Sun Life wrote to the husband and advised him of the deficiencies on his original form. The company also warned him that if he failed to provide the requested information within 90 days, a completely new form would have to be submitted for coverage to attach. Sun Life never notified him after the initial letter that his life insurance was not in effect and Sun Life allowed the husband to continue paying the premiums.

Approximately five months later, the husband was killed in a motorcycle accident. Plaintiff submitted a claim for life insurance and Sun Life issued a final determination denying life insurance benefits. Sun Life’s conclusion was based on federal ERISA law, which generally confers discretionary authority upon insurers in certain circumstances. As such, plaintiff’s burden in this case was to establish at trial that Sun Life’s determination was arbitrary and capricious. Absent such a finding, the determination would be presumed valid.

Here, the trial court found Sun Life’s applications and forms to be misleading and ambiguous. The court also found the husband’s belief that he was covered to be reasonable. However, a strict interpretation of ERISA law precluded coverage because the plan documents, not the enrollment forms, controlled the husband’s reasonable expectations under the law. The plan documents unequivocally stated that coverage was effective on the date Sun Life approved the employee’s evidence of insurability. Here, because Sun Life never approved the husband’s insurance, coverage was not bound. Plaintiff’s lawsuit was dismissed.

Rubio v. Sun Life Assurance Company of Canada, 2009 WL 4929003 (E.D.La. 2009).

Plaintiff alleged that he was entitled to damages for emotional distress under Louisiana law because of the EMTs alleged negligence in treating his sister. He claimed to have observed the EMTs go into “emergency mode,” came upon the event immediately after it happened, and observed the aftermath of his sister’s death. The trial court sustained defendant’s no cause of action exception and dismissed the lawsuit because it did not believe plaintiff viewed the accident or came upon the scene soon after it occurred.

The Louisiana Third Circuit reversed and reinstated plaintiff’s claims under Louisiana law. Defendant appealed to the Louisiana Supreme Court. Under Civil Code Article 2315.6, an individual may be entitled to compensation for their immediate shock in witnessing a traumatic event if said shock causes severe and apparent harm. Here, because the event causing plaintiff’s sister’s death occurred in the ambulance, the Court held that plaintiff neither viewed the event, nor did he come upon the scene soon after and before any substantial change had taken place in the victim’s condition. The Court stated that plaintiff experienced anguish and distress which normally accompanies an injury to a loved one, which is not compensable. Thus, the Court reversed the court of appeal’s decision and reinstated the trial court’s judgment.

Veroline v. Priority One EMS, 18 So.3d 1273 (La. 2009).

The trial court granted summary judgment in favor of defendants and dismissed plaintiffs’ case, finding that they entered the property without express or implied legal consent. Furthermore, because plaintiffs did not have consent of the owner or builder, they could not have been conducting business or otherwise communicating with the owner. Thus, the trial court found that plaintiffs were trespassers, thereby rendering defendants immune from suit.

On appeal, defendants admitted that there were no signs, warning tape, or barricades set up to prevent persons from entering. Additionally, the appellate court concluded that plaintiffs had a legitimate reason to be on the property — as prospective home buyers. Defendant also admitted that it had placed various signs on the property and other homes in the subdivision in an effort to advertise and market its work.

The Court found that the plaintiffs were prospective buyers, not criminal trespassers. It held that plaintiffs’ behavior, engaged in frequently in all developing subdivisions, was not the sort of behavior criminalized by the trespass statute. Because there were no signs posted on the premises forbidding entry thereon, plaintiffs were permitted to enter upon the property for legitimate reasons, in this case for the purpose of conducting business with or communicating with the owner of the immovable property. The Louisiana Third Circuit reversed the trial court’s dismissal and reinstated plaintiffs’ claims.

Perrin v. Randy Tuper Homes, 2009 WL 3270793 (La. Ct. App. 3rd Cir. 2009).

In opposing plaintiff’s motion, defendant argued that the insurance policies were confidential, proprietary and otherwise sophisticated commercial agreements containing defendant’s intimate trade secrets as well as trade secrets of various other businesses with which it is affiliated. Defendant further contended that it would be significantly prejudiced if it were forced to turn over the policies. Plaintiff simply argued from the plain language of FRCP 26(a)(1)(A), which generally requires applicable insurance policies to be produced in a party’s initial disclosures.

Before the court ruled on plaintiff’s motion, defendant sought a voluntary protective order, but plaintiff refused. Defendant then moved for a protective order, specifically requiring the parties to maintain the confidentiality of the insurance policies, to use the information only in connection with this case, to not disclose the information to third parties, and to return all insurance documents to defendant at the conclusion of the case.

The court granted plaintiff’s motion with respect to the production of the insurance policies and noted that the policies should have been produced without the necessity of a written discovery request. With respect to a protective order, the court granted defendant’s motion, primarily because plaintiff never objected to entry of the order on the record.

Capozzi v. Atwood Oceanics, 2009 WL 3055321 (W.D.La. 2009).

He sued the vessel owner under the general maritime law and section 905(b) of the LHWCA. The defendant vessel owner denied liability, claiming that the ladder was not previously damaged or otherwise in disrepair. Alternatively, any such condition should have been open and obvious to plaintiff. After a bench trial, the court rejected defendant’s arguments, finding that (a) any latent defects in the ladder were not open and obvious to plaintiff and (b) because plaintiff did not have any prior experience with Jacob’s ladders, even if he had a duty to inspect the ladder, he would not have known what to look for.

However, the trial court also found that plaintiff “violated Halliburton safety procedure and defied common sense by climbing the Jacob’s ladder with a clipboard in his hand.” The court correctly found that carrying the clipboard contributed to plaintiff’s injuries because he should have used both hands to hold onto the ladder and either avoid falling or lessen its impact when the rung failed. Ultimately, the court apportioned 30% of the fault to plaintiff and 70% to the vessel owner.

McCuller v. Nautical Ventures, LLC, 2009 WL 3254290 (E.D.La. 2009).

Here, an indemnity dispute arose between Grand Isle Shipyard, Inc. and Seacor Marine, two contractors of BP American Production Co. Grand Isle’s duties included the repair and maintenance of BP’s offshore platforms. Seacor was responsible for transporting workers for BP out to stationary platforms situated on the Outer Continental Shelf. The indemnity-triggering event was an injury suffered by a Grand Isle employee while traveling the Gulf of Mexico in a Seacor-owned vessel. When the worker sued Seacor, it sought indemnity under the contract between Grand Isle and BP.

The Fifth Circuit admitted that confusion reigned in these situations because the court could not previously agree on whether to consider similar indemnity disputes using a tort or contract-based analysis. Ultimately, the court held that contract principles should be used. In other words, if a majority of the contract’s work is performed on stationary platforms on the Shelf, then the platforms’ location controls and state law may apply, depending on the location of the incident.

In this case, the vast majority of the work called for in the contract was to be performed on stationary platforms. As a result, Louisiana law applied, and the Louisiana Oilfield Indemnity Act rendered unenforceable the indemnity agreement at issue. Seacor’s demand for indemnity was rejected.

Grand Isle Shipyard, Inc. v. Gray Ins. Co., 2009 WL 4597975 (5th Cir. 2009).

On appeal, plaintiff conceded that even though his new lawsuit was filed some eight years after he was injured, the three-year statute of limitations under the Jones Act was tolled by an Ohio state statute. Alternatively, plaintiff contended that defendant should be precluded from asserting a statute of limitations defense as a matter of equity.

The appellate court affirmed the district court’s finding that plaintiff’s claims for negligence and unseaworthiness were time barred. However, the court refused to apply the three-year statute of limitations to plaintiff’s maintenance and cure claims, holding that they arise regardless of fault. The court reasoned that because maintenance and cure does not have a specific statute of limitations, a Jones Act employer may use the equitable defense of laches to limit the seaman’s time to file suit.

Under the facts of this case, plaintiff established that his delay in suing for maintenance and cure was excusable and that defendant was not prejudiced. However, the court went on to find that plaintiff failed to prove that additional maintenance and cure was actually owed. Thus, after a series of procedural maneuvers, the appellate court ultimately affirmed the district court’s holding and dismissed the entire case, including plaintiff’s maintenance and cure claim.

Cunningham v. Interlake Steamship Co., 567 F.3d 758 (6th Cir. 2009).

The issue on appeal before the U.S. Ninth Circuit was whether psychological injuries resulting from legitimate personnel actions were compensable under the LHWCA. The Ninth Circuit disagreed, finding that these types of complaints are not compensable under the Act. Specifically, the court found that while a workplace accident or working conditions may cause psychological impairments, legitimate personnel actions, such as demotions, reprimands and layoffs, are not ‘injuries” under the LHWCA. As the Ninth Circuit stated, such “injuries are not caused by working conditions and they are not work related.”

Pedroza v. BRB, et al, 583 F.3d 1139 (9th Cir. 2009).

Patrick E. Costello

In the last edition of For The Record, we devoted the cover story to discussing the legal problems behind employees using company-issued cell phones while driving. It is a serious problem that can lead to catastrophic personal injuries or even death, not to mention substantial legal liabilities that may or may not be covered by insurance. What is an employer to do, however, when its employees use a company-issued cell phone to send sexually explicit, harassing or otherwise damaging texts to spouses, friends and co-workers? In those situations, does an employee have a Constitutional right to privacy and, if so, who’s protecting you, the employer?

On Monday, December 14, 2009, the United States Supreme Court granted certiorari in City of Ontario v. Quon, a case involving a SWAT team sergeant from Ontario, California and a government-issued pager. Constitutional experts have called the case “a new frontier in Fourth Amendment jurisprudence” and “the first case on Fourth Amendment protection in data networks.”

Historically, the Supreme Court has provided public employers like city governments and police departments wide latitude in not just monitoring, but actually searching employee offices, computer hard drives and the like. Generally, the mindset behind the Court’s jurisprudence on the subject is that public employees have a lesser expectation of privacy when the work spaces and tools provided to them are owned by the government (and ultimately, the taxpayers).

In Quon, the Ontario Police Department had a written policy reserving the right to monitor “network activity including e-mail and Internet use” and allowing employees to conduct “light personal communications.” Employees were explicitly warned, however, that they “should have no expectation of privacy.” Text messages on department-issued electronic devices were not specifically covered in the policy. Sgt. Quon, like other members of his SWAT team, were given text -capable pagers and told that they would be personally responsible for all charges in excess of 25,000 characters per month. Under an informal policy adopted by a police lieutenant, policemen like Quon who paid the excess charges out of their own pockets would not have their text messages inspected.

For whatever reason, however, the lieutenant later changed his mind and ordered transcripts of Sgt. Quon’s text messages, both sent and received. In just one month of 2002, Sgt. Quon received over 450 text messages, only 57 of which were related to police business. The trial judge found many of the messages Sgt. Quon exchanged with his wife and his mistress “were, to say the least, sexually explicit in nature.” Sgt. Quon and many of his text messaging co-workers, wife and others sued the city, claiming their Fourth Amendment right against unreasonable searches and seizures was violated. The district court rejected Sgt. Quon’s claim, finding that his conduct was not protected under the Fourth Amendment. The San Francisco-based U.S. Court of Appeals for the Ninth Circuit reversed, holding that Sgt. Quon had a reasonable expectation of privacy because of his lieutenant’s informal policy of allowing officers to pay for overages in exchange for officers not

In this author’s view, there is a serious question as to whether Sgt. Quon is entitled to the protections offered by the Fourth Amendment. In fact, the court’s ruling might have been different in the absence of the informal policy set by Sgt. Quon’s immediate supervisor. The inappropriateness of a policeman’s text messages notwithstanding, there is no guarantee that the Supreme Court in Quon will apply its opinion to private workplace settings. In recognizing the proliferation of text messaging and other forms of immediate electronic communication in the workplace, the City of Ontario noted in its brief that “it is not objectively reasonable to expect privacy in a message sent to someone else’s workplace pager.” The City also argued that the Court’s opinion will likely affect “a seemingly neverending stream of new technologies.”

As a practical matter, there is little distinction between the need for employers to have a written policy prohibiting inappropriate or explicit e-mails through work accounts and a policy that prohibits similar text messages on company-issued cell phones. It seems that the risk of litigation is great, while the benefits to employees are minimal. If your company needs advice in this regard, we recommend contacting counsel for assistance.

~~~ Patrick E. Costello ~~~

pcostello@mblb.com

As the case progressed, plaintiffs eventually settled with the third driver individually and his primary insurer. Plaintiffs did not settle with the excess insurer. Nonetheless, the excess insurer moved for Summary Judgment, claiming that a “Release of All Claims” document executed by plaintiffs also released it from liability. The district court denied the motion, and the excess insurer appealed.

The excess insurer relied on language contained in the release that indicated that plaintiffs released, “any and all other persons, firms, corporations. . .in any way resulting from . . . the accident . . .” Plaintiffs countered with language in the released that “appearers further reserve any and all rights against any other parties . . .”

The Louisiana Third Circuit found that the conflicting provisions of the release caused an ambiguity in interpretation. The court thus considered the intent of the parties. The court concluded that plaintiffs’ intent was to release the third driver and his primary insurer only. Consequently, the appellate court upheld the district court’s ruling and dismissed the appeal.

Bufford v. Blanchard, 19 So.3d 1255 (La. Ct. App. 3rd Cir. 2009).