TIDA’s “Hero of the Highway” Nominees

/in /by TIDA’s “Hero of the Highway” Nominees

When we defend trucking companies, in the context of civil litigation, we are expected to deal with the facts and the law as they apply and differ in each individual case. Juries are always instructed as to impartiality in consideration, that they should decide the case fairly and impartially without prejudice or bias. This instruction notwithstanding, in addition to the facts and the law, we often find ourselves having to deal with a preconceived negative bias against trucking companies and their drivers. Often the bias is deliberate, but sometimes it can be unconscious. People feel threatened by the size, weight, and speed of trucks. They form their opinion of trucking companies and truck drivers based on an individual bad experience on the highway, e.g. fast truck passing slow car in the rain. Compounding this negative bias, the news media almost exclusively portrays trucking companies in a negative context when there is a serious accident. Unfortunately, trucking companies and truck drivers don’t get enough credit for their invaluable contribution. Simply put, society as we know it would grind to halt within a few days but for the service provided by trucking companies. Everything you eat, wear, and use was touched by a truck at one point during delivery. A full 80% of all U.S. communities depend solely on trucking. ATA and other industry organization try to combat those unfair perceptions through campaigns such as “Good Stuff Trucks Bring It” and “Trucking Moves America Forward.”

At the Trucking Industry Defense Association (TIDA), one of the ways we seek to address this problem is through the “Hero of the Highway Award.” Since 2010, TIDA has recognized a truck driver for his or her heroic behavior and/or extraordinary public service demonstrated in the preceding year. We honor the Hero of the Highway at the TIDA Annual Conference where they receive a plaque together with a check for $2,500.00. At the 2018 TIDA Annual conference we honored the following nominees:

Arian Taylor (Ballard Trucking) out of Bardstown, KY, saved a 19-year-old woman from prostitution at a Compton, CA, truck stop. At around 4am, Arian received a knock on his cab door only to find a 19-year-old young woman standing outside his truck. As he spoke with her, he learned that her friend’s older boyfriend was trying to force her into prostitution. After she had refused and argued with him, he dumped her in the parking lot and sped off. She was cold, exhausted, had no money, no identification, was carrying everything she owned in her arms and was desperate to get back home to Las Vegas. At that point, Arian told her, “I will find a way to get you home.” After getting her warm and giving her water to drink, Arian looked at one of two Truckers Against Trafficking stickers prominently displayed on his windows (which the victim had been eye-level with when she knocked on his door) and called the National Human Trafficking Hotline. TAT worked with him to secure the woman shelter for the night, a pre-paid cab ride to get her to that shelter and a chaperoned train ride back to Las Vegas the next day, where she was reunited with a family member. Arian took care of the young woman until she was placed in the cab, and even gave her his personal cell phone number in case she needed anything else.

Fernandez Garner, Jr. (Dupre Logistics, LLC) out of Lafayette, LA, skillfully avoided an accident that happened right in front of him and then stopped to render aid and assistance to the victims of the accident. Fernandez was on l-45N near Buffalo, TX following a burgundy van when a tanker passed and jumped in front of him so close that he had to immediately back off to gain a safe following distance. While creating this following distance, he saw the van lose control, flip over and shoot down a hill at a high rate of speed into a tree. The tanker then quickly stopped and Fernandez was forced to take immediate evasive action to a collision. As he passed the tanker he saw a little girl in the middle of the roadway about 20 ft in front he. He quickly pulled on to the left shoulder of the roadway to avoid killing her while putting himself and his rig at significant risk of a roll over. Fernandez then jumped out of his truck and started to provide aid and assistance to the occupants of the van. He found a baby with a 4-inch cut on its head and used bandages from a first aid kit to stop the bleeding while simultaneously calming the baby’s mother down.

Robert “Bob” Jurek (Ward Trucking) out of Buffalo, NY, noticed a fellow patron choking, and took it upon himself to perform the Heimlich maneuver. Bob was eating at Ang’s Family Restaurant, when he noticed a fellow patron starting to choke. Bob got up and asked him if he was Ok and the man excused himself to the restroom. A few minutes later the man busted through the men’s room door chocking and pointing to this throat. Bob jumped up spun the man around and started performing the Heimlich maneuver which successfully dislodged the food from his throat. A few minutes later the man stood up and thanked Bob whose quick actions most likely saved his life.

Roy Gillespie (USF Holland, Inc.) out of St. Louis, MO, is a two-million-mile linehaul driver who has leveraged his driving experience to consistently help his immediate community and beyond. Sometimes referred to as “the Master of Disaster,” Roy works with the Teamsters Union, American Red Cross, and corporate partners like Holland to collect donations and coordinate trucks to deliver aid after disasters strike. In 2017 Roy organized a group of 210 volunteer truck drivers, mechanics, doctors and nurses to respond to the devastation of Hurricane Maria in Puerto Rico. Just weeks earlier Roy spent three weeks in Houston, Texas leading efforts to collect supplies in his community and bring them to Houston after Hurricane Harvey. For the past decade Roy has been busy helping communities with various charity efforts. Roy assisted in four separate disaster relief efforts in 2016. He spearheaded our St. Louis terminal’s efforts to bring clean drinking water to the people of Flint, MI by organizing, packing and delivering four 53-foot trailers loaded to capacity with clean bottled water and bringing 200,000 bottles of clean water to the people of Flint. After historic floods devastated the Baton Rouge, LA region, he brought Team Holland together to lend a hand. Jointly with local Teamsters and other organizations, Team Holland delivered five full 53-foot trailers filled with necessities and flood cleanup supplies to Baton Rouge. Roy also helped bring relief in Raleigh, NC after Hurricane Matthew hit and in Tennessee after major flooding in July. In addition to helping after natural disasters, Roy co-founded the Chris How Group to collect food and clothing for the poor throughout the year. Its Christmas toy drive involved dozens of volunteers, corporate donations, and countless hours to deliver over 100,000 new toys to children that otherwise would never have Christmas. Roy also works with H.E.R.O.E.S Care—a non-profit organization dedicated to supporting service members and their families. In total, Roy helped to deliver 18 trailers full of donated toys to ten different military bases across the Holland footprint.

John Weston (Challenger Motor Freight) out of Ontario, Canada, stopped to render assistance following a tragic accident just east of Cambridge, Ontario last October. A ten-year veteran for Challenger, John was bobtailing back after completing his last run of the week when he came across an horrific accident scene. John safely pulled over before any emergency vehicles had arrived and was the first to render assistance. He approached the wreckage of the last tractor where he was barely able to see the top of the driver’s head. He persistently called out and eventually the driver responded and John learned his name. John said to the driver, “Would you mind if I put my hand on your head so you know that I’m with you?” With the driver’s agreement, John placed his hand on the driver’s head reassuring him that someone was with him. It was a simple but profound act of kindness. Eventually the driver became unresponsive and tragically, trapped, he succumbed to his injuries. As a result of John’s act of kindness the driver did not die alone.

Darren Phillips (Sevier Valley Transportation, LLC) out of Richfield, Utah was traveling on Interstate 80 in Wyoming, as he was cresting a hill near Green River, WY, he came upon a Wyoming State Trooper (highway patrol) who had pulled over another vehicle on the right shoulder. Darren slowed down and moved to the left to the #1 lane to give the trooper space.  As Darren’s truck was passing the trooper and stopped vehicle, the driver of the stopped vehicle jumped on the trooper and tackled him to the ground. Darren, formerly an Army National Guard Blackhawk helicopter Flight Crew Chief and Platoon Sergeant who had served in Iraq, knew instinctively that he had to act immediately to protect the trooper. Darren quickly stopped his truck in the #1 lane and ran over to where the trooper was pinned on the ground with the man kneeling on top of him. The trooper saw Darren approaching and called out that the man was trying to take his gun. Darren noticed that both the man and the trooper had their hands on the trooper’s gun. Darren jumped forward and put the 6 foot/300 lb man in a headlock and with an adrenaline rush, stood up and fell straight backward onto his back which pulled the man off the trooper and on top of Darren. The man tried to wrestle away from Darren and tried to punch Darren who was holding him in the headlock from behind. Darren kept the man in the headlock as the trooper was collecting himself. At that time a second trooper arrived and the man was struggling to breathe due to the headlock. With the two troopers there, Darren asked if he could release the headlock and the trooper told him he could. The two troopers wrestled the man off the top of Darren and, despite the man’s ongoing struggle, were able to place in him handcuffs. Darren’s military training and quick selfless thinking made it so nobody was seriously hurt. If Darren had not stopped, it is likely that either the trooper or the man would have been seriously injured or killed.

We would like to heartily congratulate all  the 2018 nominees for their incredible contribution, acts of bravery and heroics. Darren Phillips was the winner of the 2018 “Hero of the Highway” award, which was announced at TIDA’s Annual Conference.

For more information about this article, please contact Andrew T. Stephenson at 410.230.3638 or astephenson@fandpnet.com.

F&P on the Road

/in /by F&P on the Road

Andrew Stephenson attended the Arkansas Trucking Seminar in Bentonville, AR from September 19-20.

John Handscomb, Angela Garcia Kozlowski, and Bert Randall presented at the MWCEA conference in Ocean City, MD from September 23-26 and  Maija Jackson, Sarah Lemmert, Tim McGough, Laura McKenzie, Kara Miller, Michael Prokopik, and Barb Thompson also attended.

Steve Marshall attended the USLAW Construction Law Exchange in Denver, CO from September 24-25.

Andrew Stephenson presented on “Paratransit Liability Issues” as well as presenting with Heather Rice on “Abuse and Molestation” at the Atlas Financial Holdings Fourth Paratransit Council Session in Schaumburg, IL on September 26.

Bert Randall and Lynn Fitzpatrick presented on the topics of wage calculations, settlement options as well as future medical and employment issues as they relate to injuries at the National Workers’ Compensation Defense Network (NWCDN) National Conference in Minneapolis, MN on September 27.

Andrew Stephenson attended the Trucking Industry Defense Association (TIDA) 26th Annual Seminar in Austin, TX on October 3-5.

Bert Randall and Tamara Goorevitz will be attending and speaking at USLAW’s Retail and Hospitality Exchange in Chicago on October 22-23.

Andrew Stephenson and Renee Bowen will be attending the Transportation Megaconference in New Orleans, LA from March 22-23, 2019.

Andrew Stephenson and Renee Bowen will be presenting at the Trucking Claims Boot Camps in Dallas, TX, Denver, CO, Chicago, IL, Atlanta, GA, Orlando, FL, New Jersey and London from April 3 – July 1, 2019.

 

 

ProExpress Distributors, LLC v. Grand Electronics, Inc.: Not-So-Reasonable Efforts to Maintain Secrecy in Cloud

/in /by ProExpress Distributors, LLC v. Grand Electronics, Inc.: Not-So-Reasonable Efforts to Maintain Secrecy in Cloud

As many businesses look to reduce the expenses associated with their information technology services, lower cost alternatives to traditional storage are becoming more and more commonplace. The growing trend has been for businesses to opt out of expensive system hardware, and instead store their confidential data with internet storage services, such as the “cloud.” Apart from their financial advantages, cloud-based servers also provide the benefit of easy remote access to information for any employees on whom an employer wants to bestow such a privilege (and responsibility). The growing popularity of the cloud as a place to store confidential information, including trade secrets, inevitably begs the question: Is all proprietary information that is stored in a cloud-based server entitled to trade secret protection? A recent decision of the Court of Special Appeals of Maryland confirms that the question is not easily answered, and there are legal risks associated with storing trade secrets in the cloud.

A brief reminder of what a trade secret is will inform the unique issues raised by cloud storage. Under Maryland law, a trade secret is defined as information (including a formula, pattern, compilation, program, device, method, technique, or process) that: (1) derives independent economic value from not being generally known to or readily ascertainable by others; and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. So, for example, the formula for Coca-Cola creates economic value for the Coca-Cola company because the formula is secret, and not generally known. If the company were to fail to take reasonable efforts to protect the secrecy of the formula, though, it would lose trade secret protection.

The Court of Special Appeals recently addressed the issue of what efforts are reasonable, in the context of cloud storage. In ProExpress Distributors v. Grand Electronics, LLC, the Court of Special Appeals signaled to businesses everywhere that dangerous storms roll in when trade secrets are not properly kept in the cloud.

ProExpress Distributors, an online retailer of electronic products (“PED”), sued Grand Electronics, a competitor (“GE”), for misappropriation of trade secrets. PED electronically stored various business records, including its purported trade secret, on various cloud-based servers such as Dropbox and Google Drive. PED shared access to its internet storage accounts with CNEST Solutions, Inc. and its employees (a separate, non-party entity). The accounts were password-protected, but once granted initial access, all PED and CNEST employees had free and open access to all of the accounts without having to enter any password to further access the site. PED alleged that a former at-will employee of CNEST Solutions (a non-party with whom PED voluntarily shared its internet storage accounts (such as Dropbox and Google Drive), discovered that he had continued access to PED’s Dropbox account, and viewed PED’s trade secrets while employed by GE.

PED claimed that the trade secrets misappropriated by GE’s employee (the former employee of CNEST) provided GE with a commercial advantage, as evidenced by a significant jump in GE’s sales and a corresponding decrease in PED’s sales.

The Court of Special Appeals focused its analysis on whether PED demonstrated efforts that were “reasonable under the circumstances to maintain secrecy,” and examined a 2004 Court of Appeals decision, LeJeune v. Coin Acceptors, Inc. In LeJeune, the Court of Appeals found that a company had taken reasonable steps to safeguard secrecy by: negotiating non-disclosure agreements with its customers to prevent price disclosure, marking all important documents as “confidential,” and communicating the secret nature of its methodology to its employees through an employee handbook.

Applying the LeJeune Court’s rationale, the Court of Special Appeals found that PED failed to produce any evidence that it took reasonable efforts to protect its purported trade secrets. First, PED did not change the password to its Dropbox account after a group of its employees left to found GE. Furthermore, PED failed to limit access on a “need to know” basis within the company, as all employees had free and open access once granted initial access. Finally, PED provided Dropbox access not only to all of its own employees, but also to all CNEST employees without the protections of confidentiality or non-disclosure agreements. In short, PED took almost no steps to protect the secrecy of its supposed trade secret. The Court easily and correctly found that PED’s supposed efforts were not reasonable under the circumstances, and that its supposed trade secret was not entitled to protection.

As the Court’s decision demonstrates, businesses that utilize cloud-based servers risk losing trade secret protection when valuable data is not properly kept on a third-party server. Maryland case law on the issue remains sparse. Nonetheless, the ProExpress decision suggests that traditional principles of trade secret law will still apply in the context of cloud storage. In other words, courts will continue to focus on a company’s own actions to maintain confidentiality in determining whether use of cloud-based servers is a reasonable way to store trade secrets. As a practical matter, businesses that are utilizing cloud storage should engage in efforts such as limiting access to trade secrets to only those with a need-to-know, maintaining written trade secret policy that guides employees, and requiring employees and third party service providers to sign confidentiality or non-disclosure agreements.

Buyer Beware: A Hidden Legal Risk of Interstate Transactions

/in /by Buyer Beware: A Hidden Legal Risk of Interstate Transactions

As the explosion of e-commerce shrinks the world, a business owner can often buy just as easily from a vendor in Pasadena, California as from one in Pasadena, Maryland. Interstate purchases, though, carry with them a particular legal risk that purely intrastate transactions do not – the possibility of having to chase the other party into its home state if things go badly.

The problem is what’s called jurisdiction. Jurisdiction is the legal authority that a court or other judicial body has to render decisions. Maryland courts certainly have jurisdiction –power and authority – to decide cases concerning, and render decisions affecting, defendants who live or regularly conduct business within our state. However, this power and authority are less certain when a potential defendant neither resides nor does business in the state. A Maryland court will not usually have, and probably should not have, authority to enter a judgment that binds a California resident or corporation that has never had any connection with Maryland.

If your business elects to buy from an out-of-state vendor, and the transaction does not go as planned, you may well be forced to chase the vendor in the courts of its home state. (Of course, jurisdiction is often addressed in any written contract that may govern the transaction). Whether or not you will be able to sue your vendor in Maryland depends on whether a Maryland court can exercise jurisdiction over the vendor. Maryland law extends Maryland’s jurisdiction over out-of-state defendants as far the limits of the U.S. Constitution will allow.

Jurisdiction over an out-of-state defendant will depend on whether the vendor has enough sufficient “minimum contacts” with Maryland that a Maryland court considers it fair to exercise jurisdiction over the vendor. Generally speaking, the vendor must have sufficient contacts with Maryland to make it reasonable for the vendor to expect to be dragged into court here.

There is no bright-line test, but greater connections and more frequent contact increase the likelihood that an out-of-state individual or company will be subject to jurisdiction here. Merely advertising in Maryland, or selling via direct mail or the internet to Maryland residents almost certainly will not suffice to allow jurisdiction. On the other hand, people or companies that have substantial contacts within Maryland, such as an office or offices, employees, real or personal property, and/or accounts in Maryland banks will likely be easy to sue here. Likewise, voluntarily becoming registered or qualified to do business in Maryland, or becoming licensed under a state statute, will almost always subject a defendant to suit in Maryland.

In some cases, even where the potential defendant is not licensed, registered, or qualified, and has no office, employees, property or accounts in Maryland, a single contract or commercial transaction might be enough. If the customer or vendor initiates contact with a Maryland resident or company, signs the contract here, and the goods are to be delivered, or the services are to be performed here, a Maryland court would likely allow the customer or vendor to be sued here.

The extra costs of litigating out-of-state can, of course, be significant. Out-of-state litigation will require new counsel, travel costs, and probably substantially more time away from your business than would be required to bring the same claim locally. Unfortunately, the question of Maryland’s jurisdiction over a particular out-of-state party is often unsettled, and may be difficult to predict in advance of a transaction. A contractual provision in which the parties agree to the jurisdiction of Maryland courts will eliminate the issue at the outset and potentially save significant money in the event of litigation later in the parties’ dealings.

“Hey! Get That Off My Lawn!” Trespass, Ejectment, and Abandoned Property on Your Premises

/in /by “Hey! Get That Off My Lawn!” Trespass, Ejectment, and Abandoned Property on Your Premises

It is often said that possession is 9/10 of the law. While that’s a catchy phrase, possession does not always mean that you have a right to do whatever you wish with another’s property.

Most business owners rely on the services of other businesses to make their operations run smoothly. For instance, many companies lease printers, copiers and other technology. Some businesses, like mechanics, builders, manufacturers, and restaurants, need to dispose of large quantities of hard waste, and as a result, engage a vendor to remove that waste on a regular basis. As we have all seen, those waste disposal companies leave their dumpsters (which represent a significant initial investment) on the property of the business owner, and make frequent stops with their own equipment to haul the waste away.

In commercial relationships, as in all relationships, circumstances change and relationships, with vendors and others, end. Sometimes, as in the case of the waste removal contract discussed above, one party will leave personal property on the real property of the other party. While it’s certainly tempting to simply remove the property, care must be taken to avoid infringing on the rights of the interloper.

In Maryland, there are several different legal relationships which can develop when a landowner allows another to place property on their land. In some instances, an easement can be created which allows another to build on or have use of the property. Such relationships are usually created by a formal legal document. In other scenarios, such as the case of the dumpster, a landowner will grant permission for another to store their personal property on the owner’s land. In that case, a “license,” or permissive use, is established. A license does not need to be written, and is often times implied from a contract or business dealing which necessitates one storing their personal property on the real property of another. Just like a driver’s license, a license to store property on land of another can be revoked. It is the process of the revocation of the license and the removal of the then-offending property that can create legal issues for the landowner.

There are several legal considerations at play. First, once a land owner revokes its license or terminates its business relationship with the owner of the stored property, then the person storing the property is effectively trespassing on the land of the owner. The land owner, however, does not automatically have the right to simply dispose of or remove the trespasser’s property. In fact, courts have routinely held landowners liable for unlawful or improper removal of such property.

To avoid this risk, landowners should almost never resort to “self-help” (i.e. removing trespassing property on their own). Instead, a landowner should sue for trespass (seeking damages for the unwelcome storage of the property) or ejectment (seeking a court order that the property must be removed).

While that level of formality might at first seem unnecessarily expensive, proactively seeking help from a court will likely prove less expensive than defending against a claim for damages brought by a vendor.

The best risk avoidance mechanism, of course, is communication, agreement, and documentation. Before allowing a customer, vendor, or other third-party to store personal property in or around your land or property, discuss the terms for delivery, storage, maintenance, and removal. Reach agreement on as much as possible, and document (with assistance from qualified counsel) any agreement that is reached. Without a agreement in advance, you will be best protected by seeking court intervention before resorting to self-help to get rid of unwelcome personal property.

 

A Lifetime to Build and Seconds to Destroy: Treat a Trademark Like a Reputation

/in /by A Lifetime to Build and Seconds to Destroy: Treat a Trademark Like a Reputation

Your business is taking off and work is showing results. You have built a reputation over the years and, until now, you have turned a blind eye toward registering a company trademark. Maybe that thought comes into focus now, when your business gathers visibility and suddenly has a reputation to uphold. Countless business disputes result from a business owner’s failure to take care of the little things early on – before they present a real threat. Consider the benefits of registering a trademark and the consequences of not doing so. Like your reputation, your business has likely taken years to build. Its reputation can be altered, perhaps irrevocably, if a competitor registers your trademark first and markets itself under your company’s brand.

What Is a Trademark?

Generally, trademarks are symbols, words or images that indicate a product’s source or origin, and distinguish it from similar products. This helps prevent a competitor from using your company’s rising visibility to their advantage.

What Is Common Law Trademark Protection?

There are two sources of trademark protections: 1) common law rights; and 2) federal rights.

Common law rights are created by mere use of your trademark and its association with a product or service you sell. Since actual use of the trademark is required to create a common law rights in the trademark, a company often must spend significant time and money marketing and building a brand before those protections are created.

Fortunately, common law protections apply without a company taking any other action aside from using the trademark – no registration of any trademark is necessary.

Under common law, your trademark will be protected by use from a competitor within a certain geographic area around your company. Ultimately, if you found a competitor was using your company’s trademark, your company could enforce common law protections on that trademark to the extent your company could show the competitor’s trademark was likely to cause confusion about the source of the product being sold. Upon the showing of such confusion, your company could use the court system to stop the competitor’s use of the trademark.

What Are the Federal Protections and Why Are They Better?

Federal trademark protections are created when you register your trademark with the U.S. Patent and Trademark Office (USPTO).

The only requirement, aside from fees, is that the application be made in good faith. Specifically, the registrant (you or your business) must show intent to use the mark in connection with the marketing of a product or service.

The ease of filing with the USPTO creates a problem – a third party can file an application for the same trademark you use, possibly creating significant hardship and expense for your company in the future. For instance, if someone else registers the same trademark before you do, that person or company is given advantages if you ever decide you need to sue that party for improper use of “your” brand. Suddenly, your business’ reputation is at risk. If your brand grows and you dispute the rights your competitor has in the trademark, there is a good chance the ensuing disagreement will be more expensive and difficult than if you had simply registered your trademark first.

Filing an application to register your trademark with the USPTO places the whole country on notice of your trademark use. Thus, if someone attempts to register the same trademark later, you are given priority due to the earlier filing date. Accordingly, moving quickly and early will provide significant protection and peace of mind.

Additionally, federal registration provides more benefits than common law trademark protections. Among other perks, federal registration provides: 1) a legal presumption that the registrant has exclusive rights to use the mark nationwide in connection with the goods and services listed in the registration; 2) significant limitation on competitors’ ability to argue against your ownership of the mark after five years of registration; and 3) a basis to sue a competitor in federal court for trademark infringement.

If you have already registered all of the trademarks that are associated with your business, congratulations. You have taken a critical step in protecting your business’ reputation in the marketplace. If not, you should consider doing so promptly. Registration generally requires only a small investment of time and money, and the return on that investment can be substantial. Registration will not prevent infringement or misuse of your marks, but it should serve as a substantial deterrent to potential infringers, and should also make defending your marks easier and less expensive if necessary.

 

Is the Cap on Punitive Damages Real Tort Reform?

/in /by Is the Cap on Punitive Damages Real Tort Reform?

West Virginia is routinely labeled a “Judicial Hellhole.” However, over the past two years, West Virginia has been removed from the “Judicial Hellhole” list and downgraded to the “watch list,” meaning there has been improvement, mainly stemming from the recent tort reform occurring through the West Virginia legislature.

One of the recent pieces of legislation that the West Virginia legislature has enacted is a cap on punitive damages, which went into effect on June 8, 2015. Highlights of the reform include: a standard of evidence demonstrating that a defendant acted with actual malice toward the plaintiff or a conscious, reckless and outrageous indifference to the health, safety and welfare; thata jury only consider awarding punitive damages in a bifurcated process, first determining the appropriate compensatory awards and then only if a judge rules there is competent evidence can a judge then submit the question of punitive damages to a jury; and the first ever cap placed on punitive damages in West Virginia (cannot exceed the greater of four times the amount of compensatory damages or $500,000, whichever is greater).

These changes have been touted as a “tort reform” measure. It is without a doubt that since 2015, the West Virginia legislature has created legislation in an effort for tort reform. However, the punitive damages cap appears to be less like tort reform than other recent measures taken by the West Virginia legislature. Instead, the statutory cap appears to be a measure taken in an effort to codify over a century worth of case law, with the exception of the new burden of proof, on punitive damages by defining what punitive damages are and the amount that is allowable by law. Thus, the statute is an attempt to normalize the award of punitive damages, and also an attempt to make the award of punitive damages somewhat predictable and more uniform on a case-by-case basis.

However, by keeping the low-bar of reckless conduct in order to establish a claim for punitive damages, the West Virginia legislature appears to have balanced the low-bar with a higher standard of proof, shifting from a more-likely-than-not standard to a firm-belief in that the conduct of the defendant warrants an award of punitive damages. Thus, the West Virginia legislature has evened the playing field of the low-bar “recklessness” conduct requirement by requiring a higher standard of proving such conduct.

It is apparent that the West Virginia legislature is in a current groove of enacting more favorable defending against claims in West Virginia. The statute now gives clear direction to lower courts and litigants regarding the conduct needed to be proven for an award of punitive damages and the amount of punitive damages that can be expected when there has been an award of compensatory damages and conduct that meets the standard for punitive damages.

For more information on this article, contact Landon Moyer at lmoyer@fandpnet.com.

 

Delaware Decision Prohibits “Owned-but-Uninsured” Exclusion from Restricting an Insured’s UIM Coverage

/in /by Delaware Decision Prohibits “Owned-but-Uninsured” Exclusion from Restricting an Insured’s UIM Coverage

Delaware courts continue to refine the case law related to uninsured (“UM”) and underinsured motorist coverage (“UIM”) as codified in 18 Del. C. § 3902. In proceeding with a UIM claim, an insured bears the burden of establishing that a particular loss falls under the coverage provisions of the applicable insurance policy. If met, the burden then shifts to the insurer to establish that a policy exclusion applies to preclude such coverage.

In a recent decision by the Delaware Superior Court, the Court concluded that “owned-but-uninsured” exclusions in insurance policies are invalid as they relate to the availability of UIM coverage. In Jessica Lee v. GEICO Choice Insurance Company, Plaintiff filed a claim for UIM coverage after settlement with a tortfeasor for damages she incurred in a motor vehicle accident. Upon submission of the claim, Plaintiff learned her policy had been canceled prior to the accident for failure to make premium payments. At the time of the collision, Plaintiff resided in the same household as her sister, who had a separate insurance policy with GEICO that also provided for UIM coverage. Plaintiff submitted a claim under her sister’s policy, which was denied by GEICO, and the lawsuit followed.

The Court evaluated Plaintiff ’s claims in the context of prior UIM case law. As Delaware courts have held, UIM coverage is personal to the insured, rather than vehicle-related. The Court first found it to be “undisputed” that Plaintiff qualified as an insured under her sister’s policy, which was defined to include “[r]elatives of [the named insured] if residents of his household.” The burden then shifted to GEICO to establish that the owned-but-uninsured exclusion applied to preclude coverage.

The Court evaluated the nature of UIM coverage as personal to the insured in the context of Frank v. Horizon Assur. Co., which also held other-motor-vehicle exclusions void as against public policy. Unlike Delaware’s no-fault insurance law, 18 Del. C. § 3902 does not include language authorizing the use of exclusions “customary to the field”. The absence of this language led the Courts in Frank and, subsequently, Lee, to conclude that any exclusions and/or restrictions to UIM coverage must be specifically authorized by statute. Furthermore, the Court in Lee held that owned-but-uninsured exclusions are contrary to the public policy behind § 3902, which is “the protection of innocent persons from the negligence of unknown or impecunious tortfeasors.” In light of this holding, the Court said it need not address the coverage status of Plaintiff ’s own vehicle.

Although the Lee decision does not significantly alter the landscape of UIM case law, it underlines Delaware courts’ emphasis on the public policy behind UM/UIM coverage as codified in 18 Del. C. § 3902. As the courts continue to adjudicate cases involving UM/UIM coverage, insurers must be mindful of the expansive nature of the statute and the court’s deference to the protection of insureds who contract for such coverage.

For more information on this article, contact Noelle Torrice at ntorrice@fandpnet.com.

 

VA Umbrella Policy Decision Results in $2.8 Million PI Settlement

/in /by VA Umbrella Policy Decision Results in $2.8 Million PI Settlement

A federal court’s decision in a declaratory action filed in the U.S. District Court for the Western District of Virginia has resulted in a $2.8 million settlement of a personal injury claim in Encompass Independent Ins. Co. v. Dombrosky.

In June 2015, teenage driver Tanya Dombrosky crashed into a tree in Botetourt County, Virginia. Her passenger Matthew Green was unrestrained at the time; he was ejected from the vehicle during the accident and sustained serious injuries, including spinal cord injuries that left him a paraplegic.

At the time of the incident, Dombrosky lived with her grandmother and mother. She was insured under her mother’s USAA policy
with $300,000 limits. Her grandmother also had an auto insurance policy with $250,000 limits and a $2.5 million umbrella insurance policy with Encompass. Encompass denied coverage for the incident under either policy and filed a declaratory judgment action in federal court. In order to determine the applicability of the umbrella policy, the issue for the court was whether the grandmother maintained or regularly used the vehicle, which had only been in the household for nine days prior to the accident.

The court ruled that the Encompass umbrella policy did cover Dombrosky. Even though the vehicle was titled in Dombrosky’s mother’s name, the grandmother paid for it in full. The purchase price included an initial oil change and limited warranty. The vehicle was also garaged at the grandmother’s house, and the grandmother filled the vehicle with fuel at leastonce and drove it 2-3 times. The court found that the meaning of the word “maintain” in the umbrella policy was ambiguous, but ultimately the grandmother’s “dominion and control” over the vehicle were important factors in finding that the umbrella policy did apply.

At the conclusion of the declaratory action, USAA and Encompass settled the case for $2.8 million.

Recent Legislation Puts Self-Driving Cars in the Fast Lane

/in /by Recent Legislation Puts Self-Driving Cars in the Fast Lane

In our current political landscape, bipartisan support is a rarity. However, one topic that all parties seem to be on the same page with is giving the green light to self-driving cars.

The U.S. House of Representatives approved a bill on September 6 aimed at hastening the deployment of self-driving cars and prohibiting states from blocking autonomous vehicles. Reuters reports that the bill, “[w]ill allow automakers to obtain exemptions to deploy up to 25,000 vehicles without meeting existing auto safety standards in the first year, a cap that would rise to 100,000 vehicles annually over three years.” A similar bill had favorable feedback from the Senate in early October.

It is believed that the legislation will pass both houses of Congress by the end of 2017. If that is the case, it would be a significant change to the current law, which prohibits self-driving cars without human controls from driving on U.S. roads. Reuters reports that the bill under consideration in the House “[w]ill require automakers to submit safety assessment reports to regulators, but would not require pre-market approval of advanced vehicle technologies.” The House bill would also limit the ability of states to regulate the performance standards of self-driving cars. However, states would still be able to regulate registration, licensing, liability, insurance and safety inspections of all cars on the road.

What does this shift in the market towards self-driving cars mean for companies who provide automobile liability insurance? In the short term, likely not much. Development of self-driving cars is in the preliminary stages, and the legislation currently in the House is meant to aid the growth of the technology necessary for self-driving cars to become widespread. The hope is that self-driving cars will reduce automobile accidents and related fatalities, as the main cause of auto accidents is human error.

In the long term, however, the allocation of liability may shift from individual drivers to the corporate owners or manufacturers of self-driving cars. The bill currently in the House will leave states free to continue to regulate their respective insurance markets. Indeed, NPR has reported that the Michigan state legislature has already passed a law that “specifies an automaker assumes liability and insures every car in its fleet when driverless systems are at fault.” It is fair to expect that more state legislatures will turn to the issue in the coming years as well. The push for self-driving cars is only just beginning, and it is one we will be watching very closely for years to come.