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Posts Tagged ‘settlement’

McDonald’s to Settle its NLRB Case

Posted on: March 30th, 2018

By: Allen E. Sattler

On March 19, 2018, McDonald’s USA LLC (“McDonald’s”) and the U.S. National Labor Relations Board (the “Board”) entered into a preliminary settlement to resolve many long-standing claims made against McDonald’s concerning its alleged labor law violations.  The proposed settlement reportedly includes the resolution of all outstanding labor law charges against McDonald’s, with payments to individual employees ranging from $20 to $50,000.  The primary issue that McDonald’s and the Board were litigating is whether McDonald’s should be considered a joint employer with its franchisee restaurant owners.  If McDonald’s is found to be a joint employer with its franchisees, McDonald’s may be liable for violations of federal labor laws committed by those franchisees.

An entity is considered a joint employer where that entity has sufficient control over the essential terms and conditions of employment of another employer’s employee.  The standard applied by the Board to determine whether sufficient control exists has changed over recent years.   In August 2015, the Board expanded the scope of the standard by holding that an entity’s control over the employee need not be “direct or immediate” and that the entity need not actually exercise its control over the employee to be considered a joint employer.  Rather, the mere reservation of a right to control the employee might be sufficient to establish a joint employment relationship.  Browning-Ferris Industries of California, 362 NLRB No. 186 (August 27, 2015).

In December 2017 and acting under a new administration, the Board overruled its decision in Browning-Ferris and issued a strongly worded critique of that standard, stating that the “Browning-Ferris standard is a distortion of common law as interpreted by the Board and the courts, it is contrary to the Act, it is ill-advised as a matter of policy, and its application would prevent the Board from discharging one of its primary responsibilities under the Act, which is to foster stability in labor-management relations.”   Hy-Brand Industrial Contractors, Ltd., et. al., 365 NLRB No. 156 (December 14, 2017).  The Board accordingly returned to the less-expansive standard that existed prior to Browning-Ferris.  Pursuant to Hy-Brand, a finding of joint employer status requires proof that the entity actually exercised control over the employee, rather than merely reserving the right to exercise control, and the control must be “direct and immediate.”  Also, a joint employer status will not result where the control is “limited and routine.”

In February 2018, the Board vacated its decision in Hy-Brand on ethical grounds, i.e., a disqualified member of the Board failed to recuse himself.  Hy-Brand Industrial Contractors, Ltd., et. al., 366 NLRB No. 26 (February 26, 2018).  The standard as articulated in Browning-Ferris once again became the controlling standard.

The McDonald’s litigation is significant because a trial on the joint employer issue might provide clarification of the appropriate standard to be applied by the Board, particularly in the franchise context, and a decision on the issue can have an enormous impact on other, similarly situated companies.  If the preliminary settlement is approved, the joint employment status of McDonald’s remains an open question.  The litigation will therefore not result in a clarification of the joint employer standard or have any precedential effect on future joint employer cases.  Unless and until the Board re-visits this issue, the standard as articulated in Browning-Ferris appears to be the controlling standard.

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

Settle at Your Own Risk

Posted on: February 16th, 2016

By: Dana Maine and Kevin Stone

The Georgia Court of Appeals issued an opinion last week in Jim Tidwell Ford v. Bashuk, A15A2030 applying the rule that settlement of an underlying suit may sever causation in a subsequent legal malpractice action.  The underlying suit in Bashuk, brought in federal court, involved a claim by a Jim Tidwell Ford customer who had fallen off of a platform and was injured. The customer prevailed at a jury trial and received an award of more than a million dollars.  Bashuk represented Jim Tidwell Ford through the conclusion of the trial, at which time appellate counsel was brought in.  An appeal was filed with the Eleventh Circuit but was dismissed upon settlement of the personal injury suit for $600,000.  While the Court of Appeals acknowledged that the issue of causation and whether a legal malpractice defendant’s conduct is too remote from the claimed injury is usually a decision left to a jury, in this case, which was plain and undisputed, it was appropriate for the court to make the decision as a matter of law. 

In reaching its decision, the Court of Appeals examined whether the appeal in the personal injury suit made the case viable for purposes of the rule that settlement of a viable underlying claim severs proximate cause.  In ruling  in Bashuk’s favor, the Court of Appeals concluded that the trial court properly found that there were legitimate issues with some of the evidentiary rulings the personal injury trial judge made about admissibility of medical testimony.  There was a chance, the Court of Appeals concluded, that the Eleventh Circuit would have found that the trial judge erred in his rulings and might have ordered a new trial. The legal malpractice defendant was not required to prove with certainty that the Eleventh Circuit would have ruled in the former client’s favor.  It was sufficient to sever causation that from the case law, “it appears at least possible” that the Eleventh Circuit may have reversed the verdict in the personal injury case. 

Every legal malpractice case with a settlement of the underlying case should be analyzed under the Bashuk rationale. Depending on the posture of the case, it might even be possible to bring an early dispositive motion applying the settlement/lack of causation rule. 

(We will monitor the docket for  an application for writ of certiorari to the Georgia Supreme Court and update this blog accordingly.)   


Right of Contribution among Joint Tortfeasors is Still Viable in Georgia

Posted on: April 2nd, 2013

By: Bart Gary

Most believed that the right of contribution among joint tortfeasors (two or more persons whose negligence combine to cause injury or damage) was abolished in Georgia in 2005 when the tort reform legislation went into effect. On March 28, 2013, the Georgia Court of Appeal issued its opinion in Zurich Amer. Ins. Co. v. Heard, 2013 WL 124544, and held that the concept of contribution in negligence cases is not completely dead. The case involved a newly constructed hotel with mold and moisture problems. The hotel owner initiated an arbitration proceeding against the general contractor, whose insurers settled the claims, but the contractor did not acknowledge liability and the parties agreed that the settlement did not fully satisfy the owner’s claims. The hotel owner also filed a lawsuit against the designers (architect and engineers) for the hotel and settled with the designers for a relatively modest amount. The insurers of the general contractor sued the designers to recover in contribution and indemnity. The trial court granted summary judgment to the designers as to the contribution claim, but the Court of Appeals reversed that ruling, and held:

[J]oint liability and the right of contribution no longer exist when damages have been apportioned by the trier of fact under this subsection. Based upon this plain language, it cannot be interpreted to abolish the right of contribution between settling joint tortfeasors when there has been no apportionment of damages by a trier of fact. When enacting subsection (b) of OCGA § 51–12–33 in 2005, the Legislature left OCGA § 51–12–32 intact in its entirety and it remains valid law. This latter Code section provides:

(a) Except as provided in Code Section 51–12–33, where a tortious act does not involve moral turpitude, contribution among several trespassers may be enforced just as if an action had been brought against them jointly. Without the necessity of being charged by action or judgment, the right of a joint trespasser to contribution from another or others shall continue unabated and shall not be lost or prejudiced by compromise and settlement of a claim or claims for injury to person or property or for wrongful death and release therefrom.

(b) If judgment is entered jointly against several trespassers and is paid off by one of them, the others shall be liable to him for contribution.

(c) Without the necessity of being charged by an action or judgment, the right of indemnity, express or implied, from another or others shall continue unabated and shall not be lost or prejudiced by compromise and settlement of a claim or claims for injury to person or property or for wrongful death and release therefrom.

(Emphasis supplied.) Based upon the plain language of this statute, the right of contribution between joint tortfeasors has not been completely abolished by the Legislature’s enactment of OCGA § 51–12–33(b), and the trial court erred by holding otherwise. (Citations and footnotes omitted; emphasis by the court).

Settlements of negligence cases must account for the potential for contribution claims by or against a settling party, who is or may be a joint tortfeasor, as was the case before 2005.