By Lou Grossman

On January 9, 2018, a split panel of the United States Fifth Circuit Court of Appeals affirmed an order from the district court, denying a motion to remand a matter removed under the Class Action Fairness Act (“CAFA”). The 2-1 decision In Warren Lester, et. al. v. Exxon Mobil Corp., et. al., No. 14-31383, __F3d___ (5th Cir. 1/9/2018) addressed two issues of first impression for the Fifth Circuit: (1) whether a motion to transfer and consolidate can effectively create a “mass action” removable under CAFA; and (2) if so, whether CAFA may be invoked as a basis for removal when one of the underlying suits comprising the new “mass action” commenced well before the 2005 effective date of CAFA. In affirming the action of the district court below, the Fifth Circuit answered both questions in the affirmative. A full copy of the opinion can be found here.  

The removed actions included two separate matters filed in the Civil District Court for the Parish of Orleans, State of Louisiana – Warren Lester, et. al. v. Exxon Mobil Corporation, et. al. and Shirely Bottley, et. al. v. Exxon Mobil Corporation, et. al. The Lester matter was filed by over 600 plaintiffs for personal injuries and property damages allegedly resulting from Naturally Occurring Radioactive Materials (“NORM”) in 2002. The Bottley matter, on the other hand, was filed in 2013 as a wrongful death and survival suit filed on behalf of Cornelius Bottley, a decedent-plaintiff in Lester, by his three remaining heirs. Following the selection of a trial flight in the Lester matter, which was to include the claims of Mr. Cornelius Bottley, the Bottley Plaintiffs moved to transfer and consolidate their suit with Lester. The matter was promptly removed by a defendant named only in the Bottley matter.

The Fifth Circuit rejected Plaintiffs’ argument that the consolidation was meant to attach the Bottley matter only to the pending trial flight such that it did not, as CAFA requires, propose a single trial with more than 100 individual plaintiffs. Rather, the Fifth Circuit held that the focus under CAFA is on the consolidation proposed, which in the case of the Bottley plaintiffs, was a consolidation of cases involving “overlapping liabilities, damages and questions of law and fact…the determination [of which] in either case will have great bearing on the other….” Plaintiffs’ Motion did not and, as a matter of law could not, limit consolidation to only the claims set for trial. As such, the Fifth Circuit found that it proposed a “mass action,” i.e. a joint trial of 100 or more plaintiffs’ claims, under CAFA.

More importantly, the Fifth Circuit examined the date of the proposed consolidation as determining the applicability of CAFA. Though Lester had been filed before CAFA’s enactment, the proposed consolidation was proposed years later. The Fifth Circuit found that the proposed consolidation created a new “mass action.” The Fifth Circuit reasoned that a civil action may commence before it becomes a “mass action,” and that the Bottley suit became a “mass action” when Plaintiffs proposed that the claims be tried jointly with those in the Lester matter. Bottley was a “civil action” commenced after CAFA’s effective date that subsequently became a mass action subject to CAFA’s removal provisions.

In affirming the denial of Plaintiffs’ Motion to Remand below, the Fifth Circuit established two compelling rules: (1) that a consolidation is effective to create a “mass action” under CAFA; and (2) that CAFA’s Section 9 requirements are met if one of the two consolidated actions was commenced after CAFA’s effective date.  In addition to providing guidance and interpretation regarding the commencement of a mass action, this opinion demonstrates a broad approach to CAFA.

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By Brittany Buckley Salup

Chief Judge Brian Jackson issued an “Omnibus Order Suspending All Deadlines” for cases pending or to be filed in the U.S. District Court for the Middle District of Louisiana.  The Order explains that the court has been inaccessible—a key term in the Federal Rules of Civil and Appellate Procedure—since August 12, 2016 due to historic flooding in the region.  Until further notice from the Middle District, all deadlines and delays in cases pending or to be filed in the Middle District are suspended.  This suspension expressly applies to prescriptive and peremptive periods.  In addition, all pending criminal cases in the Middle District are temporarily excluded from the time requirements of the Speedy Trial Act.

The Middle District’s Order follows similar Executive Orders from Governor Edwards, which suspended deadlines in Louisiana state courts due to flooding.  More information about the Governor’s Orders is available here.

A copy of the Middle District’s Order (M.D. La. General Order 2016-10) is available here.

 

 

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By Claire Juneau

On August 17, 2016, Governor Edwards amended Executive Order JBE 2016-57 which had suspended the running of prescription, peremption, and all legal delays from August 12, 2016 until September 9, 2016. The amendment to Executive Order JBE 2016-57 modifies the suspension of deadlines as follows:

  • Liberative prescription and peremptive periods continue to be suspended throughout Louisiana until Friday, September 9, 2016.
  • Deadlines in legal proceedings currently pending in state courts, administrative agencies, and boards in Acadia, Ascension, Assumption, Avoyelles, Cameron, East Baton Rouge, East Feliciana, Evangeline, Iberia, Iberville, Jefferson Davis, Lafayette, Livingston, Pointe Coupee, St. Charles, St. Helena, St. James, St. John the Baptist, St. Martin, St. Tammany, Tangipahoa, Vermilion, Washington, West Baton Rouge, and West Feliciana, Parishes, continue to be suspended until Friday September 9, 2016. This suspension includes all deadlines set forth in the Louisiana Civil Code, the Louisiana Code of Civil Procedure, Title 9 (Civil Code Ancillaries) Title 13 (Courts and Judicial Procedure), Chapter 11 of Title 18 (Election Campaign Financing); Chapter 10 of Title 23 (Worker’s Compensation); Chapter 5, Part XXI-A of Title 40 (Malpractice Liability for State Services); Chapter 5, Part XXIII, of Title 40 (Medical Malpractice), and Title 49, Chapter 13 (Administrative Procedure) of the Louisiana Revised Statutes. This is a modification from the original Exeuctive Order JBE 2016-57 which suspended deadlines statewide.
  • Except for the suspension of prescriptive and peremptive periods and the suspension of deadlines in the parishes listed above, the suspension provided for in original Executive Order JBE 2016-53 shall end Friday, August 19, 2016. If a party can show an inability to meet the deadlines caused the flooding, the court, administrative agency, or board shall suspend deadlines specific to that matter until September 9, 2016.

A copy of the amendment can be found here: JBE-16-57-Amended-Emergency-Suspension-of-Deadlines-in-Legal-Proceedings

A copy of the original executive order can be found here.

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By Edward H. Warner and Linda Perez Clark

On Thursday, May 5, 2016, the Consumer Financial Protection Bureau (CFPB) issued a notice of proposed rules that would fundamentally change the way certain businesses contract with consumers.  Among other actions, the proposed rule would eliminate class action waivers from pre-dispute arbitration clauses and agreements for certain businesses.  The announcement of the proposed rule was somewhat expected, considering Congress directed the CFPB to study the use of mandatory arbitration clauses in consumer financial markets beginning in 2012.  The CFPB released the results of its three year study in March 2015 and found that class actions were the favored method for consumers to hold certain financial services businesses accountable.  The May CFPB press release states that “the CFPB’s proposal is designed to protect consumers’ right to pursue justice and relief, and deter companies from violating the law.”

What does this proposal intend to change?

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is proposing to establish 12 CFR part 1040, which would impose two sets of limitations on the use of pre-dispute arbitration agreements by providers of consumer financial products and services (“Covered Providers”).

First, the proposed rule would prohibit Covered Providers from using an agreement with a consumer that provides for arbitration of any future dispute if such an agreement bars the consumer from filing or participating in a class action with respect to the covered consumer financial product or service.  Second, the proposal would require a Covered Provider that is involved in an arbitration pursuant to a pre-dispute arbitration agreement to submit specified arbitral records to the CFPB.

What does this change mean for your company?

While only a proposal at this point, this development warrants attention if your company uses pre-dispute arbitration agreements containing class action waivers.  If the proposal is approved, Covered Providers would need to eliminate class action waivers from pre-dispute arbitration agreements and clauses.  The proposal would apply to Covered Providers who are typically in the core consumer financial markets of lending money, storing money, and moving or exchanging money.  Additionally, if the rule is passed, any pre-dispute arbitration agreement will need to include a mandatory statement that the consumer cannot be stopped from filing his/her claim as a class action in court, or from participating in a class action filed by someone else.

What are the legal implications and timelines moving forward?

The new regulations would apply to pre-dispute arbitration agreements entered into on the date that is 211 days from the date the final rule is published, and thus would not apply to any agreement in effect prior to that date.  The 90-day period for the public to comment on the proposed regulations expires August 22, 2016.  Businesses should monitor the outcome and enlist counsel to prepare to address these new requirements if adopted.

If you wish to view the proposed rule, or file a public comment, you may do so at the link here.

 

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By Brian Carnie

The wait is over (for better or worse) – the DOL has released its final rule concerning  changes to the salary requirements to be exempt from the overtime pay requirement under the Fair Labor Standards Act (FLSA).

Under the final rule, the DOL has increased the minimum salary threshold that must be paid in order for most executive, administrative or professional employees to qualify for exemption from $455 per week ($23,660 annually) to $913 per week ($47,476 annually).  This new salary threshold does not apply to teachers, doctors, lawyers, or certain other exempt professionals who are not currently subject to the salary basis or salary level tests.  The final rule permits employers to use non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.  While the new salary threshold is $2,940 less per year than what was originally proposed in 2015, it still presents headaches for many employers who have exempt employees who are paid well below this new salary level.

The final rule also raises the amount paid to an employee to qualify for the highly-compensated employee exemption (from $100,000/yr to approximately $134,004/yr) and establishes mechanisms for automatic increases to the salary requirements every three years.  The final rule makes no changes to the duties requirements that these administrative, executive or professional employees must also meet in order to qualify for exemption, but those may come in the next wave from the DOL.

Covered employers have until December 1, 2016 to make necessary changes (which is when the final rule is effective), after which employers could be held liable for overtime pay violations in subsequent workweeks for up to 3 years after each violation (plus liquidated damages and attorneys’ fees).

What Employers Can Do

For any affected exempt employees who are not paid enough to qualify under the increased salary basis test, consider the following:

  1. Compute what their current weekly salary would be under a 40 hour workweek and then figure how much overtime s/he would have to work before hitting the new minimum salary level (this will determine whether and how much of a change will be needed).

Here is the formula:  [Weekly salary ÷ 40 hrs] x 1.5 = OT rate

[$913 – (current weekly salary)] ÷ OT rate = # of OT hours required before hitting new min. salary level of exemption

  1. Consider adopting the fluctuating workweek method which permits employers to pay non-exempt employees a fixed weekly salary regardless of the number of hours worked. If you implement this properly, employers only have to pay one-half (.5) the regular rate of pay for all hours that exceed 40 per workweek instead of the typical one and one-half (1.5) overtime rate.
  2. For employees whose hours are fairly consistent, consider translating their current weekly salary to an hourly rate where they would continue to receive approximately the same amount of compensation even if they are re-classified as non-exempt and are paid overtime.

 [current weekly salary] ÷ [40 + (1.5 x (expected OT hrs))] = New hourly rate

or if using fluctuating workweek method,

[new hourly rate] x [40 + (expected OT hrs)] = New weekly salary

Then make sure to pay them additional 1/2 rate [(new weekly salary ÷ total hrs) x .5] for all hours worked over 40 in workweek

For employees whose hours vary, consider setting a maximum hour cap beyond which they cannot work without prior management approval.  However, should one or more non-exempt employees exceed this cap in a particular workweek, you must pay them the required overtime for that workweek but you may discipline them for violating the cap.

  1. Take steps to manage off the clock work by employees who were previously treated as exempt, especially if they use electronic devices such as smartphones or laptops outside of the workplace (or outside of normal work hours) for work purposes.
  2. Implement a “safe harbor” policy that details your timekeeping requirements and prohibits off the clock work. Such a policy may provide a good faith defense to liquidated damages stemming from FLSA OT violations, and may also preserve an employee’s exempt status in the event impermissible deductions are made.

Over the next 30 days, Kean Miller will be conducting client briefings on this topic for our clients and friends of our firm.  Stay tuned for dates, times and locations.

The Medicare laws have undergone significant changes. With the relatively new reporting regulations and the focus on compliance, litigators must implement new procedures in their practice.  Many companies are establishing guidelines to obtain information needed to comply with the Medicare Secondary Payer Act (“MSP”) and the Medicare, Medicaid and SCHIP Extension Act of 2007 (“MMSEA”).

The Centers for Medicare & Medicaid Services (“CMS”) is responsible for oversight of the Medicare program. While the CMS has published information to guide the parties, there is room for interpretation of many of the guidelines and, in some instances, there are no guidelines to assist the parties.

Our White Paper is designed to provide parties involved in toxic tort liability suits with knowledge of the key provisions of the MSP and the MMSEA. The manuscript focuses on the practical aspects of obtaining information needed for compliance, common misconceptions and risk avoidance. The manuscript also discusses the significance of cases involving incidents that pre-date the December 5, 1980 MSP, practical aspects of determining when the December 5, 1980 policy may be applied and recent guidance from the CMS on that issue.

Download the White Paper.

 

By Mark D. Mese

The purpose of this post is to provide insureds with general information that will assist them in recognizing important facts and issues related to insurance coverage of environmental disasters. The primary areas addressed include (1) understanding the general types of potential insurance coverage; (2) recognizing environmental disasters; (3) deciding what to do once an environmental disaster is discovered to improve the possibility of insurance coverage and finally, (4) long term plans to improve coverage of potential future environmental disaster claims.

Insurance Policies

Insurance Coverage for Environmental Disaster Coverage is a complicated subject that must consider many different issues over many different timelines and many different jurisdictions with many different types of hazards. Understanding what an environmental disaster is and recognizing that one has occurred is the first thing an insured must do. Until the insured has recognized that an environmental disaster has occurred, it cannot ask the insurer for coverage and it cannot provide notice and coverage cannot be triggered. There are many different types of environmental disasters, a brief review of the history of the pollution exclusion in general liability policies provides some prospective as to how insurers look at environmental disasters and coverage.

Early standard general liability policies issues prior to 1966 contained insuring agreements that provided coverage for injury (caused by accident). The standard insurance service organization (ISO form) which is a general liability form used by most insurers was revised in 1966 to provide coverage for an “occurrence” with neither “expected” nor “intended” by the insured and specifically included continuous or repeated exposure to substantially the same conditions in its coverage. As a result of these changes, claims related to environmental damages increase dramatically. Insurers using the standard form added a mandatory endorsement in 1970 (ISO Form 00020173 1973) that excluded coverage using the following language:

“Bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke vapors, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any watercourse or body of water.”

The referenced ISO form was often used in conjunction with a carve-back in of coverage which provided: “this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.”

As you might expect, and as many of you may know, the 1970’s and 1980’s were a turbulent period for insureds and insurers who were engaged in coverage disputes under CGL policies for pollution related claims. Courts in the various jurisdictions reached different conclusions and were often at odds which made predicting coverage difficult.

The insurers, through the insurance service organization, created an absolute pollution exclusion in 1985 (See ISO form CG0021207), which excluded coverage for the following:

“Bodily injury” or property damage” arising out of the actual, alleged, or threatened discharge, dispersal, release or escape of pollutants:

At or from any premises, site or location which is or was at any time owned, occupied, or rented or loaned to, an insured[.]

“Pollutants” means solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.”

The absolute pollution exclusion lacked an exception for coverage for sudden or accidental problems and it did not provide coverage for allegations or threats of a polluting event and it also eliminated the requirement for a discharge into a foreign land, the atmosphere or water course or a body of water.

Not surprisingly, the absolute pollution exclusion was a source of significant litigation between insureds and insurers and lead to various interpretations by courts across the country. Some courts fell into a camp which accepted the insurance industry’s broad interpretation of the exclusion. Another group affords limited exclusion to damages when an undefined claim involved harm to the broader environment. Another group of courts found that the exclusion was ambiguous or required to be interpreted based on history of the exclusion and looked at the presentations of the insurance industry to the various insurance commissioners in the various states “Doer v. Mobil Oil Corporation,” 774 So.2d 119, 2000-0947, (La. 12/19/00). Knowing which state an environmental disaster is in and more importantly, what state law is going to apply to coverage, becomes very important and can be important in planning litigation as will be discussed below in some detail.

There are many types of insurance products today providing various types of coverage for environmental disasters. A review of all of the different products available is beyond the scope of this paper. Coverage ranges from limited coverage provided via endorsements to CGL policies to stand alone policy forms. Over the years, insureds have sought an expansion of coverage to avoid the gaps created by the pollution exclusions in CGL policies. In recent years there has been a significant increase in the number of carriers providing environmental coverage products compared to the limited market of even five or six years ago. Based on work with brokers over the last year or so, it appears that there are around 30 different insurers now offering some form of environmental coverage. Coverage available for environmental claims is more readily available currently on a claims made basis; although occurrence based insurance is also sometimes available.

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Continue Reading Insurance Coverage of Environmental Disasters

By Todd Rossi and Mark Mese

Almost everyone knows insurance policies provide a defense and indemnity for insureds, if the terms and conditions of the insurance policy are met. Insureds include named insureds, other insureds (as defined by the policy) or additional insureds as provided by endorsement. However, insurance policies may also provide payment and defense to others who are not insureds under the policies.

Most liability policies provide coverage to the insureds for liability when the insureds have contractually agreed to provide indemnity and/or defense to or party to a contract. A typical example of contractual indemnity coverage can be found in a construction contract to supply labor and materials related to electrical wiring in the construction of a home, office, pipeline or oil rig.
 

Continue Reading Contractual Indemnity Coverage Under Someone Else’s Insurance Policy May Provide Coverage in Unexpected Places

By Deborah J. Juneau

The Louisiana Department of Health and Hospitals (“DHH”) has settled a class action lawsuit filed on behalf of Medicaid beneficiaries receiving Long Term Personal Care Services (“LT-PCS”). The class action is pending in the U.S. District Court, Middle District of Louisiana. The presiding federal judge has issued preliminary approval of the settlement. A final approval hearing is scheduled for February 17, 2012.

The class action alleged that the reduction of maximum weekly service hours available to Medicaid beneficiaries eligible for LT-PCS services violated the Americans with Disabilities Act and sought declaratory and injunctive relief to prohibit the implementation of the reduction to service hours. The class action alleged that the LT-PCS recipients were at risk of being forced to enter a nursing home as a result of the cuts to service hours, which is exactly what the LT-PCS program was designed to prevent.

The court defined the class of plaintiffs as follows:

“Louisiana residents with disabilities who have been receiving Medicaid-funded services through the LT-PCS program; who desire to reside in the community instead of a nursing facility; who require more than 32 hours of Medicaid-funded personal care services per week in order to avoid entering a nursing facility, and who do not have available (including through family supports, shared living arrangements, or enrollment in the ADHC [Adult Day Health Care] waiver) other means of receiving personal care services.”

While the class action was pending, DHH allowed LT-PCS recipients who were receiving the maximum number of weekly service hours to request expedited access to the Community Choice Waiver Program. The Community Choice Waiver Program provides a variety of services, including personal care services, to assist beneficiaries to avoid institutional placement and to remain in their homes and communities.

As a part of the settlement, DHH has agreed to extend this option to additional class members currently approved for less than the maximum 32 hours per week of services, but who were receiving more than 32 hours per week at the time the reduction in hours became effective. DHH will offer Community Choice Waiver Program slots to class members who apply for the program, if the class members can show that, without the additional services, they would be at serious risk for institutional placement. DHH will also request approval from the federal government for an additional 200 Community Choice waiver slots. Any slots not filled by class members will be added to the pool of slots made available to those who are on the waiting list for waiver services.
 

 

Kean Miller LLP is pleased to announce the release of the ninth edition of the Practical Digest of Louisiana Class Action Decisions.  The digest is produced by Charles S. McCowan, Jr., Bradley C. Myers, Gerald E. Meunier (Gainsburgh, Benjamin, David, Meunier & Warshauer), and Thomas F. Daley (District Attorney of the 40th Judicial District).  The fifty page book provides a digest of Louisiana class action decisions, classification by subject matter, and classification by certification disposition.

Click here to download  a copy of the digest.  For a hard copy, please email client_services@keanmiller.com

* The digest is a compilation of certain class action decisions and it should not be construed as a complete reflection of the holdings of the cases.