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Monthly Archives: September 2011

Solo whiffs in bid to classify secretary as contractor

One District of Columbia lawyer has failed miserably in his attempt to avoid nettlesome problems like unemployment compensation by treating his secretary as an independent contractor.

But while his attempted job classification didn’t withstand the smell test, it turns out that his secretary won’t be getting unemployment after all.

Robert J. Hickey thought he had it all figured out. The D.C. solo needed a secretary, but he didn’t want to deal with the red tape and obligations of being an employer.

He had been paying a temporary agency $24 per hour for office help, but decided he could save some money by hiring Mary Bomers as his legal secretary at $18 an hour.

Hickey hired Bomers on Jan. 16, 2006, doing everything he could think of to make clear that she was an independent contractor rather than his employee. Although Bomers’ work schedule was nominally 8:30 a.m. to 5:00 p.m. with a half-hour for lunch, Hickey said that she could set her own schedule “as long as she got the work done.”

Hickey paid Bomers twice a month in accordance with billing statements she submitted that reflected her hours work during the pay period. Hickey provided no benefits to Bomers, nor did he take taxes out of her paycheck.

With regard to taxes, Bomers was required to file quarterly tax returns with the IRS. In fact, she prepared her own IRS Form 1099 for 2006 and 2007. On the office monthly financial forms, Bomers listed her salary under the category “contract compensation.” In preparing Hickey’s IRS Form 1040 for tax years 2006 and 2007, Bomers reported her own salary as a “contract labor” expense.

On the surface, everything was set up to support Bomers’ classification as an independent contractor. So Hickey thought it would be relatively painless when in January 2009 he decided to replace Bomers with someone else.

When Bomers applied for unemployment compensation, Hickey trotted out the claim that   his erstwhile secretary was an independent contractor ineligible for benefits.

The District of Columbia Department of Employment Services accepted Hickey’s independent contractor argument and denied Bomers’ claim.

So that was that.

Well, not really.

To the good fortune of Bomers, an administrative judge decided that she was in fact an employee of Hickey and the door was opened for her to receive unemployment compensation.

A dismayed Hickey appealed to the D.C. Court of Appeals, thinking that real judges would understand that Bomers was indeed an independent contractor.

Yesterday, the court introduced Hickey to the harsh truth that form does not always prevail over substance, and that no matter what the lawyer intended, Bomers had in fact been his employee.

“We … agree that the critical ‘right to control [the] employee in the performance of [her] tasks’ factor supports a conclusion that Bomers was not an independent contractor, despite Hickey’s intention to treat her as such. Accordingly, upon ‘consideration of all of the circumstances surrounding the work relationship,’ we affirm the ALJ’s ruling that Bomers was an employee,” the court said.

Fortunately, Hickey had another card to play. The lawyer argued that, even if Bomers was his employee, she was ineligible for unemployment compensation because he had terminated her for misconduct.

In particular, Hickey complained that Bomers had worked only 181 out of 241 possible work days from December 2007 through November 2008.

The court of appeals concluded that excessive absenteeism was a valid ground for Bomers’ termination when paired with Hickey’s evidence that she did not keep him properly informed of underlying medical reasons for her missing work.

“We are constrained to agree with Hickey that, taken together, Bomers’ repeated failure timely to (1) apprise Hickey about days of expected absence throughout her employment and (2) respond meaningfully to his request for information about the expected duration of her absence following her December hospitalization constituted a breach of Bomers’ duty to Hickey as her employer, and thus constituted simple misconduct,” the court said. (Hickey v. Bomers)

So Hickey is off the hook after all, even though the lawyer’s independent contractor strategy didn’t survive close scrutiny.

– Pat Murphy

patrick.murphy@lawyersusaonline.com

Judge upholds most of Alabama immigration law

A federal judge yesterday upheld most of Alabama’s tough new immigration law, including a provision that allows police to make reasonable efforts to determine whether the subject of a stop or arrest is in the country illegally.

U.S. District Judge Sharon Lovelace Blackburn said in her 106-page ruling that nothing in the federal immigration statutes “expressly preempts states from legislating on the issue of verification of an individual’s citizenship and immigration status.” 

The Beason-Hammon Alabama Taxpayer and Citizen Protection Act was signed into law in June. The Obama Administration, immigration activists and civil rights groups in three separate lawsuits sued to enjoin enforcement of what many consider to be the strictest anti-immigration measure in the country.

Judge Blackburn temporarily stopped the law from taking effect on Sept. 1, but yesterday’s ruling opened the door for enforcement of many of the statute’s most controversial provisions, including immigration checks of public school students and suspects pulled over by police.

Also left standing by yesterday’s order are measures that allow police to hold suspected illegal immigrants without bond, bar state courts from enforcing contracts involving illegal immigrants, make it a felony for an illegal immigrant to obtaining a drivers licenses from the state, and make it a misdemeanor for an illegal resident not to have immigration papers.

Judge Blackburn did block certain key provisions temporarily, including measures that criminalize an illegal immigrant’s solicitation of work within the state and make it illegal to transport or harbor an individual who is in the country unlawfully.

However, those parts of the law could still be deemed enforceable when the judge issues her final ruling in the case.

– Pat Murphy

patrick.murphy@lawyersusaonline.com

‘Castle Doctrine’ no defense in police/homeowner confrontations

The rules are simple when it comes to dealing with police: be polite and follow instructions.

If you observe those rules, the overwhelming odds are that you will shortly be on your merry way with no more damage than an annoying traffic ticket. Who knows, the officer might even cut you a break.

On the other hand, if you get confrontational, it’s a good bet you’ll spend the night in jail and the ensuing months in court trying to avoid prison.

The rules apply whether a cop pulls you over for speeding or unexpectedly comes knocking at your front door.

Now, some people have the misguided notion that you have the right to defend the home against all comers, even police. We all instinctively understand the “Castle Doctrine.” A man’s home is his castle.

To avoid charges of sexism, let’s just say a person’s home is his/her castle.

But I digress.

The common understanding is that every homeowner has the right to reasonably resist unlawful entry. But should that right include the right to resist police officers who unlawfully invade one’s home?

Common sense says that you never take on police wherever you are because you will always lose that fight. If police unlawfully enter your home, stand aside and let the courts sort it out later.

But that doesn’t answer the legal issue: Is the Castle Doctrine a defense to a charge of battery upon a police officer?

This brings us to revisit the case of Richard L. Barnes. When this corner last wrote about Barnes in May, the Indiana Supreme Court was in the process upholding Barnes’ conviction for misdemeanor battery on a law enforcement officer.

On Nov. 18, 2007, Barnes allegedly shoved a police officer against a wall during the course of a domestic dispute at the Vanderburgh County apartment he shared with his wife, Mary. 

Even though police were responding to a 911 call from Mary, Barnes claimed that the police officer’s warrantless entry of his home was unlawful and that he had a right to resist that unlawful entry. 

In its decision last May, the state supreme court rejected Barnes’ argument that the jury should have been instructed that he had the right to reasonably resist unlawful entry by police.

There were those in the Indiana General Assembly who were appalled at the apparent limitation on the time-honored Castle Doctrine, while others in the state who thought the state supreme court’s decision wasn’t clear enough on the need to protect officer safety in context of dicey domestic situations.

So the high court reheard the case, issuing a new decision last week that unequivocally put a stake in the heart of the Castle Doctrine in the context of police/homeowner confrontations.

“[W]e hold that the Castle Doctrine is not a defense to the crime of battery or other violent acts on a police officer,” the court said.

“Our holding does no more than bring Indiana common law in stride with jurisdictions that value promoting safety in situations where police and homeowners interact. Importantly, we observe the actions in this case were ‘appropriate to a rapidly unfolding situation in the immediate aftermath of a reported’ domestic violence situation.”

Since my sentiments naturally lean in favor of police who place their lives on the line every day, I have no quarrel with the decision other than it’s a point that all courts should have made clear decades ago.

The law shouldn’t give the slightest encouragement to drunken yahoos with amped up testosterone levels.

Remember the rules: be polite and follow instructions.

– Pat Murphy

patrick.murphy@lawyersusaonline.com

Drug trafficker denied ‘procuring agent’ defense

It seems rather odd that a drug dealer nabbed in a methamphetamine sale would be cut any slack because he claimed that he was merely helping a friend buy the drugs.

Last week, the Nevada Supreme Court agreed that the so-called “procuring agent” defense no longer makes any sense and eliminated it from consideration in drug trafficking cases.

The court overturned long-standing precedent in a case involving Ramon Dinkha Adam.

Adam came to the attention of Las Vegas Metropolitan Police through a confidential informant. The informant told Detective Mike Wilson that Adam had the ability to procure drugs.

The informant introduced the undercover detective to Adam and the officer spent four months cultivating a friendship. Detective Wilson claimed that Adam opened up one day and told him he had “connects” to buy drugs. The undercover detective asked Adam if he could get methamphetamine. Adam allegedly agreed to help buy 15 grams.

According to Detective Wilson, Adam arranged to meet drug suppliers at a tattoo shop in Las Vegas. The suppliers arrived in a truck while Adam and Detective Wilson waited outside in Adam’s car.

Detective Wilson later testified that one of the suppliers approached Adam’s car. The man handed Adam methamphetamine through the driver’s window, which Adam placed on a scale. Adam allegedly weighed the methamphetamine and told the supplier that he was short. The man went back to his truck and returned with more methamphetamine.

Adam allegedly reweighed the drugs, said the amount was now correct at 15 grams, and handed the supplier $500 that the undercover detective had previously given him for the drug buy.

Soon thereafter, Adam was arrested and charged with trafficking in a controlled substance for knowingly or intentionally having actual or constructive possession of 12.64 grams of methamphetamine.

At trial, Adam claimed the benefits of the procuring agent defense,  first recognized by the 3rd Circuit in a 1954 case, United States v. Sawyer (210 F.2d 169). The Nevada Supreme Court recognized the defense in 1971 and later explicitly ruled that it applied in drug trafficking cases.

The procuring agent defense generally provides that if a defendant is an agent of the purchaser, then the defendant should only be held as culpable as the purchaser. In other words, if the jury finds that the defendant was only acting on behalf of a buyer when procuring drugs, then the defendant could not be convicted of selling drugs.

The trial judge denied Adam’s request for a jury instruction on the procuring agent defense, concluding that his request was untimely and that it wouldn’t apply anyway because Adam had initiated the sale by telling Detective Wilson that had “connects” to get drugs.

So without the instruction the jury found Adam guilty of trafficking in a controlled substance. For his transgression, the trial judge sentenced Adam to a maximum of 48 months in prison.

Up before the Nevada Supreme Court, Adam’s case presented front and center the question of whether the procuring agent defense remained viable.

The state argued that the defense simply did not make sense under Nevada’s version of the Uniform Controlled Substances Act because it is designed to make all actors in the illicit drug deal equally culpable when a trafficking quantity of a controlled substance is involved.

The court agreed and overruled its procuring agent precedent in the context of drug trafficking charges.

The court explained that “when a trafficking quantity is not involved, the sale offenses typically carry harsher penalties than the possession offense.  It therefore makes a difference in that context whether the defendant is charged with a sales offense or simple possession.”

It said that the procuring agent defense should remain viable when the transaction involves a nontrafficking amount because it ensures that the buyer’s agent has only the same liability as the buyer rather than the greater liability imposed on the seller.

The same reasoning does not apply when a defendant is charged with drug trafficking, the court said.

It explained that “because the trafficking statutes do away with any distinction between seller and buyer for all practical purposes, the statutes already achieve the result that would otherwise be achieved by the procuring agent defense, and, thus, there is no place for the defense when the charge is trafficking.” (Adam v. Nevada

– Pat Murphy

patrick.murphy@lawyersusaonline.com

Attorney must pay $8.2M for breaching fen-phen referral contract

A Utah attorney finds himself on the hook for $8.2 million for breaching an exclusive referral contract with a colleague over the handling of lucrative fen-phen cases.

The dispute between plaintiffs’ attorneys Charles F. Abbott of Provo, Utah, and Patrick J. Mulligan, of Dallas, Texas, comes down to the nature of their agreement to jointly handle fen-phen litigation.

In 2001, the two lawyers entered into an agreement to “jointly pursue obtaining fen-phen clients who qualify for benefits under the [global fen-phen settlement] and/or who elect to opt out of said settlement.”

Abbot, as the “consulting attorney,” was to “make all reasonable efforts” to retain as many qualified clients as possible. After advertising for and screening prospective clients, Abbott would then refer the clients to Mulligan, designated as the “lead trial counsel,” to work the cases.

Under the agreement, Abbot was to receive 1/3 to 1/4 of Mulligan’s total fee, depending on whether Abbott had paid certain up-front costs.

Seems simple enough. From February 2001 to November 2001, Abbott referred all fen-phen clients exclusively to Mulligan.

Unfortunately, according to court records, in November 2001 Abbott began retaining some fen-phen clients who opted into the global settlement, and referring some of the opt-out clients to another attorney.

 In 2006, Mulligan discovered what was going on and accused Abbott of self-dealing. Feeling wronged, Mulligan started withholding Abbott’s portion of fees earned under the agreement.

So Abbott sued in Utah federal court to recover his fees.

Of course, Mulligan had some beefs of his own, so he filed a counterclaim. According to Mulligan, the referral agreement between the two attorneys was exclusive and Abbott had breached it by “cherry picking” fen-phen clients for himself.

The court sent the case to arbitration. An arbitration panel agreed with Mulligan on the primary issue that the referral agreement was indeed exclusive.

Moreover, the arbitrators rejected Abbot’s contention that any exclusive referral agreement would be void as being contrary to the professional rules of ethics. With an offset for unpaid fees that Mulligan owed, the panel issued a total award of $8.2 million against Abbot.

The district court denied Abbott’s motion to vacate the arbitration award.

Last week, the 10th Circuit affirmed the judgment against the Utah attorney.

The federal court of appeals rejected Abbott’s contention the arbitration panel acted in manifest disregard of the law in determining Mulligan’s damages.

The court further rejected claims that the arbitrators’ award was irrational.

It observed that Abbott “cites no provision of the agreement precluding the arbitration panel’s award. … Mulligan’s damages arguments were based on the contract. …

“Whether we agree with the award is irrelevant. There was a contractual basis on which the arbitration panel based its conclusion. Its decision is, as a practical matter, immune from judicial oversight.” (Abbott v. Mulligan

Abbott thought that he might have the key to undoing the arbitration award by contending that public policy and the ethics rules precluded the enforcement of an exclusive referral contract such as the one between him and Mulligan. 

Unfortunately, Abbott waived that argument by failing to raise it in the district court. 

“There is no Supreme Court or 10th Circuit precedent insulating a public policy argument from waiver,” the court said.

– Pat Murphy

patrick.murphy@lawyersusaonline.com

Are pretrial statements of brain-damaged witness admissible?

Here’s an intriguing twist to the common Confrontation Clause scenarios that criminal defense attorneys grapple with every day.

Suppose a key prosecution witness suffers brain damage between the time he identifies murder suspects for police and testifies at trial. Are his out-of-court statements inadmissible because his memory loss prevents effective cross-examination?

Yesterday, the D.C. Court of Appeals sided with prosecutors in answering that question.

According to those prosecutors, on the afternoon of November 9, 2000, Gonzales Diggs and Odell Griffin armed themselves and opened fire on four men sitting in a white Jeep Cherokee near the 1600 block of Fairlawn Avenue in Southeast Washington.

The four occupants of the Jeep fled, but one was pursued into the nearby woods and shot in the head.

When police later tried to piece the case together, they concluded that the four victims of the shooting had earlier robbed Diggs and Griffin, taking the Jeep of Griffin’s sister in the course of the robbery. The shooting allegedly occurred when Diggs and Griffin tried to even the score and recover the Jeep.

None of the survivors of the attack identified either gunman at the time.

Two weeks after the attack a man named Mark Fisher called a homicide detective and said he could help solve the case. It turned out that Fisher’s ex-wife was Diggs’s sister and Griffin’s cousin.

Fisher told police that, before the shooting, Diggs and Griffin had approached him for help in cleaning and loading a .45-caliber automatic handgun, saying they needed it to “scare somebody” and recover the Jeep.

At the time, Fisher also told police that he refused to lend his own gun to Diggs and Griffin, but that Fisher’s wife later gave them his gun without his knowledge.

Fisher also told police that, after the shooting, Diggs and Griffin came back to his apartment and described how they had found the Jeep and attacked its occupants. At this time, the pair returned Fisher’s gun. Fisher observed that the gun had been fired.

Despite Fisher’s statements, the case languished until 2003 when he was again contacted by police. He repeated his account in two grand jury appearances and Diggs and Griffin were indicted.

After making statements to police and testifying before the grand jury, Fisher became seriously ill. The witness suffered a total renal failure that placed him in a coma for several days and caused permanent brain damage.

By the time of trial, Fisher claimed he could not recall his interactions with Diggs and Griffin appellants in any detail.

There was some question as to the sincerity of his memory loss. In any event, the trial court concluded that Fisher was competent to testify.

Given Fisher’s memory loss, prosecutors sought to make their case with his out-of-court statements to police and before the grand jury.

The defendants’ attorneys objected, complaining that Fisher’s brain damage left him “unavailable” for cross-examination for Confrontation Clause purposes, and that his out-of-court statements were inadmissible hearsay.

The trial court admitted the disputed evidence and a jury convicted Diggs and Griffin of second degree murder.

Thursday’s decision by the D.C. Court of Appeals upholds those convictions.

Regarding the defendant’s Confrontation Clause claims, the court of appeals observed that it “makes no difference that Fisher claimed to be unable to remember the events in issue; the Clause ‘includes no guarantee that every witness called by the prosecution will refrain from giving testimony that is marred by forgetfulness, confusion, or evasion.’ Thus it is settled that memory loss, whether genuine or feigned, does not deprive the defendant of the meaningful opportunity to cross-examine that the Confrontation Clause requires.”

The court explained that, in either case, “the witness’s claimed inability to recall is regarded as a form of the ‘forgetfulness, confusion, or evasion’ that cross-examination is designed to emphasize, rather than as a barrier to cross-examination. ‘[T]he Confrontation Clause is generally satisfied when the defense is given a full and fair opportunity to probe and expose these infirmities through cross-examination,’ even if the opportunity alone does not guarantee success.”

Here, the court said that Diggs and Griffin “had that opportunity in the present case: Fisher took the stand and was subject to cross-examination, and the jury could evaluate his credibility and his prior statements in light of whatever weaknesses were revealed.”

Turning from the Confrontation Clause to the defendant’s hearsay argument, the court likewise found no problem with the admission of Fisher’s out-of-court statements.

The court concluded that Fisher’s grand jury testimony was properly admitted as substantive evidence as well as to impeach pursuant to the District of Columbia’s hearsay rule.

Moreover, the court decided that Fisher’s statements to a police detective were admissible under the hearsay exception applicable to statements of identification.

The court explained that the hearsay exception applies “only to statements of identification; additional detail pertaining to the offense or other conduct observed by the declarant ‘is admissible under this exception only to the extent necessary to make the identification understandable to the jury.’ This condition was satisfied during Detective Toland’s testimony on direct examination: The witness provided no unnecessary details in reporting Fisher’s identification of appellants.” (Diggs v. U.S.

– Pat Murphy

patrick.murphy@lawyersusaonline.com

Deep-sea explorers lose bid to keep 17 tons of treasure

Deep-sea treasure hunter was once at the top of my list of potential careers.

Being unable to swim, I chose other paths.

Now, it appears that it was my good fortune to have the buoyancy of a rock. That’s because it seems that being a treasure hunter doesn’t pay after all. Sure, you may find a sunken Spanish galleon with tons of gold and silver, but on land there are courts waiting to take your treasure away.

Yesterday, the 11th Circuit ignored the eminently fair “finders keepers” rule and decided that Odyssey Marine Exploration must turn over to the Spanish government 17 tons of silver coins and other treasure recovered from a sunken ship in 2007.

The sunken ship is the Nuestra Señora de las Mercedes (Our Lady of Mercy), a Spanish frigate. On Oct. 5, 1804, the Mercedes was part of a Spanish squadron that had the misfortune of coming across a prowling British squadron off the south coast of Portugal. 

Now, the Spanish and their French allies generally got their tails whipped whenever they met the British Navy in battle. The Battle of Cape Santa Maria on Oct. 5, 1804 (pictured above), was no exception.

In the action, the Mercedes blew up, sending its contents and 200 of her crew to the bottom of the ocean. 

Fast forward to 2007, the deep sea treasure hunting company Odyssey Marine Exploration finds what appears to be the site of the wreck of the Mercedes

That was very good news for the Tampa-based company because the Mercedes was transporting tons of silver coins and other treasure. The deep-sea explorer managed to recover approximately 594,000 coins from the wreck. 

With upwards of $500 million at stake, this high seas adventure quickly turned into a courtroom squabble.

Odyssey Marine filed an admiralty complaint in federal court in Tampa Bay, seeking to establish its rights to the wreck and treasure. 

In stepped Spain, claiming its right to the treasure by virtue of the fact that the Mercedes was one of its warships. Spain’s legal argument under the Foreign Sovereign Immunities Act (FSIA) was that the cargo recovered from the Mercedes must receive the same sovereign immunity protection as the Mercedes itself.

To Odyssey Marine, the argument was that a foreign country may claim immunity in an in rem admiralty action only when the sovereign is in possession of the res

This variant of the finders keepers rule was probably a mistake since, as we all know, judges tend to eschew simple, common-sense rules when there are juicy statutes, rules and regulations to masticate.

Yesterday, the 11th Circuit decided that Spain had the better of the argument and upheld a lower court ruling in favor of that country. 

“An examination of the FSIA reveals no possession requirement exists in any part of the statute,” the court explained. 

“When Congress determined ‘the exact degree[] and character’ of subject matter jurisdiction over the property of foreign sovereigns under the FSIA, it did not provide an exception to immunity for property not in a foreign sovereign’s possession.” (Odyssey Marine Exploration v. Spain)

Gee, a bleak statement of the law like that just sucks all the fun out of roaming the high seas for adventure and treasure. 

– Pat Murphy

patrick.murphy@lawyersusaonline.com

Woman disfigured by permanent makeup loses in court

Vanity should have its limits. Risking one’s health in the search for a better look definitely crosses the line.

To the good fortune of plastic surgeons, tanning salons, tattoo artists and cosmetologists, there are millions of customers who don’t give a second thought to the risks.

One of those customers is a California woman who should have thought long and hard before allowing a cosmetologist to inject her eye lids and brows with permanent makeup.

In 2003, Donna Hennigan came up with the bright idea of having permanent makeup affixed around her eyes.

Now, being of the male persuasion, I don’t pretend to understand what women go through in putting makeup on every day. So perhaps it makes some sense to have some of the basics tattooed around the eyes.

But don’t fashions change? And isn’t it something of a stretch for a woman to predict how she might want her eyes to appear ten or twenty years down the road?

I suppose permanent makeup can be retouched or updated as time goes by, but why bother, particularly when it comes to some cosmetologist taking a needle and injecting pigment under the skin?

The needle part would certainly be a show-stopper for me.

But it wasn’t a show-stopper for Hennigan, although it should have been.

In April 2003, Hennigan went to the Dermatique Day Spa in the Sacramento area to get her permanent makeup.

Alicia White owns the spa and handled Hennigan’s permanent makeup procedures. Essentially, it’s a form of tattooing.

Since people can have an allergic reaction to the pigment administered under the skin, White first did a spot test behind Hennigan’s ear. There was no reaction, so White proceeded to do Hennigan’s eyebrows using a pigment called Brown Suede, made by Premier Pigments.

Two months later, in June 2003, Hennigan returned to the spa to have White touch up her right eyebrow. At this time, White also did Hennigan’s eyelids using another Premier pigment called Black Magic.

Alas, in mid-July 2003, Hennigan began experiencing adverse reactions in the area of her eyebrows. By August, she had developed granulomas (nodular inflammatory lesions) and a bacterial infection in her eye lids and brows.

Yep, Hennigan found herself suffering a delayed allergic reaction, allegedly due to the pigments injected by White. 

Doctors prescribed prednisone to treat the problem, which helped. But the prednisone caused other side effects. One of Hennigan’s eyelids drooped, requiring surgery to repair it.

In July 2004 — too late for Hennigan — the Food and Drug Administration issued an alert warning of adverse reactions suffered by those injected with certain Premier pigments, including Brown Suede and Black Magic.

Hennigan sued White in state court, asserting claims of negligence and strict liability.

With respect to negligence, Hennigan alleged that, rather than doing just a spot test, White should have performed a purportedly more conclusive patch test to determine if she was allergic to the Premier pigments.

For her strict liability claim, Hennigan alleged that the pigments that White sold and used were defective.

Yesterday, a California appeals court upheld a summary judgment in favor of White on both counts.

The key problem with Hennigan’s negligence claim, the court found, was that there was no evidence showing that White’s omission of a patch test caused Hennigan’s injuries.

To the contrary, Hennigan’s own expert testified that allergic reactions to pigments may not occur for years after application.

“Because the only evidence before the trial court indicated a patch test likely would not have disclosed Hennigan’s allergy to the pigment, the court could not find a contested issue of fact over whether omitting the patch test proximately caused Hennigan’s injury,” the court of appeals said.

Turning to the strict liability claim, the court decided that Hennigan’s lawsuit faltered because she was unable to show that the premier pigments were defective.

In this regard, the court held that evidence of an allergic reaction by itself does not establish a product is defective for purposes of strict liability.

“No evidence shows the defendants had a duty to warn at the time Hennigan received her applications because they knew or had reason to know the pigments could cause an allergic reaction such as Hennigan suffered,” the court explained.

“The FDA Talk Paper was issued one year after Hennigan began experiencing adverse effects. Under such circumstances, the mere fact of an allergic reaction is insufficient to establish a dispute over whether the product at issue was defective.” (Hennigan v. White

– Pat Murphy

patrick.murphy@lawyersusaonline.com

Costco class action gets the Wal-Mart treatment

Everyone knew that Wal-Mart v. Dukes would be a nightmare for employment attorneys who once had hopes of making a splash with a nationwide class action.

The 9th Circuit just had the pleasure of applying the Supreme Court’s earth-shaking decision in a gender discrimination case against wholesaler Costco. Not surprisingly, the news is bad for plaintiffs and their attorneys.

Shirley Ellis, Leah Horstman, and Elaine Sasaki sued Costco, alleging that the company’s promotional practices regarding store managers discriminate based on gender.

January 11, 2007, was a good day for the plaintiffs because on that day a federal district court in California granted their motion to certify a class for all current and former female Costco employees nationwide who had been denied promotions to certain managerial positions since Jan. 3, 2002.

Costco appealed the class certification to the 9th Circuit. While the Costco appeal simmered, the Supreme Court decided Wal-Mart.

Lest anyone forget, this summer’s decision in Wal-Mart barred certification of what would have been the largest job discrimination class action in history. 

Wal-Mart opposed class certification for 1.5 million gender discrimination plaintiffs on the basis that they failed to meet Civil Rule 23’s requirement that claims be cohesive, common, typical and adequate to represent all members of the class. 

On the issue of certification under Rule 23(b)(2), which covers injunctive or declaratory relief, the Court unanimously concluded that the Wal-Mart plaintiffs didn’t qualify. 

Regarding monetary relief under Rule 23(b)(3), a majority of the Court found that the Wal-Mart plaintiffs — whose positions ranged from hourly store greeters to salaried company executives — did not possess the requisite commonality to proceed as a class action. 

The Court’s decision left many attorneys wondering about the continued viability of class actions in the employment context.  

Those worries appear to be well-founded based on Friday’s decision by the 9th Circuit in the Costco case. 

In vacating the certification of the Costco class, the 9th Circuit recognized the changed landscape in the wake of Wal-Mart, stating that “[g]iven this new precedent altering existing case law, we must remand to the district court.” 

In particular, the appeals court said that a redo was required as to the district court’s ruling on “commonality” under Rule 23(a).

“The district court failed to conduct the required ‘rigorous analysis’ to determine whether there were common questions of law or fact among the class members’ claims,” the 9th Circuit said. “Instead it relied on the admissibility of Plaintiffs’ evidence to reach its conclusion on commonality.”

The 9th Circuit further vacated the district court’s ruling as to “typicality” under Rule 23(a), because “the district court failed to consider the effect that defenses unique to the named Plaintiffs’ claims have on that question.”

Placing a final nail in the coffin, the 9th Circuit said that, “[i]n light of Wal-Mart’s rejection of the ‘predominance’ test,  the district court must consider whether the claims for various forms of monetary relief will require individual determinations and are therefore only appropriate for a Rule 23(b)(3) class.” (Ellis v. Costco

– Pat Murphy

patrick.murphy@lawyersusaonline.com

Insurance doesn’t cover global warming suit

Friday, in a first-of-its kind ruling, the Virginia Supreme Court decided that an insurance company is not obligated to defend or indemnify an energy company sued for damaging the environment of an Alaskan village through the emission of greenhouse gases. 

In 2008, the village of Kivalina, Alaska, sued AES Corporation and other energy companies for nuisance in California federal court.

Kivalina is a native community located on an Alaskan barrier island. Kivalina claimed that AES and its codefendants damaged the village by causing global warming. The village’s beef is that AES released tons of carbon dioxide and greenhouse gases into the atmosphere as part of its electricity-generating operations. 

Virginia-based AES sought defense and indemnity of the global warming suit under a commercial general liability policy issued by Steadfast Insurance, a subsidiary of Zurich Financial Services. 

AES sued in state court to establish coverage when Steadfast concluded that the global warming lawsuit didn’t allege an “accident” within the meaning its policy. 

Friday’s decision by the Virginia Supreme Court affirmed a lower court’s judgment in favor of the insurer. 

The court explained that Kivalina’s complaint “alleges, from the viewpoint of AES, that AES should have anticipated the damages resulting from its emitting carbon dioxide and greenhouse gases. …

“Even if AES were actually ignorant of the effect of its actions and/or did not intend for such damages to occur, Kivalina alleges its damages were the natural and probable consequence of AES’s intentional actions. Therefore, Kivalina does not allege that its property damage was the result of a fortuitous event or accident, and such loss is not covered under the relevant CGL policies.” (AES v. Steadfast Insurance)

– Pat Murphy

patrick.murphy@lawyersusaonline.com

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