Clueless in the Cubicle

The Journal’s recent piece about managing employees with misperceptions about their employment self-worth reminds us once again why honest and timely performance feedback makes good business sense. I have written before about the benefit of candid performance reviews, even at the risk of hurt feelings. I have also defended performance evaluations as an important tool to mitigate potential liability for employment claims. The Journal’s piece states that nearly four in 10 employees who received the lowest grades from their managers last year rated themselves as highly valued by the organization based on almost two million assessments. If true, that represents an astounding disconnect between performance-related perception and reality.

Theory is one thing. Managers who are adept at giving feedback is another. While businesses are rightly focused on running the organization’s business, training managers how to deliver quality feedback is often assigned a low priority. Adding to that deficiency is the often unmet need for managers with the right EQ to deliver feedback. But despite those challenges, which exist even for employees who relish feedback, there are some important guidelines for managing employees with an inflated sense of employment worth. Here are a few suggestions for delivering feedback for performance-deniers, who clearly require a more exacting approach.

First, performance discussions (especially about the areas in which the employee is falling short) must be done regularly and ongoing, and especially promptly after an error or mistake is committed. Performance deniers will use a one-time annual review (even if negative) to point out the obvious: if they are falling so short, the manager would not have waited so long to deliver that message (and which, in their view, adds to the review’s inherent unreliability).

Second, managers should not shy away from a denier’s tendency to fight the feedback (they disagree with it, it is wrong, it is fake). Rather, managers should use the denier’s dispute to double down on feedback: the employee’s inability to accept criticism, consider it, and even hear it, are all key parts of an employee’s commitment to the organization to grow and do better. Growth requires introspection. The refusal to engage in that process is itself a performance deficiency.

Third, managers should not permit performance conversations to become a discussion about victimization, unfair treatment or perceived persecution (all of which may end up becoming a legal claim). Performance deniers are adept at deflecting: one key deflection is to blame others and make the discussion about things entirely outside performance parameters. Managers need to be empowered to insist on returning the feedback conversation back to the key and only focus: what is the employee doing well and how can (and must) the employee improve?

Finally, organizations need to assess the impact performance deniers have on employee morale. While not all employees will share the same perception, most people are aware when others aren’t pulling their weight – especially when they are tasked to pick up the pieces. Those on the downhill slope of these assignments – often the best performers because of the natural inclination to step up – may not stick around. The slippery slope here is clear and cluelessness at work is not a great look for the business or the employee.

Even in the 9th Circuit, merely conveying contaminated groundwater isn’t “transportation” of a “solid waste”

Just before the July 4th holiday, two Judges on a Ninth Circuit panel reversed their earlier conclusion that conveying contaminated groundwater can give rise to RCRA liability for the “transportation” of a “solid waste”.  The panel now agrees that the City of Vacaville’s mere conveyance of drinking water contaminated by someone else is not something Congress intended to criminalize (or make subject to civil penalties) in RCRA.

The two Judges reiterated their view that the contaminated groundwater does fall within RCRA’s definition of “solid waste”.

This case first caught my attention in January after the panel’s first bite at this apple. (See https://insights.mintz.com/post/102hg8l/overturning-the-9th-circuit-vaca…).

I guess it is progress that the panel has corrected one of its two mistakes.  But to suggest that conveying groundwater containing parts per billion of anything is the transportation of a solid waste is completely unfaithful to the language of RCRA as the panel has now recognized with respect to the definition of “transportation” but not the definition of “solid waste”.

It bears repeating that the water the City is providing to the residents of Vacaville reportedly meets all applicable federal and state standards, including those established under the Federal Safe Drinking Water Act, and the State of California has stringent standards of its own.  It is those laws, and not the federal law having to do with the transportation and disposal of solid waste, that should apply.

As I wrote in January, if we think those laws, or any of our other federal and state environmental laws, need improving, we should lobby our elected officials to improve them.  But stoking the fears of an already cynical citizenry that our federal, state and local governments aren’t doing their job isn’t worth whatever citizen suit plaintiffs might stand to gain from misusing the laws that we do have.

“RCRA’s context makes clear that mere conveyance of hazardous waste cannot constitute ‘transportation’ under the endangerment provision,” writes Judge Patrick J. Bumatay in the new ruling, joined by District Judge Douglas L. Rayes, sitting on the 9th Circuit by designation.

©1994-2022 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

One-Two Punch: Businesses Must Fight the Virus and Possible Liability Claims

After several weeks in lockdown and thousands of business closures in an attempt to control the spread of the novel coronavirus, businesses are finally reopening their doors. Given the high transmission of COVID-19, businesses should consider their risks of legal liability to visitors on their property – customers, employees and others – in the event of COVID-19 exposure at their premises.  But the fear of civil liability remains a hindering problem. These claims will most commonly be pursued under the legal theory of negligence and plaintiffs may seeking financial compensation for their injuries and medical treatment related to COVID-19. Plaintiff’s lawyers in these cases will focus on the operations and procedures in place during the reopening. Some businesses are taking extraordinary measures to protect customers, while others are doing the bare minimum. Businesses need to know how to be in compliance with best safety practices to prevent and defend against claims related to an alleged failure to protect customers from COVID-19 exposures.

Immunity for Businesses for COVID-19 Exposure?

A large number of states, including Massachusetts, have enacted laws to shield health care workers, health care facilities and volunteer organizations treating COVID-19 patients from negligence claims subject to certain exceptions. However, the immunity does not extend to cover damages caused by gross negligence or recklessness. It is important to note that these states have not provided similar immunity to other businesses, nor have they limited liability in cases involving gross negligence for COVID-19 related claims. There have been discussions of additional legislation to protect businesses in these cases, but this has yet to happen.

Tort Claims and Premises Liability Law in Massachusetts

Personal injury claims typically stem from negligent acts, where a party had a duty of care, failed to reasonably care for that individual, and that failure to care caused the individual harm or injury. A ”duty of care” exists when its reasonably foreseeable that some act or omission would cause some type of knowable harm, and thus taking reasonable action to ensure safety. The breach of that duty is the act or omission that causes the harm. The breach of duty must cause some damages. Damages are monetary compensation for the victim’s injuries and losses if liability is found.

Premises liability law, a subset of personal injury law, similarly holds that property owners owe a duty of reasonable care to visitors on their premises in Massachusetts, so as to not create or allow unsafe or hazardous conditions to exist on their premises that could cause injury or harm to patrons and guests. If a hazardous condition exists that could reasonably cause harm, and the property owner fails to remove it or warn of it, this could ultimately result in liability.

The duty of care is stricter for business owners, as they invite persons onto their property to purchase goods or services. The level of care owed depends upon the type of visitor on the property. Massachusetts has two types of lawfully present visitors: 1) licensees- individuals presenting financial gain for the property owner like patrons, diners, shoppers; and 2) invitees- those who are not providing any financial gain to the property owner like guests and friends at a social gathering. The property owner owes its visitors a duty of care, that is to keep the property reasonably safe. In this context, the property owner is well aware of the risks associated with COVID-19, the nature of the disease and how it is transmitted. If it did not take reasonable steps to prevent the transmission of the virus to its licensees and invitees, and the claimant can prove the business’ failure to exercise reasonable care was a “substantial contributing factor” in causing the claimant’s injury, they may be entitled to damages, which can include among other things, medical expenses, economic damages, and even emotional distress.

Breach of Duty

There is an abundance of guidance available to businesses on the virus, transmission, preventative measures. Whether a business “breached” their duty of care will focus on what the business did to determine if taking action (or taking no action) was reasonable or not, given the state of knowledge on the virus. Thus, claimants would need to point to what steps the businesses took to protect its licensees and invitees, and whether there were additional procedures that could have been implemented to prevent the transmission, and whether those additional actions were reasonable in light of what was known about the virus. Intentional ignorance is not a defense – property owners have a duty to investigate known or potential hazards, including COVID-19.

Causation

Claimants in tort claims have the burden of proving causation. This usually means proving that the breach of duty was a “substantial contributing factor” in causing the claimant’s injury. In COVID-19 cases, the claimant will ultimately need to prove that the virus was contracted at that business as opposed to another source, which may be extremely difficult to do. Asymptomatic spread of COVID-19 is one of many challenges to proving the initial source of exposure. While some claimants will rely on contact tracing, that alone does not rule out alternative sources of COVID-19 exposure – any other place the person visited (markets, homes, their workplace), and exposure to family members and friends.

Notably, a large number of states are enacting legislation applicable to workers compensation claims related to COVID-19. This legislation establishes a rebuttable presumption that an employee who tests positive for COVID-19 contracted it in the course of employment, although some are limited to essential workers. A “rebuttable presumption” means that the burden of disproving causation is thrust upon the employer. While there are no similar rebuttable presumptions for personal injury and premise liability claimants at this time, it is an open question as to whether these presumptions can be used affirmatively in tort lawsuits, particularly in a situation where a worker brings COVID-19 into the home and sickens a family member or housemate.

Mitigating Liability

If businesses can show that safety protocols were followed, this evidence can be used to defend these types of claims. The Centers for Disease Control and Prevention (CDC) has set guidelines that should be followed as best practices to avoid COVID-19 liability claims. There is an abundance of state and local guidance on social distancing, use of masks and other measures to prevent the spread of the virus. With the vast amount of information available to the public on the risks of the virus and preventative measures, claimants will argue that businesses have enough information to safely operate Crafty plaintiff’s lawyers will likely seek out and find guidance that specifically supports their clients case. Business owners are advised to do the same for their respective industries, whether it be restaurants, offices or youth sports leagues.

Defenses to Consider in Defending COVID 19 Liability Claims

Statute of Limitations

The statute of limitations for in Massachusetts governing personal injury and premises liability cases places a time limit of three years within the date of the incident for filing the lawsuit. Lawsuits filed after the statute of limitations period may be dismissed as “time-barred.” Other states have similar statutes, although the specific timeframe may vary.

Modified Comparative Negligence Law

Some states, including Massachusetts, use a modified comparative negligence rule in personal injury cases, allowing plaintiffs to recover only if the defendant’s share of the blame was equal to or greater than their own. There are only a few exceptions allowing plaintiffs to recover if they were more than 51% at fault. Another important factor of this rule to consider is that if plaintiffs are found to be at fault, their damages are reduced by their allocated share of the blame. Did the visitor where a mask? Did they stay 6 feet apart from other individuals? Did they wash their hands and sanitize frequently? Were they placing their hands on their mouth and nose? These facts and circumstances are critical factors to consider when shifting the blame to the claimant.

Assumption of Risk Abolished in Massachusetts

Some jurisdictions allow a defendant in a personal injury action to raise an affirmative defense of assumption of risk, but that is abolished in Massachusetts as a defense in personal injury cases. In jurisdictions where this defense is allowed, instead of denying the allegations, defendants can assert that a plaintiff was aware of the risk when engaging in the activity or conduct, fully had knowledge of the consequences and willingly disregarded the risks or assumed the risks. Therefore, the defendant cannot be at fault for negligence and this serves as a complete bar to recovery.

Liability Waivers

Did a plaintiff sign a written liability waiver acknowledging and accepting risks? Enforceability of liability waivers as well as the exceptions to the enforceability of releases vary from state to state. While this only shows licensees and invitees were made aware of the risk, using such waivers in these COVID 19 claims is not a slam dunk defense.

Conclusion

We encourage businesses to consider these liability risks when resuming operations and to follow comprehensive procedures and CDC guidelines to mitigate the risks and protect licensees and invitees from the spread of the virus at these establishments. Our office can help businesses develop a plan specific to their business to mitigate the risks of liability from emerging claims related to COVID 19 and provide guidance and advocacy for defending such claims.


©2020 CMBG3 Law, LLC. All rights reserved.

ARTICLE BY Seta Accaoui at CMBG3 Law.
For more on business COVID-19 liability, see the National Law Review Coronavirus News section.

How Outdoor Sports and Recreation Operations Can Legally Protect Themselves in a Post COVID-19 Environment

There is a world history of pandemics that, at one point or another, crippled civilizations or dynasties.  In America’s more recent history, our country has experienced the Spanish Flu (1918 – 1920), the Asian Flu (1957 – 1958), and the H1N1 Swine Flu (2009 – 2010).  Though the Swine Flu is in our society’s most recent memory, the current Coronavirus infection and death numbers have already surpassed the total Swine Flu infection and death numbers.  The Coronavirus (COVID-19) has wreaked havoc on Americans and their interactions with each other because of the rapid rate at which the virus spreads.  Businesses have been impacted due to governmental orders to temporarily close or greatly reduce their services.  But with proper action, the spread of the virus will slow, the economy will rebound, and people will return to the extracurricular activities they enjoy.

As our country presses forward, the Coronavirus will change the way business owners conduct business – including operators in the outdoor sports and recreation business.

On May 5, 2020, North Carolina Governor Roy Cooper signed Executive Order No. 138 (the “Order”), which modifies Executive Order No. 121 (also known as The North Carolina “Stay at Home” Order).  The Order signaled the beginning of Phase 1, effective 5:00 p.m. on May 8, 2020, and the gradual reopening of North Carolina.  On May 20, 2020, Governor Cooper signed Executive Order No. 141, which outlines “Phase 2” of reopening North Carolina and will begin on May 22, 2020, at 5:00 p.m. (also known as the North Carolina “Safer at Home” Order).  The Order removes the distinction between essential and non-essential businesses, which were defined in Executive Order No. 121, thus allowing many businesses originally deemed non-essential to reopen.  Additionally, the Order explicitly provides that outdoor activities are allowed and that day camps and programs for children and teens are permitted to resume if they are able to adhere to certain guidelines and social distancing requirements.  Phase 2 allows for overnight camps for children and teens to resume, also as long as requirements are met.  As North Carolina moves through Phase 1 and into Phase 2, several state parks will reopen to the public.  Phase 2 does not permit Mass Gatherings of more than ten people indoors or more than twenty-five people outdoors nor does it allow for indoor fitness facilities to reopen.  Please click HERE for a summary of what Phase 2 allows and does not allow.

As outdoor sports and recreation businesses prepare to eventually reopen, business owners should evaluate their legal documents to determine if the business is adequately protected in the event of this continuing pandemic or another pandemic.  Two items to consider are the contractual language in event contracts and liability waivers.

Update Contractual Language Regarding Event Cancellation or Postponement

Outdoor sports and recreation businesses that provide services such as race organization, adventure vacations, guided excursions, exhibition management, or outdoor recreation conference organization have been forced to cancel or postpone events if the event was scheduled to take place during one of the many state or local government orders to shut down.

Businesses that plan these events often expend costs associated with the event as the planning progresses.  In light of the Coronavirus, most businesses should revise their contractual language involving event production, especially in cases where there is a “no refund” policy.

If the current contractual language does not address governmental orders related to government-ordered shutdowns, pandemics, or does not contain a force majeure provision, then the contract likely should be revised to include such provisions.

The contractual language that addresses pandemics and governmental orders to shut down can help limit the business’s financial liability in the event of event cancellation or postponement due to a future pandemic or governmental order to shut down.

Update Liability Waivers

Outdoor sports and recreational activities come with inherent risks for participants and sometimes even for event spectators.  When a participant or spectator gets injured during the activity, there is potential liability exposure to the other participants, the event organizers, and the activity providers.  Liability exposure is greatly reduced with a proper liability waiver signed by the participant or agreed to by the spectator before the activity begins.

There are several key components to an effective liability waiver.  One such component is the assumption of risk provision.  This provision identifies (1) the activity at hand, (2) the inherent risks associated with engaging in or observing such activity, and (3) that these risks cannot be eliminated no matter the level of care taken to avoid injury.

In light of the Coronavirus, outdoor sports and recreation business owners should examine the assumption of risk provision in their liability waivers.  They should seek legal guidance in adding language to provide that participants are at risk of coming into contact with certain communicable diseases or viruses similar to COVID-19.  The waiver should also be updated to reflect that participants agree to waive claims arising from injury, illness, or death associated with these assumed risks.

Many runners and tri-athletes are looking eagerly to the day when they will once again be allowed to sign up for and compete in races and events. Others are awaiting the return of guided white-water rafting trips, lazy days floating on a tube down a local river, or visiting an adventure center to challenge themselves on a ropes or zip line course.  Owners of these outdoor sports and recreation operations should use this time to get their documents in order to protect themselves against potential future lost revenue or liability in the event of another pandemic or if a government order to shut down occurs.


© 2020 Ward and Smith, P.A.. All Rights Reserved.

For more on the return of sports, see the National Law Review Entertainment, Art & Sports law section.

Million-Dollar Settlement of Billion-Dollar Claim Found Reasonable in Light of Due Process Problems Posed By Disproportionate Damages

Another court has observed that a billion-dollar aggregate liability under the TCPA likely would violate due process, adopting the Eighth Circuit’s reasoning that such a “shockingly large amount” of statutory damages would be “so severe and oppressive as to be wholly disproportionate[] to the offense and obviously unreasonable.”

In Larson v. Harman-Mgmt. Corp., No. 1:16-cv-00219-DAD-SKO, 2019 WL 7038399 (E.D. Cal. Dec. 20, 2019),  the Eastern District of California preliminarily approved a settlement proposal that represents less than 0.1% of potential statutory damages. Like the Eighth Circuit decision that we discussed previously, both courts observed that several uncertainties exist as to whether the plaintiffs can succeed in proving certain legal issues, such as whether consent was provided and whether an ATDS was used.

The Larson case exposed the defendants to TCPA liability for allegedly sending 13.5 million text messages without prior express consent as part of a marketing program called the “A&W Text Club.” After extensive discovery and motion practice, the parties proposed a settlement that would have the defendants deposit $4 million into a settlement fund that in turn distributes $2.4 million to class members who submit a timely, valid claim.

The court preliminarily approved the proposed settlement, observing that its terms demonstrated “substantive fairness and adequacy.” As a preliminary matter, it found, “[i]t is well-settled law that a cash settlement amounting to only a fraction of the potential recovery does not per se render the settlement inadequate or unfair.” Concerned that calculating damages based on $500 per message under 47 U.S.C. § 227(b)(3)(B) would violate the Due Process Clause, it agreed that the conduct of the defendant (sending over 13.5 million messages) was not persistent or severely harmful to the 232,602 recipients to warrant the billion-dollar judgment.

While $4 million represents less than 0.1% of the theoretical aggregate damages, “the value of the settlement is intertwined with the risks of litigation.” Here, in addition to the uncertainty about whether the “A&T Text Club” program uses an ATDS, “several risks are present, including . . . whether the plaintiff can maintain the action as a class action, . . . and whether the plaintiff’s theories of individual and vicarious liability can succeed.” The proposed settlement amount was found to strike the appropriate balance as it would likely result in each class member receiving $52 to $210 for each message if 5% to 20% of the class submit timely claims.

Although the case was only at the preliminary approval stage, this decision again illustrates that at least some courts recognize the due process problem posed by disproportionate aggregate damages and do not reject settlements simply because they provide some fraction of the theoretical aggregate damages available under a given statute.


©2020 Drinker Biddle & Reath LLP. All Rights Reserved

“Broken Link in the Chain of Liability”: MTCA Decision Highlights Intricacies of Corporate Law

Last week, in a decision highlighting the overlay of environmental and corporate law, a Washington federal district court dismissed claims seeking remediation costs, attorneys’ fees, and a declaratory judgment on liability under the Model Toxics Control Act (MTCA) by the current owner of a service station in Cle Elem against Chevron Corp., Chevron USA, Inc., and unnamed “predecessor companies and subsidiaries.” Short Stop Shell, LLC v. Chevron Corp., No. 1:19-cv-03103-RMP, Dkt. No. 43 (E.D. Wash. Aug. 27, 2019) (Order Granting in Part & Denying in Part Defendants’ Mot. to Dismiss & Denying Plaintiff’s Mot. for Summ. J.). The court rejected the allegation that the Chevron entities were corporate successors to Texaco, Inc., which was believed to be responsible for contamination at the service station.

The court’s findings reflect a limitation on the sweeping liability under MTCA and similar statutes, the relevance of corporate transactions in minimizing such liability, and the potential difficulty of identifying proper corporate defendants before filing lawsuits for cost recovery at contaminated sites.

Site Background – Petroleum Contamination at Service Station

The claims alleged that, until 1984, Texaco owned and operated the service station where contamination had been disposed or released at the property. In 2000, Texaco agreed to indemnify an owner of the service station for “actual petroleum contamination originating from the Property in excess of clean up levels [that] originated from Texaco’s operation of a gasoline … facility … or from deliveries of motor fuels to the station ….” Then, in 2001, Chevron Corp. acquired Texaco in a “reverse triangular merger.”

The plaintiff acquired the property in 2012, decommissioned several underground storage tanks alleged to be leaking, and incurred over $275,000 in remediation costs.

Court Decision – “Broken Link in the Chain of Liability”

Ultimately, the court concluded that the “reverse triangular merger,” in which Texaco merged with a subsidiary of Chevron Corp., did not cause Chevron to assume Texaco’s liabilities. Rather, Texaco remained a “separate entity” as a Chevron subsidiary and Chevron was not a successor to Texaco’s liabilities. The Court found further that suing unnamed defendants was a “disfavored practice” and agreed to strike the “John Doe”-style pleading that included a general reference to the defendants’ “predecessor companies and subsidiaries.”

The court also rejected a judicial estoppel theory that the defendants had already accepted liability “through their actions,” which included interactions between Chevron EMC, a Chevron subsidiary “that manages environmental matters for affiliated companies, including Texaco,” and Ecology. Notably, the court determined that even if, in an ambiguous exchange with Ecology in 2003, Chevron had accepted “potentially liable person status,” that such an acceptance did not amount to a “representation” that the defendants had “expressly assumed Texaco’s liabilities.”

However, litigation is likely to continue. In order to “properly allege a theory of liability,” the court granted the plaintiff leave to incorporate allegations in an amended complaint that the defendants “delivered gasoline products to tanks” that they “knew were leaking.”


© 2019 Beveridge & Diamond PC
For more in environmental contamination, see the National Law Review Environmental, Energy & Resources law page.

Mode of Operation Potentially Creates New Theory of Liability Against Retailers for Premises Liability

This article will address the use of “mode of operation” theory in so-called negligent stacking cases against retailers for premises liability. Adding mode of operation analysis into the mix creates new considerations for retailers in defense of cases of falling merchandise. While many courts look solely to the method of stacking standing on its own in making this determination, some have introduced the concept of mode of operation into the analysis. By introducing this consideration, courts invite inquiry into the reasonably foreseeable interference of customers. Being on the lookout for this issue is important early in the pleading process as well as during the presentation of evidence at trial.

Typically, in premises liability cases, including those involving falling merchandise, a retailer is not the insurer of the safety of its customers. See, e.g. Garvin v. Bi-Lo, Inc., 343 S.C. 625 (2001); Mounsey v. Ellard, 363 Mass. 693 (1973); Meek v. Wal-Mart Stores, Inc., 72 Conn. App. 467, 806 A.2d 546 (2002). However, a plaintiff may recover if she can show that the manner of stacking a shelf was dangerous. “The merchant must use reasonable care in placing goods on the store shelves. Merchandise must not be stacked or placed at such heights, widths, depths, or in such locations which would make it susceptible to falling.” See e.g. Pullia v. Builders Square, Inc., 265 Ill.App.3d 933, 937, appeal denied, 158 Ill.2d 565, 645 N.E.2d 1368 (1994); Dougherty v. Great Atlantic & Pacific Tea Co., 221 Pa.Super. 221, 289 A.2d 747 (1972). The jury also may consider the method of stacking, the presence or absence of lateral support, and the stacked item’s dimensions and center of gravity. Meek v. Wal-Mart Stores, Inc., 72 Conn. App. 467 (2002); Wal-Mart Stores, Inc. v. Sholl, 990 S.W.2d 412 (Tex. App. 1999); Fleming v. Wal-Mart, Inc., 268 Ark. 241 (1980).

These cases, relying on a simple formulation of negligent stacking present clear areas for the defense to emphasize. Any deficiency in the plaintiff’s presentation as to orientation, heights, and weights must be highlighted for the finder of fact. Unless the case is brought in a jurisdiction that sanctions res ipsa loquitur liability in these situations, the plaintiff cannot simply rely on the occurrence of the accident to support a case. In addition to highlighting deficiencies in the plaintiff’s case, the defense may also benefit from the right expert. Testimony from a structural engineer or other qualified expert to affirmatively establish the stability of the retailer’s chosen display and compliance with industry standards.

In some jurisdictions, courts have employed a mode of operation analysis to allow a plaintiff to establish liability for falling merchandise. For example, in Meek v. Walmart, 72 Conn. App. 467, 806 A.2d 546 (2002), the Connecticut Appellate Court held that “the store’s mode of operation may be taken into account by the fact finder when it considers whether the method of display was unsafe.” Consequently, “one of the factors to be considered in establishing and maintaining a display in a department store is that the merchandise is going to be inspected by the customers.” This ruling extended the mode of operation analysis to Connecticut in line with the more than twenty other states. See Kelly v. Stop and Shop, Inc., 281 Conn. 768 (2007).

Adding mode of operation analysis into the mix creates new considerations for retailers in defense of cases of falling merchandise. Although the jurisdictions that allow mode of operation liability employ different tests, generally speaking, there needs to be a business model that encourages customers to handle merchandise making a “particular resultant hazard readily foreseeable.” See e.g. Fisher v. Big Y Foods, Inc., 298 Conn. 414, 428, 3 A.3d 919, 928 (2010). Such modes of operation typically concern a particular method of operation within the self-service context, rather than the self-service model itself. See Jasko v. F.W. Woolworth Co.,supra, 177 Colo. at 420, 494 P.2d 839 (“defendant’s method of selling pizza” created dangerous condition); Gump v. Wal-Mart Stores, Inc., supra, 93 Hawai’i at 418, 5 P.3d 407 (specifically limiting application of rule to circumstances of case, i.e., when “a commercial establishment, because of its mode of operation, has knowingly allowed the consumption of ready-to-eat food within its general shopping area”). The fact that customers are allowed to select merchandise off of a shelf typically will not satisfy a mode of operation analysis. See e.g. Fisher v. Big Y Foods, Inc., 298 Conn. 414, 428, 3 A.3d 919, 928 (2010).

Therefore, when confronted with a claim of mode of operation case for falling merchandise, the defense should initially consider a motion to contest the sufficiency of the allegation if the mode of operation alleged is merely that customers are allowed to select and carry away their own merchandise. Without identifying a specific practice within a self-service context, the plaintiff’s allegation may be legally insufficient.

If unable to dispense of such an allegation through a pre-trial motion, it will be incumbent upon the defense to present evidence at trial negating the mode of operation claim. A well-prepared defense witness on compliance with internal standards and practices showing proper stacking methods and inspections will go a long way towards a successful defense. Further, evidence showing lack of injury from the merchandise display method at issue will bolster the defense. This can be done through presenting evidence as to industry practice as well as demonstrating an absence of regularly occurring falling merchandise. Retailers can best achieve this by regularly documenting any claims and having in place a system for monitoring such accidents. By showing that the practice at question was not peculiar to a particular aspect of the retailer’s operation or that the hazard was not so regularly occurring as to be foreseeable, a defendant should be able to avoid liability.


© 2019 by Raymond Law Group LLC.

For more on legal liability, see the National Law Review Products Liability law page.

Juul Gives $7.5 Million for Research as Sales Continue to Climb

Just like the traditional tobacco industry, Juul has started to issue grants to study the effects of e-cigarettes on users. Back in the bad, old tobacco days, almost all research was funded by tobacco companies through the Council for Tobacco Research (CTR) and the Center for Indoor Air Research (CIAR). Both companies were included in fraud cases against the industry. After a settlement in 1998, the tobacco industry started funding private groups. Much of that funding was undisclosed in study results, suggesting there might be a conflict of interest.

So…is Juul, a company heavily funded by big tobacco, the same? Or is this highly successful, private interest, for-profit company an altruistic anomaly?

Juul’s grant program seems to be part of a new advertising campaign to reverse its bad reputation for targeting youth. Juul is now focused on creating a socially-responsible reputation for health-conscious product marketing, including:

  • Its unproven claim that the product works for smoking cessation;
  • An adults-only website landing page and public statement campaign; and, now,
  • An investment in e-cigarette research.

However, Juul’s concern for its product users only arose after coming under fire for the rising use of Juul products by underage users. By the time Juul launched its new advertising campaigns, it had already completed its big tobacco investment with Altria. According to reports, underage use of e-cigarettes had further increased another 40%. These facts throw shade on the selfless reputation Juul is trying to create with its new grant program. While you might applaud them for listening to their new tobacco investor, you should probably question their motives for the same reason.

If you look at this grant you will see Juul is giving $7.5 million tax-deductible dollars to a school. This is about 0.3% of its estimated annual sales. It’s a pretty meager investment with a high-value publicity gain. That is smart marketing–Juul’s key skill. Smart marketing is how Juul swept up 75% of the e-cigarette market, largely composed of underage users. Juul’s youth-focused advertising (which has decreased as of this date) smacks of historic big tobacco advertising which was eventually and belatedly banned. Juul’s similar approach has generated exponential market growth, and, more recently, FDA and congressional investigations into its operations. Regrettably, the initial investigations only seem to address the prevention of advertising to underage users. Although this satisfies an immediate and important need, it largely ignores the health dangers inherent in e-cigarette use; health dangers that affect the adult population as well.

E-cigarette product development is still unregulated due to former FDA chief, Scott Gottlieb’s, failure to impose immediate FDA oversight of the industry back in 2016 and 2017. There have been many e-cigarette explosions that have caused devastating, permanent, injuries to youth and adults alike. There is also the danger of developing life-altering lung conditions, terminal cancers, and other health risks related to inhaling e-cigarette chemicals into the body. These dangers are exacerbated by a higher rate of nicotine addiction—alleged to be worsened by Juul’s nicotine delivery system—because addicted users vape more often and for extended periods.

To ignore the health risks of vaping and nicotine addiction is to repeat history. The tobacco industry depended on nicotine addiction for recurring sales and to capture new markets. The vaping industry, including Juul, appear to be banking on the same.

 

COPYRIGHT © 2019, STARK & STARK
For more on product safety, see the National Law Review Products Liability page.

How Manufacturers Can Work With Social Media Influencers

It’s a typical marketing story: Not too long ago, manufacturers marketed coconut oil as a heat-tolerant alternative to other cooking oils. They further promoted it by noting that it was more sustainably harvested than palm oil and could replace butter for people avoiding dairy.

But then coconut oil marketing took a turn. People—not the manufacturers but social media influencers—started to talk about coconut oil in a different way. Influencers claimed that coconut oil was a “miracle cure” for a variety of health and other problems.

Then the influencers’ claims were challenged. In August 2018, Harvard public health professor Karin Michels called coconut oil “pure poison.” Professor Michels blamed the oil for raising levels of LDL cholesterol and increasing the risk of heart disease.

This situation raises an important question: How can manufacturers work with social media influencers to enjoy the benefits of viral promotion while maintaining control of messaging and avoiding the consequences of influencers going rogue?

Going Viral Through Virtual Influencers

Social media influencers use their perceived authority to convince followers to buy the products they endorse. Some influencers partner with manufacturers, which pay them to market a product. In 2017, 12.9 million posts on Instagram were brand-sponsored.

Other influencers, however, make unsolicited claims about products, many of which the company doesn’t approve. Their followers may overlook this fact and buy the product because they trust the influencer as they would a friend. In fact, 92 percent of consumers use products recommended by people they know – or feel that they know through social media.

What can manufacturers do to leverage the social media explosion but still control product marketing? First, they can establish partnerships with influencers, who then promote the product as the manufacturer intends in exchange for a “#sponsored” hashtag. Data show that consumers see sponsored posts as more like typical user content than like marketing. That makes the posts more effective than traditional advertisements.

Some manufacturers have also chosen to use “brand ambassadors,” recruiting some of the first fans of a new product to grow both the brand’s and the promoter’s social presence organically – and on the manufacturer’s terms. Brand ambassador jobs have cropped up on job search engines, and sometimes the brand’s websites will include links encouraging people who already love the products to apply.

When Influencers Go Rogue

Where influencers “go rogue” and promote a manufacturer’s products on their own terms, their messaging may morph into “miracle cure” claims that do not reflect the manufacturer’s claims. The small blue check mark by influencers’ usernames denotes them as “verified” public figures, which means that an account is the authentic presence of the public figure, celebrity, or brand it purports to represent. Followers of verified accounts may treat this advice with as much weight as a medical doctor’s signature on a prescription. Manufacturers are left picking up the pieces of a problem they did not create.

But manufacturers can offset potential challenges of influencer-led advertising, even without working directly with influencers. First, manufacturers can proactively include disclaimers – in the form of warning labels or in advertisements – addressing known potential risks of use or misuse of a product. Social media influencers have recently hailed activated charcoal, for example, for its toxin-removing qualities if ingested. Partly because of the media attention, activated charcoal has moved from poison control wards into juice shops as a “detox” drink. But since activated charcoal’s absorptive qualities may counteract the effects of certain prescription medications, some manufacturers may consider warning people taking birth control pills or antidepressants to consult with a doctor before using it.

Second, manufacturers can partner with influencers who have already promoted their products to continue reaching the influencers’ audience while modulating the messaging. Recently, for example, influencers have promoted the use of adaptogens – non-toxic plants used for stress relief – in their morning drink elixirs. Manufacturers had previously been promoting the stress-relieving qualities of adaptogens, but it was not until recently that these messages started cropping up on social media pages – which made the product turn up in more stores and cafes. By partnering with influencers who have already promoted adaptogens, manufacturers can help shape their messaging and avoid the risk that influencers will tout products as something they are not.

Manufacturers can help dispel myths by engaging with their consumers – especially social media influencers – who talk about them. Manufacturers involved in messaging at the ground level have a much better chance of stopping unrealistic claims before they spread. By working with customers to share proper use and benefits of their products, manufacturers can manage expectations and keep their consumer base happy.

 

© 2019 Schiff Hardin LLP
This post was written by Derin Kiykioglu and Jill Berry of Schiff Hardin LLP.
Read more Products Liability legal news at the National Law Review’s Product Liability page.

Do Your Employees Use Cell Phones for Work While Driving?

Many employers have policies regarding the use of cell phones while driving, including the requirement to use the car’s hands-free, Bluetooth phone system, and abide by all applicable laws. But what happens when an employee still abides by the employer’s policy, is involved in a car accident, and causes injuries to a third party? Can the employer be held liable under the theory of respondeat superior?

Well, it depends on the facts and circumstances of the case. By way of background, respondeat superior means that an employer is vicariously liable for the torts of its employees when these employees commit the wrongful acts within the scope of their employment. California courts have held that the determination of whether an employee has acted within the scope of employment is a question of fact, but it also can be a question of law in circumstances where the facts cannot be disputed and there can be no conflicting inferences possible.

The California Court of Appeal in Ayon v. Esquire Deposition Solutions (decided on Sept. 21, 2018) was faced with this issue and held that under the facts presented the employer was not liable for the actions of its employee because there was no evidence that the employee in question was acting within the scope of her employment at the time of the accident.

In Ayon, the plaintiff’s car was struck by Brittini Zuppardo (“Zuppardo”), the scheduling manager of defendant Esquire Deposition Solutions (“Esquire”) while Zuppardo was driving. At the time of the accident, Zuppardo was on the phone with one of Esquire’s court reporters using her car’s hands-free Bluetooth phone system. This phone call (and hence the accident) occurred after normal business hours.

The plaintiff filed suit against Esquire and Zuppardo for personal injuries.  Esquire filed a motion for summary judgment on the ground that the plaintiff could not establish Esquire was vicariously liable for any damages its employee caused. The trial court agreed with Esquire, and the plaintiff appealed.

On appeal, the Court found that, based on the evidence presented, Zuppardo was not acting within the course and scope of her employment, particularly since (a) the phone call in question was after-hours, (b) Zuppardo was not on a work errand, but rather was coming home from a social engagement, and (c) although the phone call was with one of Esquire’s court reporters, Zuppardo and the court reporter were also friends and the conversation was not about work matters, but rather personal in nature. In sum, the trial court concluded that there was no evidence that Zuppardo talked about work matters at the time of the accident.

In Ayon, the Court found convincing the testimony of the Esquire employees who denied that they were discussing anything concerning work. And, their testimony was supported by undisputed evidence that (a) Zuppardo only made after-hours work calls on rare occasions, (b) it was not within her usual job duties, and (c) the two were friends. Accordingly, the Court of Appeal agreed with the trial court’s findings in favor of Esquire.

While it is unclear from Ayon whether the employee’s use of her cell phone (albeit hands-free) was a contributing factor to the accident, the employer was successful in avoiding liability in this case. Nevertheless, the outcome of this case may have been different if the employee was not using a hands-free device at the time of the accident. As such, enforcing policies can reduce the risk of claims.

 

©2018 Drinker Biddle & Reath LLP. All Rights Reserved.
This post was written by Pascal Benyamini of Drinker Biddle & Reath LLP.