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Archive for June, 2016

What’s Uga Worth? The Georgia Supreme Court Provides the Calculus

Posted on: June 30th, 2016

By:  Wes Jackson

Earlier this month, the Georgia Supreme Court clarified the appropriate measure of damages for family pets and other animals that are killed or injured due to a defendant’s negligence. Under the Court’s ruling in Barking Hound Village, LLC v. Monyak, S15G1184, —S.E.2d— (Ga. June 6, 2016), a negligently injured or killed animal’s value is determined by the animal’s fair market value at the time of the loss plus interest and, in addition, any medical and other expenses reasonably incurred in treating the animal. The Court also held that while the sentimental value of the dog to the owners was not an appropriate measure of the dog’s value, certain non-economic factors, such as the dog’s breed, age, training, temperament, and use, were nevertheless admissible.

Perhaps the best way to illustrate Georgia’s top court’s holding will be with an example involving the state’s top dog: Uga, the iconic English bulldog who proudly serves as the University of Georgia’s mascot. If Uga prematurely passed away due to a tortfeasor’s negligence, what factors could a jury consider in determining his value? The jury could not consider Uga’s sentimental worth to his owners or the millions of Georgians who comprise the Bulldog Nation—the Supreme Court’s acknowledgement that “the unique human-animal bond, while cherished, is beyond legal measure,” likely applies to Uga’s immeasurable sentimental value as well. However, that inadmissible sentimental value would likely influence other factors that a jury could consider. For example, Uga’s fair market value is unlike any other dog’s in the state, in that his progeny will likely fetch top-dollar in the market for pure-bred English Bulldogs. Additionally, Uga’s popularity may command a high fee for his presence at Georgia sporting events and related activities. Finally, in light of Uga’s symbolic importance in the state and income-generating potential, a jury would likely find reasonable even the most exorbitant veterinary fees incurred in attempting to cure his hypothetical injury or ailment.

Thus, the Georgia Supreme Court’s holding in Barking Hound Village may preclude an animal’s valuation based solely on its sentimental value to its owner, but it does not shut out non-economic factors completely. The Court’s holding will likely impact the types of evidence that will be submitted to juries in a variety of future cases, including those concerning car accidents, insurance claims, veterinary malpractice, and, as in Barking Dog Village, kennels and other pet-service providers. While other dogs may not be as valuable as Uga, the Court’s calculus leaves plenty of room for dog owners to claim the full value of their lost animals.

“Occurrence” v. “Offense:” Understanding the Trigger of Coverage Under the Standard CGL Policy

Posted on: June 28th, 2016

By:  Mandy Proctor

It is commonly understood in the insurance industry that the standard CGL policy provides coverage for bodily injury and property damage, which is caused by an “occurrence” resulting in loss during the policy period, as well as personal and advertising injury caused by an “offense” committed during the policy period.  “Occurrence” in this context means an “accident, including continuous or repeated exposure to substantially the same general harmful conditions.”  An “offense,” by contrast, generally connotes an intentional act.  The standard CGL policy defines seven specific “offenses,” which fall within the grant of coverage, including, among others, false arrest, detention, or imprisonment, malicious prosecution, and oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services.

These two acts—the occurrence and the offense—are critical to understanding the trigger of coverage under the standard CGL policy, but the significance of when these acts transpire is often misunderstood by both courts and practitioners alike.  Specifically, with respect to coverage for bodily injury and property damage caused by “occurrence,” some mistakenly believe that it is the “occurrence” that must take place during the policy period to trigger coverage.  On the contrary, it is the actual bodily injury or property damage—not the event that caused it—that triggers coverage.  The confusion arises in part because, as a practical matter, the “occurrence” and the damage generally occur at the same time.  But consider the following hypothetical: A roofing company replaces a roof in 2005.  A year later, water leaks through the roof because the roof was improperly installed, causing property damage in the attic.  If the roofing company is insured under a standard CGL policy in 2006, the property damage would trigger coverage under that subsequent policy, even though the “occurrence” that caused it occurred a year earlier.  By contrast, coverage for personal and advertising injury is only triggered if the offense causing the injury is committed during the policy period.  The distinction, though seemingly minute, bears repeating as it can have far-reaching implications.

There is Too Much Foam in My Latte

Posted on: June 23rd, 2016

By:  Seth Kirby

This week a federal judge in California has ruled that a class-action lawsuit against Starbucks can proceed.  The lawsuit alleges that the company has systematical cheated its customers by under filling its latte based beverages.  The plaintiffs argue that Starbucks is deceiving its customers, and saving money in ingredient costs, by failing to fill its latte beverages to the brim with liquid.  Specifically, they allege that a 16 ounce grande latte does not actually contain 16 ounces of liquid, but rather a lesser amount of liquid topped by foam.  Of course, the class-plaintiffs claim that they and all customers who have purchased lattes have been damaged by this deception.

Putting aside commentary about the likely motivation for this type of this type of lawsuit (Hint – Fortune magazine recently reported that the Starbucks mobile app stores about $1.2 billion for their customer’s potential purchases, more than many banks have on deposit).  The lawsuit shines a light on an important concept for insurance coverage analysis – are the damages alleged in the complaint potentially covered by the relevant insurance policy?  The answer to this question will impact whether the suit is entitled to coverage under a liability policy issued to the insured defendant.

Using the Starbucks class action as a example, if the Plaintiffs were only seeking injunctive relief (i.e. a court order forbidding Starbucks from continuing the practice in the future), some liability policies might not provide coverage for the claim as it fails to seek “damages.”  Continuing the analogy, what harm have the plaintiffs allegedly suffered?  There is no allegation of bodily injury, but what about property damage?  Many jurisdictions have held mere economic injury does not constitute property damage as the loss of money is not “physical injury to tangible property.”  Bottom line, if the suit does not allege a covered loss, liability coverage may not be triggered.  Evaluation of the damages alleged and the comparison of those allegations to the policy at issue is a must for proper coverage analysis.

Now, when will someone start a class action regarding the tendency of the baristas to place the lid on top of the cup’s seam?  They leak every time, much to the delight of my dry cleaners.  Maybe there is a conspiracy.

The Ninth Circuit Gets a Mulligan

Posted on: June 22nd, 2016

By:  Brad Adler and Michael Hill

In February, we wrote about the U.S. Department of Labor’s unexpected decision to change the decades-long understanding of the salesman exemption to the Fair Labor Standards Act (FLSA) and the ruling of the Ninth Circuit Court of Appeals that upheld it.  This week, however, in Encino Motorcars, LLC v. Navarro, the Supreme Court vacated that decision and sent the case back to the Ninth Circuit to decide anew.  While car dealerships in the Ninth Circuit are no doubt excited about this second chance, the ruling may come as a disappointment to people on both sides of the issue who wanted the Supreme Court to provide some much-needed clarity and make a decision on the merits.

The issue here is whether service advisors at car dealerships (i.e., the people who interact with the customers and sell repair and maintenance services) are exempt as “salesmen” under the FLSA’s overtime requirement.  The FLSA exemption applies to “any salesman . . . primarily engaged in selling or servicing automobiles” at a covered dealership.  Since at least 1978, the Department of Labor (DOL) has taken the position that service advisors were exempt, and it confirmed this position in its 1987 Field Operations Handbook and a 2008 proposed rule.

Then, in 2011, the DOL suddenly reversed course and, with “barely any explanation” (in the words of the Supreme Court), decided that service advisors would not be exempt.  The Supreme Court thus found that the Ninth Circuit was not entitled to defer to the DOL’s interpretation of the law because the DOL “gave almost no reasons at all” for its interpretation.  Now the Ninth Circuit has to make the decision on its own, without giving any deference to the DOL.

We will continue to monitor this case and provide an update when the Ninth Circuit issues a new decision.  Although the Supreme Court’s majority declined to address the merits of the issue, Justices Clarence Thomas and Samuel Alito indicated in a dissenting opinion that they think the exemption should apply to service advisors.

New EEOC Guidance on Employer-Provided Leave Under the Americans with Disabilities Act

Posted on: June 21st, 2016

By:  Michael Hill

The EEOC recently issued new guidance on employer-provided leave under the Americans with Disabilities Act (ADA), which contains useful information on the EEOC’s focus relating to providing reasonable accommodations for employees with disabilities.  Employers should review their leave policies in light of this new guidance to ensure compliance.

For instance, most employers that offer leave have a certain maximum number of days or weeks that an employee may apply towards leave.  Some employers also require their employees to have worked a certain amount of time (e.g., 30 days) before being permitted to take leave.  The EEOC’s guidance makes clear that such policies cannot stand in the way of an employee with a disability who requires leave as a reasonable accommodation.  Unless doing so would constitute an undue hardship, an employer must consider making an exception to its leave policy and providing additional leave to an employee with a disability if the employee requires it.  This rule applies even if the employer does not offer leave as an employee benefit (but leave provided as a reasonable accommodation does not have to be paid leave).

Another practice that raises a red flag for the EEOC is the “100% Healed Policy,” under which an employee is not permitted to return to work unless he or she is “100%” healed or recovered.  Such policy violates the ADA if the employee at less than 100% is able to perform the necessary functions of the job with or without reasonable accommodation (unless accommodation would pose an undue hardship).  Similarly, not permitting an employee with a disability to return from leave for fear that his or her medical restriction poses a safety risk will violate the ADA unless the employer can show that employee’s disability poses a “significant risk of substantial harm” to self or others.  An employer that wishes to take this position will be expected to back it up with specific facts—not mere assertions—and to show that it considered whether a reasonable accommodation could eliminate this threat.

Sometimes the reasonable accommodation may not be additional leave but reassignment to a different job position.  Here, the EEOC emphasizes that, if an employee with a disability is qualified for another position, and such reassignment would be a reasonable accommodation for his disability, he should not just receive an equal opportunity to compete for that other position—he should receive the position.  This emphasis on not making the disabled employee compete for the job essentially means that he should get the job even if another candidate is more qualified (unless giving it to the disabled employee would be unduly burdensome).  This nuance could present a pitfall to the unwary employer who believes equal employment opportunity is all that is required.  As the EEOC has stated elsewhere, “reassignment means that the employee gets the vacant position if s/he is qualified for it.  Otherwise, [if merely permitted to compete,] reassignment would be of little value[.]”

It is a good practice for employers to review their employment policies periodically to ensure they still are in compliance with the law, particularly on issues where the EEOC has announced its focus.