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Posts Tagged ‘#SupremeCourt’

Supreme Court of Georgia Eliminates Direct Appeals from Denials of Immunity at Motion to Dismiss Stage

Posted on: March 28th, 2016

By: Andy Treese

Since 2009, government defendants in Georgia state courts have been authorized to directly appeal from denials of immunity-based motions to dismiss.  The underlying premise has been that such rulings, though not “final orders,” fell within a narrow category of “collateral orders” which were effectively final and therefore subject to immediate appellate review.  Board of Regents v. Canas, 295 Ga. App. 505 (2009).

No more.  Last week, the Supreme Court of Georgia held that a denial of immunity raised in a motion to dismiss is not directly appealable as a collateral order, expressly overturning Canas and at least twenty subsequent cases.  The cases are Rivera v. Washington (S15G0887) and Forsyth County v. Appelrouth (S15G0912)(consolidated for appeal) and the opinion is available here.  The Court signaled in its ruling that any reform of the appellate scheme will require legislative action, and the ruling appears to foreclose direct appeals as to the denial of sovereign, official, qualified, or any other immunities asserted by a motion to dismiss.  The result is that interlocutory review remains available through the discretionary appeal process, which the Georgia Supreme Court encourages trial courts to liberally grant.

This severely undermines the power of state-law immunities asserted in Georgia by way of motions to dismiss; future opinions will have to explore whether this ruling applies to summary  judgment orders.



Issuing a Reservation of Rights? You May Lose Control Over Settlement

Posted on: February 5th, 2016

By: Jonathan Romvary

By reserving the right to deny coverage, insurers may be relinquishing the power to force the policyholder to forego reasonable settlement opportunities for covered claims that do not align with the goals of the insurer.  In Babcock & Wilcox Co., et al. v. American Nuclear Insurers, et al., 2015 WL 4430352 (Pa. July 21, 2015), the Pennsylvania Supreme Court announced a rule similar to the rule set forth by the Arizona Supreme Court in United States Auto Ass’n. v. Morris, 741 P.2d 246 (Ariz. 1987), allowing policyholders to settle claims without their insurer’s consent when the insurer is providing a defense under a reservation of rights.  This “Pennsylvania Approach” applies only after the insurer breaches its obligation of fair dealing with the policyholder by unreasonably objecting to settlement that is in the best interest of the policyholder. 

The consent-to-settle clause in liability policies generally allows the insurer to retain control of the defense and any settlement opportunities over claims when coverage is certain.  This clause provides that a policyholder is not allowed to enter into a settlement that would otherwise bind the insurer without the insurer’s consent.  However, when an insurer is defending under a reservation of rights, coverage is uncertain, and often the goals of the insurer and policyholder are conflicting.  A strict application of the consent-to-settle clause may require policyholders to pass up reasonable settlement offers while also requiring them to pay the full judgment if the insurer ultimately determines that the claim is not covered.  The Pennsylvania Approach (1) permits policyholders to enter into a reasonable settlement rather than risk a substantial and adverse verdict at trial and (2) allows insurers to contest coverage for a settlement that is unreasonable or one that is not covered under the terms of the policy.  Determination of whether a settlement is reasonable necessarily entails consideration of the terms of the settlement, the strength of the insured’s defense against the asserted claims, and any potential fraud or collusion by the insured.

Note that this ruling does not allow policyholders full control of their litigation when a reservation of rights has been issued.  Cooperation clauses still require the insured to communicate any settlements to the insurer and seek consent.  However, now in Pennsylvania, after a reservation of rights is issued, the insurer needs to carefully consider all reasonable settlements whether or not it believes that the claim is covered.

This Pennsylvania Approach is consistent with the current draft of the Restatement of the Law of Liability Insurance being prepared by the American Law Institute.  Therefore, we can expect more states to adopt this approach in the future. 


The Service Advisor Quandary – It’s Now the Supreme Court’s Turn

Posted on: February 2nd, 2016

By: Brad Adler and Tim Holdsworth

For over forty years, courts have almost universally found that auto dealership service advisors were exempt from the FLSA’s overtime requirements under the salesman exemption contained in Section 13(b)(10)(A) of the statute. In contrast, over the same period, the U.S. Department of Labor (“DOL”) waffled on the issue.  Most recently, in 2011, the DOL explained that their regulatory definitions for the exemption were not meant to cover service advisors.

Of course, the Ninth Circuit Court of Appeals never seems to shy away from surprises or from departing from the position of other courts, including in 2015 when facing the service advisors exemption issue. In Navarro v. Encino Motorcars, LLC, the Ninth Circuit bucked the judicial trend on the service advisor issue and found that service advisors were not exempt from overtime under the salesman exemption.

The Ninth Circuit found that the salesman exemption is ambiguous and the DOL’s regulation was reasonable because FLSA exemptions should be construed narrowly. Therefore, the Ninth Circuit found that the service advisors were not covered by the salesman exemption and subject to overtime requirements.  The good news for auto dealerships (at least hopefully) is that the Supreme Court has recently granted cert in the Navarro case, signaling its intent to answer the currently unclear question of whether service advisors are exempt from the overtime requirements of the Fair Labor Standards Act (“FLSA”).

We should expect a decision on this issue from the Supreme Court by mid-year. Please contact us if you have any questions or need advice about how you presently pay service advisors, how you could pay service advisors if the exemption is lost, or any other issues discussed above.

Official Immunity: Recent Georgia Supreme Court decision reaffirms need for specific directives before finding ministerial duty for public officers

Posted on: July 10th, 2015

By: Chuck Reed, Jr.

Last week, in Eshleman v. Key, 2015 WL 3936075 (June 29, 2015), the Georgia Supreme Court reversed the Court of Appeals’ denial of official immunity for an off-duty police officer whose police dog escaped from its kennel and bit a child. This reversal reaffirms that the presence or absence of specific directives will often be the turning point in analyzing immunity issues under Georgia law.

Eshleman was a canine handler with the DeKalb County Police Department and had a practice of taking her canine partner, “Andor,” home with her. Eshleman had warned her neighbor’s children to just stand still if they ever saw Andor outside the fence because Andor could perceive them as prey if they ran. One day, Eshleman had loaded Andor in a kennel in the back of her personal vehicle and, assuming the kennel door was secured, stepped away from the vehicle to retrieve some belongings. Andor saw the neighbor’s children playing nearby and escaped the kennel. When the child plaintiff attempted to run away, Andor chased him, latched onto his arm and took him to the ground. It was undisputed that the DeKalb County Police Department had no policies governing how to transport and secure canines in private vehicles, nor had Eshleman received any training on that topic.

However, in affirming the trial court’s denial of summary judgment, the Court of Appeals held that there was a genuine issue of material fact whether Eshleman violated O.C.G.A. § 51-2-7 regarding “vicious animals” and negligently failed to perform the ministerial duty of properly restraining Andor. Eshleman v. Key, 326 Ga. App. 883, 888-889 (2014). The Court of Appeals held that “Eshleman did not show that the act at issue in this case, restraining the canine by securely closing the kennel door, ‘called for the exercise of personal deliberation and judgment, which in turn entail[ed] examining the facts, reaching reasoned conclusions and acting on them in a way not specifically directed.” Id. at 887.

In reversing the Court of Appeals, the Supreme Court of Georgia held that while it was undisputed that Eshleman was acting in her official capacity in taking care of Andor, there was no evidence that she was engaged in a ministerial duty in doing so. The Supreme Court rejected the Court of Appeals’ citation to the general standard of care codified in O.C.G.A. § 51-2-7 as a ministerial duty for Eshleman holding that “in the context of official immunity [it] is not merely whether an officer owed a duty of care, but rather, whether the official owed a duty that is particularized and certain enough to render her duty a ministerial one.” Eshleman, 2015 WL 3936075 at *3. Since there were no standards governing how to properly restrain Andor, the Georgia Supreme Court found that the legal standards at issue required “an exercise of personal deliberation and judgment about what is reasonable in the particular circumstances presented.” Id. at 4.

While public employers have an interest in ensuring that their employees are properly trained in the procedures of their departments, Eshleman reaffirms that law enforcement and other public agencies should not inadvertently create liability through enacting specific directives concerning every area of their employee’s duties. The policy that provides instruction or grounds for discipline could also provide a basis for personal liability against that employee.

Should We Have Seen This Coming? Supreme Court of Georgia: Duty to Preserve is Triggered by Constructive Notice of Anticipated Litigation

Posted on: July 6th, 2015

By: E. Andrew Treese

It has been clear for some time that a duty to preserve evidence is triggered by actual notice of pending or contemplated litigation.  Last week the Supreme Court of Georgia held that the duty is also triggered by constructive notice, that is, when “the defendant/alleged tortfeasor … reasonably should have anticipated litigation, even without notice of a claim.”

Read that again.  The law in Georgia is now that sanctions for spoliation may be entered against an alleged tortfeasor on the theory that it should have seen a suit coming, even if it never did, and even if it never received a preservation letter or letter of representation.

The case is Phillips v. Harmon, S14G1868 (Ga. June 29, 2015), a medical malpractice lawsuit arising from an alleged “bad birth.”  Shortly after the birth the hospital conducted a “sentinel event” investigation, an internal query triggered by some unexpected outcomes which result in serious injury or death.  The hospital’s investigation did not, however, preserve a paper strip from a fetal heart rate monitor.  Plaintiffs argued this constituted spoliation and asked for sanctions.  The trial court refused, reasoning that no spoliation occurred because at the time the strip was lost, the hospital was not on actual notice that the plaintiffs contemplated filing suit.  On appeal from a defense verdict, the Georgia Court of Appeals affirmed.

The Supreme Court of Georgia reversed, explaining that the duty to preserve may be triggered by actual or constructive notice that suit may be filed.  The Court further identified several circumstances which could give rise to constructive notice, including: (1) the type and extent of injury; (2) the extent to which fault for the injury is clear; (3) potential financial exposure if faced with a finding of liability; (4) the relationship and course of conduct between the parties, including past or threatened litigation; and (5) the frequency with which litigation occurs in similar circumstances.  The Court also reiterated previous admonitions that trial courts should impose sanctions “only in exceptional cases” and consider “whether the party who destroyed the evidence acted in good or bad faith.”  Trial courts in Georgia are vested with broad discretion to impose sanctions, however, and it will likely take months or years before the impact of the new rule is clear.

Strategically, the Phillips opinion underscores the importance of prompt and thorough investigation of potential claims, even in the absence of a preservation request.  Companies with relatively short retention policies (30, 60, or 90 days), particularly regarding audio and video-recordings, may want to re-examine their current policies and consider involving counsel early in pre-suit investigations.