FEDERAL CASE SUMMARIES
Amica Mut. Ins. Co. v. Fogel
656 F.3d 167 (3d Cir. Pa. 2011).
Using NJ Choice-Of-Law Rules, 3rd Circuit Overturns Middle District of Pennsylvania and Applies Pennsylvania Law in UIM Stacking Case
Background: UM/UIM stacking is available in PA, but is not permitted in NJ. The insureds (Fogels) resided in NJ when they insured multiple automobiles with Amica. During the policy term, the insureds moved to Pennsylvania, and made the insurer aware of their permanent relocation, before they were involved in a fatal traffic accident in Pennsylvania. The insureds filed a UIM claim and sought stacking. At the time of the accident, the Fogels’ policy with Amica had not been rewritten or reissued as a PA policy and, in fact, after the accident, Amica paid the Fogels NJ no-fault benefits, not PA no-fault benefits.
In motions for summary judgment on the choice-of-law issue, the Middle District of PA applied PA's choice-of-law rules and, under those rules, held that NJ law would apply as to stacking (thus, no stacking). On appeal, the 3rd Circuit reversed, holding that the choice-of-law rules of NJ should have been applied. Under the NJ choice of law analysis, PA law would apply, thus, there would be stacking.
Holding: Using NJ's choice-of-law the 3rd Circuit held that PA law should apply because it had a strong interest in protecting its citizens’ rights to the full benefit of the insurance they purchased. Further, the Court noted that Amica had actual knowledge that the principal location of the insured risk had shifted from New Jersey to Pennsylvania. NJ’s only relationship to the parties was that it was the state where the policy was initially issued.
Any questions regarding this case can be directed to Jason Giurintano at 717-237-7157 or jgiurintano@tthlaw.com.
Reilly v. Ceridian Corporation
2011 U.S. App. LEXIS 24561
Decided: December 12, 2011
The Third Circuit holds that personal and financial information which has been “hacked”, without any evidence of misuse does not confer standing. All alleged injuries are purely hypothetical, and not actual or imminent.
Background:Ceridian is a payroll processing firm for Plaintiffs’ employer. Ceridian suffered a security breach when its computer system was “hacked” and access was gained to personal and financial information belonging to approximately 27,000 employees at 1,900 companies. It was not known whether the hacker read, copied or understood the data. Plaintiffs filed a complaint in the United States District Court of New Jersey, alleging that they: (1) have an increased risk of identity theft, (2) incurred costs to monitor their credit activity, and (3) suffered from emotional distress. Ceridian filed a motion to dismiss, which was granted, with the court holding that: (1) Plaintiffs lacked standing; and (2) even if there was standing, Plaintiffs failed to adequately allege damages or injuries.
Holding: On appeal, the Third Circuit reviewed the standing requirements. The Plaintiffs have the burden to establish standing. Standing requires an “injury-in-fact” that is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical. Allegations of possible future injury are not sufficient. The Court held that the allegations were insufficient to establish standing, as they rely on speculation that the hacker: (1) read, copied, and understood their personal information; (2) intends to commit future criminal acts by misusing the information; and (3) is able to use such information by making unauthorized transactions. The court also concluded that alleged time and money expenditures to monitor financial information by the Plaintiffs does not establish standing, because costs incurred to watch for a speculative chain of future events based on hypothetical future criminal acts are no more actual injuries than the alleged increased risk of injury which forms the basis for the claims.
Any questions regarding this case can be directed to Paul Walker at 717-441-7061 (pwalker@tthlaw.com).
Williams v. Gyrus ACMI, Inc.
United States District Court for the District of Maryland
Case No. CCB-11-323
Filed: June 9, 2011
Maryland District Court holds thatMaryland applies the law of the state where the injury occurs.
Background: An object was left in the plaintiff’s body during surgery. The plaintiff filed a products liability action in Maryland federal court, alleging counts of strict liability. The defendant moved to dismiss the strict liability counts on the grounds that Virginia law did not allow for strict liability. The defendant argued that Virginia law applied because the surgery giving rise to the case occurred in Virginia. The plaintiff argued that Maryland law applied because the plaintiff moved to Maryland after the surgery and experienced pain in Maryland.
Holding: In tort cases, Maryland applies the law of the state where the injury occurs. In this case, the plaintiff first sustained injury in Virginia because the plaintiff had a cause of action as soon as the object was left in her body. Thus, the court held that Virginia law applied, and dismissed the strict liability claims.
Any questions regarding this case can be directed Ben Peoples at (410) 653-0460 or cpeoples@tthlaw.com.
PENNSYLVANIACASE SUMMARIES
Toney v. Chester County Hospital
60 MAP 2009 (Pa. 2011)
Decided: December 22, 2011
The Pennsylvania Supreme Court, evenly divided, affirms the Superior Court holding that a plaintiff may state a valid cause of action for negligent infliction of emotional distress [NIED] based on a breach of contractual or fiduciary duty, even if there is no physical impact or injury. The Court also holds that a plaintiff no longer need plead a physical impact or injury in order to establish a valid claim of NIED. Although not precedential, as the Supreme Court was evenly split in its decision, this case will be cited for persuasive authority.
Background: During plaintiff’s pregnancy, she underwent an ultrasound, which was reported as normal. When plaintiff gave birth, her son had profound physical abnormalities. Plaintiff claimed that because of the negligent interpretation of the ultrasound, she was prevented from preparing herself for the shock of witnessing her son’s birth. She alleged that she suffered emotional distress which manifested in nausea, headaches, insomnia, depression and nightmares. Plaintiff filed a lawsuit claiming NIED. The trial court granted the defendant’s preliminary objections. The Superior Court reversed. The Supreme Court accepted review of whether a plaintiff can plead a viable cause of action for NIED based on a contractual/fiduciary duty and can plead a cause of action for NIED absent a physical impact or injury.
Holding: Previously, a plaintiff could only establish a valid cause of action for negligent infliction of emotional distress on one of the three grounds: the impact rule; zone of impact/danger liability; or bystander liability. The three justices, who found a viable cause of action for NIED based on a pre-existing fiduciary/contractual relationship, examined the decisions from states which have permitted such claims. The court explained that the relationship cannot be a garden-variety commercial enterprise, but must be special. The relationship must involve an implied duty to care for the plaintiff’s emotional wellbeing. Examples given were the doctor-patient relationship and mortuaries. The court also found that NIED claims do not require a physical impact as an element of the tort.
The three dissenting justices explained that the decision to recognize a NIED claim, based on a fiduciary/contractual relationship and which eliminates the requirement of any physical impact or injury, significantly expands healthcare providers’ liability. The judiciary should not undertake to expand liability in this manner. This is something better left to the legislature. The three dissenting justices further expressed concern about how the jury is to assess damages when the plaintiff would have experienced emotional suffering as a result of her son’s birth regardless of the ultrasound interpretation.
Any questions regarding this case can be directed to Stephanie L. Hersperger at 717-255-7239 (shersperger@tthlaw.com).
Betts Industries, Inc. v. Raymond V. Heelan, Jr. and Cairn L. Bishop
2011 PA Super 265; 2011 Pa. Super. LEXIS 4300
Decided: December 12, 2011
The Superior Court holds that, for the purpose of applying the Dragonetti Act, when the federal court dismisses each of the federal claims over which it has authority to exercise jurisdiction, the federal proceeding is terminated.
Background: Defendants Raymond V. Heelan and Cairn L. Bishop were two officers of Allegheny Valve and Coupling Inc. The officers’ company filed a federal suit against Betts Industries, Inc. asserting violations of the federal Lanham Trademark Act as well as various state law violations. The federal court granted summary judgment in favor of Betts Industries, Inc. as to the federal trademark claim, dismissing it with prejudice. The federal court declined to address the state claims and dismissed them without prejudice.
Subsequently, Betts Industries, Inc. sued the two officers, alleging wrongful use of civil proceedings pursuant to the Dragonetti Act, 42 Pa.Cons.Stat. §8351. Under §8351(a)(2) of the Dragonetti Act, a person who takes part in the procurement, initiation or continuation of civil proceedings against another is subject to liability to the other for wrongful use of civil proceedings if: (1) he acts in a grossly negligent manner or without probable cause and primarily for a purpose other than that of securing the proper discovery, joinder of parties or adjudication of the claim in which the proceedings are based; and (2) the proceedings have terminated in favor of the person against whom they are brought. The trial court held that the federal action was not terminated in favor of Betts Industries, Inc. for purposes of the Dragonetti claim, because the officers’ company was allowed to file its state claims in state court. The trial court granted the officers’ preliminary objection in the nature of a demurrer and dismissed the action. Betts Industries, Inc. appealed. The issue was whether the trial court properly dismissed the Dragonetti action based on its finding that the proceeding had not yet terminated in favor of Betts Industries, Inc.
Holding: The Superior Court reversed and remanded the case for further proceedings consistent with its opinion. The Superior Court explained that all of the federal claims were withdrawn or dismissed by the federal court. The federal claims were resolved in favor of Betts Industries, Inc. and could not be re-raised in state court. Thus, the federal court order was a final adjudication and terminated the federal proceeding in favor of Betts Industries, Inc. Accordingly, Betts Industries, Inc. could bring a Dragonetti claim against the two officers based on the officers’ actions in filing the federal claims.
Any questions regarding this case can be directed to Kimly Vu at (412) 926-1438 or kvu@tthlaw.com.
Soto v. Nabisco, Inc.
2011 PA Super 249, 2011 Pa. Super. LEXIS 3753
Decided: November 21, 2011
The Superior Court of Pennsylvania holds that an injured employee’s sole course of recovery against his employer lies within the Workers Compensation Act, despite that employer’s merger with, and taking on of, a new corporate identity.
Background: Mr. Soto was injured in 2007 while operating a cracker cutting machine while working for Nabisco. He had been employed by Nabisco since at least 2000. In July 2001, Nabisco merged with Kraft Foods and, thereafter, ceased to exist as a separate entity. Mr. Soto filed a Complaint against Kraft for his workplace injuries, and Kraft asserted the defense of statutory immunity under Pennsylvania’s Workers Compensation Act (“WCA”). The trial court agreed that the immunity applied and Mr. Soto appealed.
Holding: The Superior Court affirmed the lower court and held that the WCA contained Mr. Soto’s sole course of recovery against his employer. In so doing, the Court rejected Mr. Soto’s arguments under the “dual persona” and “dual capacity” doctrines.
The Court reasoned that Kraft had not modified the cracker cutting machine, the machine was used solely by Nabisco/Kraft employees, Nabisco had manufactured the machine and no members of the public were permitted to use the machine, among other related facts. In sum, to Mr. Soto, the only indication of the merger was that his paycheck now came from Kraft instead of Nabisco. Accordingly, the Court held that Kraft had not “injured” Mr. Soto while acting as a separate entity; therefore, Kraft was his employer at the time of his injury. As that employer could not be subjected to independent liability in light of the WCA, the dismissal of Mr. Soto’s claims against Kraft in Common Pleas Court was upheld.
Any questions regarding this case can be directed to Ryan Blazure at 570-820-0240 or at rblazure@tthlaw.com.
State Farm Mutual v. Cavoto
2011 Pa. Super. 250
Decided November 21, 2011
The Superior Court holds the Chiropractic Practice Act and the Motor Vehicle Financial Responsibility Law permits licensed chiropractors to delegate certain adjunctive procedures to unlicensed support personnel and seek reimbursement from insurers so long as procedures are performed under the direct supervision of a licensed chiropractor.
Background: State Farm filed an action against Cavoto Chiropractors and others after learning that they were billing and being reimbursed for certain adjunctive procedures that were being performed by unlicensed support staff. These procedures included applying hot and cold packs, turning on and off mechanical, intersegmental, traction machines and assisting in therapeutic exercise. In the Complaint, State Farm sought restitution of the amounts previously paid and a declaration that they were not obligated to pay for such services under the Chiropractic Practice Act (“CPA”) and the Pa. MVFRL. State Farm argued that they should not have to pay for services being provided by unlicensed staff and the Chiropractors contended that they were properly delegating procedures. The trial court held a hearing on the declaratory judgment claim and ruled against State Farm, which then appeal.
Holding: On appeal, the Superior Court affirmed the trial court on the “primary impact” of the order, i.e., that unlicensed support staff may perform certain aspects of adjunctive procedures that do not require chiropractic training. In so holding, the Court reasoned that that many of the procedures at issue, such as applying hot and cold packs, turning on and off traction machines and administering hydrotherapy and paraffin, were “non-specialized” procedures, which were properly delegable under the CPA as long as done under the “direct on-premises supervision” of a chiropractor. As such, State Farm was required to pay for such services. However, the Court questioned whether services such as “assisting in therapeutic exercise”, fell within the scope of the “non-specialized” services that could be delegated. The Court noted that some forms of assistance would be innocuous, such as monitoring repetitions, while others might require specialized education. Accordingly, the Court vacated that portion of the trial court’s opinion regarding therapeutic exercise “and remanded the case with instructions to make more “specialized findings” regarding whether such assistance with exercise required formal chiropractic training.
Based upon this holding, carriers are responsible for payment of adjunctive chiropractic services even though certain “non–specialized” aspects of the services were performed by unlicensed chiropractic support staff.
Any questions regarding this case can be directed to Darren Powell at 717-237-7154 or dpowell@tthlaw.com.
MARYLAND CASE SUMMARIES
Stalker Brothers, Inc. v. Alcoa Concrete Masonry, Inc.
Court of Appeals
September Term, 2010
Case No. 57
Filed: October 24, 2011
An unlicensed subcOntractor can enforce a contract with a licensed home improvement general contractor.
Background: An unlicensed subcontractor contracted with a licensed home improvement general contractor. The general contractor did not pay the amounts due under the contract. The subcontractor sued the general contractor. The circuit court dismissed the complaint on the grounds that the contract was unenforceable under Maryland’s Home Improvement Act, which prohibited subcontractors from working unlicensed.
Holding: Maryland’s highest court reversed the circuit court’s ruling. The court explained that the purpose of the statute was to protect the public from unlicensed contractors. The purpose of the statute was inapplicable in this situation because the public was not involved. Rather, the contract at issue was between two companies with knowledge of the industry. Unlike the general public, the general contractor was in a position to know and did know the qualifications of the subcontractor. Thus, the Act did not render the contract unenforceable.
Any questions regarding this case can be directed Ben Peoples at (410) 653-0460 or cpeoples@tthlaw.com.
NEW JERSEY CASE SUMMARIES
Rogers v. Cape May County Office of the Public Defender
Superior Court of New Jersey – Appellate Division
No.: A-63 Sept. Term 2010
Decided: December 5, 2011
Defendant was “exonerated” on the day the indictment was dismissed, not when his case was reversed, thus his legal-malpractice action was not time-barred
Background: During a criminal trial, a jury convicted Rogers of various crimes relating to the distribution of controlled dangerous substances. After trial, Rogers filed a Post Conviction Relief (PCR) Petition arguing ineffective assistance of counsel by the public defender, which was granted. The trial court subsequently dismissed the indictment against Rogers with prejudice.Significantly, the date the case was reversed would have subjected Roger's claim to a one-year time bar, but a dismissal would not. Rogersthen sued the Cape May County Public Defender's office for malpractice. One year later, his attorney filed a Motion For Leave To File a Late Notice of Tort Claim, which was denied. The trial judge determined that Rogers’ claim accrued in 2007, and that, because he filed his Late Notice of Tort Claim more than one year after accrual of the claim, i.e., “exoneration,” the court lacked jurisdiction to hear his case. The appellate court affirmed, and Rogers appealed.
Holding: Upon review, the Supreme Court found that Rogers was not "exonerated" until the indictment was dismissed with prejudice in 2008. His claim was, thus, not time-barred by the one year filing limitation. Nevertheless, because the claim was filed ten days beyond the ninety-day limit, the Court remanded the case for further proceedings to determine whether the "extraordinary circumstances" as defined by the governing statute were satisfied.
Any questions regarding this case can be directed to Oliver M. Bather at 610-332-7006 or (obather@tthlaw.com).
New Providence Apartments Co. v. Mayor and Council of New Providence
Superior Court of New Jersey – Appellate Division
A-2924-10T4
Decided Dec. 1, 2011
A municipal ordinance imposing a user fee for sewer service upon owners of apartment units, but not single-family homeowners, survived statutory and constitutional scrutiny where the ordinance was reasonably designed.
Background: The owners of apartments in New Providence challenged a municipal ordinance imposing a $100 annual fee per unit for sewer service upon apartment owners, but not on single-family homeowners. The statutory challenge alleged a violation of N.J.S.A. § 40A:26A-10 providing that such user fees are to be uniform and equitable for the same types and classes of use and service of the facilities. In addition, the constitutional challenge alleged violations of the equal protection guarantees of the United States and New Jersey constitutions. The Union County trial court upheld the validity of the user fee.
Holding: On appeal, the Appellate Division affirmed. Because the user fee is reasonably designed to reduce the gross disparity in the contributions to the costs of sewer service derived from real estate taxes paid by owners of single-family homes and apartment owners, the ordinance complies with the statutory mandate of N.J.S.A. § 40A:26A-10, that sewer fees shall be "uniform and equitable for the same types and classes of use and service" and the equal protection guarantees of the U.S. and N.J. constitutions.
Any questions regarding this case can be directed to Christopher J. Dos Santos at 610-332-7017 or (cdossantos@tthlaw.com).
Senisch v. Carlino, et al.
Superior Court of New Jersey – Appellate Division
A-6218-09-T3; 2011 N.J. Super. LEXIS 211
Decided: Dec. 1, 2011
The Appellate Division affirms a trial court’s entry of summary judgment in favor of a hospital and two employees where a former employee alleged violations of the Conscientious Employee Protection Act (“CEPA”), common law defamation and tortious interference with prospective economic advantage. The Court held that the Defendants acted in good faith and without malice. Further, the Health Care Professional Responsibility and Reporting Enhancement Act (“HCPRREA”) as well as prior case law established a qualified privilege for the hospital’s employees against civil liability.
Background: Plaintiff was employed from 1995 through 2000 as a physicians’ assistant (“PA”) at the Defendant hospital. During that time, Plaintiff filed complaints relating to discrimination in the treatment of male PA’s and alleged violations of laws pertaining to patient care and hospital record keeping. After Plaintiff’s performance reviews were unfavorable, the hospital terminated him. Plaintiff later applied for various medical positions and in response to information requests from potential new employers, his previous employer provided a letter indicating that Plaintiff was involuntarily terminated for specific deficiencies. Subsequently, Plaintiff retained the services of a company, Documented Reference Check (“DRC”) to pose as a prospective employer and seek a reference from Defendant hospital. In response, DRC received substantially the same letter which indicated that Plaintiff was terminated for deficiencies and not eligible for rehire. Plaintiff filed suit against the hospital for retaliation under CEPA and against the employees who provided the responses for defamation and tortious inference with prospective economic advantage.
Holding: The trial court properly entered summary judgment in favor of the Defendants on all counts. Plaintiff’s claims failed because all of the Defendants acted in good faith and without malice. Additionally, there was no viable claim for defamation based upon the letter provided to DRC because DRC was acting as Plaintiff’s agent and thus there was no publication of defamatory statement to a third-party. Further, Plaintiff had no claim for interference with prospective economic advantage, because DRC did not have any employment position available for Plaintiff, rather it was posing as a prospective employer. Moreover, the individual Defendants were entitled to a qualified immunity under the HCPRREA and controlling case law.
Any questions regarding this case can be directed to Lisa Trembly at 610-332-7029 or (ltrembly@tthlaw.com).
K.L. v. Evesham Township Board of Education
Superior Court of New Jersey – Appellate Division
No: A-1771-10T3
Decided: December 12, 2011
Notes kept by school personnel at the direction of the Board’s attorney are not privileged as attorney-client communications, but are attorney work-product material and are not subject to disclosure under the OPRA or common law
Background: Parents sought access to school records pertaining to alleged incidents of bullying of their children at an elementary school. Defendant Board of Education declined to release any records except the children's own school files. The parents brought suit, alleging a right of access both under New Jersey’s Open Public Records Act (OPRA), and under a common-law right of access to government records.
At trial, the Board identified two categories of records it possessed but believed need not be disclosed under OPRA or the common law. First, school personnel had notes made at the request of the Board's attorney concerning incidents involving plaintiffs’ children and contacts with plaintiffs. The Board asserted that the notes were not subject to disclosure because the attorney-client privilege, the work product privilege, and the deliberative material exception exempted them from disclosure. Second, according to the Board, any records that pertain to other students are exempt from disclosure under the federal Family Educational Rights and Privacy Act (FERPA) as well as State privacy laws. After reviewing the notes, the trial court determined that the documents were exempt from disclosure under OPRA and the common law because they were protected by the attorney-client and work product privileges, and that any records pertaining to other students were protected from disclosure by FERPA. Plaintiffs appealed.
Holding: In a unanimous ruling, a three-judge appellate panel of the New Jersey Superior Court affirmed the trial court’s ruling in this regard. The court held that the notes were not protected by the attorney-client privilege, but were entitled to a qualified privilege under the work product doctrine. However, the court explained that, although the notes are attorney work product, the work product privilege is not an absolute bar to disclosure. Thus, to determine whether Defendant’s work product privilege should give way to plaintiffs’ right of access to the records, the court weighed plaintiffs’ OPRA and common law rights of access against the Board's interest in maintaining confidentiality under the work product doctrine. The court ultimately determined that the records were privileged from disclosure under the work product doctrine, and therefore, the Board was not required to disclose them to plaintiffs in response to either their OPRA or common law requests.
Any questions regarding this case can be directed to Oliver M. Bather at 610-332-7006 or (obather@tthlaw.com).
JUDGE EAKIN’S MOST RECENT RHYMING OPINION
Judge Eakin of the Pennsylvania Supreme Court has filed his most recent opinion in verse, something he has become well-known for. The case addressed whether the maker of a forged check, appearing to be from State Farm, had committed insurance fraud by attempting to deposit the check. A link to the decision is here: http://www.pacourts.us/OpPosting/Supreme/out/J-24-2011oaj.pdf.