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Archive for June, 2020

When Laws Conflict: What Ethics Rule Applies to a California Lawyer Advising On Cannabis?

Posted on: June 30th, 2020

By: Greg Fayard

It goes without saying that a lawyer—from California or elsewhere—shall not counsel a client to do something illegal.

But what about a state law that conflicts with a federal law? For example, federal laws that criminalize the use of marijuana and state laws that don’t criminalize marijuana–how should the lawyer advise a client when laws conflict regarding a subject matter?

Under California’s Rules of Professional Conduct applicable to lawyers, a lawyer can assist a client in complying with California law, but must inform the client when California law conflicts with federal (or Tribal law). The lawyer then needs to discuss the consequences of complying with a California law that runs afoul with another law.

For those lawyers that work in the area of Cannabis law, Rule 1.2.1 is the Rule to follow in California.

If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

Teamwork Makes The Dream Work: Lawyer in Same Firm Allowed To Submit Expert Affidavit On Behalf of Firm’s Client

Posted on: June 30th, 2020

By: Gregory Blueford

In a case of first impression, the Georgia Court of Appeals reversed a trial court’s order granting a motion to dismiss after determining the trial judge improperly dismissed the case because the expert affidavit in support of the complaint was written by a law partner of the filing attorney.

Plaintiff David Mitchell (“Plaintiff”) retained defendant law firm Parian Injury Law (“Parian”) to defend him in a personal injury case. Plaintiff alleges that Parian referred the case out to another law firm without his knowledge, who then failed to notify him of depositions that were trying to be set which ultimately led the court to dismiss the case and impose $1,8000 in sanctions for missing three depositions. Plaintiff further alleges that the first time he saw the complaint was after the dismissal and it did not resemble his actual claims made and appeared that the law firm used a complaint from a different case and simply substituted his name into the complaint.

In 2019, Plaintiff sued Parian and others (collectively “Defendants”) for legal malpractice and submitted an expert affidavit from his attorneys’ legal partner supporting the claims. Defendants moved to dismiss the case on the grounds that Plaintiff had not complied with the Georgia expert affidavit statute. The trial court granted the motion, finding an “inherent conflict between [the partner attorneys] in making the affidavit as a witness and being a member of the law firm” representing Plaintiff.

O.C.G.A. § 9-11-9.1 provides, in relevant part, that in any action asserting a claim for legal malpractice, the plaintiff is “required to file with the complaint and affidavit of an expert competent to testify, which affidavit shall set forth specifically at least one negligent act or omission claimed to exist and the factual basis for each such claim.”

The appellate court reversed the trial court decision, stating that the statute is clear that it “requires only that an affiant in a professional malpractice action be ‘competent to testify’ as to the opinion set forth in his or her affidavit” and that neither the statute nor the Georgia Rules of Professional Conduct regarding attorney-client conflicts serves to bar a member of a firm from testifying for a colleague’s client “provided the testimony will not be adverse to or otherwise conflict with the client’s interests.”

As this is a case of first impression, it remains to be seen how this ruling will play out practically going forward. One could surmise that firms will initially rely on members of their own law firms to submit the necessary affidavit under O.C.G.A. § 9-11-9.1 rather than rely on a hired expert to save costs up front, although it may not be a practical plan of action if the matter is going to actually require a professional malpractice attorney to give testimony later on in the litigation.

If you have questions or would like more information, please contact Greg Blueford at [email protected].

The Pandemic Risk Insurance Act of 2020 is Introduced in Congress

Posted on: June 29th, 2020

By: Wayne Hammack

Since March 2020 the House Financial Services Committee has considered the creation of a federal reinsurance program to provide a safeguard for businesses against future pandemic-related business interruption losses. An early memorandum calling for the creation of the Pandemic Risk Insurance Act (PRIA) has been revised and augmented, and on May 26, 2020 legislation was introduced by Congresswoman Carolyn B. Maloney (D-NY). The PRIA (H.R. 7011) is intended to provide for a transparent system of shared public and private compensation for business interruption losses resulting from a pandemic or outbreak of communicable disease. The legislation has been crafted to protect consumers by addressing market disruptions; to ensure the continued widespread availability and affordability of business interruption coverage for losses resulting from a pandemic or outbreak of a communicable disease; and to allow for a transitional period for the private markets to stabilize, resume pricing of such insurance, and build capacity to absorb any future losses, while preserving state insurance regulation and consumer protections. 

The proposed legislation would create the Pandemic Risk Reinsurance Program (PRRP), a system of shared public and private compensation or business interruption losses resulting from future pandemics or public health emergencies. In introducing the legislation, Congresswoman Maloney stated, “Millions of small businesses, nonprofits, mom-and-pop shops, retailers, and other businesses are being left out in the cold and will never be able to financially recover from the coronavirus crisis because their business interruption insurance excludes pandemics. We cannot allow this to happen again.” 

As drafted, the PRIA defines a “Covered Public Health Emergency” as any outbreak or infectious disease or pandemic for which an emergency is declared on or after January 1, 2021, under the Public Health Service Act, and is certified as a public health emergency by the Secretary of Health and Human Services. Under the PRIA, the PRRP will be administered by the Treasury Secretary, and participation will be voluntary for insurers, who may sign up on an annual basis. Participating insurers will be required to have business interruption policies, including event cancellation, that include coverage for pandemics. 

The PRRP would only be triggered when aggregate insured losses for a covered public health emergency exceed $250 million. Once triggered, the federal share of compensation would be equal to 95% of insured losses that exceed the insurer deductible. The PRIA would set each participating insurer’s deductible at 5% of the value of the insurer’s direct earned premiums during the preceding calendar year. 

The PRIA would provide for a $750 billion cap for federal compensation.  Should losses exceed that cap, the Treasury Secretary is authorized to determine the pro-rata share of insured losses beyond the cap. (In contrast, an early memorandum outlining the PRIA would have capped the amount insurers would have to pay out against a public health emergency at $500 billion per year). Insurers are not prohibited from purchasing reinsurance coverage in the private markets.

The proposed legislation gives the Treasury Secretary the authority to investigate and audit claims and prescribe regulations and procedures. Participating insurers are required to submit information relating to insurance coverage for business interruption resulting from covered public health emergencies, and the Treasury Secretary is required to submit annual reports to Congress on the PRRP.

Since the onset of the most recent coronavirus pandemic, there have been numerous state and federal legislative proposals to expand business interruption coverage to cover pandemic-related losses. For insurers participating in the PRIA as currently drafted, exclusions in effect on the date of enactment of the Act that specifically exclude losses covered under the PRRP would be deemed void, and any state approval of those exclusions would be preempted, unless the exclusion meets certain criteria, such as a written statement from the insured that affirmatively authorizes the reinstatement of the exclusion.

The legislation proposed by Congresswoman Maloney would terminate on December 31, 2027. 

While the proposed legislation has been endorsed by a number of industry groups including Marsh & McLennan Companies, the Retail Industry Leaders Association, and The Council of Insurance Agents & Brokers, among others, the National Association of Mutual Insurance Companies and the American Property Casualty Insurance Association are calling for an alternative approach. Whereas PRIA was modeled after the Terrorism Risk Insurance Act (TRIA), certain participants in the insurance industry have suggested a Federal Pandemic Loss Program as an alternative to PRIA, which as outlined would fully back future losses due to pandemic response initiatives, providing direct funding to businesses through a predetermined formula. 

While there remains significant work to be done to reconcile the competing interests, the introduction of PRIA and other alternative proposals are an indication that federal relief is an inevitability given the catastrophic losses suffered to date as a result of Covid-19 and the potential for a resurgence in the coming months and years.

We will continue monitoring developments related to the PRIA legislation and alternative proposals and provide updates as the legislative proposals move forward. 

If you have questions or would like more information, please contact Wayne Hammack at [email protected].

The Right to Recover Costs

Posted on: June 24th, 2020

By: Dhave Balatero

In California, the right to recover costs is entirely a creature of statute (Murillo v. Fleetwood Enterprises, Inc. (1998) 17 Cal.4th 985, 989) and Cal. Code. Civ. Pro. section 1032 is “the fundamental authority for awarding costs in civil actions.” (Scott Co. v. Blount, Inc. (1999) 20 Cal.4th 1103, 1108.  

The statute states: 

  1. “Complaint” includes a cross-complaint;
  2. “Defendant” includes a cross-defendant, a person against whom a complaint is filed, or a party who files an answer in intervention;
  3. “Plaintiff” includes a cross-complainant or a party who files a complaint in intervention
  4. “Prevailing party” includes a party with a net monetary recovery, a defendant in whose favor is a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who does not recover any relief against that defendant […] Cal. Code. Civ. Proc. section 1032. 

Since the Legislature has not distinguished between types of dismissals in the statute, [the Court] will not read such a restriction into it. “[O]ne should not read into the statute allowing costs a restriction which has not been placed there. ‘In general, a court should not look beyond the plain meaning of a statute when the language is clear and unambiguous, and there is no uncertainty or doubt as to the legislative intent.’” (Crib Retaining Walls, Inc. v. NBS/Lowry, Inc. (1996) 47 Cal.App.4th 886, 890 quoting Teachers Management & Inv. Corp. v. City of Santa Cruz (1976) 64 Cal.App.3d 438, 446.

Therefore, a defendant including a cross-defendant, in whose favor a voluntary dismissal has been entered is a prevailing party for cost recovery purposes. (Cal. Code. Civ. Proc. Section 1032; Brown v. Desert Christian Center (2011) 193 Cal. App. 4th 733, 737-738.). 

Consider the following scenario: Plaintiff names two defendants in its initial complaint. Based on the facts and allegations in the complaint, Defendant A files a cross-complaint for indemnity and contribution against Defendant B. Defendant A/cross-complainant does not conduct any significant discovery in relation to its cross-complaint. Before trial, Defendant A reaches a settlement agreement with Plaintiff.  Defendant A’s settlement is deemed a good faith settlement with the Court pursuant to Cal. Code. Civ. Proc section 877.6 and Plaintiff dismisses Defendant A from the suit. Accordingly, Defendant A dismisses its cross-complaint against Defendant B.

Is Defendant B entitled to seek his/her litigation costs from Defendant A? Yes! Even if the costs are not limited to the defense of the cross-complaint? Yes! It may seem unfair, but as mentioned above, the court will not look beyond the plain meaning of the statute and create restrictions. More and more cross-defendants are seeking cost from cross-complainants and attorneys should be mindful of this growing trend in their litigation plan.

If you have questions or would like more information, please contact Dhave Balatero at [email protected].

OSHA Issues Guidance On Reopening for Non-Essential Businesses

Posted on: June 24th, 2020

By: Hillary Freesmeier

The Occupational Safety and Health Administration, better known as OSHA, has recently released its Guidance on Returning to Work for those businesses that have been deemed “non-essential” during the COVID-19 pandemic.

The Guidance directs a Three Phase approach to reopening and identifies several categories employers should address in their reopening plans. OSHA continues to encourage employers to consider ways in which to utilize workplace flexibility, such as teleworking, and alternative business operations to provide goods and services to customers, such as curbside pickup.

During Phase 1, employers should consider allowing employees to telework when possible and feasible. For employees returning to the workplace, employers should consider limiting the number of people in the workplace and maintain strict social distancing practices. Flexibilities should also be offered for high risk workers and for those whose household members are considered to be at high risk. Non-essential business travel should be limited.

During Phase 2, employers should continue to make teleworking available where possible, but can allow non-essential business travel to resume. Restrictions on the number of people in the workplace can be eased, but moderate to strict social distancing should be maintained. Employers should also continue to accommodate vulnerable workers as they did in Phase 1.

During Phase 3, businesses may resume unrestricted staffing.

Employers should also develop and implement policies and procedures for preventing, monitoring, and responding to any possible emergence or resurgence of COVID-19 in their workplace or community.

All reopening plans should address:

  • Hazard assessment, which should include practices and procedures to determine when, where, how, and to what sources of COVID-19 employees are likely to be exposed to in the workplace;
  • Hygiene, including practices for hand washing, cleaning, and disinfection;
  • Social distancing;
  • Identification and isolation of sick employees, including employee self-monitoring, screening, and isolation procedures;
  • Returning to work after an employee recovers from COVID-19 or has completed a self-quarantine after exposure to a person with COVID-19;
  • Controls for safe work practices, including providing for personal protective equipment based on your hazard assessment results;
  • Workplace flexibility for teleworking and sick leave;
  • Training to ensure employees know how to identify the signs, symptoms, and risk factors associated with COVID-19 and to prevent the spread in the workplace;
  • Anti-retaliation for those who adhere to guidelines or raise workplace safety concerns.

The Guidance also provides that employers may:

  • Conduct worksite COVID-19 testing if done in a transparent, non-retaliatory manner, and
  • Take worksite temperature checks or other health screenings, such as temperature/symptom screening, self-checks, self-questionnaires, etc.; however, employers should ensure these are conducted in a confidential manner as required by the Americans with Disabilities Act
    • Be aware that if you decide to record these results, these records may qualify as medical records under the Access to Employee Exposure and Medical Records standard, which would require employers to retain the results for 30 years and follow confidentiality standards. However, employers may take employee temperature in real time and forgo maintaining records of the results.

Additional Information:

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients.  Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments.  For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER:  The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19.  The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement.  We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG.  An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such.  We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**