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

Archive for February, 2019

Can Governments be Liable for Mass Shootings under the Constitution?

Posted on: February 11th, 2019

By: Phil Savrin

The recent tragedies of mass shootings have spawned litigation over the civil liabilities of state governments for failing to protect members of the public from harm, particularly when there were advance warning signs that police departments overlooked or ignored. To evaluate whether States can be liable under the Constitution for such conduct we need to reach back 30 years to a decision by the Supreme Court called DeShaney. In that case, county officials had allowed an abused child to remain in a household despite knowledge of mistreatment, after which the boy was left permanently disfigured. In considering a civil rights claim brought on his behalf under the due process clause, the Supreme Court reasoned that the Constitution places limitations on the government’s ability to act and does not affirmatively require it to provide services that benefit the public. It is up to the individuals States to allocate resources to provide for public safety, in other words, as opposed to an obligation mandated by the Due Process Clause. That said, the Supreme Court reasoned that it is only when the State takes some action that puts a person in peril that the Constitution imposes “some corresponding duty to assume some responsibility for his safety and general well-being.”

Cases applying DeShaney’s reasoning are often heart-wrenching, as they tend to involve very egregious injuries that could have been avoided had law enforcement officers acted on knowledge they possessed. The most extreme example applying DeShaney can be found in the Supreme Court’s 2005 decision in Town of Castle Rock, where police officers refused the desperate pleas of a citizen to arrest her estranged husband who had violated a restraining order, resulting in the father’s murder of the couple’s three daughters. These harms could have been avoided had the State acted to intercede, yet it is only when the State by its conduct affirmatively puts the person in danger that the State has a constitutional obligation to protect that individual from harm.

Which brings us to the question of mass shootings such as the incidents at the Pulse nightclub in 2016 where a gunman killed 49 people or the high school in Florida in 2018 where a student opened fire killing 17 persons. In lawsuits that followed, allegations were made that government officials either ignored warnings or intentionally failed to act, thereby violating the constitutional rights of the victims. In both circumstances, however, the federal courts applied DeShaney to conclude that without danger created affirmatively by the State’s conduct, there is no constitutional right to protection where the harm begins and ends with the actions of a private citizen.

The absence of a constitutional claim in these circumstances does not, of course, mean that there can be no remedy of any sort. What these cases hold instead is that any such remedy exists by reference to state law as the federal Constitution is a bulwark against governmental interference in the public arena and is not a guarantor of safety for the citizenry.

If you have any questions or would like more information, please contact Phil Savrin at [email protected].

Cancelling a Financed Policy: Reliance on a Power of Attorney

Posted on: February 8th, 2019

By: Eric Benedict

When a prospective insured is applying for and obtaining coverage, no matter the type of risk, the cost of the premiums is likely to be a foremost concern. To cover the cost of the premium, an insured may choose to seek financing from third-party entities known as premium financing companies. In exchange for agreed upon terms, premium financing companies will pay all or part of the premium due, with expectation that the insured will pay back the loan over time. In an effort to reduce the risk that the premium finance company will suffer a loss as a result of the insured’s default, premium financing companies often require that the insured grant the company a power of attorney to cancel the policy on the insured’s behalf and collect any returned premium in the event of a default. Both the terms of a policy and relevant legal authorities may set forth different requirements for cancellation when the policy is cancelled by the insured than when it is cancelled by the insurer.

As a result of the relationship established between the premium finance company and the insured, an insurer is often placed in the position of receiving a notice of cancellation from the premium finance company on behalf of the insured. In many states, premium finance companies are subject to regulation and some states have set forth specific procedures that a premium finance company must follow when exercising a power of attorney to cancel a policy on the insured’s behalf. To provide certainty to the insurer regardless of whether the premium finance company has complied with statutory or regulatory requirements prior to cancellation, some statutory schemes also provide insurers the ability to rely on representations and cancellations from premium finance companies. Many of the states which have adopted such schemes provide specific conditions under which an insurer is entitled to rely on a notice of cancellation from a premium finance company, thereby shielding the insurer from liability after it cancels a financed policy at the direction of the premium finance company. While many of these schemes contain similar language, the circumstances and conditions under which an insurer may properly rely varies by jurisdiction.

Ultimately, although an insured’s ability to finance an insurance premium may have the effect of widening access to coverage to those who require financing, it is imperative that both the premium finance company and the insured understand their rights and obligations under the relevant statutory scheme. Similarly, it is critical that insurers understand the relevant legal authorities concerning its rights and responsibilities when dealing with an insurance premium finance company which exercises its right to cancel a party on behalf of the insured.

If you have any questions or would like more information, please contact Eric Benedict at [email protected].

District Court in California Certifies a Class of Five Million Against Walmart

Posted on: February 8th, 2019

By: Koty Newman

On January 17, 2019, a Federal District Court in California certified a class of five million Walmart applicants. The Class Representatives allege that Walmart failed to comply with the Fair Credit Reporting Act’s (“FCRA”) disclosure requirements by including extraneous information in its disclosure forms, thus violating disclosure and authorization requirements. The Class Representatives also allege that Walmart obtained investigative reports without informing the applicants of their right to request a written summary of their rights under the FCRA.

For a court to certify a class, the court must find that the proposed class satisfies the four requirements of Federal Rule of Civil Procedure 23(a): numerosity, typicality, commonality, and adequacy of representation. The facts of this case were tailor-made to meet these requirements. The Court noted that with the proposed class of five million applicants and employees, the class would be so numerous that joining all the members would be impracticable. The Court also found that the Class Representatives would adequately represent the class and vigorously prosecute the action on behalf of the class.

The requirements of typicality and commonality overlap to some degree, and the Court found that both were satisfied in this case. The Class Representatives, as applicants to Walmart, were found to be typical of the class because their interests align with those of the class. Finally, the case satisfied the commonality requirement given that every person in the class allegedly encountered similar confusing extraneous material in violation of the Fair Credit Reporting Act during their application process to Walmart. Each class member also allegedly was not informed of his or her right to request a written summary of his or her rights. The Court found these common issues would predominate the adjudication of the case, even though there may be small factual differences among individuals in the class. Thus, the Court held that it made practical sense to certify the class and resolve all of these individual’s problems in one case, rather than five million cases.

The Court also noted that this case presents more than a mere technical violation of the FCRA. The Class Representatives have, in essence, alleged that Walmart accessed their personal information in violation of their protected rights, a concrete harm.

This ongoing case serves as a warning to employers across the United States who conduct background investigations; comply with the FCRA, or you may face the prospect of having all those applicants come back to haunt you in a class action. If you have any questions or need help with an FCRA case, please contact one of our attorneys for guidance.

If you have any questions or would like more information, please contact Koty Newman at [email protected].

New Cybersecurity Trend: Data Security and Disposal Laws

Posted on: February 7th, 2019

By: David Cole & Amy Bender

Tales of data breaches flood our news reports these days. By now, you hopefully are aware that all 50 states have laws requiring persons and organizations that own or maintain computerized data that includes personal information to notify affected individuals, and sometimes the government, in the event of a data breach involving their personal information. (You know those letters you’ve received from hospitals, retail stores, and other companies advising you that they experienced a data breach that may have exposed your personal information? They didn’t notify you out of the goodness of their hearts – it’s the law!)

In the past, these laws have focused solely on notifying affected individuals about compromises to their personal information. Outside of specific industries, such as healthcare or financial services, which are regulated by laws applicable only to them, such as HIPAA and the Gramm-Leach- Bliley Act, respectively, there have not been laws of general applicability regulating the standard of care required for protecting personal information in the first place. Recently, however, a trend has emerged among state legislatures to take this next step in cybersecurity legislation by setting standards for businesses’ protection of consumers’ personal information.

The majority of states now have enacted data security and/or data disposal laws that place affirmative obligations on entities (or, in some instances, certain types of industries) that own or use computer data containing personal information to safeguard and/or dispose of or encrypt that data. Below is a current list of states that have adopted these laws:

(Click here for our discussion of the significant and comprehensive data security law California passed last year.)

Unfortunately, there is not one universal standard for how to secure and destroy data containing personal information, but rather, the standard varies by state. Organizations that operate in multiple states thus may have to comply with multiple and differing requirements. In addition, many of these laws only provide general, and often vague, guidelines that do not specify particular technologies or data security measures that should be implemented. For instance, many laws only require that businesses implement “reasonable” administrative, physical, and/or technical safeguards to protect personal information from unauthorized use or disclosure, and then describe “reasonable” measures as those “appropriate based on the size of the business and the nature of information maintained.” That may be clear as mud, but at least it’s a start and enough to put businesses on notice that doing nothing is not an option.

For these reasons, we recommend that businesses work with legal counsel to understand the laws of the states where they do business and to conduct a security risk assessment to evaluate the information they maintain, the potential risks to it, and the current measures in place to protect it. Working with legal counsel, businesses should then work with an experienced cybersecurity provider to translate that risk assessment into an actionable plan for improving data security and privacy within their organization. The legal standards still might be vague, but going through a process like this will put businesses in the best position to demonstrate good faith and reasonable efforts to meet their legal obligations if and when an incident occurs or a claim is made by a third party.

Please contact David Cole, Amy Bender, or one of the other members of our Data Security, Privacy & Technology team at FMG for additional questions or to discuss conducting a risk assessment for your organization.

998s: The Stealth Policy Limit Demand

Posted on: February 7th, 2019

By: Tim Kenna & Kristin Ingulsrud

In personal injury practice, the claimant’s attorney will sometimes serve a statutory offer to compromise in tandem with service of the summons and complaint. This strategy has a two-fold impact on the case. The first is that if the plaintiff obtains a better result at trial, it may seek costs and prejudgment interest at 10%. The second is that the 998 be relied upon as a policy limit demand. In both cases, the running of the defendant’s time to accept the 998 triggers the consequences of a failure to settle. An insurer’s rejection of a valid policy limit demand can result in extracontractual exposure. Licudine v. Cedars-Sinai Medical Center, No. BC499153, 2019 Cal. App. LEXIS 2*, directly addresses the requirement that an early 998 is only valid if the offer is reasonable under the totality of the facts. The relevant factors are (1) how far into the litigation the 998 offer was made, (2) the information available to the offeree prior to the lapse of the 998 offer, (3) whether the offeree let the offeror know it lacked sufficient information to evaluate the offer, and (4) how the offeror responded. The court struck plaintiffs request for millions in prejudgment interest following a verdict far in excess of the 998 on the ground that it was premature because Cedars had not had an adequate opportunity to evaluate damages.

Licudine is relevant to the 998 used as a policy limit demand. The factors considered by Licudine also apply to the determination of the validity of conditional policy limit demands in general. See Critz v. Farmers Ins. Group (1964) 230 Cal.App.2d 788, 798 (insurer should request additional time to respond to policy limit demand if further investigation of facts needed). Following trial, the results of a motion to tax costs could determine whether the 998 was valid as a policy limit demand. In either event, the case is critical of the premature demand for settlement designed to “game the system.”

If you have any questions or would like more information please contact Tim Kenna at [email protected] and Kristin Ingulsrud at [email protected].