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FMG Law Blog Line

Archive for April, 2019

Engagement Letters Can Reduce The Risk of a Legal Malpractice Claim

Posted on: April 26th, 2019

By: Greg Fayard

Lawyers often ask: what can I do to reduce the risk of a legal malpractice lawsuit? They can do several things, but a clear, narrowly-tailored engagement letter can certainly help decrease the risk of a claim. Here are some tips on effective lawyer-client engagement letters.

• Treat the letter more as an opportunity to build rapport with the client, and less as a formal, intimidating contract. How the relationship begins often determines how it will end, thereby mitigating the risk of a dispute down the road.

• Specifically, identify who the client is to avoid confusion. For example, an engagement letter can state the client is a corporation while excluding officers, directors and shareholders. Stating who is not the client can be as important as stating who is the client.

• State clearly how long the representation will last. Will it end upon settlement, a plea, a conviction, judgment enforcement, but not an appeal? For transactional matters, will the representation end when funds have been transferred and received or after any monitoring provisions lapse? A well-defined length-of -representation clause can also aid the lawyer in a statute of limitations defense. Statutes of limitation begin to toll on termination of the lawyer-client relationship.

• A good engagement letter should also specify precisely the fees in a matter, how fees are calculated, how fees are different than costs, and who is responsible for costs. Contingency matters should also be precise in terms of the percentage going to the attorney, and if different percentages apply, when those percentages apply. Whether a personal injury attorney is entitled to additional funds upon successfully negotiating a medical lien should be succinctly laid out as well. However, the client should be given the opportunity to consult independent counsel with regard to extra attorney compensation for negotiating a medical lien.

• Most importantly, an engagement letter that specifies the scope of representation can help address any misunderstandings over whether the lawyer was to advise a client on all legal issues faced by the client, or only a specific matter. A general scope of representation clause in an engagement letter can lead to a client believing the lawyer represents the client on all of its legal issues, indefinitely, causing some clients to believe the lawyer has an ongoing duty of representation.

For any questions, please contact Greg Fayard at [email protected].

The EPA Acts, Kind of, on Asbestos

Posted on: April 26th, 2019

By: Koty Newman

On April 17, 2019, the EPA finalized a significant new use rule (“SNUR”) governing asbestos use. The SNUR ensures that any discontinued uses of asbestos will not re-enter the marketplace without the EPA’s review. The EPA explains that this will close a loophole in its regulatory scheme for asbestos. Thus, if a manufacturer or processor would like to reintroduce asbestos into any product that is now free of asbestos, but contained it in the past, the reintroduction of asbestos would be subject to EPA review. Under the SNUR, the following uses for asbestos are examples of uses subject to EPA review: adhesives, sealants, roof and non-roof coatings, cement products, high-grade electrical paper, pipeline wrap, and any other building material. The EPA characterizes these uses as neither ongoing nor already prohibited under the Toxic Substances Control Act. The SNUR keeps prior asbestos prohibitions in place and does not amend them in any way. The SNUR will be effective sixty days after the date it is published in the Federal Register.

Critics of the SNUR say it does not go far enough. The Asbestos Disease Awareness Organization likens the SNUR to a smokescreen, as it only applies if companies wish to reintroduce to the marketplace a product that is already obsolete. The Asbestos Disease Awareness Organization called for a complete ban of asbestos.

The SNUR is not likely to have a great impact on business because industries are already utilizing economically viable products without any significant need for the reintroduction of asbestos. Even so, if a company wishes to reintroduce asbestos to a product, it must notify the EPA at least ninety days prior to initiating manufacturing or processing of the product that falls under the SNUR.

Regarding ongoing uses of asbestos in the United States, the EPA is evaluating those uses in the context of its separate asbestos risk evaluation. Some uses that the EPA is looking at in the context of its risk evaluation, but that are not affected by the SNUR, are sheet gaskets, oilfield brake blocks, and aftermarket automotive brakes/linings. If the EPA finds that a use constitutes an unreasonable risk of injury to health or the environment, the EPA could decide to prohibit the use.

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

Currently pending in the Massachusetts legislature is Bill S.120 entitled “An Act Relative to Consumer Data Privacy”

Posted on: April 25th, 2019

By: Eric Martignetti

The proposed bill defines “personal information” as “information that identifies, relates to, describes, is capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or the consumer’s device.” “Personal information” includes “biometric information.” “Biometric information” is “an individual’s physiological, biological or behavioral characteristics, including an individual’s DNA, that can be used, singly or in combination with each other or with other identifying data, to establish individual identity,” including “imagery of the iris, retina, fingerprint, face, hand, palm, vein patterns, and voice recordings, from which an identifier template, such as a faceprint, a minutiae template, or a voiceprint, can be extracted, and keystroke patterns or rhythms, gait patterns or rhythms, and sleep, health, or exercise data that contain identifying information.”

Under the proposed bill, a business that collects a consumer’s personal information shall, at or before the point of collection, notify a consumer of: (1) the categories of personal information it will collect; (2) the business purpose for which their personal information will be used; (3) the categories of third parties to whom the business discloses their personal information; (4) the business purpose for the third-party disclosure; and (5) the consumer’s right to request a copy of their personal information, the deletion of their personal information, and the right to opt out of the disclosure of their personal information to third parties. Also, a business must include these five items either in its online privacy policy or on its website.

Under the proposed bill, a business shall also make reasonably available to consumers two or more methods, including a link on the home page of its website, for submitting a consumer verified request. Through a consumer verified request, a consumer can request: (1) the specific pieces of personal information the business has collected about them; (2) the sources from which their personal information was collected; (3) the names of third parties to whom the business disclosed their personal information; and (4) the business purpose for third-party disclosure.

The proposed bill applies to a “business” that: (1) “is organized or operated for the profit or financial benefit of its shareholders or other owners”; (2) “collects Massachusetts consumers’ personal information”; and (3) “has annual gross revenues in excess of $10,000,000” or “derives 50 percent or more of its annual revenues from third party disclosure of consumers’ personal information.”

The proposed bill carves out an exception for “a business collecting or disclosing personal information of the business’s employees so long as the business is collecting or disclosing such information within the scope of its role as an employer.” This exception would, in most cases, protect employers from lawsuits brought by employees under the Act.

The proposed bill creates a private right of action for consumers. In a private right of action, a consumer need not suffer a loss of money or property, and they may recover $750 in statutory damages of their actual damages, whichever is greater. A consumer may also recover costs and attorneys’ fees.

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

Amendments make the difference for opioid prescription writers in the recently passed House Bill 551

Posted on: April 25th, 2019

By: Shaun Daugherty

Several years ago in Georgia, the Legislature passed a law requiring anyone with a DEA registration number to enroll and become a user of the Prescription Drug Monitoring Program (“PDMP”) no later than January 2018. For those that did not register, the law read that the prescriber will “be held administratively accountable to the state regulatory board governing such prescriber…” Recently, many of our state regulatory boards started looking to see who had not registered and starting to hold providers “administratively liable.” Generally speaking, this meant getting a disciplinary letter from the board or the Attorney General’s Office citing the violation and the sanctions that were desired. In many cases, this meant a public reprimand in the form of a consent order.

House Bill 551 was introduced in the 2019 legislative session. Originally, the Bill was related to kratom, its prohibition to anyone under 18, and the labeling requirements of packaging. Kratom is an herb that is being studied for its effects on pain relief, depression and anxiety. However, the substance has been used recreationally, can be abused, and is under great scrutiny on the federal and state levels.

Through the process of how a bill becomes a law (thank you Schoolhouse Rock!), House Bill 551 received an amendment which had nothing to do with kratom. The amendment related to the powers of the state regulatory boards when holding a prescriber “administratively liable” for failure to register with the PDMP. For any prior disciplinary actions that had been levied, the Bill indicates that until December 31, 2019, the issuing board shall have the discretion to rescind the same if the prescriber subsequently registered for the database, complied with any other imposed requirements, and has not had other administrative violations in the past. Some would argue that the regulatory boards always had this discretion and the fact that there is now a date where such discretion is withdrawn may create future issues.

In addition, the Bill further restricted the board’s power moving forward by defining “administratively liable” as the ability to provide a warning to the prescriber and/or to impose a fine. The fine is considered administrative in nature and not a form of discipline. Essentially, the Bill appears to take away the power of the boards to publicly sanction or discipline any provider that has failed to register for the PDMP as they were required to do.

The Bill was sent to the Governor for signature on April 11, 2019. If the Bill becomes law, and you have been publicly sanctioned for failure to register for the PDMP, you can petition to have the discipline rescinded. If you received a letter about the desire to sanction your license, but no action has yet been taken, hold tight, you may just get a warning and a fine.

For any questions, please contact Shaun Daugherty at [email protected].