Misbehavior at Misconduct Tavern Leads to Adverse Inference at Trial (PA)

Timothy St. Clair and a group of friends weren’t feeling the luck of Irish on St. Patrick’s Day, 2012, according to the facts in St. Clair v. 1511 Locust Tavern. That evening, Plaintiff St. Clair and his brother entered Misconduct Tavern on 15th and Locust in Center City, Philadelphia to use the restroom. At some point thereafter, St. Clair realized that his brother was involved in what looked to be an impending altercation. While approaching his brother, St. Clair was struck on the side of the face and knocked out.

A staff member of Misconduct Tavern assured St. Clair that the bar had surveillance equipment that would show the incident. St. Clair departed for the hospital, where he had surgery to reconstruct his deviated septum. St. Clair then called Misconduct Tavern two days after the incident to ensure that the promised videotape was preserved. He was told that it was.
Days later, Misconduct Tavern stopped responding to St. Clair. It was subsequently discovered that the bar had failed to preserve the videotape, at which point St. Clair filed a personal injury claim against the bar based upon the allegation that Misconduct Tavern served the already-intoxicated assailant more alcohol.

At trial, Misconduct Tavern argued that they could not be held liable for St. Clair’s personal injuries because there was no video tape proving the bar served a visibly intoxicated individual. St. Clair then asked for and was granted an adverse inference that Misconduct Tavern spoliated evidence by losing the videotape. An eight-member jury found in favor of St. Clair after determining that Misconduct Tavern did serve alcohol to the already-intoxicated assailant, an act of negligence that was a factual cause of St. Clair’s injuries. The verdict was $80,000.

In the future, if a videotape is promised, it appears that a videotape must then be delivered to avoid a damaging adverse inference on spoliation. When dealing with patrons’ misbehavior, bars like Misconduct should be careful going forward to preserve all videotapes of incidents.

Special thanks to Melanie Brother for her contributions to this post. For more information, please e-mail Bob Cosgrove .

“Gist of the Action” Doctrine Bars Negligence Claims for Lost Data (PA)

The Philadelphia Court of Common Pleas recently sustained preliminary objections (which is the Pennsylvania equivalent of a motion to dismiss in lieu of an action) as to a plaintiff’s negligence and negligent misrepresentation claims relying on the “gist of the action” doctrine in the case captioned Kay, Tabas & Niknam Ophthalmology Associates, P.C. v. Gibraltar Technologies, Inc. and Thomas Hogue.

By way of background, the plaintiff Kay, Tabas & Niknam Ophthalmology Associates, P.C. (“Kay Tabas”), a healthcare provider, entered into a service agreement with the defendants Gibraltar Technologies, Inc. and Thomas Hogue (collectively “Gibraltar”) in 2012 wherein Gibraltar agreed to provide data backup services to Kay Tabas. Specifically, Gibraltar was hired to convert Kay Tabas’ patient records, billing records, and other business records into a paperless system. Thereafter, Gibraltar subcontracted with a third-party to store Kay Tabas’ back-up data. On or about November 28, 2013, Kay Tabas’ on-site servers malfunctioned. As a result, Kay Tabas transmitted corrupt data to the third-party. Consequently, Kay Tabas’ back-up data was corrupted and ultimately lost.

On or about May 6, 2015, Kay Tabas filed a complaint against Gibraltar in Philadelphia County, Pennsylvania alleging, inter alia, negligence and negligent misrepresentation. Gibraltar filed preliminary objections in response to Kay Tabas’ complaint. With respect to Kay Tabas’ negligence based claims, Gibraltar argued that Kay Tabas failed to state a legally sufficient cause of action under the gist of the action doctrine as recently established in Bruno v. Erie Insurance Company.

The “gist of the action” doctrine addresses how and when negligence claims apply in the contract context. Specifically, the doctrine holds that “if the facts of a particular claim establish that the duty breached is one created by the parties by the terms of their contract, then the claim is to be viewed as a breach of contract.” Alternatively, “if the fast establish that the claim involves a broader social duty, then it must be regarded as a tort.” The “gist of the action” doctrine also requires courts to distinguish between business actions that are within the scope of the actual promises made in a contract and those that go beyond the scope of the contract.

With this background, the Philadelphia Court of Common Pleas first looked at the service agreement between Kay Tabas and Gibraltar, as the service agreement formed the basis for Kay Tabas’ lawsuit. In doing so, the court determined that Kay Tabas and Gibraltar contracted directly for a backup plan. Further, the court stated that the data backup services Gibraltar failed to deliver were the precise services Kay Tabas expected pursuant to the service agreement. Ultimately, the court ruled that Kay Tabas’ loss of data neither implicated a general societal duty nor did Gibraltar’s business actions go beyond the scope of the promises made in the service agreement. Rather, the court held that Kay Tabas’ claimed damages arose from the specific promises made in the service agreement; thus, the claim should be viewed as a breach of contract, not tort. Accordingly, the court dismissed Kay Tabas’ negligence and negligent misrepresentation claims pursuant to the gist of the action doctrine.

Special thanks to Erin Connolly for her contributions to this post. For more information, please e-mail Bob Cosgrove .

Temporary Employees are Employees Too, At Least for Summary Judgment Purposes (PA)

To bring a claim for employment discrimination in Pennsylvania, a plaintiff may allege a violation of Title VII and /or the Pennsylvania Human Relations Act (“PHRA”), both of which require proof of an employer-employee relationship. Temporary workers in Pennsylvania, who are hired and assigned jobs through employment agencies, face a significant legal hurdle in proving that such a relationship exists before they can get their case to a jury.
On November 18, 2015, the Third Circuit Court of Appeals ruled that temporary workers suing for bias can overcome summary judgment on the issue of an employer employee relationship. In Faush v Tuesday Morning, the court reversed a district court decision that granted summary judgment to retailer Tuesday Morning.

The appellant, Matthew Faush was an African American employee of Labor Ready, a temporary employment firm, that assigned him to work at a Tuesday Morning retail store. He claims that he was subjected to racial slurs by his immediate supervisors. The district court previously ruled for summary judgment in favor of Tuesday Morning on the issue of whether an employment relationship existed. Reviewing the grant of summary judgment de novo, the Third Circuit concluded that an application of the Darden factors was enough to establish that Faush’s relationship with Tuesday morning was more than sufficient to preclude summary judgment

The US Supreme Court’s Darden test, which the Third Circuit employed to determine the existence of an employment relationship, iterates an exhaustive list of factors that establish an employment relationship, including, but not limited to: the skill required for the worker’s task, the source of the instrumentalities and tools used, location of the work, duration of the relationship between the parties, the hiring party’s right to assign additional projects to the hired party, extent of the hired party’s discretion over duration and location of work, tax treatment of the hired party, and method of payment. Here, the Circuit reasoned that with respect to Faush’s relationship to Tuesday morning, the district court overstated the extent to which the factors relating to compensation, hiring and firing, and control over temporary employees cut against Faush.
With respect to method of payment, the court focused particularly on the payment to Labor Ready, which “were functionally indistinguishable from direct employee compensation.” Control over the employee was evident in Tuesday Morning’s direct supervision and provision of assignments. Tuesday Morning also had the power to hire and fire employees, which it could exercise through its demand for a replacement if it was unhappy with a temp’s performance.

Aside from the Darden test, the court paid particular attention to the use of the term “temporary employee” as distinguished from independent contractor, as the descriptor used for workers at Tuesday Morning. The court was further persuaded by Fourth Circuit precedent, particularly Maynard v. Kenova Chem. Co. and Butler v. Drive Automotive Industries of America, Inc., both of which involved the court holding the existence of an employment relationship for temporary employees as a matter of law.

While the Faush v Tuesday Morning ruling merely holds that a temporary employee can move past summary judgment, we think it may serve to open a broader class of individuals who can and thus will bring employment discrimination suits in Pennsylvania.

Special thanks to Sathima Jones for her contributions to this post. For more information, please e-mail Bob Cosgrove .

The Times (or Federal Rules of Civil Procedure) Are A’Changing.

More than 30 years ago, the Federal Rules of Civil Procedure were amended in an attempt to bring proportionality to discovery. Now, new rules with the same goal will take effect on December 1, 2015. We comment on what the changes are so that you can be prepared to the battles ahead.

Cooperation and Rule 1

Rule 1, as amended, provides that the civil rules “should be construed and administered, and employed by the court and the parties, to secure the just, speedy, and inexpensive determination of ever action and proceeding.” The intent of the amendment is clear: both the bench and the bar share the responsibility of cooperation. The theme of cooperation pervades many of the proposed amendments.

Proportionality and Rule 26(b)(1)

Under the proposed amendments, the scope of what is discoverable will now be determined by proportionality. The concept of proportionality is not new; it has been included in the federal rules since 1983. However, for various reasons, courts have avoided enforcing proportionality in favor of reasonableness. The amendment makes proportionality unavoidable. The amended rule reads as follows:

Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burdens or expense of the proposed discovery outweighs its likely benefit.

By moving proportionality to the top of the list of factors to consider, the amendment makes proportionality unavoidable. With that said, no one factor has greater importance, value, weight, or significance than another. Rather, all factors must be considered to determine the scope of discovery appropriate for the case. Notably, the amended version of the rule also does away with permitting any and all discovery that may be admissible. Under the new regime, discovery will be limited to what is discoverable per the Rules.

There are concerns that the amended rule places new burdens and obligations on the parties. In reality, the amendments do not change the substance of the rule. Rather, the amendments codify what lawyers are supposed to be doing in practice, but only ascribe to in theory (i.e., cooperation). The changes to the scope of discovery are not intended to deprive any party of the evidence needed to prove its claims or defenses. With the amendment, information must be relevant and proportional in order to be discoverable. However, the change will only make a difference so long as judges are willing to engage in active case management. Judges will need to intervene early and help parties identify the amount of discovery reasonably needed to resolve a case.

Case Management and Rule 16

To encourage effective case management, the amendments delete the language in Rule 16(b)(1)(B) that allows the scheduling conference to be held “by telephone, mail or other means.” Judges and lawyers now will actually have to speak to each other. Additionally, the time for holding the scheduling conference will be moved to the earlier of 90 days after any defendants has been served (reduced from 120 days) or 60 days after any defendant has appeared (reduced from 90 days). Finally, the proposed amendments add two subjects to the list of issues to be addressed in a case management order: the preservation of electronically stored information (ESI) and agreements reached under the Federal Rules of Evidence 502. The practical effect of this will be increased communication with the judge and shorter turnaround time for discovery tools such as Rule 26(f) Reports.

ESI and Rule 37(e)

Under the new regime, Rule 37(e) recognizes the existing common law duty to preserve information when litigation is reasonably anticipated. The amended rule applies when “electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery.” If reasonable steps are not taken and ESI is lost as a result, the rule directs the court to focus first on whether the lost information can be restored or replaced through additional discovery. If the ESI cannot be restored or replaced, Rule 37(e)(1) provides that the court can, “upon finding prejudice to another party from loss of the information may order measures no greater than necessary to cure the prejudice.” This provision deliberately preserves broad trial court discretion in imposing sanctions while limiting the application of sanctions to cases in which “the party acted with the intent to deprive another party of the information’s use in the litigation.” The practical effect of this will be more adverse inference jury instructions for the loss of ESI.

Putting the Amendments Into Practice

Going forward, the name of the game is cooperation; cooperation between the parties and cooperation between the bench and the bar. To achieve this, parties should engage in early, ongoing, and meaningful discovery planning. The operative word being “meaningful.” This also means that you should expect your judge to be more involved in the mechanics of the case. Additionally, in cases where there is likely to be voluminous or complex discovery, or in which there is likely to be significant disagreement about the relevance or proportionality, the parties should consider initially focusing discovery on the sources that are most clearly proportional to the needs of the case. There results of this discovery should be used to guide decisions about future discovery.

Special thanks to Hillary Ladov for her contributions to this post. For more information, please e-mail Bob Cosgrove .

Tincher Continues To Confuse Pennsylvania Products Attorneys

It has been a year since the Pennsylvania Superior Court decided that PA would continue to follow the Restatement (Second) of Torts in Tincher v. Omega Flex, and the fog of confusion surrounding the state of products liability law has not ebbed.  The recent case of Sliker v. Ntnl Feeding Systems, No. 282 CD 2010 (C.P. Clarion Co. Oct. 19, 2015 Arner, P.J.), illuminates this problem.

In Sliker, the plaintiff suffered a significant injury that resulted in a left leg amputation when he attempted to fix a silo unloader that had become stuck.  Plaintiff was servicing the auger portion of the unloader while it was still moving.  Evidence of Tincher confusion became obvious during the pre-trial stage of this matter, when a glut of motions in limine were filed.  Plaintiff filed two motions in limine at issue here.  First, he argued that defendants should not be allowed to introduce evidence of negligence, since under the Restatement (Second) of Torts; the user’s conduct is irrelevant and prejudicial.  The plaintiff cited Tincher’s reasoning that such evidence is outside the confines of the risk-utility standard.  Meanwhile defense cited Tincher as a means to demonstrate that the Court no longer so strictly distinguishes the two concepts.  Judge Arner ultimately agreed with defendant and held that evidence of negligence can be relevant because “the user’s ability to avoid danger in using a product will factor into the manufacturer’s conduct”.

In addition both sides also cited Tincher in plaintiff’s motion to exclude defendant’s evidence of compliance with industry standards.  Plaintiff used Tincher to argue that a manufacturer’s reasonableness is irrelevant to its product’s defectiveness, while NFS argued that compliance with industry standards is now relevant to the consumer-expectation and risk-utility test.  In this instance, Arner also sided with defense.  He noted that since there is no affirmative authority from Tincher or other precedential cases, “barring such evidence as a matter of law, the principles of Tincher counsel in favor of its admissibility”.

As is evidenced by the above arguments, there has been virtually no consensus from the Pennsylvania bar on the practical application of Tincher.  Over the last year there have been numerous instances of courts throughout the state struggling with the legal implications.  A close reading of all the recent products liability opinions is a useful tool in predicting how the courts will handle your products liability issue.  Thanks to Remy Cahn for her contribution to this post.  Please email Brian Gibbons with any questions.


Help Me Help You – Cooperation No Longer a Coverage Question in PA?

A recent Pennsylvania Superior Court decision interpreting a relatively innocuous arbitration provision in an insurance policy may have inadvertently undermined the long-held belief that an insured’s duty of cooperation is a fundamental condition precedent to coverage.

In the case of Heim v. Merchants Insurance Group, the estate of Merchants Insurance Group’s insured petitioned the Court of Common Pleas to appoint arbitrators to decide a question of available underinsured motorist (“UIM”) coverage where the decedent had previously settled his third-party claim with his alleged tortfeasor.  More specifically, prior to his death, Joseph Heim was involved in a motor vehicle accident in which he received a $24,000 settlement with Merchants’ consent.  In the UIM claim that followed, however, Heim and later his estate failed to comply with written requests for information regarding his wage and employment records, and instead elected to delay the administration of the claim for one year before ultimately filing an arbitration petition with the trial court.

In response to the petition to arbitrate the UIM claim, Merchants argued that such proceedings were barred by the policy’s dispute resolution provision.  While the trial court initially agreed with this interpretation of the policy, the Superior Court on appeal rejected the fundamental notion that questions regarding the insured’s cooperation, or lack thereof, rise to the level of a “coverage dispute.”  To the contrary, the Superior Court explained that “coverage disputes” in the context of UIM generally pertain only to questions of whether the claimant is a “covered person”, and issues regarding cooperation are more appropriately cast as disputes pertaining to the quantification of covered losses.  In fact, the Superior Court ultimately held that even if an insurer demonstrates prejudice as a result of the insured’s lack of cooperation, the same is inextricably linked to the assessment of damages such that the dispute no longer revolves around coverage and may fall under the policy’s arbitration provisions.

To be sure, Heim is a non-precedential decision from an intermediate appellate court in Pennsylvania but, all the same, the interpretation of the insured’s duty to cooperate is confounding.  In the main, Pennsylvania had ascribed to the principle espoused in other prominent jurisdictions that policy coverage is preconditioned on the insured’s cooperation in investigating and administering the claim. Heim is therefore a stark departure from this well-accepted rule in Pennsylvania and may serve in the future as fodder for insured’s seeking to ratify their lack of cooperation in far more complex claims.    Thanks to Adam Gomez for his contribution.  Please email Brian Gibbons with any questions.

Buyer Beware: No Duty to Inform Purchaser of Safety Features (PA)

Despite acknowledging a lack of safety features, the District Court for the Eastern District of Pennsylvania recently ruled in favor of a machinery seller, dismissing negligence claims for selling a forklift without safety features in the case of Morello v. Kenco Toyota Lift.

Defendant Kenco Toyota Lift sold a forklift to Jet Plastica, a manufacturer of plasticware. Plaintiff Joseph Morella worked for Jet Plastica and injured his leg when a forklift driver by a co-worker struck him. Morella used Kenco, arguing it had an obligation to inform the buyer that safety features should have been included in the purchase. Judge Kearney rejected this argument, stating Morello’s theory would require that machinery salespeople know and anticipate “a wide range of conduct in their buyer’s dynamics based largely on speculation,” and ultimately deciding that Kenco was not negligent in selling the forklift without the optional backup alarms, strobe lights, and rearview mirrors.

Morello also argued that the need for safety features for forklifts has been recognized by many industry safety authorities and standard setting organizations. Judge Kearney also rejected this argument, citing a case in which the court held that industry standards have no bearing on the issue of whether a duty was owed, and that such standards may instead be admissible on the issue of standard of care.

Thanks to Chelsea Rendelman for her contribution to this post and please write to Mike Bono for more information.

Battle of the Pipe Experts Results in Defense Verdict

Paul McCartney isn’t the only one who needs to maintain his pipes.  Apparently building owners in the Western District of Pennsylvania do too.

In Greater New York v. Fire Fighter Sales & Service Co., A Holiday Inn in Braddock Hills, PA hired Fire Fighter Sales & Service Co. to install an automated sprinkler system into an already existing fire suppression system at the hotel. About two years later, a standing pipe that was installed in a stairwell froze and burst, causing $8.1 million in water damage. The Insurance Co. of Greater New York as the subrogee of Holiday sued Fire.

The plaintiff alleged that Fire installed a fire suppression system that could not withstand temperatures below freezing, which was a necessity for systems in the Greater Pittsburgh Area.  The plaintiff’s expert claimed that the freeze was due to faulty placement of the standing pipe, as it was too far from any heat source. The defense expert claimed the freeze was due to cold air infiltrating the stairwell, and that the hotel was responsible for heating the stairwell that housed the pipe, and that its failure to do so is what actually caused the burst.  The jury found in the favor of the defense.

When experts battle, someone’s pipe (dreams) will be burst.

Thanks to Rachel Freedman for her contribution to this post.






Madd Minivan Driver Pins Premises Owner in Suit (PA)

In Truax v Roulhac, an out-of-control minivan may be changing the landscape of summary judgment for premises liability actions. On March 9, 2009, Tanya Roulhac, under the influence of alcohol, cocaine, and THC, drove her minivan into the parking lot of Madd Anthony’s Bar. The minivan careened into a parking space in front of the bar, jumped over a five inch concrete “bump out”, and slammed into Tracy Truax, pinning her to the building. Truax sued Wildwood 115, Inc., the corporate operator of Madd Anthony’s, and Silvio Vitiello, the owner of the building for premises liability.

The trial court granted summary judgment to the defendants because the harm caused was unforeseeable. However, the plaintiff appealed arguing that the premises liability clam should go to a jury to determine if the risk was reasonably foreseeable. Given the plaintiff’s status as a business invitee, the defendants owed a duty to take reasonable precautions against harmful third party conduct that could be reasonably anticipated. The plaintiff pointed to damage on the concrete “bump outs” as evidence that vehicles could cross the pedestrian sidewalk and collide with the opposite wall. She also produced evidence that Madd Anthony’s had, at one time, placed large rocks between the parking lot and the pedestrian sidewalk, but the rocks were removed after a vehicle ran into one and pushed it across the sidewalk into the building.

The Appellate Court determined that this evidence created a fact question of whether the defendants could have reasonably anticipated a vehicle crossing the pedestrian sidewalk and hitting the building. As such, the risk of an out-of-control vehicle crossing a sidewalk and striking the opposite building was not per se unforeseeable. Furthermore, the use of the concrete “bump outs” might have been in perfect compliance with zoning regulations but this was not sufficient evidence of due care.

In the future, Madd Anthony’s may consider safety features to protect their patrons from Madd minivan drivers.

Thanks to Melanie Brother for her contribution.

For more information, contact Denise Fontana Ricci at dricci@wcmlaw.com.

When Runoff Water Runs Afo(w)l (PA)

In Scott v. Ferguson, plaintiff Scott filed a complaint against a neighboring homeowner, alleging that Ferguson allowed his guinea fowl to enter plaintiff’s property and cause damage. Ferguson countersued, alleging that plaintiffs improperly installed a water drainage pipe, causing water to run off onto Ferguson’s property.

In response to the countersuit, plaintiffs filed a third-party complaint against Susquehanna Township, alleging that the Township was negligent in failing to install catch basins on or near the properties of the plaintiff and defendant. In essence, the plaintiffs installed a drainage pipe that emptied onto a public roadway. The water then travelled downhill and entered defendants’ property. The claim was that the Township should have installed a basin to catch the additional water coming off the plaintiffs’ property. At issue here are the Township’s preliminary objections to the plaintiffs’ third-party complaint.

The Township argued that the complaint should be dismissed since it had no duty to the plaintiffs to install a basin. This was based on the Township’s assertion that the overflow of water was due to incremental changes in the landscape over time. The Court of Common Pleas of Lycoming County agreed. The court said that a city cannot be held liable for the effects of an incidental increase in surface waters flowing in a natural channel where the increase is owing to normal, gradual development in the city. In this case the increase in water flow was due to the gradual changeover from rural to urban land and there is no authority to hold a city liable for such changes.

This case provides a useful window into understanding how Pennsylvania courts in more rural counties are dealing with surface water issues. We expect similar issues to come up more frequently as residential and commercial development in these areas continues to grow. It is important to recognize that in cases such as these, the role of the town or city as a potential source of contribution is likely minimal.  Thanks to Remy Cahn for her contribution.  Please email Brian Gibbons with any questions.