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Category: Accidents

  • Drilling Accident Shows Standards for Reasonable Care

    A field service technician sued a crew boat operator and several entities related to the drilling operations when he was injured during a personnel basket transfer and a mobile drilling unit. The trial court, applying a “reasonable care” standard, granted summary judgment in favor of the drilling companies and the service technician, Callahan, appealed the decision.

    Callahan, an employee of Cooper Cameron Corporation, was hired to help install, repair and replace equipment on the offshore oil well. While transferring the mobile drilling unit, the ship moved abruptly, causing Callahan’s back to pop and sharp pain to shoot through it. Callahan returned to his cabin and later executed a successful personnel basket transfer. Once he arrived on the barge, he reported his injury to the medic. Callahan argued various claims of negligence, revolving around the decision to transfer him to the barge in unreasonably dangerous conditions. However, according to the district court, since no employee of the crew boat directed Callahan to leave his cabin for transfer, these companies could not be held liable, particularly given Cooper Cameron Corporation’s “stop work” policy which gives employees the right to stop working if they find the conditions to be unsafe. Callahan clearly knew of this policy since he has used it before, but did not apply in these circumstances.

    On appeal, Callahan claimed that the trial court made a mistake in finding that the conduct of the drilling companies (Diamond, Golf Logistics, Eagle Consulting, and LLOG) was reasonable and therefore in granting them summary judgment. Summary judgment is appropriate if “there is no genuine dispute as to any material fact”. FED. R. CIV. P. 56(a). A material fact is one that might affect the outcome of the case if it is found in favor of a particular party.

    To prove a tort claim, Callahan must prove that these companies owed him a duty, that there was a breach of that duty, that those companies were responsible for the breach, resulting in a need for damages. The appellate court affirmed the summary judgment motions in favor of LLOG, Diamond, and Eagle Consulting. However, it reversed the summary judgment order against Gulf Logistics.

    While neither LLOG, nor Diamond were either directly or indirectly involved in providing a safe method for boarding and disembarking from the vessel, and were not exerting any control over this procedure. While Eagle Consulting was theoretically allowed to terminate conduct that its employees believed to be unsafe, this alone is not enough to create an issue of material fact as to the company’s liability for the actual decision to transfer Callahan. There is no evidenced that the company either knew of the rough sea conditions or was involved at all in the decision to transfer personnel under those conditions. Therefore, the summary judgment motion in favor of Eagle Consulting was properly decided.

    However, Callahan’s evidence of the hazardous nature of the sea conditions is enough to create a material fact issue as to a breach of duty on Gulf Logistics part by setting up an unsafe personnel transfer. Therefore, the district court should not have granted summary judgment to Gulf Logistics. The appellate court reversed this decision and remanded it back down to the trial court.

    If you believe your case was improperly dismissed due to a summary judgment motion, please contact the Berniard Law Firm for assistance.

  • BP Refinery Sued for Negligence in Gas Release

    Contractor company employees working at a British Petroleum (BP) refinery sued the oil company for negligence. Workers at the refinery reported a “weird” gas smell while they were employed at the factory. None of the gas monitors about the refinery sounded an alarm. About 100 employees went to the hospital but none showed any injury due to gas exposure.

    The employees claim that the substance was carbon disulfide gas. The mask of one of the plaintiffs tested positive for traces of carbon disulfide gas but the lab technician who took charge of the mask noted that the mask had not been well maintained enough to be tested properly. When the district court found for the plaintiffs, BP appealed the verdict. BP argues that it was wrong for the trial judge to have instructed the jury on res ipsa loquitur and that without that instruction, the plaintiffs could not have shown that the company to be negligent.

    Res ipsa loquitur is a doctrine used in certain types of cases when the circumstances surrounding the accident constitute sufficient evidence of the defendant’s negligence to support such a finding. Basically translated, the doctrine concludes that if an accident could not have come about by any other method than the one claimed, then the fact that the event happened is proof enough that it happened in the manner claimed; in other words, “the thing speaks for itself”. Res ipsa loquitur is applicable only when: (1) the character of the accident is such that it would not ordinarily occur in the absence of negligence; and (2) the cause of the injury is shown to have been under the management and control of the defendant. Using res ipsa loquitur, negligence can be inferred by the jury without evidence of wrongdoing.

    The appellate court reversed the district court decision after concluding that a res ipsa instruction was inappropriate in this case. In a very similar previous case against Marathon Oil, the Texas Supreme Court found a res ipsa instruction inappropriate under the facts because escaping gas in the vicinity of a complex plant could be due to an unexpected and unforeseeable mechanical failure instead of necessarily being negligence.

    None of the plaintiffs’ experts could identify where the odor came from or even if it was coming from BP’s property. The employees weren’t able to prove that the character of the accident is one that would not usually occur absent negligence or that the cause of injury was under BP’s control. Since neither of the two elements necessary for a res ipse loquitur instruction was satisfied, the district judge should not have instructed the jury on the doctrine. Without a res ipsa instruction, the plaintiffs were unable to meet their burden of proof as to negligence and the district court’s judgment was reversed.

    If you believe you have a res ipsa loquitur negligence case, please contact the Berniard Law Firm for assistance.

  • Final Decision Important to Appeal in Iberia Parish Insurance Case

    The appellate process is somewhat complicated. One of the major confusions is when a party is allowed to appeal. The simple answer is that a party can appeal a judgment after the lower court has rendered a final decision. But, what makes a decision final? Does the decision include the case as a whole or just a single part of the case? An attorney can address these questions can specifically, but a short overview is helpful as well.

    Just like the federal level, a party cannot appeal a decision without that decision being final in Louisiana. A final decision will decide all of the elements of the case. None of the issues will be excluded. The court looks at each issue and renders a decision for either one party or the other on every issue. Therefore, if the court does not address even one issue, then the decision cannot be final.

    There is one exception to this rule that is provided in the Louisiana Code of Civil Procedure, which governs all of the court procedures in civil lawsuits for the state. The exception states that a decision can be final even if it does not resolve all the issues as long as the court specifically states that their decision is final and gives valid reasoning for that ruling.

    In a recent case, an individual brought suit against their insurance company because he believed that the insurance company failed to replace his roof adequately. He asked for attorney’s fees and penalties. The insurance company argued with this claim and the court granted their motion to dismiss the individual’s suit. The court ruled only on the attorney’s fees and penalties, and not on the adequacy of the roof’s repairs. The lower court stated that this was a final judgment, but did not give reasoning for their declaration as required by Louisiana Code of Civil Procedure. Therefore, the Louisiana Court of Appeals had to determine whether the lower court was justified in their final judgment.

    Occasionally, the court will also allow a single issue to be appealed because that issue is extremely important to the rest of the case. The Louisiana Supreme Court has listed several factors to determine whether one of these “partial judgments” can be considered a final judgment for the purpose of appeal. These factors include:

    – The relationship between the issues that have been resolved and the issues that have not been addressed. Does one issue need to be determined in order to find out the other? For example, the court may say that the decision cannot be final if the lower court found that car A hit car B because they did not resolve whether car B was making an illegal turn at the time of the collision. Whether car B was making an illegal turn could be a deciding factor in the case and needs to be addressed.

    – Whether the issue might resolve itself as the case progresses. In the insurance case mentioned above, if the insurance company was not found to be at fault, then there would be no need to appeal the attorney’s fees and penalties because the insurance company would not be liable. There is no need to appeal when the trial court can make these determinations on its own.

    – Whether the appeals court might have to consider the issue again in the future. If the court finds that they will likely have to review the issue again when the entire case is brought on appeal then they will probably not review that particular issue. Reviewing it twice would be a waste of resources for both parties.

    – Miscellaneous factors such as delay, shortening the time of trial, frivolity of competing claims, expense, and economic and solvency considerations. For example, if deciding one particular issue will resolve a whole line of issues, then the appellate court may decide that issue and send it back to the lower court to finish the case.

    Obviously, the court has quite a bit of discretion to decide whether or not to resolve an issue. Experienced attorneys can sometimes pick out these issues ahead of time, which would give clients an edge on appeals proceedings.

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  • Contract Dispute Resolution in Louisiana

    The state of Louisiana, like many other states, has very specific requirements that the judicial branch uses to help interpret contracts when the parties are in dispute. Generally, the court likes to stay out of contracts because the right to contract without interference from the government is something that the American society greatly cherishes. The ability to contract is a basic fundamental right that is guaranteed by the Fourteenth Amendment. The court will usually only interfere if there is a dispute or if the contract was in some way illegal. Therefore, it is very important to have a contract that is well written and that all parties understand completely.

    If the court has to step in to work with a contract, then it will follow a few select guidelines. The ultimate goal of the court is to determine the common intent of the parties and enforce the contract in that way. In order to determine the intent, the court will look to the contract itself. In contracts that include terms of art or very technical requirements, the court will look to the common use of the word within that trade. For example, some trades include quantity information that is always larger than actually stated; think of a “baker’s dozen.” Even though twelve is technically considered a dozen, a contract between bakers may actually mean thirteen. This notion disregards the fact that in any other contract that is not between bakers, a dozen would equal twelve.

    The court will also consider the contract in its entirety, not just a few sections or a single disputed term. It will determine what outcome is practical for both parties and technical terms will be given their technical meaning. In addition, if a word has more than one meaning, then the court will defer to the meaning that will carry out the goal of the contract. Consider a simple example. If a grocery store contracts to receive bananas and they receive plastic bananas instead of real bananas, the court will likely conclude that the other party providing the plastic bananas was at fault because the definition of a banana is commonly a consumable food, especially if it is going to be sold at a grocery store. The contract did not say that the grocery store wanted edible bananas, but the court will assume this information because the outcome becomes ridiculous without this assumption.

    The court will generally try to stay within the language of the contract when attempting to resolve disputes. When the contract is clear and doesn’t lead to ridiculous consequences, then external evidence provided by the parties to show an alternative intent cannot be considered. The contract’s wording is therefore very important. However, if the contract is not clear or is ridiculous, then the court can consider some outside evidence in order to determine the common intent of the parties. In our banana example, if the grocery store has always ordered real bananas from this seller and has never requested plastic bananas from this seller, then that information could be considered in the court’s analysis.

    The court has a means to determine whether the meaning of the contract is clear or not. Obviously if a term or issue is missing from the contract entirely, then the court will most likely deem the issue to be unclear or ambiguous. In addition, the court will also reason that an issue is ambiguous when “the language used in the contract is uncertain or is fairly susceptible to more than one interpretation.” If this is the case, then the outside evidence can be used to determine what the intent of both parties actually is.

    A well written contract will convey the intention of both parties and will define all of its questionable terms so that there is no contention in the future. Sometimes, one party does not think a term in unclear when it actually is, so a conflict will arise. Competent attorneys are needed to create a well written contract and deal with conflict.

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  • Auto Insurance Case Illustrates Need for Following Statutory Requirements

    It is widely accepted in Louisiana that insurance companies may limit coverage in any manner they desire, so long as the limitations do not conflict with the law or with public policy. Coverage limitations must be written into the policy and the burden to prove that a claim is excluded generally falls on the insurer. One common limitation for auto insurance policies is a driver exclusion. Louisiana law specifically authorizes insurance carriers and their customers to agree to exclude a resident of an insured’s household from coverage under a policy. LSA-R.S. 32:900(L). This arrangement allows the insured to pay a lower premium since excluding one or more drivers in the household from the policy would reduce the insurance company’s potential liability. A dispute over the effectiveness of an excluded driver provision was at the center of the recent case of Young v. McGraw.

    In December of 2007, Vernon Washington took out an insurance policy for his two cars with the USAgencies Casualty Insurance Company. During the application process, Washington signed an excluded driver endorsement. The provision expressly excluded as insured drivers Aretha McGraw and her two children, Christopher McGraw and Tiffany McGraw. During the policy’s period of coverage, Aretha McGraw was involved in a car accident while driving one of Washington’s cars. The owner of the other vehicle, Jacqueline Young, filed a suit which named McGraw, Washington, and USAgencies as defendants. USAgencies filed a motion for summary judgment, arguing that McGraw was an excluded driver under its policy and therefore was not covered. The trial court denied the motion and, after a trial, the court concluded that the evidence presented failed to establish that Washington and McGraw lived in the same household when the policy was issued. Therefore, McGraw could not be considered an excluded driver under the policy because the requirements of LSA-R.S. 32:900(L) were not met. The trial court awarded Young personal injury and property damages totaling $5,800. USAgencies appealed.

    The Second Circuit Court of Appeal reviewed the evidence presented at the trial concerning whether McGraw was actually a member of Washington’s household at the time he took out the auto policy. McGraw testified that she and her children had lived with Washington continuously since 1998 and at the address of 1996 Joe G. Drive in Monroe since 2003. She admitted to giving the address of her parents’ house to the police officer at the accident scene, but said she “didn’t think it was a big deal” since she visits there every day and receives her mail there. Washington testified that he and McGraw had lived together at 1996 Joe G. Drive for seven years. He also explained that at the time he bought the auto policy, he informed USAgencies that McGraw was a member of his household but wanted to exclude her from coverage due to “financial constraints.” The court noted: “Our review of the record convinces us that the lower court’s finding that McGraw and Washington were not residents of the same household at the time the automobile liability policy was issued is clearly wrong.” “Consequently,” the court reasoned, “the trial court was manifestly erroneous in concluding that the policy endorsement excluding Aretha McGraw … under the policy was inapplicable and that … [she] was a covered operator of the vehicle at the time of the automobile accident.” The trial court’s judgment was, accordingly, reversed.

    This case demonstrates the requirement that insurance companies carefully follow all statutory requirements, if they exist, when writing coverage limitations into policies. Post-contract reviews of the insurer’s processes may, like in this case, require a fact-intensive analysis and a clear understanding of the law’s requirements. Thus, a skilled attorney is essential for any party facing a dispute over a coverage limitation.

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  • Texas Construction Injury Leads Court to Analyze Duty to Defend, Indemnify

    Construction worksite accidents are common occurrences in New Orleans and Louisiana. When a lawsuit is filed seeking compensation for these workplace injuries, issues often arise concerning the multiple companies involved in the construction project and their insurance companies. Chief amongst these concerns are the duty to defend and indemnification.

    The duty to defend refers to an insurance company’s obligation to defend an insured against claims made under a liability insurance policy. Though this may sound straight forward, in the construction context this theory can become complex. For example, if a construction company or contractor takes out insurance, the project’s other general and subcontractors may or may not be covered under that same policy depending on the wording of the insurance policy. In many cases, general and subcontractors will be covered as an additional insured under the insurance contract. If thi is the case, then the facts of the underlying claim must sufficiently allege liability in order for the duty to defend to engage.

    These issues were closely examined recently by the Court of Appeals for the Fifth Circuit when a man injured at a construction site filed a lawsuit against the general contractor, but not his employer that was the subcontractor. The general contractor sought to have the subcontractor’s insurance company defend them as an additional insured under the subcontractor’s policy. After analyzing the policy, the court found that the general contractor was an additional insured under the subcontractor’s policy, but nevertheless held that the insurance company had no duty to defend the general contractor. The reasoning behind this finding was that neither the injured employee nor his employer, the subcontractor, where alleged in the complaint to have been responsible for the injury. Since the contractor could only seek the insurance company’s duty to defend through negligence on behalf of those directly insured, namely the subcontractor or the general employee, then that duty to d efend was not induced.

    The second issue in these complex insurance cases is indemnification. If a company is covered under an insurance policy, then if that company is forced to pay liability damages in a lawsuit, the insurance company will essentially reimburse the company for those damages. However, legal costs associated with defending the claim fall under the duty to defend, not indemnification.

    Since the duty to defend and the duty to indemnify are separate, it is possible that an insurance company will not have to defend an additional insured but must still indemnify that company. This is what happened in the construction injury case mentioned above. The district court found that the employee was at least one percent responsible for his injury, causing the insurance to be invoked. The Court of Appeals upheld this finding as the insurance company did not challenge that ruling, but rather challenged the finding that the contractor was an additional insured.

    Anytime a business or individual takes on construction work, it is important to know whether insurance coverage is provided and, if so, by whom. This will ensure that any injuries, physical, emotional or financial, will be compensated. A failure in determining insurance coverage can lead to a long, drawn out claims process that can leave an individual or business emotionally and financially drained.

    Insurance claims are a necessity in order to protect businesses’ and workers’ interests. Yet, disputes over insurance coverage can be lengthy and convoluted. These complexities require the expertise of an experienced, competent attorney.

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  • Summary Judgment Summarily Dismissed by Third Circuit in Vehicle Accident Case

    A summary judgment is rendered when a trial court decides that there are no genuine issues of material fact that need to be determined. “Manifestly erroneous” is the high standard under which summary judgments are reversed on appeal. Summary judgments are cheaper and less time consuming than full blown trials; they are a means toward the end of judicial expediency, a goal that becomes increasingly important to our judicial system over time. Despite the importance of this procedural device, many cases do not call for summary judgment. Sometimes trial courts grant full or partial summary judgments in error and are reversed. That is what occurred in the case of Jagneux v. Frohn, which you can read here.

    The defendants in this case convinced the trial court that no issues of fact existed that required litigating. Their legal journey was not over though due to the plaintiff’s appeal. The court of appeals applied the standard promulgated by the Louisiana Supreme Court. This Louisiana Supreme Court’s standard initially places the burden of proof on the party that is moving for a summary judgment. The moving party must prove that one or more elements of the adverse party’s claim or defense lacks any factual support on the record so far. The opposing party is then granted an opportunity to prove that there have been facts alleged that support that party’s position. At the time of summary judgment the record is sparse so a granting of summary judgment represents a finding by the court that no facts supporting a particular party’s, in this case the plaintiff’s, position.

    The appellate court reversed the trial court’s decision in this case because it found that the issue of whether Mrs. Kling, a defendant in this case, was the driver of the white SUV at the time that it, at least partially, caused the accident at issue in this case. Because there was conflicting evidence about where Mrs. Kling was and whether or not she was actually in control of the car at the time of the accident, summary judgment was not the right choice in this case. The trial court is not to weigh the merits of the case when addressing summary judgment. Summary judgment is only appropriate in cases where no potentially meritorious case is presented by one of the parties.

    Judicial efficiency is a desirable goal at this point in history. America is an incredibly litigious society and with good reason. Science and technology move faster now than ever before and this leads to more pernicious injuries becoming increasingly common. Society functions better when injured people are compensated. This is even more true when injured people are compensated quickly and at minimal expense to society. However, as important as these goals are, the pursuit of the truth is the most important aim of our justice system. When the truth of a matter is in question, it falls to our trial courts with their judges and juries to put together an authoritative version of events. This version, when properly decided, becomes the truth for all intents and purposes. When there is no need to conduct an exhaustive search for truth, summary judgment becomes necessary and expedient.

    Summary judgments take up less of a court’s time than a trial. Because of this, summary judgments allow a court to hear more cases in less time. This benefits society as a whole. Frequently, American and Louisiana courts have a substantial backlog of cases. This prevents swift access to the justice that many people require. Summary judgment and other procedural and dispute resolution devices that avoid full trials aid in mitigating this abundant caseload. The case of Jagneux v. Frohn was not one in which summary judgment was appropriate but many cases are decided this way every day saving time, money and stress for our judges and juries.

    For help navigating the legal system and potentially winning a summary judgment of your own, call the Berniard Law Firm toll-free at 504-521-6000.

  • Personal Injury Case Delves into Medical Malpractice Difficulties

    The following very interesting and compelling question by plaintiffs, and the contingent commentary by the court, is articulated in this appeal to the Second Circuit Court of Appeals in Louisiana: “Does a diagnosis by a doctor rendering a second and correct opinion, equate to a per se reasonable belief that the previous treating physicians committed medical malpractice?”
    This question arises in the context of the Second Circuit’s consideration of the plaintiff’s appeal of the trial courts “judgment of defendants, sustaining an exception of prescription as to the malpractice claim filed by Joseph Lee Amos prior to his death and granting summary judgment which dismissed their wrongful death claim.” The purpose of this paper is to discuss the question posed by the plaintiff and the Second Circuit’s response to that question.

    On April 12, 1999, Joseph Lee Amos had his first appointment with Dr. Rebecca Crouch: he was experiencing “occasional rectal bleeding.” Mr. Amos “repeatedly complained of similar symptoms in his subsequent visits to Dr. Crouch.” Mr. Amos claims that “when he was under Dr. Crouch’s care, he was continually ‘hurting a lot’ and that the blood was ‘bright red’…The physicians report states that Mr. Amos said that Rebecca Crouch checked down there ‘and (Mr. Amos) was told everything was okay.” His final appointment with Dr. Crouch was on January 3, 2000.

    On January 11th, 2000 Mr. Amos went to another physician to seek a second opinion due to Mr. Amos’s “questions about the quality (or lack thereof) of Dr. Crouch’s medical treatment.” This visit to another doctor resulted in a diagnosis of colorectal cancer and subsequent treatment for the condition. On April 6, 2001 Amos filed a medical malpractice complaint with the Patient’s Compensation Fund against Dr. Crouch and her insurance company for her “failure to recommend and conduct the proper diagnostic testing called for by Mr. Amos’s symptoms, which delayed an accurate diagnosis and treatment of his disease.”

    The medical review panel rendered a decision on February 3, 2003. In the decision the panel articulated the appropriate standard of care in Mr. Amos’s circumstances. The panel determined that Dr. Crouch should have “recommended further evaluation and diagnostic tests, including but not limited to ordering a barium enema with proctoscopy or a complete colonoscopy”. The panel deferred the issue of breach due to some contested issues of fact. One of the issues was Dr. Crouch’s claim that she repeatedly recommended these tests; while Amos denied that she made those recommendations.

    Mr. Amos filed a lawsuit on April 26 2003. The trial court granted summary judgment, but the decision was reversed and remanded by the Second Circuit. Upon remand the defendants filed an exception of prescription, claiming that “the filing of the initial medical review complaint was untimely.”

    The defendants claim that prescription began to run on January 11, when Amos visited another doctor for a second opinion. The plaintiff’s claim that May 1, 2001 is the earliest date that prescription should begin to toll, since this is the date that Dr. Crouch terminated her doctor/patient relationship with Mr. Amos. Louisiana Revised Statute 9:5628(A) is as follows:

    “No action for damages for injury or death against any physician, chiropractor, nurse, licensed midwife practitioner, dentist, psychologist, optometrist, hospital or nursing home duly licensed under the laws of this state, or community blood center or tissue bank as defined in R.S. 40:1299.41(A), whether based upon tort, or breach of contract, or otherwise, arising out of patient care shall be brought unless filed within one year from the date of the alleged act, omission, or neglect, or within one year from the date of discovery of the alleged act, omission, or neglect; however, even as to claims filed within one year from the date of such discovery, in all events such claims shall be filed at the latest within a period of three years from the date of the alleged act, omission, or neglect.”

    The question “does a diagnosis by a doctor rendering a second and correct opinion, equate to a per se reasonable belief that the previous treating physicians committed medical malpractice” can be interpreted in more than one way. The inquiry is directed towards the belief of the patient that is receiving the treatment. A clearer articulation of the question would be “does a diagnosis by a doctor rendering a second and correct opinion about a patient, equate to a per se reasonable belief on the part of the patient that the previous treating physicians committed medical malpractice?”. The Second Circuit determined that the answer depends “on the particular circumstances of each case.”

    In the present case, the issue between the two parties is fundamentally whether Mr. Amos claim is permitted by the prescription statute. The disputed matter is when the statute begins to toll: did Mr. Amos file his claim “within one year from the date of discovery of the alleged act, omission, or neglect.” “Prescription begins when a plaintiff obtains actual or constructive knowledge of facts indicative to a reasonable person that he or she is the victim of a tort… Constructive knowledge is notice enough to excite attention, to put the injured party on guard, and to call for inquiry.”

    Mr. Amos was a 61 year old man who was working for Dry Crouch as a custodian while he was seeing her as a patient. The plaintiffs claim that this personal relationship, Mr. Amos’s age, and his relative unsophistication, all indicate that “Mr. Amos had a more personal trusting relationship with Dr. Crouch than he would have had with an unfamiliar physician.” The plaintiff’s argue that Mr. Amos had no reason to question Dry Crouch’s opinion until she terminated her relationship with him after a phone call on May 1 2000… The ultimate issue is the reasonableness of the patient’s action or inaction, in light of his education, intelligence, the severity of the symptoms, and the nature of the defendant’s conduct.”

    The defendants argue that Mr. Amos had “constructive knowledge that he was the victim of a tort” when he procured the second opinion and was provided with the diagnosis of cancer. They argue that although Mr. Amos had a special and trusting relationship with Dr. Crouch, this “does not translate into being unaware that the medical care he received from his doctor/employer was substandard.”

    The Second Circuit considered the “circumstances” in the case, and affirmed the trial court’s decision: “the conclusion of the trial court that Mr. Amos had notice enough to excite attention, to put him on guard and call for inquiry when his cancer was diagnosed on January 11, 2000 is not clearly in error or manifestly wrong”. Ultimately, the decision confirms the statement made regarding the lack of a “bright line rule,” and sets the precedent for future situations like this; that a determination of prescription in cases of second medical opinions will not automatically render the first per se evidence of malpractice.

  • Class Action Rules Difficult to Understand, Important for Successful Litigation

    The Class Action Fairness Act of 2005 was passed in an effort to prevent class action lawsuit abuse. CAFA changed the practice of class action litigation in state and federal courts. This change was accomplished by CAFA’s jurisdictional alterations in both the diversity and removal components of the traditional framework of class action practice, i.e. Rule 23 of the Federal Rules of Civil Procedure.

    In Williams v Homeland Insurance, the Fifth Circuit applied the “local controversy” exception of CAFA to the facts of the case, determining that a class arbitration is not, nor does it preclude a class action. Williams provides a lesson in the application of the elements of CAFA and an understanding of CAFA’s features. The decision also demonstrates yet another unique feature of Louisiana law that distinguishes it from the law of all of the other jurisdictions in the United States: the Louisiana Direct Action Statute.

    CAFA changed the rules for federal diversity jurisdiction and removal. The Act enables large class action law suits to be filed in and/or removed to federal court. CAFA changed the numerosity requirement of Rule 23 from by raising the requirement from 40 class members to more than 100 class members; the citizenship requirement of Rule 23 by relaxing the diversity criteria, i.e. any class member must be diverse from any defendant; and the amount-in-controversy (from one named plaintiff having a claim of more than $75,000) to the total of $5 million. In addition, CAFA incorporated looser removal rules: in diversity cases any defendant can remove the case (including in-state defendants); any defendant can remove without the unanimous consent of the other defendants; there is no 1 year limit on the timing for removal of the case to another court’s jurisdiction; and the decision to grant or deny a remand is subject to appellate review.

    CAFA “essentially makes the resolution of large class actions with minimal diversity a federal court matter”, while reserving “for the states certain types of large class actions arguably more local in nature. Four key exceptions to CAFA’s jurisdictional expansion accomplish this reservation of state authority.” The exception discussed in Williams is the “local controversy” exception.

    The local controversy exception requires the district court to decline its jurisdiction under CAFA:
    (A)(i) over a class action in which-
    (I) greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed;
    (II) at least 1 defendant is a defendant-
    (aa) from whom significant relief is sought by members of the plaintiff class;
    (bb) whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class; and
    (cc) who is a citizen of the State in which the action was originally filed; and
    (III) principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed; and
    (ii) during the 3–year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons.
    When the Fifth Circuit looked at George Raymond Williams vs. Homeland Insurance Company of New York, Homeland Insurance was appealing the “district courts remand of a class action to Louisiana state court.” George Williams had brought a class action in Louisiana state court, representing a class of medical providers against 3 Louisiana defendants: Med-Comp USA, Risk Management Services, and SIF Consultants of Louisiana. The plaintiffs contracted with Med-Comp (an operator of a PPO network) for “discounted rates” and SIF and RMS applied Med-Comp’s discounts when administering worker’s compensation claims for Louisiana employers. A year later, Williams joined 3 non- Louisiana defendants: “Corvel Corporation and its insurers Homeland Insurance Company and Executive Risk Specialty insurance.”

    Corvel and the plaintiffs agreed to settle their claims. However, before the settlement was approved in state court, Executive Risk removed the case to Federal court, claiming federal jurisdiction under CAFA. This action demonstrates the new removal rules of CAFA, e.g. that removal does not require unanimity amongst defendants as it does under the prior and traditional rules.

    Williams and Corvel responded by moving that the case be remanded back to state court under the “local controversy” exception of CAFA. The district court found that Williams satisfied all of the elements of the “local controversy” exception and remanded the case to state court. Homeland appealed this decision to the Fifth Circuit and the Fifth Circuit reviewed the district court’s remand under CAFA’s “local controversy” exception: de novo. If any of the elements of the “local controversy” exception are not met, remand would be improper. Homeland disputed all of the elements of the exception.

    First, Homeland disputed that less than 2/3 of the plaintiff class were citizens of the state of Louisiana, and thus did not meet that requirement of the local controversy. The total number of class members numbered 1,388, many of which were registered corporations in the state of Louisiana. In its argument in front of the district court, Williams argued persuasively that 1055 of these plaintiffs met the criteria for membership in the class, i.e. that they were citizens of Louisiana. In front of the Fifth Circuit, Homeland was claiming that the plaintiff class represented either 45.4% or 65.4% Louisiana citizenship. Homeland argued that in either circumstance, the percentage did not rise to the appropriate level required by CAFA. Homeland arrived at the 45.4% by identifying many of the business organizations that made up the plaintiff class as inactive corporations, and removing them from the total number of plaintiff members. This argument was denied because “inactive corporations remain citizens of their state of incorporation.” The 65.4% was a number arrived at by Homeland though a mathematical error, and was dismissed appropriately
    Williams’ claims meet the second group of elements of the “local controversy” exception pretty simply because Med-Comp is a local defendant, and Williams seeks “thousands of discounts, including discounts applied by other defendants.” The exception requires a “local defendant, from whom significant relief is sought, and whose conduct forms a significant basis for the claims asserted.” Med Comp clearly fulfills these criteria.

    The third element that the “principle injuries resulting from each defendant’s alleged or related conduct must have occurred in Louisiana” was found to be fulfilled by the district court because, “the record showed that a supermajority of plaintiffs are Louisiana citizens, who rendered services in Louisiana and who allege that the defendants violated the Louisiana PPO act.” The defendants are alleged to have “violated the Louisiana PPO Act” and the injuries occurred “by the failure to provide notice at the point of medical service in Louisiana.”

    It is this discussion of the fulfillment of the third element of the “local controversy” exception that provides the context and opportunity for the digression into a discussion of a unique feature of Louisiana law: the Louisiana Direct Action statute. “Louisiana is one of the few states in the country with a direct action statute. A direct action statute allows an injured person (the plaintiff) to sue the insurance company of the person or entity who caused their injury directly.”

    The direct action statute is mentioned in relation to the defendant Homeland and the fact that Homeland’s conduct “must have occurred in Louisiana,” the requirement of CAFA. “Although Homeland is an out-of-state defendant who insured the out-of-state Corvel, the CAFA exception is satisfied because Homeland’s related conduct as insurer includes Corvel’s failure to notify in Louisiana.”

    The claims asserted against Homeland are described by the Fifth Circuit as “unique” in nature because the “sole claims against Homeland are by virtue of the Louisiana Direct Action statute and based on the conduct of Homeland’s insured.” These claims would clearly not be possible in most states because most states do not have a direct action statute.

    The Fifth Circuit does not elaborate on, or even mention the rarity of a direct action statute. However, the statute is important to take notice of out of the discussion of the Fifth Circuit because it plays a very important part in Louisiana insurance law. “There may be no other Louisiana statute which has so affected the development of an area of the law as has the Direct Action Statute. ” The Direct Action statute is not of primary importance in the discussion in Williams v Homeland Insurance, but it is important exactly because it does permit claims to be made against Homeland that otherwise could not be made directly.

    The last element of the “local controversy” exception provokes the most interesting feature of the Fifth Circuit’s discussion, and provides the context for the major holding of the case: “a class arbitration is not a class action”. The element of the exception is as follows: “during the 3–year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons.”
    The parties disputed whether a class arbitration qualified as a class action. Consequently, the Fifth Circuit addressed the question. The district court had determined that the two were different because an arbitration involved out-of-court resolutions to disputes, while a class action involved in-court resolutions to disputes. The Fifth Circuit decided that “a class arbitration is not a class action, and consequently, a prior class arbitration does not frustrate the CAFA exception.” The Court looked at the CAFA definition of “class action,” i.e. “any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure.” Homeland argued for an “expansive reading” of the definition to “encompass arbitrations”, but the Court determined that this expansive of a reading would “require district courts to exercise original jurisdiction over any arbitration that satisfies CAFA’s threshold requirements. We hold that a class arbitration is not a class action, and consequently, a prior class arbitration does not frustrate the CAFA exception.”

    Williams v Homeland Insurance is an interesting case because of the important holding that makes the distinction between class arbitrations and class actions. This decision will not only provide precedent for Louisiana, but will provide persuasive law for other jurisdictions. This holding will probably be followed in other jurisdictions. The discussion reveals the features and dynamics of CAFA, which has made a significant impact upon class action jurisprudence in Louisiana and the nation as a whole. Lastly, the discussion in Williams reveals the unique and distinguishing feature of Louisiana insurance law: the Direct Action Statute.

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