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LEGAL UPDATE: Governor Corbett signs tort reform bill limiting civil liability

HARRISBURG, Pa., June 28, 2011 – Pennsylvania Governor Tom Corbett today signed into law Senate Bill 1131, which limits the liability for the negligence of defendants in some civil court cases.

After the Senate signed off earlier this month, the state House voted 116-83 on the Bill on June 27.

As a result of this law, supporters anticipate that business owners and other defendants will not have to pay a disproportionate share of the damages for negligence awarded in certain civil court cases.

Current law holds that all defendants potentially liable for damages may be required to pay 100 percent of a damages award if their co-defendants cannot pay for the negligence resulting in death or injury to a person or property.

Supporters of the new law argue that the old standard allowed an alleged victim’s lawyer to target wealthy companies and small-business owners who had only minor involvement in the negligent act because of their ability to pay out higher amounts in potential settlements.

Under the new law, defendants found to be less than 60 percent at fault would not pay more than their share of the damages, except in certain specific cases.

House leaders said the law now aligns Pennsylvania with the legal standard in effect in 40 other states.

Please click here to read the full text of the Bill.

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LEGAL UPDATE: Supreme Court defines proper standard of causation under FELA

By: T.H. Lyda, Esq. and Edwin B. Palmer, Esq.

June 23, 2011 — The Supreme Court of the United States today announced its decision in the matter of CSX Transportation, Inc. v. McBride. This decision has been anticipated for several months, with the railroad industry and FELA counsel expecting that the Court’s ruling would clarify the proper standard of causation under the Federal Employers’ Liability Act.

Robert McBride, a CSX locomotive engineer, alleged that on April 12, 2004, he was assigned to operate a train on a local run with an unusual consist: two ”wide-body” engines followed by three small conventional cabs. Although McBride protested the arrangement was unsafe, he was instructed to take the train as configured. McBride claims that because the wide-body engines required constant use of a hand-operated independent brake, he became fatigued and sustained a debilitating hand injury when his hand fell and struck the independent brake. McBride filed suit under FELA, alleging that the railroad required him to use unsafe switching equipment and that the railroad failed to properly train him how to use the equipment.

The matter proceeded to trial. The trial court instructed the Jury that the railroad would be liable if “Defendant’s negligence played a part – no matter how small – in bringing about the injury. ” The trial court declined CSX’s request for additional charges, requiring McBride to prove that CSX’s negligence was the proximate cause of Plaintiff’s injury. CSX further requested that proximate cause be defined as “any cause which, in natural or probable sequence, produced the injury complained of,” with the qualification that a proximate cause “need not be the only cause, nor the last or nearest cause. ” After the Jury entered a verdict for the Plaintiff, CSX appealed. The United States Court of Appeals for the Seventh Circuit affirmed the trial court’s jury instruction. CSX again appealed to the United States Supreme Court.

In a 5-4 decision, the United States Supreme Court held today that the FELA does not incorporate proximate cause standards found in non-statutory common law tort actions. The Supreme Court held that the proper standard of causation is whether a defendant railroad caused or contributed to a plaintiff employee’s injury if the railroad’s negligence played any part in bringing about the injury. In arriving at its opinion, the Court relied heavily on the Supreme Court’s 1957 opinion in the matter of Rogers v. Missouri Pacific Rail Co. and the 50 years of subsequent precedent that established a relaxed standard of causation in FELA matters. In Rogers, the Supreme Court found that the FELA did not incorporate the traditional common-law formulation of proximate causation. The Rogers Court first articulated the “any part… in producing the injury” test of causation. The Court’s ruling in McBride specifically approved of Jury instructions defining the standard of causation as whether the defendant railroad’s negligence caused the injury “even in the slightest,” noting that the Rogers opinion “stated a clear instruction comprehensible by juries. ”

On preliminary analysis, the Court’s ruling essentially maintains the status quo in FELA litigation, as Courts have more often than not instructed Juries that the railroad defendant is liable if its negligence played any part in bringing about the alleged injury.

The Court’s full opinion is available to review by clicking here.

For a comprehensive and full analysis of how this impacts the rail industry, please contact T.H. Lyda, Esq., co-chair of Burns White’s Transportation Practice Group or Edwin B. Palmer, Esq., a partner in the Burns White Transportation Practice Group.

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LEGAL UPDATE: What employers need to know about the new ADAAA

By: Dean F. Falavolito, Esq.

The ADA Amendments Act of 2008 (ADAAA) officially took effect on May 24, 2011. The new law made significant changes to the definition of “disability” under the Americans with Disabilities Act (ADA).

The new regulations make it easier for those seeking protection under the ADA to establish they have a disability. Toward that end, the regulations overturn prior Supreme Court decisions that lawmakers felt had interpreted the definition of “disability” too narrowly.

The ADA’s original definition of the term “disability” is a physical or mental impairment that substantially limits one or more major life activities; a record (or past history) of such an impairment; or being regarded as having a disability.

The ADAAA implements changes Congress made regarding how those terms should be interpreted, including the adoption of “rules of construction” that determine if an individual is substantially limited in performing a major life activity. Within these rules, an impairment:

  1. Does not need to prevent or severely restrict a major life activity to be considered “substantially limiting.”
  2. Requires an individualized assessment to determine whether it substantially limits a major life activity.
  3. Will be determined to limit a major life activity without regard to ameliorative effects of “mitigating measures,” such as medication or hearing aids.
  4. Shall be considered a disability even if episodic or in remission as long asit would substantially limit a major life activity when active.
  5. Should not require extensive analysis to determine if it is a disability.
  6. Will have its insurance coverage based on how the person has been treated rather than on what an employer may have believed about the nature of the impairment.

The final regulations differ from the Notice of Proposed Rulemaking (NPRM), clarifying or removing language that groups representing employer or disability interests had found confusing.

For example: Instead of providing a list of impairments that would “consistently,” “sometimes,” or “usually not” be disabilities, the final regulations provide the aforementioned rules of construction to explain how some impairments will virtually always constitute a disability. The regulations also provide examples of such impairments as well as examples of individuals who could be considered substantially limited in working.

For a comprehensive and full analysis of these regulations, please contact Dean F. Falavolito, co-chair of Burns White’s Employment Law Practice Group.

In addition, please consult the following important links:

U.S. Equal Employment Opportunity Commission (EEOC) fact sheet on the final regulations implementing the ADAAA

The Federal Register’s complete list and definitions of the ADAAA regulations

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ATTORNEY BLOG: An unfortunate trend – Immigration-related cases make up the largest category of federal crimes

By: Francis D. Wymard, Esq.

About 36% of all criminal cases filed in federal district courts in late 2009 and early 2010 involved immigration-related offenses, the Administrative Office of the U.S. Courts reported in March. Of 78,013 criminal cases filed in the twelve months ending September 30, 2010, 28,046 (35.9%) involved an immigration crime. This is an 8.7% increase from the prior year. Immigration-related offenses constitute the single largest category of federal crime lodged by prosecutors (drug offenses came in second with 15,785). This data is consistent with a recent U.S. Sentencing Commission report stating that immigration offenses resulting in a sentence in 2009 are now the largest category of federal crime (32.2%) – the first in the Commission’s 20 years of data gathering for which this is true.

Click here to read the Administrative Office of the U.S. Courts report.

Click here to read the U.S. Sentencing Commission report.

If you have a question for Francis or would like to make a comment on the issues discussed in this update, please email SocialMedia@burnswhite.com.

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LEGAL UPDATE: Supreme Court expands scope of employee discrimination cases

By: Dean F. Falavolito, Esq.

Last week, the Supreme Court issued its ruling in Staub v. Proctor Hospital, a much-anticipated decision that will greatly expand the scope of employee discrimination cases. The case was decided under the Uniformed Services Employment and Reemployment Rights Act (USERRA), but because USERRA uses the same discrimination standard as Title VII and the Age Discrimination in Employment Act (ADEA), this decision could potentially have far-reaching consequences in all discrimination cases.

The issue at hand was whether an employee could state a case for discrimination if the person with the discriminatory motive was not the person who actually made the adverse employment decision against the employee (this is sometimes referred to as a “cat’s paw” case). Specifically, the employee was able to prove that his immediate supervisors were hostile towards him as a result of his military service. The employee was later terminated, but by a superior higher up the corporate ladder who (admittedly) had not been hostile or discriminatory toward the plaintiff because of the plaintiff’s military service.

The Supreme Court held that even if the decision-maker did not have any discriminatory motives toward the employee, the employee can sustain a discrimination claim if the decision maker was even slightly motivated by or relied on any information from the discriminating supervisor. This decision has a far reaching effect on employers, as it potentially makes the employers more likely to be liable for “mid-level” managers’ conduct and makes it far more difficult for an employer to defend a case by claiming that a discriminating employee played no role in the plaintiff’s termination.

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LEGAL UPDATE: NLRB settles case regarding employee Facebook post

By: Dean F. Falavolito, Esq.

When the National Labor Relations Board (NLRB) filed suit against an employer in November of 2010 for terminating an employee as a result of her complaints about the employer on Facebook, other employers around the country took notice. The NLRB’s position was that her comments were “protected concerted activity,” which(under the National Labor Relations Act) allows employees to discuss the terms and conditions of their employment with co-workers and others.

Therefore, this firing had the potential to affect all employers, whether or not they had unions in the workplace. The fact that this case quickly settled without leading to any binding precedent can be seen as a positive for employers, but it still serves as a word of caution to any employer considering taking action against an employee for postings on social media.

Click here for the Feb. 8 Wall Street Journal article detailing the settlement.

If you have a question for Dean or would like to make a comment on the issues discussed in this update, please email SocialMedia@burnswhite.com.

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ATTORNEY BLOG: Validating our support of alternative billing arrangements

By: David B. White, Esq.

When our firm was founded in 1987, we sought to bring a progressive, pro-active approach to representing our clients, with the goal of creating innovative solutions while maintaining the highest legal standards.

Our attorneys were to see themselves as advisors who worked to understand our clients’ businesses and anticipate their needs. We understood then – as we do now – that clients and potential clients regarded return on investment as a leading criterion in choosing their legal counsel. History has demonstrated that we haven’t forgotten these core values, especially in regard to our decision to explore alternative billing arrangements with clients right from day one.

Several recent measurements, including The American Lawyer’s 2010 Survey of Leaders of America’s 200 largest law firms, have validated this strategy. According to the survey, 91 percent of respondents said their firm used a flat fee for entire matters in 2010, up 9 percent in just one year, and nearly 93 percent used a flat fee for at least some stages of matters, up 25 percent from 2009.

Those of us with corporate clients should also take note of the results from a survey of 453 corporate chief legal officers and general counsel conducted by the American Association for Corporate Counsel (ACC) and The American Lawyer. A total of 53 percent of general counsel polled revealed that they used flat fee billing for an entire matter, an increase of 5 percent from 2009. The 128 general counsel polled from companies with revenues of $1 billion or more used alternative billing arrangements more than 62 percent of the time and only 13 percent said they didn’t use alternative billing arrangements at all.

Even more revealing are the actual words of general counsel about their experiences with alternative billing arrangements. Their candor (albeit anonymous) as documented in the December 2010 edition of Corporate Counsel Magazine online should serve as a shot across the bow to those firms that are – as-of-yet – unwilling to buy in to a more modern way of partnering with their clients.

“Virtually all firms are willing to talk about alternative fee arrangements, but few are actually willing to commit,” said one law department leader.

“The firms all seem to think ‘alternative’ means an alternative path to the same high fee,” said another.

“Law firms need to adapt to the new marketplace or lose our business,” concluded a general counsel, in what appears to be a startling ultimatum.

Amid the backdrop of the added pressure on law firms to make alternative billing arrangements with their clients, it’s again important to point out that Burns White has been a pioneer in this type of agreement since our inception, when we immediately entered into such an accord with our largest client. During the last 20-plus years, we’ve initiated various, creatively structured flat fee arrangements and monthly fixed retainer fees with clients that allow for adjustments in their payments on a monthly, semi-annual or annual basis, depending upon what is mutually agreeable between the firm and those we represent.

Surveys and feedback such as those documented above serve to support not just our decision regarding alternative billing arrangements, but also our firm’s overall philosophy regarding client representation: We strive to offer higher levels of productivity and cost efficiency to help you enhance your bottom line.

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ATTORNEY BLOG: U.S. financial crisis – the lost story?

By: Lyle Washowich, Esq.

Arguably the “lost” story during the U.S. financial crisis is (and has been) the profound impact of this crisis on the private mortgage insurance industry. Unlike the spotlight placed on the “too big to fail” banks and other major financial institutions – many of whom received U.S. taxpayer financed “TARP” funds – the private mortgage insurance industry has been turned upside down with little fanfare and virtually no public financial support. Nevertheless, the impact of the financial crisis on the private mortgage industry could well be more profound than the impact felt by the major financial institutions.

Indeed, according to the Mortgage Bankers Association, the “survival to date by all but one of the private MI’s is something to be duly recognized.” See “Private MI: The Last Man Standing,” Robert Stowe England, Mortgage Banking, January 2011. Acknowledging that the remaining six private MI’s have lost substantial monetary sums during the crisis, David Katkov, Executive VP and Chief Business Officer of The PMI Group, Inc., noted that “the industry as a whole experienced some of the toughest issues facing the housing finance system, because we’re structured to be in that first-loss position on low-down-payment loans.” Id. Indeed, given the losses to date and the remaining challenges, the survival of the remaining private MI’s is no guarantee.

In short, the private MI’s serve a market that (under the Federal Housing Enterprises Financial Safety and Soundness Act of 1992) requires loans purchased by Fannie Mae and Freddie Mac to carry mortgage insurance to cover potential losses for loan balances above 80 percent of loan-to-value (LTV). While Standard & Poor’s remains worried about some of the MI’s that exist below investment grade today, both S&P and Moody’s cite as a positive sign that a new company is entering the market — Essent Guaranty Inc., from Radnor, Pennsylvania. To stay alive, S&P has calculated that more than $3.34 billion was raised in 2010 by the MI’s. As cash-burn issues are now prevalent, historically going back to 1990, roughly 20% of all mortgages in the country were higher than 80% LTV – which represents “the insurable marketplace,” according to Mike Zimmerman, Director of Investor Relations at MGIC. Within this slice, the private MI’s have typically insured about 2/3 of the business while the federal government has insured the rest. Id.

Any perceived, and certainly real, recovery by the MI’s will signal the dawn of yet another new day in the residential mortgage finance industry. Stay tuned this year and next year to see how these players rebound. Their trajectory will be a sign of the direction of the industry as a whole.

If you have a question for Lyle or would like to make a comment on the issues discussed in this Blog, please email SocialMedia@burnswhite.com.

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