Stipulating to Course and Scope 2.0

We previously noted the decision of the United States District Court for the Western District of Louisiana in Dennis v. Collins, 2016 WL 6637973 (W.D. La. 2016), in which the court held that a plaintiff cannot simultaneously pursue both (1) a negligence cause of action against an employee for which the employer is vicariously liable and (2) a direct negligent training and supervision cause of action against the employer when the employer stipulates that the employee was in the course and scope of employment when he committed the alleged negligence. The Middle District of Louisiana recently reached the same result on analogous facts.

In Wilcox v. Harco International Insurance, 2017 WL 2772088 (M.D. La. 2017), the defendant-driver was operating a commercial tractor-trailer owned by his employer when it collided with an automobile being driven by plaintiff. Although the underlying facts of the accident were disputed, defendants admitted that the defendant-driver was acting within the course and scope of his employment with the tractor-trailer’s owner at the time of the accident. Plaintiff asserted independent claims of negligence against both the defendant-driver and against the employer, specifically, that the employer failed to properly train the defendant-driver; failed to employ a safe and competent driver; failed to properly supervise and instruct its driver; and permitted its employees to drive while distracted. Defendants sought partial summary judgment arguing that it would constitute legal error for a jury to allocate separate fault against the employer independent of the negligence of its employee. The Court agreed both with this analysis and with the Western District’s holding in Dennis. Accordingly, the independent negligence claims against the employer-owner were dismissed with prejudice.

Wilcox v. Harco International Insurance

Eric W. Sella

Serving, Issuing, and Quashing a Rule 45 Federal Subpoena – Oh My!

In 2013, Rule 45 of the Federal Rules of Civil Procedure was amended to allow for nationwide service of process. In other words, Rule 45(b)(2) now provides that “[a] subpoena may be served at any place within the United States.” In 2013, Rule 45 was further amended to clarify from which district court a subpoena must be issued. While prior law required a subpoena to be issued from the district court where the deposition or document production would be compelled, Rule 45 now provides that a subpoena must be issued from the court where the action is pending.

For example, if a party to a case, which is pending in the United States District Court for the Eastern District of Louisiana, seeks to serve a Rule 45 subpoena on a party or non-party who resides in Houston, Texas for a deposition to take place in a corporate office in Houston, Texas, Rule 45(a)(2) now requires that the subpoena be issued from the Eastern District of Louisiana. But, what if the party or non-party served with the subpoena seeks to quash it? In that case, Rule 45 provides that the party or non-party must file a motion to quash in “the court for the district where compliance is required.” Referencing the above example, although that subpoena was issued from the Eastern District of Louisiana (where the case is pending), the party or non-party who seeks to quash the subpoena must do so in the United States District Court for the Southern District of Texas – Houston Division, as that is the district court where compliance was required (the corporate office in Houston, Texas).

It is critical that a party/non-party be aware of the caveats of Rule 45, as issuing a subpoena from, and/or moving to quash a subpoena in, the wrong district court can cause a party/non-party much time, trouble, and expense.

Megan T. Jaynes

Per Person Bodily Injury Policy Limits

The Mississippi Supreme Court recently considered automobile insurance policy language regarding per person bodily injury liability limits. In Rylee v. Progressive Gulf Ins. Co., plaintiff’s husband was injured in a motorcycle accident. After each plaintiff, as husband and wife, received full “each person” policy limits for damages resulting from the bodily injury, they sued their own insurers for uninsured-underinsured motorist (UM) benefits, with each plaintiff claiming entitlement to separate “each person” policy limit awards.

The Mississippi Supreme Court, however, found that the clear language of the UM insurance policies specified that the policy limit for “each person” included any person’s claim based on one person’s bodily injury. The Court also cited precedent, in which it had previously found that to recover more than the “each person” limit for one person, there must be more than one person who sustained bodily injury during the accident. Accordingly, the court held that the wife’s loss-of-consortium claim fell under the policy limit for damages resulting from the husband’s bodily injury. Because the husband had already received full policy limits for damages resulting from his bodily injury, the claims against the insurers were properly dismissed on summary judgment.

Rylee v. Progressive Gulf Ins. Co.

Eric W. Sella

Louisiana Constitution Requires Payment of Fair Market Value for Levee Improvement Servitudes

In January 2010, in an effort to upgrade the size of permanent levee servitudes, the Board of Commissioners of the South Lafourche Levee District (“BOC”) approved a resolution appropriating a permanent levee servitude affecting certain tracts of land located on the west bank of Bayou Lafourche. Chad M. Jarreau owned a 17.1 acre tract of land and was notified that one acre of that land was within the appropriated area. Jarreau received notification that he was to stop all activity on that tract immediately. In spite of this notice, Jarreau continued excavating dirt. The BOC filed for permanent injunction, and issued a check to Jarreau for $1,326.69 as compensation for value of the appropriated property. Jarreau rejected the dollar amount and filed a reconventional demand seeking compensation for the appropriated land, severance damages, economic and business losses, general damages, and statutory attorney’s fees. The district court awarded the BOC $16,956.00 for the dirt excavated by Jarreau, and awarded Jarreau $11,8609.00 as compensation for the appropriated tract, $164,705.00 for economic and business losses, $43,811.85 for attorney’s fees, and $26,490.95 for expert witness fees. The court of appeal affirmed the award for fair market value, but reversed the award of economic and business losses.

The Louisiana Supreme Court granted supervisory writ and considered what compensation, if any, to Jarreau was appropriate. The Supreme Court looked to both the United States Constitution and the Louisiana Constitution, which both contain provisions regarding the taking of private property for public use. The Louisiana Constitution provides for governmental taking of property that allows for: (1) expropriation of private property used for public purposes and (2) appropriation of private property necessary for levee or levee drainage purposes. Where expropriation refers to the taking of ownership, appropriation involves taking of merely a servitude. Under La. R.S. 38:301, where property is taken by way of a permanent levee servitude, compensation shall be the “fair market value of the property taken or destroy before the proposed use of the property or construction of the levee facilities.” The Supreme Court concluded that Jarreau was entitled to fair market value of the appropriated property at the time of the appropriation, which did not include lost profits or other severance damages. The court affirmed the award of $11,869.00 to Jarreau as compensation for the appropriated tract. Based on this award, the Court also awarded attorney’s fees of $2,635.57.

South Lafourche Levee District v. Jarreau

Daniel P. Sullivan

Stipulating to Course and Scope

In Dennis v. Collins, the United States District Court for the Western District of Louisiana was tasked with determining whether independent negligence claims against an employer survived once the employer stipulated to course and scope of employment. Often, following an automobile accident involving a company driver and interstate carrier, plaintiffs assert claims against the driver and the carrier, the latter generally falling under negligent hiring, supervision, or training. In Dennis, plaintiff did just that.

The court, however, found that a plaintiff cannot simultaneously pursue both (1) a negligence cause of action against an employee for which the employer is vicariously liable and (2) a direct negligent training and supervision cause of action against the employer when the employer stipulates that the employee was in the course and scope of employment when he committed the alleged negligence. Accordingly, after the defendant-carrier stipulated to course and scope of employment, the defendant-carrier’s motion for partial summary judgment was granted, and although the claims against the defendant-driver remained, plaintiff’s negligent supervision and training causes of action against the carrier were dismissed, with prejudice.

Dennis v. Collins

Eric W. Sella

Pre-Hearing Discovery in Federal Arbitration Not Guaranteed

So, you think a party has the right to conduct discovery in arbitration? Think again. Unlike the Federal Rules of Civil Procedure, which provide for “broad discovery” in civil litigation, there is no “right” to discovery in federal arbitration. Indeed, only one provision of the Federal Arbitration Act (“FAA”) contemplates discovery in federal arbitration:

The arbitrators selected either as prescribed in this title or otherwise, or a majority of them, may summon in writing any person to attend before them or any of them as a witness and in a proper case to bring with him or them any book, record, document, or paper which may be deemed material as evidence in the case. The fees for such attendance shall be the same as the fees of witnesses before masters of the United States courts. Said summons shall issue in the name of the arbitrator or arbitrators, or a majority of them, and shall be signed by the arbitrators, or a majority of them, and shall be directed to the said person and shall be served in the same manner as subpoenas to appear and testify before the court; if any person or persons so summoned to testify shall refuse or neglect to obey said summons, upon petition the United States district court for the district in which such arbitrators, or a majority of them, are sitting may compel the attendance of such person or persons before said arbitrator or arbitrators, or punish said person or persons for contempt in the same manner provided by law for securing the attendance of witnesses or their punishment for neglect or refusal to attend in the courts of the United States.

See 9 U.S.C. § 7 (emphasis added). The right to discovery in arbitration becomes even more difficult when one seeks to obtain pre-hearing discovery from a non-party. While the federal jurisprudence is clear that the plain language of Section 7 of FAA does not contemplate pre-hearing depositions of non-parties, there is a split among the circuits concerning the extent to which Section 7 authorizes pre-hearing document discovery from non-parties. For example, while the U.S. Eighth Circuit allows pre-hearing document discovery from non-parties (e.g. In re Security Life Ins. Co. of America, 228 F.3d 865 (8th Cir. 2000)), the Second and Third Circuits do not (e.g. Hay Group Inc. v. EBS Acquisition Corp., 360 F.3d 404 (3d Cir. 2004), Life Receivables Trust v. Syndicate 102 at Lloyd’s of London, 549 F.3d 210 (2d Cir. 2008)). Further, while the Fourth Circuit agreed with the findings of the Second and Third Circuits, it carved out an exception to that rule: when a party demonstrates “a special need or hardship.” (COMSAT Corp. v. National Science Foundation, 190 F.3d 269 (4th Cir.1999)).

Although the Fifth Circuit is silent with respect to pre-hearing document production from non-parties to an arbitration, the Eastern District of Louisiana has, at least once, ruled on the issue and has agreed with the holdings in Hay and Life Receivables. In Chicago Bridge & Iron Co. N.V. v. TRC Acquisition, LLC, No. 14-1191, 2014 WL 3796395, at *3 (E.D. La. July 29, 2014), Judge Engelhardt “agree[d] with the Second, Third, and Fourth Circuits that Section 7 provides only for the issuance and enforcement of a subpoena duces tecum against non-parties who are compelled to testify as witnesses before the arbitrator, not for a subpoena seeking merely the production of documents by a non-party who is not summoned to testify as a witness before the arbitrator.”

Megan T. Jaynes

New Orleans Bar Association Young Lawyers’ Section CLE Program Receives National Recognition

The American Bar Association will award the Big Easy Bootcamp the E. Smythe Gambrell Professionalism Award. The Big Easy Bootcamp is held annually following Louisiana’s October bar examination results announcement. The program is designed for newly admitted attorneys practicing in the New Orleans area. For the past three years, it has been chaired by Eric Winder Sella.

The ABA will give the award, along with a cash prize of $3,500.00, at the National Conference of Bar Presidents Annual Meeting in New York City this summer. According to the ABA, the Gambrell Awards honor excellence and innovation in professionalism programs by law schools, bar associations, professionalism commissions and other law-related organizations and were established in 1991 to honor E. Smythe Gambrell, ABA and American Bar Foundation president from 1955 to 1956. Gambrell founded the Legal Aid Society in Atlanta, where he practiced law from 1922 until his death in 1986.

Eric W. Sella

Google (Takes) It

On June 27, 2017, European Union regulators assessed a $2.7 billion fine against Alphabet, Google’s parent company, related to an antitrust case brought by the European Commission. The fine is the largest ever imposed by the EU and makes up over 3% of Google’s revenue from the 2016 fiscal year. The Commission charged Google with favoring its own comparison shopping service to rivals in online search results. As one of the world’s largest companies, it is unlikely that the fine itself will have much impact on Google’s bottom-line, however, it will need to adjust its search practices to comply with EU regulators going forward and avoid further penalties.

Pierce C. Azuma

Nothing to Smize About: Tyra Banks Named in Lawsuit

Supermodel and entrepreneur Tyra Banks was recently named in a lawsuit for allegedly ridiculing an act that appeared on the reality television competition show, America’s Got Talent. The production company that oversees AGT, Marathon Productions, was sued by a husband-and-wife-singing duo who performed an original song about their daughter and motherhood. In the lawsuit, the couple (identified as John and Jane Doe) alleged that an AGT producer requested that they perform this song which, according to the complaint, had a long-term emotional importance to their daughter (identified as Mary Doe). The couple performed the song on stage, and their performance was panned by both the audience and the judges.

While the Does were performing, the lawsuit alleges that Banks ridiculed both Mary herself and the performance in front of Mary while cameras were rolling. Specifically, the suit alleges that Banks told Mary that Mary was accidentally conceived. Further, Banks and other producers told Mary to act embarrassed and annoyed by the performance. The suit alleges intentional infliction of emotional distress, negligent infliction of emotional distress, civil battery, and civil assault. The suit, pending in Los Angeles County Superior Court, is seeking unspecified damages.

The plaintiffs further requested that their footage not be aired, but the defendant only agreed to omit any footage of Mary.

Doe v. Marathon Productions

Daniel P. Sullivan

A Win for Insurance Carriers: Part of CMS’s Bill Recovery Practice Deemed Unlawful

The court in CIGA v. Price, 2017 WL 1737717 (C.D. California, May 3, 2017) has issued a new ruling limiting Medicare’s conditional payment rights. The case has potentially significant impact on the Centers for Medicare & Medicaid Services (“CMS”) recovery claims.

In the case, CIGA disputed CMS’ billing practice of seeking full reimbursement of a medical provider’s single charge where some portion of that charge was unrelated to services covered by the insurance plan. CIGA argued that CMS’s practice of collecting the full amount, inclusive of the uncovered charges, was improper under the Medicare Secondary Payer Act and that it resulted in an over broad conditional payment recovery. CIGA sought a court ruling that the practice was unlawful and also a permanent injunction preventing CMS from utilizing the policy in the future.

The court agreed that CMS’ practice was unlawful and vacated and set aside the disputed portions of CMS’ recovery demands against CIGA. The court suggested that CMS would need “to determine whether some sort of apportionment…is warranted, and if so, by how much” should it seek recovery on the bundled and disputed charges in the future.

The court also addressed the bundling of the charges, and stated if a single line-item charge on a payment summary form contains multiple diagnosis codes—some of which relate to a medical condition covered by an insurance policy and some of which do not—the presence of one covered code does not ipso facto make the carrier responsible for reimbursing the full amount of the charge. The court declared that it was proper for the carrier to refuse to pay the uncovered item that was billed together with the covered item.

Notwithstanding the foregoing decision, and while CMS’ billing practice was ruled unlawful, the court declined to go so far as issuing a permanent injunction against CMS. The court did not want to issue the injunction for fear that doing so could substantially disrupt other aspects of CMS’s operations. The court further reasoned that an injunction was not necessary because the workers’ compensation carrier had access to the administrative appeals process to challenge future recovery demands made by CMS.

The court’s decision could prove useful to insurers challenging CMS recovery claims when CMS attempts to obtain full recovery on a single charge that includes items and services for which the insurance carrier is not responsible. The decision is only binding in California, but may provide persuasive authority to challenge CMS’ bill recovery practices in other jurisdictions.

CIGA v. Price, 2017 WL 1737717 (C.D. California, May 3, 2017)

Simone H. Yoder