Manufacturers’ Duty to Recall

The Georgia Court of Appeals recently addressed a manufacturer’s duty to recall a product with a design defect and a party’s ability to introduce testimony and pleadings from other lawsuits involving the same defendant. Ford Motor Co. v. Reece, A09A0871 (September 16, 2009).  The issue arose from an accident in which a dump truck rear ended a 1994 Ford Tempo, pushing the car down a 371 foot embankment.  The driver of the car was paralyzed and died shortly after the accident.  The Plaintiffs alleged the Tempo’s seatback was defectively designed, causing it to collapse during the accident and resulting in more severe injuries to the driver than she would have otherwise suffered.  Plaintiffs asserted claims of negligence, strict liability, negligent failure to warn, and negligent failure to recall.  Ford argued the seat design was reasonable, protective and in line with industry standard at the time.  It also argued that the decedent’s injuries were due not to the seatback, but due to the car’s impact at the bottom of the embankment after it was rear ended.  The trial court awarded Plaintiffs compensatory damages only. 

Ford appealed, arguing: (1) the jury was erroneously instructed that there was a duty to recall when Georgia law imposes no such duty on manufacturers; (2) the jury instruction regarding the crash worthiness doctrine was misleading; (3) complaints from other lawsuits against Ford should not have been allowed to establish notice of the alleged seat defect; (4) deposition testimony from those lawsuits concerning the plaintiffs’ injuries should not have been admitted.  The Supreme Court of Georgia previously declined to address the question of whether a manufacturer had a duty to recall, thus the issue was unsettled.  The court of appeals held that the jury instruction regarding a manufacturer’s duty to recall was both legally erroneous and harmful.  It was erroneous because there was no common law or statutory duty to recall a product after the product has left the manufacturer’s control.  This limitation was necessary because without it, a manufacturer would be the perpetual insurer of its products safety.  Furthermore, such a duty would create a substantial economic burden that goes against public policy.  The court of appeals also concluded the erroneous instruction was harmful because it meant it could not determine if the verdict was entered on a proper basis.

The court of appeals briefly addressed the remaining issues raised by Ford on appeal.  Ford argued the crashworthiness doctrine was incomplete because it did not instruct the jury that Ford could limit its liability by demonstrating a basis for the apportionment of liability.  The court of appeals held any error in the instruction was not reversible because Ford did not present any evidence concerning apportionment of liability between the dump truck collision and the collapse of the seat, instead arguing the second crash, not the seatback, was the cause of the decedent’s injuries.  Thus the instruction regarding the crashworthiness doctrine was properly adjusted to the facts of the case.  Ford also argued the complaints from other cases should have been excluded because the Plaintiffs did not establish that the underlying incidents were substantially similar to the matter at hand.  The court of appeals disagreed, stating the Plaintiffs showed the other accidents were substantially similar because they involved Ford vehicles, rear impacts and seatbacks that deformed during the accidents.  Finally, Ford argued that the deposition testimony that was admitted was irrelevant and unfairly prejudicial.  The court of appeals disagreed, noting that although relevant evidence may damage or impair the party against which it is introduced, this does not justify its exclusion.  The testimony was admissible because it was probative concerning the injuries received under similar circumstances and was useful in enabling a jury to assess “the gravity and severity of the danger” the alleged design defect imposed.

For more information, please contact Tim Buckley at (404) 633-9230.

Court Upholds Assumption of the Risk Defense in “Car Surfing” Case

The Court of Appeals recently held that Georgia’s assumption of the risk doctrine applied in a case where a teenager was injured while “car surfing” on a friend’s automobile.  Teems v. Bates, 2009 WL 2902487 (Ga.App. Sept. 11, 2009).  Assumption of the risk is a complete defense in a lawsuit alleging negligence. 

Late one night, three friends drove to a church parking lot where Teems suggested that she and Mercurio “surf” on Bates’s car.  Mercurio was reluctant and told Teems that she thought it was dangerous.  Nevertheless, the two agreed to do it and Bates told them he would be careful driving around while they lied on top of his car.  After Teems and Mercurio took their positions on the roof of the car, Bates began driving at a speed of 10-15 miles per hour.  When he made a sharp right-hand turn, Teems was thrown from the car and onto the pavement, resulting in severe injuries. 

When Teems sued Bates for negligence, Bates responded that Teems assumed the risk of injury and that she was therefore barred from recovery.  In Georgia, the assumption of the risk defense applies if the plaintiff (1) had actual knowledge of the danger, (2) understood and appreciated the risks associated with the danger, and (3) voluntarily exposed himself to those risks.  When a person voluntarily participates in an obviously dangerous activity, that person necessarily assumes the risks attendant to that activity.  Here, the Court held that car surfing constituted an inherently dangerous activity that posed obvious risks to anyone who participated, and despite being made aware of the danger, Teems voluntarily chose to expose herself to it. 

Interestingly, the Court likened car surfing to an amusement park thrill ride, where a person accepts the risks generated by normal changes in speed and direction.  Therefore, when Teems agreed to car surf, she assumed the risks of changes in speed and direction, including the risk that she would fall off the moving vehicle.  Therefore, because Teems assumed the risk of injury by engaging in an obviously dangerous activity, she was precluded from recovering damages, and a verdict for the defendant was affirmed.

For more information, please contact Tim Buckley at (404) 633-9230.

Notice Requirements in a Fair Labor Standards Act Lawsuit

The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.  For the FLSA to apply, there must be an employment relationship between an employer and an employee.

In a lawsuit against an employer for claims pursuant to the FLSA, employees or former employees of a defendant may join as plaintiffs if they consent in writing and thereby “opt in.”  The preliminary determination of whether an employee should be allowed to gather information from the employer and send notice of the action.  At the preliminary stage, the plaintiff may seek “conditional certification.”  At this point, the plaintiff’s burden is very low and will likely be granted because the employer can later file a motion for decertification if discovery reveals that certification was not appropriate.  If the plaintiff can show that there are others that are “similarly situated,” he will be allowed to send notice to such individuals.  Although the Eleventh Circuit has not provided a specific definition for “similarly situated,” the Court has made it clear that “similarly situated” includes more than just the mere facts of job duties and pay provisions.  Instead, the court will consider job titles, if the potential plaintiffs worked at the same geographical location, the extent to which different time periods and different decision makers were involved, and whether the alleged treatment of each potential plaintiff is similar to that of the named plaintiffs.

If the plaintiff is allowed to send notice, the employer is only required to provide information on “similarly situated” employees for the past three (3) years because the longest applicable statute of limitations is three (3) years, which requires a finding of willful violations.  Also, courts may limit notice to a particular geographical area.  This includes a specific facility, terminal, office branch, etc.  Notice should include information concerning any fees or advances a plaintiff would be obligated to pay; that the court has not expressed an opinion concerning the merits of FLSA claims; and that it is an action seeking overtime from a specific employer that they may join.  In matters where the defendants are unable to provide plaintiffs with adequate information concerning former employees who were potential class members, notice via newspaper, radio and/or posts may be permitted.

Once discovery is complete, the employer has the right to file a motion for decertification, asserting that the individuals are not “similarly situated” and that the action should not be allowed to proceed to trial as a collective action.  At this point, the plaintiff burden is much higher.  However, it could be argued that the damage has been done because the plaintiff has been provided contact information of former and/or current employees who may have FLSA claims and may subject the employer to signification FLSA litigation whether proceeding as a collective action or individual claims.

For more information, please contact Tim Buckley at (404) 633-9230.

Bad Faith Claims Against Insurance Companies For Failure to Pay Claims

O.C.G.A. § 33-4-6 provides a cause of action for penalties and attorney’s fees when an insurer is guilty of “bad faith” in refusing to pay a claim submitted by its insured. This statute addresses losses covered by insurance an insurance policy where the insurance company refuses to pay for such loss within 60 days after a demand has been made by the holder of the policy. To prevail on a claim for an insurer’s bad faith, the insured must prove: (1) that a demand for payment was lodged against the insurer at least 60 days prior to filing suit and (2) that the insurer’s failure to pay was motivated by bad faith. “The purpose of the statute’s demand requirement is to adequately notify an insurer that it is facing a bad faith claim so that it may make a decision about whether to pay, deny or further investigate the claim within the 60-day deadline.” Primerica Life Ins. Co. v. Humfleet, 217 Ga.App. 770, 458 S.E.2d 908 (1995).

The demand must notify the insurance company with some degree of specificity that the insured is asserting a claim for bad faith. Id. The demand may not be sent unless the insured’s right to payment has vested under the policy. “Demand must be made at a time when the insured is legally in a position to demand immediate payment, and it is not in order if the insurer has additional time left under the terms of the insurance policy in which to investigate or adjust the loss and therefore has no duty to pay at the time the demand is made.” Dixie Construction Products, Inc. v. WMH, Inc., 179 Ga.App. 658, 659, 347 S.E.2d 303, 304 (1986).

After showing that a timely demand was sent, the insured must demonstrate that the refusal to pay the claim was in “bad faith.” Federal Ins. Co. v. National Distributing Co., Inc., 203 Ga.App. 763, 768, 417 S.E.2d 671, 676 (1992). Although the statute does not define “bad faith,” the Court of Appeals has held that bad faith under O.C.G.A. § 33-4-6 means “a frivolous and unfounded refusal to pay a claim.” United Services Automobile Association v. Carroll, 226 Ga.App. 144, 148, 486 S.E.2d 613, 616 (1997). In those cases in which an insured is successful in pursuing a bad faith claim under O.C.G.A. § 33-4-6, the insurance company has typically failed to conduct a proper investigation of the claim. Georgia Farm Bureau Mut. Ins. Co. v. Murphy, 201 Ga.App. 676, 411 S.E.2d. 791 (1991).

For more information, please contact Denny Brown at (404) 633-9230.

Statutes of Limitation for Breach of Contracts

Many companies are having trouble collecting on invoices after having rendered the services or delivered goods. But with this economy, what options do you have?

A client’s failure to pay for services rendered or goods delivered pursuant to contract constitutes a “breach of contract.” If you can’t otherwise get your client to pay, then you may sue for the payment in state court in a breach of contract action.

When the amount due is relatively small, it may be easiest and best to file suit in “small claims” or “magistrate” court. Some courts have minimum amounts to sue starting at $1,000 and all have maximums ranging up to about $15,000. In Georgia, the court is called “Magistrate court” and handles money claims of less than $15,000. Even if you’re owed more than the maximum, you can forego the excess and seek the maximum allowed by the small claims court. The filing fee varies by county and can range from approximately $45 to $55, which includes the charge to serve one defendant. An extra charge for service for any additional defendants usually ranges from $25 to $35 per defendant.

Some states will not allow attorneys to represent the parties in small claims courts. But in Georgia, you may choose to have an attorney assist you in Magistrate Court. An attorney is advisable if the opposing party has counsel.

Since the economy has slowed, some clients don’t have money now. So you may want to wait a bit to sue, hoping that the client gets money later (balancing the risk that the client will go out of business). But the time that you have to make your claim is limited. This is based on a legal principle called “the statute of limitations.” Statutes of limitation, in general, are laws that prescribe the time limits during which you can file lawsuits. The deadlines vary with the type of claim and depend on the state where the claim is made. The purpose of them is to reduce the unfairness of defending actions after a substantial period of time has elapsed. They allow people to go on with their lives, regardless of guilt, after a certain amount of time has passed.

In the United States, the statute of limitations to sue for breach of a written contract ranges from 3-15 years. In Georgia, the statute of limitations for a written contract is six years. So whether you file suit now or later, be sure to take steps to protect your business!

For more information, please contact Tim Buckley at (404) 633-9230.

Statute of Limitations for Catastrophic Workers Compensation Claims

The issue of whether, and what, statute of limitations applies to claims for catastrophic designation has previously remained unanswered in Georgia.  A trio of cases – two already decided by the Georgia Court of Appeals and one fully briefed and under consideration – will provide answers to these questions and will establish in what, if any, circumstances the statute of limitations regarding a catastrophic claim can be tolled.

 As a brief background, under Georgia workers’ compensation law, an injured employee’s entitlement to income benefits is capped at 400 weeks.  However, if an injury is deemed to be catastrophic, the injured worker is entitled to lifetime income benefits.  A catastrophic injury must fit in one of five categories: “(1) spinal cord injury involving severe paralysis of an arm, a leg, or the trunk; (2) amputation of an arm, a hand, a foot, or a leg involving the effective loss of that appendage; (3) severe brain or closed head injury…; (4) second or third degree burns…; (5) total industrial blindness; or (6) any other injury of a nature and severity that prevents the employee from being able to perform his or her prior work or any work available in substantial numbers within the national economy for which such employee is otherwise qualified.”  O.C.G.A. § 34-9-200.1(g).  Most claims which fit into the first five (5) categories are relatively easy to discern, but the “catch-all” sixth category has generated substantial litigation. 

 The first of three recent cases that will finally solidify the law as to what statute of limitations applies to requests for catastrophic designation and when, and if, the statute is tolled is Williams v. Conagra Poultry of Athens, Inc., 295 Ga. App. 744, 673 S.E.2d 105 (2009).  In Williams, the employee injured her neck and shoulders in November 1992.  She received income benefits for the full 400 weeks, ending in April 2001.  In March 2002, she requested that the State Board of Workers’ Compensation deem her injury catastrophic.  Her request was denied in August 2002.  She filed a second request in April 2003, which was denied as well.  With this denial, the State Board stated that the employee could submit another request if she included the proper documentation.  Ms. Williams did not appeal either decision, but submitted another request in September 2003, which was granted.  The employer appealed.  The Court of Appeals held that requests for catastrophic designation, at their essence, are requests for change of condition in status.  O.C.G.A. § 34-9-104(b) sets the statute of limitations for requests for change of condition claims and requires that any request be made within two (2) years after the last payment of income benefits.  Therefore, to be deemed timely, a request for catastrophic designation must be filed within two (2) years after the last payment of income benefits.  The Court held that the September 2003 request at issue was not timely and, as such, barred by the statute of limitations.

The second case that addresses the statute of limitations issue is Tara Foods v. Johnson, ___ S.E.2d ____, 2009 WL 783011 (Ga. App. 2009).  In Johnson, the employee injured her neck in November 1992 and she received income benefits until August 2001.  In November 2002, Ms. Johnson filed a WC-14, marking only “notice of claim,” indicating that she was not seeking a hearing but only income benefits from August 28, 2001, and continuing for catastrophic designation.  No action was taken.  In August 2005, Ms. Johnson filed another WC-14, requesting payments of medical expenses.  This dispute was resolved and the Consent Agreement indicated that there were no additional issues to be heard.  In September 2006, Ms. Johnson filed another WC-14, this time indicating that she was requesting a hearing.  She also checked the box for catastrophic designation.  The State Board determined that her request for catastrophic designation was untimely.  On appeal to the Court of Appeals, the Court reiterated its holding in Williams that claims for catastrophic designation are subject to the two (2) year statute of limitations of O.C.G.A. § 34-9-104(b).  Additionally, the Court held that Ms. Johnson’s 2002 WC-14 only gave notice of her claim and failed to meet the requirements of O.C.G.A. § 34-9-104(b) and, therefore, it was not proper application.  As such, and consistent with its opinion in Williams, the Court of Appeals held that Ms. Johnson’s first proper request for catastrophic designation was not made until September 2006 and was barred by the applicable statute of limitations.

The final case that addresses the statute of limitations for catastrophic designations is the case of Kroger Co. v. Wilson, Appeal No. A09A1226, currently pending before the Court of Appeals.  In this matter, Mr. Wilson injured his back in June 1994.  He returned to work, was injured in 1998, and returned to work for a different employer until 2004.  Mr. Wilson received his statutory maximum weeks of income benefits and last received income benefits in September 2001.  In August 2003, Mr. Wilson, while gainfully employed, filed a WC-14 seeking income benefits from September 2001 and continuing.  He made no mention of catastrophic designation.  In October 2003, Mr. Wilson dismissed the hearing request, “not to be re-set.”  In April 2006, Mr. Wilson filed a WC-R1CATEE seeking catastrophic designation.  The State Board ruled that Mr. Wilson’s April 2006 request was barred by the statute of limitations and his August 2003 request did not provide the employer with notice he was seeking benefits for catastrophic designation.  This decision was reversed by the Appellate Division, which held that Mr. Wilson was entitled to catastrophic designation.  The Superior Court upheld the Appellate Division’s opinion and the case is currently pending before the Court of Appeals.

In light of the recent related cases of Williams and Johnson, it appears likely that the Court of Appeals will determine that Mr. Wilson’s request for catastrophic designation was not timely filed and was barred by the statute of limitations.  Should the Court of Appeals provide full analysis, as it did in Williams and Johnson, the issue of the application and potential tolling of the statute of limitations with regard to catastrophic claims should be clearly established.  However, both Williams and Johnson have been appealed to the Georgia Supreme Court and, regardless of the decision, Wilson is likely to be appealed as well.  The final result, regardless of the outcome, will give both employees and employers direction as to the time frame in which a claim for catastrophic designation must be filed.

For more information, please contact Tim Buckley at (404) 633-9230.

County Immunity Not Waived by Community Service Act

The sovereign immunity doctrine provides that a sovereign or state cannot commit a legal wrong and thus is immune from civil suit or criminal prosecution. For some situations, however, governments have waived its immunity to allow for suits. Recently, the Supreme Court of Georgia clarified that O.C.G.A. § 42-8-71, also known as the “Community Service Act,” does not waive a county’s sovereign immunity. Currid v. Dekalb State Court Probation Department, — S.E.2d —-, 2009 WL 735641 (Ga. 2009).

 In Currid, Vincent Currid was ordered to perform community service based on a DUI plea deal. While performing this community service, Currid fell off a DeKalb County sanitation truck and eventually died from the resulting injuries. DeKalb County relied on the Community Service Act to claim that it was immune from liability. The Community Service Act specifically provides that:

“No agency or community service officer shall be liable at law as a result of any of his acts performed while participating in a community service program. This limitation of liability does not apply to actions on the part of any agency or community service officer which constitute gross negligence, recklessness, or willful misconduct.”

O.C.G.A. § 42-8-71(d).

The Trial Court agreed with Dekalb County because there was no showing of gross negligence concerning Currid’s assignment. The Court of Appeals reversed, holding that whether Currid’s assignment to a sanitation truck was gross negligence was a jury question. Currid v. Dekalb State Court Probation Department, 274 Ga.App. 704, 618 S.E. 2d 90 (2005). Upon remand, the trial court denied DeKalb County’s motion to limit damages based on sovereign immunity and OCGA § 33-24-51. On appeal, the Court of Appeals reversed and held that the language of the Community Service Act barred the claims against DeKalb County.

The Supreme Court of Georgia affirmed. In doing so, it explained that implied waivers of sovereign immunity are not favored. For a waiver of sovereign immunity to be shown, the statutory language must state: (1) a waiver of sovereign immunity; and (2) the extent to which the immunity is waived. The Court held that the Community Service Act did neither of these things. Instead, the statute limits the liability of those partaking in community service programs that typically would not be immune from legal action. It does not state that those who are immune from lawsuit have waived that immunity by participating in a community service program. Therefore, DeKalb County’s sovereign immunity was not waived by the Community Service Act.

 For more information, please contact Tim Buckley at (404) 633-9230.

Are Interns Eligible for Workers Compensation?

Workers compensation is a form of insurance that provides medical care for employees who are injured in the course of employment, in exchange for the mandatory relinquishment of the employee’s right to sue his or her employer for the tort of negligence.  But it sometimes is difficult to determine who qualifies as an employee.  Does a person have to be paid to receive workers’ comp benefits?

O.C.G.A. § 34-9-1 (2), provides, in pertinent part, that an employee is “every person in the service of another under any contract of hire or apprenticeship, written or implied.”  So does this definition include unpaid interns who work for a company to gain experience?

The courts in Georgia look at several factors to determine whether an uncompensated person qualifies as an employee and thus is eligible for workers compensation.  Specifically, in North v. Floyd County Bd. of Educ., 442 S.E.2d 809 (Ga.App. 1994), the court found that a workers’ compensation claimant who had only begun her training period as a substitute bus driver for the defendant was not an “employee” at time of injury.  The court considered the facts that Ms. North was did not appear to be under the Board’s control, she was not paid during training period, she was not assured that she would be hired after successfully completing training, and the County Board did not receive any significant benefit from her services.  Accordingly, the court held Ms. North was not entitled to workers comp benefits.

The Georgia courts have not specifically addressed the question of whether unpaid interns are “employees” eligible for workers comp benefits.  The North decision is instructive on this issue, however, since interns are not compensated and the benefits derived by the employer for interns may not be significant enough to render the relationship an employment.

Thus, any companies who use unpaid interns should consider carefully the potential ramifications of such relationships and should plan for their workers’ compensation insurance needs appropriately.

For more information, please contact Barbara Mulholland at (404) 633-9230.

Do Photographs of Property Require the Owner’s Permission?

Plantation Road; Copyright Benjamin Ham

The College of Charleston Foundation (“Foundation”) sued Benjamin Ham for trespass, invasion of privacy, and conversion for his taking and selling a photograph of the Foundation’s property, known as the “Dixie Plantation.” The photo at issue is called “Plantation Road” and is shown here (with permission).

Background

The Foundation alleged that Ham passed through locked gates and ignored the “no trespassing signs” to enter its property, the Dixie Plantation, without permission to take photographs. Dixie Plantation was left to the Foundation pursuant to a gift from a will that included certain restrictions on the property’s use for commercial purposes. The Foundation believed that Ham’s selling of his copies of the “Plantation Road” photograph violated that restriction and thus sued Ham after he refused to stop selling his photograph.

The Court’s Order
The case now has settled out-of-court at a mediation, but not before the judge issued some important rulings. The Order may be viewed here.

The Foundation’s Motion to Remand
First, the Foundation asked the judge to remand the case back to state court from federal court. Only federal courts have “jurisdiction” (authority) to hear cases related to copyright. The issue is much more complex than is addressed here, but some of the court’s analysis is instructive. Specifically, the Foundation’s claims of conversion, trespass, and violation of the right of privacy (all state court claims) don’t appear on their face to be related to copyright. Generally, the Foundation would be allowed to keep the case in a state court to hear its state court claims. But Ham argued that the state law claims were “subsumed” by federal copyright law.

As part of the court’s analysis, it looked closely at the Foundation’s claim of conversion. The court defined conversion as “the unauthorized assumption and exercise of the right of ownership over goods or personal chattels belonging to another, to the alteration of the condition or the exclusion of the owner’s rights. Conversion may arise by some illegal use or misuse, or by illegal detention of another’s personal property.” After reviewing the case law on the subject, the court stated:

Federal courts, then, have generally found that when a conversion claim encroaches upon the subject matter covered under federal copyright law, the claim is preempted and should be brought as a copyright claim. A conversion cause of action only passes the extra element test where there was actually physical property converted, or some other circumstance . . . which makes the conversion cause of action fundamentally distinct from the kind of claim that could be brought under the Copyright Act. . . .

[T]he court simply cannot see how the gravamen of the conversion claim is not simply this: that Defendant unlawfully photographed an image belonging to Plaintiff and is now commercially distributing it. Plaintiff has not asserted that Defendant took any tangible object, so the only possible property of Plaintiff’s that Defendant is alleged to have converted is the image of “Plantation Road.”Disputes over ownership, use, or distribution of photographs and images are properly the realm of federal copyright law.

Accordingly, the court held that plaintiff’s state claims are preempted by copyright law so that the parties’ dispute was properly before the federal court. Thus, this court and other courts have found that taking a photograph of real property does not comprise the legal action of “conversion.”

Ham’s Motion to Dismiss
The Foundation’s Conversion Claim
The court then turned to Ham’s motion to dismiss. Because of the above finding, the court dismissed the Foundation’s claim of conversion because it is preempted by federal copyright law.

The Foundation’s Right of Privacy Claim
Ham also argued that the Foundation’s claim of invasion of privacy should be dismissed.  A defendant commits the tort of invasion of privacy by (1) publicizing, (2) absent any waiver or privilege, (3) private matters in which the public has no legitimate concern, (4) so as to bring shame or humiliation to a person of ordinary sensibilities. The court found, however, that most other courts that have considered this issue have held that corporations may not bring suit for invasion of privacy.  When the plaintiff is a corporation, as opposed to a living individual/human, it has no action for invasion of privacy.

Regardless, the court did not need to rule on the issue of whether South Carolina law allows a corporate plaintiff to recover in tort for invasion of privacy because the Foundation failed to allege the 4th element necessary for invasion of privacy. 

The court can see no way in which the publication of a photo capturing a beautiful image like “Plantation Road” in any way “bring[s] shame or humiliation to a person of ordinary sensibilities.” This is especially true in light of the fact that Defendant does not even identify Dixie Plantation as the setting of “Plantation Road.”

 

Accordingly, the court dismissed the Foundation’s claim for invasion of privacy.

The Foundation’s Trespass Claim
Because Ham physically invaded Dixie Plantation without permission to take photographs, the court did not dismiss the trespass claim against Ham. Significantly, the court noted that if Ham had somehow taken the “Plantation Road” photograph from off the property with some sort of high-magnification equipment, the Foundation would have no cause of action for trespass.

The court closely compared this matter to the Fourth Circuit’s decision in Food Lion, Inc. v. Capital Cities/ABC, Inc. , 194 F.3d 505 (4th Cir. 1999). The Food Lion case involved news reporters from the ABC program PrimeTime Live who obtained jobs at the grocery store chain at stores in North Carolina and South Carolina under fraudulent pretenses, and then proceeded to surreptitiously film Food Lion’s unsavory food handling practices. When the program aired, Food Lion sued the program and its producers, and at trial, obtained a verdict against the defendants on a charge of trespass, among other charges. Food Lion alleged no physical damages, but sought compensation for “loss of good will, lost sales and profits, and diminished stock value.”

Before the damages phase of the trial went before the jury, the trial court instructed the jury that the plaintiff could not recover damages related to intangible losses on the trespass claim. The court, however, allowed the claim of trespass to go forward and the jury awarded Food Lion nominal damages of $1.00.

The Fourth Circuit upheld the ruling of the trial court and the jury’s verdict with regard to the trespass claim. The inquiry mainly centered on the issue of whether Food Lion somehow consented to have the “employees” videotape the store’s food handling practices by hiring them and allowing them into the store. The court was untroubled by, and indeed never even raised, the issue of whether Food Lion should be barred from its trespass action because the trespass caused no physical harm.

In a separate fraud claim, the Food Lion jury was limited to awarding Food Lion damages based on actual tangible damages, and awarded the plaintiff a mere $1,400. However, the jury then went on to award the plaintiff over $5.5 million in punitive damages on the same claim.

Based on the Food Lion case , the Ham court found that if it is a trespass for a photographer to take photographs without the owner of private property’s consent when the owner has at least consented to have the photographer on the property, the court simply cannot see how it would not also be trespass in a similar situation where the difference is that the owner has not even consented to allow the photographer on the property. Furthermore, the issue of physical versus intangible harm does not represent a per se requirement of a holding of trespass, but rather goes to the issue of harm. While the Foundation had not alleged any physical or tangible harm from Ham’s actions, the Foundation may have been awarded punitive damages by a jury. Thus, the court would have allowed the Foundation’s claim of trespass to go to the jury if the case had not settled.

The Settlement
After the ruling by the court discussed above, trespass was the only surviving claim of the Foundation. The parties then mediated the dispute. As with the vast majority of lawsuits, the parties reached a compromise at mediation.

Importantly, the photo, “Plantation Road,” is still for sale on the Martin Gallery’s website. But, as is usual, the terms of the settlement agreement are confidential.

Of significance, it is reported that despite the Foundation’s position that the property could not be used for “commercial purposes,” parts of the movie, “The Patriot” were filmed there and other photographs have been taken of the property. Unfortunately, many of the photographers identified during discovery as having taken photos while on the Foundation’s property removed their photos after receiving “letters of intent” from the Foundation. But Ham was willing to fight for photographer’s rights (at great expense).

Conclusion
Ham says of his experience, “I am glad the process is over and we were able to reach an agreement that I think was beneficial to both parties. The legal costs were significant and I will have to bear the costs since I had no insurance for such legal issues. I have no regrets in having done so and I hope it will clarify some of these issues.”

Medicare Set-Asides in Liability Settlements

As we previously reported on February 19, 2008, the new Medicare, Medicaid, and SCHIP Extension Act of 2007 requires liability insurers, including self-insurers, no-fault insurers and workers’ compensation insurers, to:
• Determine Medicare/Medicaid status for all claimants; and
• Report to the Centers for Medicare and Medicaid Services (“CMS”), the federal administrative agency responsible for administering Medicare and Medicaid, when those claims are resolved.

The Act now has additional requirements regarding how these insurers must handle the funds for the liability settlements.

With the enactment of the Medicare/Medicaid SCHIP Extension Act of 2007 (MMSEA), which went into effect July 15, 2008, a set-aside must be made concerning Medicare in liability settlements. The Act requires the withholding of Medicare payments when a payment has been or reasonably can be expected to be made by a primary plan, including a liability insurance plan. The Act also requires that, where a primary plan exists, any Medicare payment is conditioned on reimbursement by the entity that received the primary plan payment. Non-group health plans, including liability insurance, no-fault insurance, and workers’ compensation, must begin reporting the information required by the Act July 1, 2009. Failure to report as required by the Act may result in a civil penalty of $1000 per day per claimant.

For more information, please contact Tim Buckley at (404) 633-9230.