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Posts Tagged ‘personal injury’

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].

Yelp Can’t Be Ordered to Remove Defamatory Reviews by A California Lawyer’s Unhappy Former Clients

Posted on: December 3rd, 2018

By: Frank Olah

On July 2, 2018, in Hassell v. Bird (2018) 5 Cal.5th 522, the California Supreme Court held that Section 230 of the Communications Decency Act of 1996 prohibits courts from ordering Yelp to remove defamatory consumer reviews posted by an attorney’s former client.

Section 230 states that “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” Moreover, “[n]o cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section.”  (Section 230(e)(3).)

The Hassell court held that Section 230’s broad immunity protects “interactive computer services” such as Yelp from defamation liability even in circumstances where Yelp was not itself sued for defamation. The court reasoned that a defamed plaintiff should not be able to avoid the immunity protections of Section 230 by intentionally not naming Yelp as a defendant. Instead, some defamed plaintiffs tried to circumvent Section 230’s immunity by enforcing a judgment against the defamer defendant, and then using the judgment and injunction to remove the defamatory Yelp posts. Such a strategic end-run around Section 230 is not permitted.

In June 2012, Ava Bird hired attorney Dawn Hassell to prosecute a personal injury lawsuit. After a few months, Hassell concluded Bird was unhappy and withdrew. Bird posted negative reviews on Yelp about Hassell’s lawyering skills. Hassell asked Bird to remove them; Bird declined. Hassell proceeded to sue only Bird for libel.

After a default prove-up hearing, the trial court entered judgment for Hassell for $557,919 in damages, apparently caused by three one-star Yelp reviews. The trial court also ordered both Bird and Yelp to remove the three defamatory reviews. Upon being served with the court’s order, Yelp moved to set aside and vacate the default judgment. The trial court denied the motion. The Court of Appeal affirmed. It found the removal order did not did not impose any “liability” on Yelp, as that term is used in Section 230(e)(3), since the default judgment and damages were against Bird and not Yelp.

The California Supreme Court reversed. It observed that the “immunity provisions within section 230 have been widely and consistently interpreted to confer broad immunity against defamation liability for those who use the Internet to publish information that originated from another source.” (Id. at 535.) It found that “lawsuits seeking to hold a service provider liable for its exercise of a publisher’s traditional editorial functions—such as deciding whether to publish, withdraw, postpone or alter content—are barred.” The Court found that Section 230 confers “blanket immunity from tort liability for online republication of third party content.” The Court reasoned that subjecting companies like Yelp to defamation liability for the republication of online content would tend to chill online speech. This chilling effect could materialize in the high costs for companies like Yelp of having to investigate potentially defamatory postings.

The Court found that Yelp was being held to account for nothing more than its ongoing decision to publish the challenged reviews. The Court concluded that Hassell’s legal remedies lay solely against Bird, and could not extend to Yelp. Notably, the Court ruled that Hassell had powerful remedies available to her, i.e. “the judgment requires Bird to undertake, at a minimum, reasonable efforts to secure the removal of her posts. A failure to comply with a lawful court order is a form of civil contempt… the consequences of which can include imprisonment.”

On October 18, 2018, Hassell filed a petition for writ of certiorari urging the United States Supreme Court to review the decision, which she argue renders California courts powerless to compel companies like Yelp to remove clearly unlawful content. Apparently, Hassell is not convinced that pursuing a contempt order against Bird and demanding that her former client be thrown in jail will improve her Yelp rating.

One criticism of the Hassell Court’s reasoning is its naïve willingness to adopt the fiction that Yelp is just a folksy old-fashioned newspaper publisher exercising a publisher’s traditional editorial functions. The reality is that Yelp applies its own judgment to award star ratings to businesses. In this case, Hassell claimed that the manner in which Yelp utilized Bird’s reviews caused its rating to drop to 4.5 stars. The trial court had observed that Yelp featured one of Bird’s defamatory reviews as a “Recommended Review” and that Yelp had not factored many positive reviews into Hassell’s overall rating. That is to say, Yelp promoted Bird’s negative reviews and gave them greater weight than many more positive reviews causing Hassell’s star-rating to drop.  And the lower Yelp star-rating caused Hassell to lose business.

Perhaps the U.S. Supreme Court will not want to parse the issue so finely. But Congress may wish to consider whether it makes sense to update Section 230 to allow a company like Yelp to be compelled to remove postings that the original poster was ordered to remove.

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

Working Without a Net

Posted on: September 14th, 2018

By: Seth Kirby

For the legal professional, careful and appropriate selection of insurance is an essential component of practice management.  When faced with potential liability for an alleged mistake, attorneys should want the safety and security of relying upon their insurance carrier to help mitigate the potential liabilities that accompany their practice.  Unfortunately, many attorneys do not see the gaps in their insurance coverage until they are faced with a claim arising from their business activities.  A recent unpublished decision by the 4th Circuit Court of Appeals is illustrative of this dilemma.  In Hartford Casualty Insurance Co. v. Ted A. Greve & Associates PA, case number 17-2407, in the U.S. Court of Appeals for the Fourth Circuit, the Court affirmed a general liability carrier’s denial of coverage to a personal injury law firm that was sued for alleged violations of North Carolina’s Driver’s Privacy Protection Act.  Apparently the firm had been obtaining crash reports from the state’s Division of Motor Vehicles and then using the information contained in those reports to solicit business from the involved drivers.  When faced with a class action lawsuit arising from these activities, the firm’s general liability carrier denied coverage on the basis that the claims were excluded as they arose out of a violation of a state statute.  The Court approved the denial, rejecting the firm’s contention that the claim could be viewed as a common law invasion of privacy.

This decision has very little significance outside of the unique facts of the case.  Indeed, it is conceivable that the firm at issue in the case may have other types of coverage that fill this gap.  Nevertheless, it serves as an important reminder that firms should carefully review all aspects of their operations and consider whether their particular areas of exposure are covered.  Does the firm engage in novel or unique advertising to solicit business?  Does the firm use litigation financing to assist in pursuing claims?  Does the firm have potential contractual exposure because it is acting as a title agent?  These are just a few of the questions that lawyers must consider when evaluating their risk profile and in determining the nature and extent of insurance products that they should purchase.  Frankly, this task is too difficult, and the consequences are too severe, to attempt without professional assistance.  A meaningful relationship with a qualified insurance broker that specializes in professional liability placement is an invaluable resource for law firms.  The broker can often spot risks that the firm is blind to, and they are certainly more familiar with the insurance products that may provide valuable protection to the firm.

It is impossible to accurately predict what the future holds, but careful examination, and regular reexamination, of a law firm’s business model can go a long way toward identifying the dangers that lie ahead.  Absent such careful planning, lawyers are literally working without a net and potentially setting themselves up for drastic financial consequences in the event of an alleged error.

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

Insuring Against Rule 68 Offers of Settlement

Posted on: June 28th, 2018

By: Matt Grattan

One tool defense lawyers in Georgia frequently use to induce settlements is an offer of settlement under O.C.G.A. 9-11-68.   Rule 68 allows either party to a tort action to serve a written offer to settle the claim, so long as the offer is made within a certain time and satisfies several other elements under the statute.  If a Rule 68 offer is properly made by a defendant and rejected, that code section allows a defendant to recover its post-rejection attorney’s fees and expenses from a plaintiff in the event the plaintiff does not recover at least 75% of the offered amount at trial.

It is easy to see how the fee-shifting provision in Rule 68 can provide defense attorneys with leverage during settlement negotiations.  Simply put, it forces plaintiffs to put some skin in the game.  Because paying the defendant’s attorney’s fees and costs can significantly reduce or even eliminate a plaintiffs’ award at trial (and in turn a plaintiffs’ attorneys’ fees), plaintiffs may be more inclined to settle rather than face such risks at trial.

The fee-shifting benefit from Rule 68, however, could potentially be diminished by companies like LegalFeeGuard.   Established in Florida in 2012 to combat that state’s offer of settlement statute, LegalFeeGuard has recently started offering insurance policies in Georgia that cover attorney’s fees and costs under O.C.G.A. 9-11-68.  LegalFeeGuard offers no-deductible policies with limits as low as $10,000 and as high as $250,000.   Policies are triggered by a judgment in a bench trial or the return of a verdict in a jury trial, and are available to plaintiffs and defendants for a wide array of cases, including personal injury, breach of contract, and intentional torts.

What does the availability of fee-shifting insurance mean for defense lawyers and their clients?  LegalFeeGuard recently launched in Georgia (and the author is unaware of any other similar companies), so it is tough at this point to determine what kind of impact fee-shifting insurance will have on litigation in Georgia.  But this is certainly a development for lawyers to keep an eye on (particularly since LegalFeeGuard claims on its website to have sold over 1,000 policies in Florida) as such insurance may persuade more plaintiffs to roll the dice and take their case to trial knowing the downside risk of paying fees and costs is reduced, if not altogether eliminated.

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

Independent Contractor vs Employee Status in the Gig Economy

Posted on: May 31st, 2018

By: Daniel Walsh

As recently noted by FMG’s Connor Bateman, Courts across the country are now reexamining coverage issues stemming from auto insurance policies held by drivers working with Transportation Network Companies (“TNCs”) such as Lyft and Uber.

In Dynamex Operations W. v. Superior Court, 2018 Cal. LEXIS 3152, the California Supreme Court set forth a refined and more inclusive standard on the classification of employees vs. independent contractors in the “gig economy” commonly associated with Lyft and Uber but also extending to various delivery services.   An underappreciated side effect of this decision is the effect upon coverage issues that have been litigated for years throughout California courts.  With a robust gig economy in California, the Courts have seen a high number of general liability cases that have turned upon the Trial Court’s interpretation of employee vs independent contractor status.  This, in turn, has created a high volume of declaratory relief lawsuits centered upon liability coverage for the actions of a gig economy participant, as most insurance policies grant coverage to an employee but deny it to an independent contractor.  With the Court clarifying that distinction in Dynamex, California insurance coverage opinions regarding personal injury liability in the gig economy will now require a new focus and analysis.

If you have any questions or would like more information please contact Daniel Walsh at [email protected].