I was recently asked to make a presentation regarding arbitration clauses before a national dealer group. I went through past issues of You Auto Know and since 2001, I have drafted five You Auto Knows on arbitration clauses. I went from being a great proponent of arbitrations to recommending that each matter be reviewed independently to determine whether or […]
Although production has slowed, some companies continue to build pipelines associated with transporting shale gas and oil here in Ohio. Private landowners often attempt to deny pipeline companies access to their property for the usual reasons such as not wanting what seems like trespassers on their property. However, the Ohio Ninth District Court of Appeals […]
On May 23, 2016, the United States Department of Labor, Wage and Hour Division (DOL-WHD), issued its final rule relating to overtime requirements under the Fair Labor Standards Act (FLSA). The new rules become effective December 1, 2016. This gives employers six short months to figure out how to comply with the new requirements. The most […]
Employers should become familiar with a newly enacted federal law which affects their ability to enforce trade secrets protections against their employees and independent contractors. In summary, the Defend Trade Secrets Act of 2016 (“DTSA”), enacted on May 11, 2016, is a new federal law which: Expands an employer’s ability to bring trade secret […]
In the October 2015 You Auto Know©, we discussed the proposed bill that would have amended Ohio’s Constitution to permit medical and recreational use of marijuana. The measure, in the November election, was resoundingly defeated primarily due to the fact that a monopoly was going to control the growing and distribution of the drug. Very […]
You Auto Know! Social Media Update By Robert A. Poklar As you know, in the past this author has written articles on social media. Recently, I received a call from an attorney in another state asking for advice on a problem where a salesperson was sending text messages to potential customers. Some issues arose regarding […]
Today, the Department of Labor (DOL) issued its much anticipated final rule expanding overtime eligibility. The final rule sets the minimum salary threshold for overtime exemption at $47,476. Under the new rule, all salaried employees making less than $47,476 must be paid overtime for all hours worked over 40 in a regular work week, no […]
In World Harvest Church v. Grange Mutual Casualty Company, slip opinion 2016-Ohio-2913, decided on May 12, 2016, the Ohio Supreme Court enforced an abuse exclusion in a commercial insurance policy, finding no coverage for damages awarded against an employer found liable for its employee’s physical abuse of a child in the care, custody or control […]
I was recently asked to make a presentation regarding arbitration clauses before a national dealer group. I went through past issues of You Auto Know and since 2001, I have drafted five You Auto Knows on arbitration clauses. I went from being a great proponent of arbitrations to recommending that each matter be reviewed independently to determine whether or not arbitration would be applicable. Let me provide you with snippets of my position over the years.
June 2001 You Auto Know: “First it must be established that arbitration is viewed as a good procedure to follow in order to resolve legal disputes. The reasoning is that arbitration is generally much quicker, less costly, the matter is heard either in front of one or three impartial arbitrators, and the court system is not being tied up with litigation … This author highly recommends an arbitration provision in each and every Buyer’s Order.”
March 2014 You Auto Know: “First, it must be noted that this author is absolutely in favor of having an arbitration clause in your Buyer’s Order …. Even a poorly written arbitration clause provides you with a window of opportunity to stay any litigation in court in the attempt to have the matter arbitrated.”
January 2008 You Auto Know: “At first, the arbitration clauses worked very well, not only on behalf of the dealer, but also on behalf of the consumer. The reason behind this was the fact that the parties were able to have an impartial hearing within a short period of time after the arbitration was filed.” “However, there was one downfall to the arbitration. The Plaintiff’s attorney fees were significantly reduced. Obviously, this lead to litigation which has substantially redefined the arbitration system.” “… if a plaintiff pleads that the arbitration clause was one of adhesion and he or she was coerced into executing an unconscionable agreement, then the Court has the ability to hold a full blown hearing (trial) specifically on the topic of the arbitration clause itself.” “… parties must incur time and litigation expenses in determining whether or not the arbitration is valid …” “The downside for the dealer in any arbitration is still a ‘runaway’ arbitrator(s) who chooses to ignore the law and award damages to an undeserving plaintiff.”
The upside to a well written arbitration clause is the inclusion of a “class action waiver.” Although this is under attack throughout the United States by plaintiffs’ attorneys and activist judges, the inclusion of the class action waiver clause has been upheld and therefore precludes the individual consumer plaintiff from participating or instituting a class action lawsuit. Obviously, this is important if one knows that plaintiff’s counsel is seeking to pursue a class action against a dealership. However, in ordinary consumer cases, there are downsides. As I indicated before, plaintiffs are entitled to what I call a “trial within a trial,” specifically, Ohio Revised Code §2711.023 permits a plaintiff to challenge the arbitration clause based upon its terms or conditions and the manner in which the clause was executed. In the legal practice, it is known as substantive unconscionability and procedural unconscionability. In essence, this permits a plaintiff to pursue discovery, interrogatories, requests for production of documents, admissions and depositions against the business/dealership regarding the formulation and utilization of the arbitration clause itself. Since this is a final appealable order by the court, either the plaintiff or the dealership has the right to appeal and, obviously, the appellate process can take an additional year. This means additional time and cost before the actual consumer case is even heard. Quoting my October 2011 You Auto Know, “Further, I have found that most plaintiffs’ attorneys who are willing to run to arbitration generally do so because they have a weak case. They believe that since discovery process is limited, they have a better opportunity to present a weak case to an arbitrator.” It is not necessary for an arbitrator to specifically follow the Rules of Civil Procedure or the Rules of Evidence in a hearing, therefore, there is the danger to present evidence and testimony that would not be permissible in a courtroom situation. Further, in order to overcome one of the main objections to arbitration by a consumer, businesses will generally agree to pay the full arbitration fee schedule and the arbitrator’s time and costs. Regardless of the independent arbitration sources that you utilize, this can be very expensive. For example, one arbitration source will only use retired judges and you will pay their time, travel, and hotel accommodations to be present for the arbitration. Next, there is always the issue of obtaining a rogue arbitrator who does not or will not follow the law. Does this happen? Absolutely! In this situation, the arbitrator will find for the plaintiff simply out of sympathy and will craft a decision to support his or her bias. The decision can be hard to understand. There really is no appeal process to the arbitrations unless it can be shown that there is evident partiality or bias on behalf of the arbitrator and this is very difficult to prove.
Further, some arbitration sources state that if you use their name in an arbitration clause, then the business is obligated to submit the business’ arbitration clause to the entity for review to determine if it follows the guidelines for that arbitration source. This is particularly true of the American Arbitration Association. Quoting the American Arbitration rules, “Upon receiving the arbitration agreement, the AAA will review the agreement for material compliance with due process standards contained into consumer due process protocol … There is a non-refundable fee to conduct this initial review … Any subsequent changes, additions or deletions or amendments … to an arbitration agreement must be resubmitted for review and a fee will be assessed at that time … Further, “after the AAA reviews a submitted consumer clause, receives the annual consumer registration fee and determines it will administer consumer related disputes filed pursuant to the arbitration clause, the business will be included in the publicly accessible consumer clause registry … Therefore, in order for you to utilize AAA, your arbitration clause must be approved by AAA, for a fee, and you will pay a yearly fee to AAA besides the actual arbitration fees and costs.
I realize the choice to go to arbitration should be determined on a case by case basis. I do not believe that each and every matter should automatically go to arbitration. This is a situation where you and your legal counsel will have to determine the facts of the matter and the strengths and weaknesses of not only your case, but the plaintiff’s case. Therefore an informed decision should be made as to the best venue to try the case. In many cases, a court will throw out a number of the plaintiff’s claims based upon the filing of a Motion for Summary Judgment which will streamline the issues at hand. Although permitted, many arbitrators refuse to rule on motions for summary judgment believing that any and all issues should be presented whether warranted or not.
Again, make sure you have an arbitration clause with a class action waiver, but choose the location of your battle wisely. You may find out that going to court is better.
Although production has slowed, some companies continue to build pipelines associated with transporting shale gas and oil here in Ohio. Private landowners often attempt to deny pipeline companies access to their property for the usual reasons such as not wanting what seems like trespassers on their property. However, the Ohio Ninth District Court of Appeals recently confirmed that under Ohio Revised Code Section 1723.01, pipeline companies have the clear right to enter private property to conduct survey activities.
Landowners argued that the statute allowed the pipeline company to survey only in connection with an actual appropriation (taking) of the land. The court ruled that the pipeline company could enter even before an appropriation action and without a showing of necessity.
This ruling confirms that many utility companies have broad access rights to a landowner’s private property. However, such rights are not unfettered. Nothing physically can be done to private property except with a landowner’s permission or after a legal process has run its course.
If you have any questions about this topic, feel free to contact Dana Rose or your Weston Hurd attorney.
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Employers should become familiar with a newly enacted federal law which affects their ability to enforce trade secrets protections against their employees and independent contractors. In summary, the Defend Trade Secrets Act of 2016 (“DTSA”), enacted on May 11, 2016, is a new federal law which:
Expands an employer’s ability to bring trade secret misappropriation claims under federal jurisdiction;In the October 2015 You Auto Know©, we discussed the proposed bill that would have amended Ohio’s Constitution to permit medical and recreational use of marijuana. The measure, in the November election, was resoundingly defeated primarily due to the fact that a monopoly was going to control the growing and distribution of the drug. Very quietly on June 8, 2016, Governor Kasich signed into legislation a law that would create a tightly controlled, permissible use, of medical marijuana. The law will go into effect 90 days from the date the Secretary of State officially files the law. The mechanics of the law are somewhat cumbersome, but it would be a regulated program controlled by the Ohio Department of Commerce, State Pharmacy Board and State Medical Board. I will not go into detail about the law since it is over 84 pages. The law specifically states that smoking or growing marijuana is strictly prohibited. The lawmakers believe that smoking would be detrimental to a person’s health and would go against public health messages against cigarette smoking. Therefore, the only forms of medical marijuana that will be dispensed are oils, tinctures, plant material, edibles and patches. Further, there is an opening for “any other form approved by the State Board of Pharmacy” under Section 3796.061 of the Revised Code. It must be noted that vaporization of medical marijuana is permitted, but again, smoking it is not. There is a list of medical conditions that are approved for a patient seeking medical marijuana. For example, epilepsy, Crohn’s disease, Parkinson’s disease, PTSD, Tourette Syndrome, traumatic brain injury and others. The patient, through his physician, must seek approval from the previously mentioned Board in order to obtain the proper authorization. The application includes a statement by the physician indicating:
In that regard, the employer cannot be sued by an individual for failing to hire, to discharge, to discipline or to seek discrimination or retaliation claims against the employer for terminating the individual for medical marijuana use. The termination will be deemed as discharged for just cause purposes in order for the business to have a drug free work place and zero tolerance policy or any other policies that the business has established through its employee handbook.
Well, there you have it in a nutshell. Simply because an individual has a medical marijuana permit does not mean that the dealership cannot terminate that employee for cause under its employee handbook for substance abuse.
Today, the Department of Labor (DOL) issued its much anticipated final rule expanding overtime eligibility. The final rule sets the minimum salary threshold for overtime exemption at $47,476. Under the new rule, all salaried employees making less than $47,476 must be paid overtime for all hours worked over 40 in a regular work week, no matter their duties. This new rule will go into effect on December 1, 2016.
Although the final salary threshold is somewhat lower than the initial threshold proposed in July 2015, the DOL still anticipates the new threshold will result in over four million employees becoming eligible for overtime.
As we have advised in prior client alerts, it is important that employers undertake a thorough review of their pay practices to determine whether any of their salaried employees are at or near the $47,476 threshold. More detailed recommendations for employers to comply with the new law will follow.
If you have any questions about the final rule, please contact your Weston Hurd attorney.
In World Harvest Church v. Grange Mutual Casualty Company, slip opinion 2016-Ohio-2913, decided on May 12, 2016, the Ohio Supreme Court enforced an abuse exclusion in a commercial insurance policy, finding no coverage for damages awarded against an employer found liable for its employee’s physical abuse of a child in the care, custody or control of the employer.
Factual and Procedural Background
In 2006, Michael and Lacey Faieta filed suit against World Harvest Church (“WHC”) and its employee, Richard Vaughan, alleging that Vaughan beat their two-and-a-half-year-old son while the child was attending WHC’s daycare center. WHC settled the Faietas’ lawsuit for $3.1 million and sought to have its commercial carrier, Grange Mutual Casualty Company (“Grange”), reimburse it for a portion of the settlement. Grange denied WHC’s insurance claim, and WHC filed suit.
The commercial insurance policy included a corporal punishment endorsement that provided coverage for injuries that result from the corporal punishment of a student administered by or at the direction of the insured. The policy also had an “Abuse or Molestation Exclusion” (“abuse exclusion”) which excluded coverage for bodily injury arising from “the actual or threatened abuse or molestation by anyone of any person while in the care, custody or control of any insured” or the negligent supervision of a person for whom any insured is or ever was legally responsible. Grange argued, in part, that the abuse exclusion excluded coverage for WHC’s claim.
The trial court sided with WHC, and the Tenth District Court of Appeals affirmed part of the trial court’s decision finding Grange had to cover WHC for an amount of compensatory damages, attorney fees, and post judgment interest. The Ohio Supreme Court accepted Grange’s discretionary appeal.
Ohio Supreme Court Holding
The Ohio Supreme Court reversed the Tenth District’s determination that Grange is responsible for coverage for damages awarded to the Faietas, finding that the language of Grange’s abuse exclusion bars coverage for an award of damages based on WHC’s vicarious liability arising from Vaughan’s abuse of the child while in WHC’s care and custody.
Rationale
The Court concluded that the language of the abuse exclusion encompassed WHC’s vicarious liability for Vaughan’s intentional infliction of emotional distress arising from the abuse. The Court did not find any language in the abuse exclusion that limits its application to damages awarded for an insured’s direct liability, explaining: “The failure to include an express denial of coverage for claims of secondary, or vicarious, liability, does not support the interpretation advanced by WHC, i.e., that the policy must therefore cover vicarious liability. Nor does it render the exclusion ambiguous.”
The Court further held that, because the result of its decision was that no claims were covered by the insurance policies, there was no basis to conclude that Grange must indemnify WHC for the attorney fees awarded on noncovered claims, nor was Grange obligated to pay any amount of post judgment interest.
Assessment
This is an important decision that enforces the abuse exclusion that is found in many commercial policies. The Ohio Supreme Court did not disturb the Tenth District Court of Appeals’ conclusion that the exclusion unambiguously applies to physical abuse and not just sexual abuse. Importantly, the Court found that the exclusion is not ambiguous, in that it clearly excludes claims for bodily injury arising from secondary, or vicarious, liability.
Please contact your Weston Hurd attorney if you have any questions about this decision.
Ohio Supreme Court Slip Opinion
http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2016/2016-Ohio-2913.pdf
Weston Hurd Insurance Update
