georgia law.  Previously, the Supreme Court of Georgia upheld the constitutionality of Georgia’s apportionment statute which cleared the way for defendants to identify non-parties on a jury verdict form to reduce their own liability.  A defendant, however, is still required to prove a “rational basis” for a jury to apportion fault to that non-party and it was unclear what evidence would be required to meet that burden.  In Polite, the plaintiff established that he was attacked while walking between the property of the apartment complex at which he lived and an adjoining gas station.  A wrought iron fence encompassed much of the apartment complex, but,  in an area where there was a path used by residents to traverse from the complex to the Chevron, all that was present was a wooden gate that was easily breached.  A security expert testified that, in light of prior crime on the property and in the neighborhood, the existence of this wooden gate fell beneath the standard of care required by the apartment complex to keep its premises safe.  It was undisputed that the gate was on the Chevron’s property and that it had been installed by owners of the Chevron though repaired by the apartment complex.  Defendant identified three separate entities which could have been owners of the Chevron, but neither party could conclusively identify the legal entity which owned the Chevron at the time of the attack.  The trial court denied defendant’s request to identify a Chevron entity on the jury verdict form as a potential at-fault party and the jury returned a verdict in favor of plaintiff in which it apportioned no fault to plaintiff’s criminal attackers and 13% fault to plaintiff.  An extended panel of the Court of Appeals held it was error for the trial court to exclude the Chevron entity from the jury verdict form given the facts.  The Court found that a jury issue existed as to whether the Chevron entity had a duty to maintain the gate on its property.  The dissent noted that, given the inability to properly identify the Chevron entity, there was no ability to determine what knowledge that entity had of prior crime on the property and, consequently, no ability to establish that the Chevron entity could be legally at fault for plaintiff’s injury.  The majority countered, however, that given the high frequency of crime in the neighborhood and on the Chevron’s property, there was a question of fact as to Chevron’s knowledge of prior substantially similar crime which should have been resolved by the jury, not a trial court judge.  In other words, the determination as to whether there was a rational basis to apportion fault to the Chevron entity was for the jury, not the judge.  The Court of Appeals also did not find it fatal that the defendant could not specifically identify the Chevron entity as the statute only required defendant to give the best possible identity under the circumstances.

This holding is incredibly helpful to defendants in premises liability cases as it loosens the proof requirements for property owners and managers who seek to apportion fault to a non-party.  A defendant need not meet the same burden to identify a non-party as a plaintiff must meet to recover.  If there is some evidence upon which a jury could rationally rely to find a non-party wholly or partially at fault for a plaintiff’s injury, the jury can weigh that evidence and decide whether to apportion fault and, if so, in what amount.  Defendants still must introduce some evidence to apportion fault to the non-party, and they should be careful in deciding strategically whether to do so if the evidence would also implicate the defendant (such as the existence of well-known high crime in the neighborhood).  Defendants should also be careful as to how this evidence is presented so as to not send mixed messages.  Defendants should not push the issue of apportionment so far as to confused the jury in to believing that the mere existence of crime near a property creates liability for property owners and managers.  It is likely the contours of apportionment will continue to be defined through future litigation, but, for now, one important issue was resolved favorably to defendants.  Plaintiff, however, indicated an appeal is likely, so it is possible the victory could be short-lived, but, at least for now, there is one concept from childhood which may prove critically important to defendants seeking to reduce their liability.

“Advertising on Social Media? Better Watch Your Step!”

Posted on: April 4th, 2014

By: Taryn Kadar 

Social media provides an outlet for politics, sports, connecting with friends, contests, and window shopping. It is only natural that it also provides companies with unique marketing and advertising opportunities to reach consumers. Because of the wide spread influence of social media, companies have been taking advantage of these opportunities, and the Federal Trade Commission (FTC) is frantically trying to keep up with the times.

The latest FTC effort to reach the headlines is its recent attempt to crack down on the viral marketing campaign of the shoe and clothing company Cole Haan.  In a promotional event called the “Wandering Sole Pinterest Contest” Cole Haan encouraged Pinterest users to create their own “My Wondering Sole” board for all the world to see.  Participants of the contest could win a $1,000 Cole Haan gift card if they created a board on Pinterest and “re-pinned” their favorite Cole Haan images to their board.  The FTC considered the resulting posts to be deceptive because the participants were not revealing that they were professing their love for the brand for the chance to win a contest.  The FTC actually initiated regulatory action against the company (in the form of an official warning) to put an end to the “deception.”  In the FTC’s view, if a company’s followers are sharing something on social media because of a chance to win money or gifts, it is essentially a paid endorsement that needs to be affirmatively disclosed.  Just to clarify, the followers/consumers, as well as the company, need to disclose this information.

Many companies, from Fortune 500 to “mom and pop shops” have been using social media to promote a product or their brand. With the rise of social media advertising, and the FTC’s attempts to regulate it, the future of potential insurance claims and coverage for an FTC fine is unclear. Will regulatory action by the FTC trigger coverage under a standard general liability policy as a potential advertising injury?  Could an FTC fine be covered under a cyber-liability endorsement or standalone policy?  What happens when the plaintiff’s bar decides that “deceptive” social media advertising is worthy of a class action lawsuit?  Do exclusions need to be modified to address this new developing issue?

On the other side of the coin, what does the FTC’s position mean for businesses and their social media marketing campaigns?  Tweets, Facebook posts and the like are brief by their nature.  If a promotional contest will now require an 8 paragraph disclaimer, is it worth the risk?

As of now, these are questions without clear answers.  I suspect that the FTC will have to find a way to make peace with the brave new world of social media advertising.  But until then, we must all watch our step.