Category: Litigation

Electronically Stored Information, Social Media and the Rules of Professional Conduct: Are you compliant with your duties of competence and diligence?

Recently published in The National Law Review was an article about Compliance and Diligence and Electronic Media by  Charles H. Gardner of  Much Shelist, P.C.:

Electronically Stored Information and its increasingly complex progeny, social media evidence (collectively, “ESI”) are quickly being woven into the fabric of discovery and the practice of law.  As the cases and rules of professional conduct discussed below demonstrate, lawyers who fail to thoughtfully investigate and use social media evidence (both that of their own client and that of the opposing party(ies)) are not engaged in best practices.

The American Bar Association (“ABA”) Model Rule of Professional Conduct 1.1 (Competence) states that “[a] lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.” (The Model Rules have been adopted in all of the fifty states, except California, and in the District of Columbia and the U.S. Virgin Islands). Comment 5 to Rule 1.1 provides, in part, that “[c]ompetent handling of a particular matter includes inquiry into and analysis of the factual and legal elements of the problem, and use of methods and procedures meeting the standards of competent practitioners. It also includes adequate preparation (emphasis added).” Further, the ABA Standing Committee on Ethics and Professional Responsibility Formal Opinion No. 98-411(1998) states, “[w]e believe the ethical issues are the same whether [involving] substantial legal or procedural aspects of a client’s matter or [a lawyer’s] ethical duties in furtherance of the client’s matter.”

Much has changed since the ABA adopted the Model Rules of Professional Conduct and its predecessor guidelines. Electronic data and communication and social media communities such as Facebook, MySpace, and Twitter have become linchpins of society and discourse. As of December 2011, Facebook alone reported that it had 845 million monthly users and more than 483 million average daily users (http://newsroom.fb.com/content/default.aspx?NewsAreaId=22, last visited Feb. 12, 2012).

In the recent case of Griffin v. Maryland, 192 Md. App. 518, 535 (2010), the court opined, “[i]t should now be a matter of professional competence for attorneys to take the time to investigate social networking sites (emphasis added).” In addition, a 2010 study by the American Association of Matrimonial Attorneys found that an overwhelming eighty-one percent of the nation’s top divorce attorneys said that they have seen an increase in the number of cases in which social media evidence plays a role. Sixty-six percent of those attorneys cite Facebook as the primary source of such evidence. Accepting as an imminent practical reality that an attorney has or will soon have an affirmative duty to investigate social media evidence, what might the cost be to the attorney, the client, or both for failing to do so or, worse, failing to preserve such evidence?

Consider hypothetically the evidentiary value of photographs posted on a disability claimant’s social media page showing her rock climbing, for example. One can see just how persuasive ESI can be.  However, ESI can also be a minefield of professional liability. Consider the case of Lester v. Allied Concrete Company, Nos. CL08-150, CL09-223 (Va. Cir. Ct. Oct. 21, 2011) in which a Virginia attorney was found to have instructed his assistant to tell his client to remove a photograph from a social media website. Finding that the lawyer had violated Virginia’s equivalent of Model Rules 3.3 (Candor toward the tribunal), 3.4 (Fairness to opposing parties and counsel), 5.3 (Responsibilities regarding non-lawyer assistants), 8.4 (Misconduct) and rules of court regarding conduct that tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute, the court sanctioned the attorney with a fine of $540,000. In addition, the court fined the client $180,000 for spoliation of evidence. For the twenty-first century practitioner, a well thought-out ESI discovery plan could mean not only the difference between success and failure in the matter at hand, but may also mean the difference between a grateful client and a client that brings a malpractice claim, a disciplinary complaint or both for ineffectiveness in investigation and preparation. However, case investigation and preparation are not the only source of risk for attorneys and judicial officers.

The case of In re: B. Carlton Terry, Jr., No. 08234 (N.C. Judicial Standards Commission, April 1, 2009) demonstrates how critical it is for attorneys to be savvy in social media and ESI discovery in general. In that family law case, the judge, plaintiff’s counsel and defense counsel were discussing Facebook in a meeting in chambers. Plaintiff’s attorney commented that she did not know what Facebook was and did not have time for it. Following the meeting in chambers, Judge Terry and defense counsel became friends on Facebook and discussed the case in some detail. Judge Terry also conducted independent investigation into plaintiff’s social media pages and quoted from them at the hearing. The judge did not inform plaintiff’s counsel of his actions until after he had entered an oral order. Plaintiff’s counsel immediately sought to and did have the judge’s order vacated. Judge Terry voluntarily disqualified himself and the case was remanded for a new hearing, costing the taxpayers a considerable amount. Ultimately Judge Terry was publicly reprimanded by consent in formal proceedings before the Judicial Standards Committee.

Had plaintiff’s counsel conducted a thorough, or even a rudimentary, ESI investigation, the wrongdoing on the part of defense counsel and the bench could have been addressed promptly which would have spared both Plaintiff and the taxpayers significant costs in having to try the same matter twice.

Furthermore, it is worth noting that the rules of professional conduct apply equally to in-house counsel and transactional attorneys as to litigators. In the more casual in-house and transactional business environments, the line between clients and business colleagues can become easily blurred. These attorneys should be especially mindful of their professional responsibilities and the implications that their actions may have on their organization in the event that litigation ensues.

Following are six simple and practical suggested steps towards developing a strong ESI discovery plan and investigation process:

  1. Educate yourself about social media and ESI in general. If you do not know where to look, you could be lost in a search engine “black hole”. Not only can you place yourself ahead of the pack in the legal community, you will also be able to communicate with your children and grandchildren!
  2. Draft a written ESI discovery plan that includes an immediate request for a discovery hold on ESI.  Be systematic and judicious in your requests. And be mindful of Model Rule 1.3 (diligence).
  3. Draft and circulate acknowledgement forms to all personnel in your organization and obtain their signatures.  These documents should educate your personnel about sound social media practices and emphasize ethical concerns as well as the legal liability to the organization, to you and to the employee, who could also face appropriate discipline for violating company policy.  Be mindful of Model Rule 5.3 (responsibilities regarding non-lawyer assistants). And, with respect to employees, be mindful of the limitations imposed by the National Labor Relations Act when drafting your policies and acknowledgement forms.
  4. Instruct your client that ESI is evidence and that the client should not tamper with or destroy such evidence until the case is completely resolved, including during the time allowed for appeals and in appellate proceedings, if any.
  5. Check your client’s social media pages.  Know what you are up against.
  6. Conduct a thorough review of any and all available ESI of the other party.  Be careful to abide by the “no contact” rules.  For example, do not send a surreptitious friend request to gain access to another party’s ESI, but rather, look only at what is publicly available to you and obtain proper warrants for any additional information.  And be prepared to argue to the court why the evidence is relevant and why it should be produced and admitted.

If you are not making diligent and competent use of ESI, you place yourself and your client at a severe disadvantage and you are arguably breaching your ethical obligations. The immediate future is a rare opportunity to be on the cutting edge of developing law.  With a little knowledge and a reasonable amount of follow-through, you can set yourself apart in the new media frontier by making sound use of the bountiful resources that new media technologies have brought to the practice of law.

Charles H. Gardner is Special Counsel to the Intellectual Property & Technology group at Much Shelist, P.C. and head of its social media practice.  Mr. Gardner is a frequent writer and lecturer on the topic of social media and new media technologies. He has been featured in Crain’s Chicago Business and The Chicago Daily Law Bulletin and will be leading a CLE seminar on the “Laws of Social Media” (tailored for house counsel and business executives) on February 21, 2012.* Before joining Much Shelist, Mr. Gardner served as Director of Legal and Business Affairs for Harpo Studios, Inc. Mr. Gardner has a juris doctorate from Loyola Law School, Los Angeles (Entertainment Law Review) and a bachelor’s degree from the University of California, Berkeley.  He is admitted to practice law in California, New York, Illinois, the District of Columbia and before the United States Supreme Court.

*For more information and/or for complimentary registration, please call or e-mail Mr. Rodney Abstone at CLS Executive Search at (312) 251-2564 or email rabstone@clsexecutivesearch.com. 

© 2012 Much Shelist, P.C.

Cutting Edge Issues in Asbestos Litigation Conference

The National Law Review would like to advise you of the upcoming Perrin Conference regarding Cutting-Edge Issues in Asbestos Litigation:

Thursday, March 1st – Friday, March 2nd, 2012
Beverly Wilshire, A Four Seasons Hotel
Beverly Hills, CA

Cutting Edge Issues in Asbestos Litigation Conference

The National Law Review would like to advise you of the upcoming Perrin Conference regarding Cutting-Edge Issues in Asbestos Litigation:

Thursday, March 1st – Friday, March 2nd, 2012
Beverly Wilshire, A Four Seasons Hotel
Beverly Hills, CA

High Court: Police Tracking of Suspect Via GPS Requires Warrant

Recently found in The National Law Review an article by Rachel Hirsch of Ifrah Law regarding a recent High Court Decision Requiring a Warrant:

Last November, we discussed the U.S. Supreme Court’s oral argument in United States v. Jones, which posed the question of whether police need to obtain a warrant before attaching a GPS device to a suspect’s vehicle during a criminal investigation.

We noted that in this case, 21st-century technology had come face to face with the constitutional requirements of the Fourth Amendment. We were hoping that the high court would uphold the U.S. Court of Appeals for the D.C. Circuit and hold that this action is a search that requires a warrant, but we took a pass on predicting what the Court would actually do.

On January 23, 2012, the Court decided the case – unanimously against the government and in favor of defendant Antoine Jones. The decision is fairly gratifying for those of us who believe it desirable to curb prosecutors’ power by imposing restrictions upon it, including, where appropriate, the requirement of a judge-issued warrant.

It turns out that both the advocates of the original-intent approach to constitutional interpretation, epitomized here and in general by Justice Antonin Scalia, and those who prefer the doctrine of the “living Constitution,” led here by Justice Samuel Alito, agree that the use of a GPS device by the government constitutes a search and requires a warrant.

Scalia, writing for a majority of the Justices, observed that prosecutors had intruded upon Jones’ property in way that would have been a “trespass” under common law.

Prosecutors “physically occupied private property for the purpose of obtaining information,” Scalia wrote. “We have no doubt that such a physical intrusion would have been considered a ‘search’ within the meaning of the Fourth Amendment when it was adopted.” And for Scalia, that fact alone was enough to decide the case.

Alito, joined by three Justices who concurred in the result, used quite a different line of reasoning and sharply criticized Scalia’s majority opinion, saying that ironically, it relied upon 18th-century tort law to decide a case involving 21st-century technology.

“This holding, in my judgment, is unwise,” Alito wrote. “It strains the language of the Fourth Amendment; it has little if any support in current Fourth Amendment case law; and it is highly artificial.”

Instead, Alito wrote, he “would analyze the question presented in this case by asking whether [Jones’] reasonable expectations of privacy were violated by the long-term monitoring of the movements of the vehicle he drove.” Alito observed that for decades, the Court has invoked the concept of “reasonable expectations of privacy” in a number of cases to define the nature of a “search” under the Fourth Amendment and to expand the definition of “search” to actions that do not involve a trespass to someone’s property.

Even though Alito is often identified with the pro-prosecution, conservative wing of the Court, he took the defendant’s side in this case. As our blog post last November noted, at oral argument Alito expressed concern about how easy it is these days “to amass an enormous amount of information about people” by the use of today’s technology.

Alito’s opinion followed similar lines. In the absence of legislation about police use of GPS tracking, he wrote, “The best that we can do in this case is to apply existing Fourth Amendment doctrine and to ask whether the use of GPS tracking in a particular case involved a degree of intrusion that a reasonable person would not have anticipated.”

This is good news for constitutional rights and for defendants. Whatever approach one takes to the Fourth Amendment, it’s clear that prosecutors can’t attach a GPS to a suspect’s car without a warrant.

© 2012 Ifrah PLLC

Cutting Edge Issues in Asbestos Litigation Conference

The National Law Review would like to advise you of the upcoming Perrin Conference regarding Cutting-Edge Issues in Asbestos Litigation:

Thursday, March 1st – Friday, March 2nd, 2012
Beverly Wilshire, A Four Seasons Hotel
Beverly Hills, CA

Cutting Edge Issues in Asbestos Litigation Conference

The National Law Review would like to advise you of the upcoming Perrin Conference regarding Cutting-Edge Issues in Asbestos Litigation:

 

 

Thursday, March 1st – Friday, March 2nd, 2012
Beverly Wilshire, A Four Seasons Hotel
Beverly Hills, CA

 

 

 

Indictments of Megaupload Are a Greater Threat to Web Users Than Piracy

Recently featured in The National Law Review was an article by Rachel Hirsch of  Ifrah Law regarding Megaupload Indictments:

 

 

 

In last week’s Megaupload indictment, the U.S. government has raised the debate over copyright infringement on the Web to a whole new level – treating the operators of one of the most popular sites on the Internet as if they were part of organized crime.

On January 19, 2012, a federal grand jury in the Eastern District of Virginia charged executives, founders and employees of Megaupload.com, one of the leading file-hosting services on the Web, with copyright infringement, conspiracy to commit racketeering and money laundering. The U.S. Department of Justice is charging that Megaupload.com caused over $500 million in lost revenue from “pirated” content such as music and movies. In addition, the government seized Megaupload’s domain names and shut down all of its sites, contending that Megaupload is an organization dedicated to copyright infringement.

These actions, more suitable to the type of steps that the government takes against an organized-crime enterprise dedicated to murder, theft and racketeering, are astonishing. The government seems to have ignored the fact that other popular content-sharing sites have successfully defended themselves in civil cases by using the safe harbor provisions of the Digital Millennium Copyright Act, which provide immunity to a site that promptly takes down infringing content.

Among those charged in the indictment were Megaupload founders Kim Dotcom and Mathias Ortmann, chief marketing and sales officer Fin Batato, and lead programmer Bram Van der Kolk. All four were arrested in Auckland, New Zealand. On Monday, the Auckland district court denied bail, making way for extradition proceedings that will likely be contested. In addition to the arrests, approximately 20 search warrants have also been executed within the United States and in eight additional countries. The Eastern District of Virginia has called for the seizure of 18 domain names associated with the site, and about $50 million in assets and targeted sites have been seized thus far.

The indictment is riddled with inconsistencies. On the one hand, the government asserts that Megaupload is not entitled to use the safe harbor provisions. According to the government, everything on the site was doctored to create a veneer of legitimacy, while its employees knew full well that the site’s main use was to distribute infringing content. Yet the government readily admits that it has Megaupload emails talking about using U.S. courts and lawyers to file actions against other “pirate” sites and that the site did take down illegal content and build an abuse tool. To top it all off, many big-name artists support the site, as evidenced by an entirely legal video posted on YouTube, which Megaupload tried to save in U.S. courts from takedown requests.

The 72-page indictment is not some knee-jerk reaction to the ongoing protests of proposed misguided legislation that would strengthen protections against piracy at severe costs to the Internet. This action was clearly in the works for some time. But the filing of a criminal case against one of the most popular sites in the world is remarkable to say the least, given that other popular content-sharing sites have never faced criminal charges for allegedly facilitating piracy. Indeed, when these other sites have been targeted in well-financed civil cases, they have successfully asserted defenses.

When Viacom filed its lawsuit against YouTube in 2007 based on charges that YouTube and its parent, Google were engaging in “massive intentional copyright infringement,” the government did not arrest YouTube or Google executives. In fact, the U.S. District Court for the Southern District of New York held that YouTube was shielded from liability in that case by the safe harbor provisions.

Similarly, when IO Group, Inc. filed a complaint against Veoh Networks for copyright infringement, the U.S. District Court for the Northern District of California held that Veoh’s video-sharing website was entitled to the protection of the safe harbor provision. In both cases, U.S. courts recognized that simply providing access to content did not equate to engaging in infringing activities.

Megaupload, an online storage and web hosting service site, counts itself in the same category as YouTube and Veoh — merely acting as a hosting company that provides access to content. By invoking the full wrath of U.S. criminal laws, the government is using tools that were never meant for this situation – and is potentially doing incalculable harm to thousands of Internet users and to the integrity of the Web itself.

© 2012 Ifrah PLLC

Court of Appeal Reminds Litigants That Settling With Named Plaintiff Does Not Necessarily End Putative Class Action

An article recently published in the National Law Review by Neil A.F. Popović and Lai L. Yip of Sheppard Mullin Richter & Hampton LLP  regarding Putative Damages and Class-Action Lawsuits:

 

If a defendant in a putative class action settles with the class representative prior to class certification, does the defendant nonetheless have to respond to pre-settlement discovery requests to identify absent class members? According to the California Court of Appeal in Pirjada v. Superior Court, 2011 WL 6144930, Case No. B234813 (Cal. App. Dec. 12, 2011), the answer is no, although the appellate court left open the possibility that the trial court could require some form of notice to protect the interests of absent class members.

Plaintiff Seeks Discovery Identifying Putative Class Members

Putative class representative Obaidul Pirjada (“Pirjada”) brought a purported class action on behalf of all security guards who had been employed in California by defendant Pacific National Security, Inc. (“Pacific National”) during the preceding four years, alleging violations of the California Labor Code and the California Business and Professions Code. Pirjada propounded discovery requesting, among other things, the names and addresses of all putative class members. Pacific National did not object or respond to the discovery requests.

Plaintiff, Without Counsel Involvement, Settles Directly With Defendant

Without the involvement of his attorneys, Pirjada settled directly with Pacific National after negotiating with its CEO. Then, by letter to his counsel, Pirjada requested that his claims be dismissed with prejudice, and enclosed the settlement agreement along with payment for legal services.

Plaintiff’s Counsel Files Motion for Order Providing Notice to Putative Class Members; Defendant Files Motion to Dismiss

Instead of dismissing the lawsuit, however, Pirjada’s counsel filed a motion seeking to provide notice to absent members of the proposed class that substitution of a suitable class representative was necessary. Pacific National filed a motion to dismiss based on the parties’ settlement, which Pirjada joined.

Superior Court Denies Both Motions

The superior court denied Pacific National’s motion to dismiss, noting that a plaintiff’s individual settlement does not vitiate plaintiff’s or his counsel’s fiduciary obligations to the putative class members. The court granted sixty days leave to amend to add a new plaintiff as class representative. The court denied counsel’s motion for notice, finding it unnecessary because unlike in CashCall, Inc. v. Superior Court, 159 Cal. App. 4th 273 (2008), and Best Buy Stores, L.P. v. Superior Court, 137 Cal. App. 4th 772 (2006), members of the putative class of security guards know whether they were injured and thus can determine without notice whether to assert claims against Pacific National. The court specifically noted, however, that regardless of notice, plaintiff’s counsel was authorized to communicate with potential class members.

Plaintiff’s Counsel Moves to Compel Discovery to Identify New Class Representative, Which Superior Court Denies

Plaintiff’s counsel then moved to compel responses to the previously propounded requests for information identifying putative class members, arguing that Pacific National had waived its objections by failing to respond; that Pirjada could not provide contact information for other putative class members because he worked at only one Pacific National location and was the only guard assigned there; and that Pirjada contacted counsel only after his employment at Pacific National had ended. The superior court denied the motion to compel, stating that Pirjada had settled his claims and that his discovery requests were therefore moot. The court reiterated, however, that counsel were free to communicate with class members, even if it they were not entitled to discovery.

Court of Appeal Denies Petition, Deciding Superior Court Did Not Abuse Discretion

Plaintiff’s counsel filed a petition for writ of mandate challenging the superior court’s denial of the motion to compel, as well as the denial of the motion to provide notice.

The Court of Appeal concluded that the superior court acted within its broad discretion in denying the motion to compel, and choosing instead to protect absent class members by allowing counsel leave to amend the complaint after using informal means to identify potential replacement class representatives.

With respect to notice, the Court stated:

[P]recertification discovery may be allowed in appropriate circumstances to identify a substitute class representative in place of one who is not able to serve in that capacity, as well as to assist the lead plaintiff in learning the names of other individuals who might assist in prosecuting the action. But the obligation to notify absent class members before dismissing the case rests with the superior court, not the lead plaintiff or class counsel. The nature and extent of that notice must be decided by the court itself.

Pirjada, 2011 WL 6144930. at *14. The Court noted that under California Rule of Court 3.770, no notice to absent class members is required at all “if the court finds that the dismissal will not prejudice them.” Id. Moreover, because the superior court issued an order to show cause regarding dismissal, counsel will have the opportunity at that hearing to demonstrate that some form of notice is required to avoid prejudice to absent class members.

Lessons for Class Action Defendants

The somewhat unique circumstances in Pirjada highlight the importance of making sure to tie up procedural loose ends, such as outstanding discovery, when a defendant settles with the named plaintiff(s) prior to class certification. More broadly, the case serves as a reminder that named plaintiffs and their counsel have an ongoing fiduciary duty to potential class members, and courts must take reasonable steps to protect those interests, including through potential discovery and notice procedures.

Under Parris v. Superior Court, 109 Cal. App. 4th 285 (2003), and its progeny, “‘trial courts must apply a balancing test and weigh the actual or potential abuse of the class action procedure against the potential benefits that might be gained'” by allowing precertification discovery to identify a substitute class representative.Pirjada, 2011 WL 6144930, at *5 (quoting Starbucks Corp. v. Superior Court, 194 Cal. App. 4th 820, 825 (2011)). Addressing that standard remains a key consideration for defendants who seek to avoid ongoing class action litigation when they settle with a named plaintiff.

Copyright © 2011, Sheppard Mullin Richter & Hampton LLP.

Barnes & Thornburg Labor Relations’ Top Ten Traditional Labor Stories of 2011 (Part 1)

‘Tis the season for year-end recaps, and we here at BT Labor Relations couldn’t resist taking our own look back at the year in traditional labor. As we move into 2012, here’s our countdown of the top ten traditional labor issues that made the news this year. Numbers 10 through 6 are below; check back tomorrow for our top five.

10. The Board sues Arizona over secret ballot constitutional amendment

2011 started off with a bang in January when the Board’s Acting General Counsel Lafe Solomon threatened to sue four states (Arizona, South Carolina, South Dakota, and Utah) over their secret ballot union election constitutional amendments. All four states added provisions to their state constitutions mandating that union elections be held by secret ballot only, after constitutional amendments passed by public referendum at the November 2010 election. These constitutional amendments were in response to the Employee Free Choice Act (EFCA) proposed in Congress in 2009, which would have required an employer to recognize a union if a majority of employees signed cards stating their desire for representation. This “card check” method of recognition is currently allowed by the NLRA, but employers have the option of demanding that election of the union be confirmed by a secret ballot. EFCA would have taken this option away from employers (as well as enacting other pro-union changes to the NLRA).

EFCA never became law, but the constitutional amendments in these states passed anyway, purportedly preserving the right of a secret ballot election for employers in those states. The amendments as they currently stand do not conflict with the NLRA, but the NLRB nevertheless took exception to them, claiming that such state provisions are preempted by federal law. After a back and forth discussion with the states’ Attorneys General during the early part of 2011, the NLRB filed suit against Arizona in May, asking the court to declare that Arizona’s constitutional amendment was preempted by federal law and therefore unenforceable.

Although EFCA never became law, the NLRB has made attempts to individually implement many of the pro-union changes proposed in the bill, and Arizona has become the battleground for card checks. So far, the NLRB’s lawsuit appears to have some traction. The Arizona federal court hearing the case has deniedArizona’s motion to dismiss and litigation continues. Stay tuned in 2012 as this issue continues to develop …

See B&T’s previous coverage of this issue here.

9. The NLRB strikes a blow to mandatory arbitration policies in Supply Technologies

Companies love mandatory arbitration policies in contracts and in May, the U.S. Supreme Court issued a landmark decision in AT&T v. Concepcion upholding such policies in consumer contracts. Employers also see the appeal of mandatory arbitration clauses and many union contracts include such provisions. However, an NLRB Administrative Law Judge reminded employers of the limits of such policies in a decision in June, finding in Supply Technologies LLC that an employer’s arbitration policy violated the NLRA by unlawfully restricting employees’ rights by suggesting that an employee had to bring any unfair labor practice charge through the arbitration procedure, and thus could not make that charge with the Board. This decision served as a warning for employers hopeful after theConcepcion decision that arbitration provisions should be carefully reviewed before being included in collective bargaining agreements. Employers should know that just because SCOTUS approves, doesn’t mean the Board will.

See B&T’s previous coverage of this issue here.

8. Congress sits up and takes notice (although no new legislation is actually passed)

With a new majority in the House of Representatives after the 2010 elections, certain Republican members of Congress have made the NLRB their new target this year. Several hearings were held by Congressional Committees to discuss what many characterize as the pro-union, “activist agenda of the National Labor Relations Board.” The Board’s complaint against Boeing was a frequent target, as well as its decisions regarding posting requirements, “quickie” elections, and “micro” bargaining units.

Additionally, Republicans in both the House and the Senate have introduced bills to amend the NLRA to reverse these controversial actions taken by the NLRB in 2011. The Democrats weren’t able to get EFCA passed when they had a majority of both houses, so it is unlikely that any of this legislation will actually be passed by a divided Congress, but the NLRB’s continued perceived pro-union actions have made traditional labor a key issue as we move into the 2012 election season.

See B&T’s previous coverage of this issue here.

7. General Counsel memo regarding mandatory language in settlement agreements puts additional pressure on employers

This year, the Board has placed additional pressure on employers looking to settle NLRB proceedings with the issuance of a memo by General Counsel Solomon in January which requires mandatory language in settlement agreements whereby an employer in effect agrees in advance that if it is even accused of violating the agreement, all of the prior charges against it have merit. Although the Board characterized this language as necessary for effective enforcement of such agreements, this requirement likely has the effect of simply making employers less willing to settle a case. And it was another example of the Board’s aggressive efforts to secure rights for unions in 2011.

See B&T’s previous coverage of this issue here.

6. Specialty Healthcare decision opens the door for “micro” bargaining units

One of the Board’s more controversial decisions of 2011 was issued in August regarding appropriate bargaining units. In Specialty Healthcare (357 NLRB No. 83), the Board overturned 20 years of precedent regarding determination of an appropriate bargaining unit in non-acute health care facilities. The Board increased the burden on employers who wish to challenge a bargaining unit petitioned for by a union to include more employees. Under the new standard, employers have the burden to prove that the employees the employer believes also should be part of the unit share an “overwhelming community interest” with the petitioned for employees. The previous rule (as articulated by the Board inPark Manor Care Center, 305 NLRB 872 (1991)), applied a lower standard: whether the community of interest of the employees the employer sought to include was “sufficiently distinct from those of other employees” in order to justify their exclusion from the bargaining unit.

The upshot is that this decision allows unions to pursue so-called “micro” bargaining units, and it will be easier for unions to certify bargaining unit(s) piecemeal, even when a majority of employees in a facility do not desire union representation. This decision helps unions trying to “get a foot in the door” by allowing them to target vulnerable employer sub-groups.

This decision was targeted by legislation introduced in Congress to reverse it, but for now, it remains current Board law and sets up new challenges for employers seeking to avoid unionization.

See B&T’s previous coverage of this issue here.

Disagree with our picks? Let us know in the comments what traditional labor issues you think were most important in 2011. And don’t forget to check back tomorrow for our top five!

© 2011 BARNES & THORNBURG LLP

Washington Supreme Court Affirms Class Certification and Post-Accident Diminution in Value Award to Automobile Insureds

Recently posted in the National Law Review an article by Dana Ferestien of Williams Kastner regarding Moeller v. Farmers Ins. Co, of Washington wherein the Washington Supreme Court affirmed lower court rulings in favor of a plaintiff class of automobile insureds:

On December 22, 2011, in Moeller v. Farmers Ins. Co, of Washington, a 5-3 majority of the Washington Supreme Court affirmed lower court rulings in favor of a plaintiff class of automobile insureds seeking breach of contract damages against their insurer for failure to compensate them for the diminished value of a postaccident, repaired car.

The Supreme Court acknowledged that a majority of other jurisdictions have previously denied coverage for diminished value because an automobile policy’s reference to “repair or replace” unambiguously encompasses only a concept of tangible, physical value. But the Court disagreed with this view, emphasizing that Washington law imposes “presumptions in favor of the insurance consumer that are inherent in the rules of construction regarding insurance contracts.” The Court explained that, it “must read an insurance contract as an average person would read it” and that, from the point of view of the consumer, “the reasonable expectation is that, following repairs, the insured will be in the same position he or she enjoyed before teh accidenten enjoyed before the accident.”
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