May It Please The Court

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May It Please The Court
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When Is a Volunteer an Employee Covered by Work Comp? It Depends on the Pixie Dust you Sprinkle.

Well, Disneyland is in Orange County, after all, so the term "Pixie Dust" is considered jargon around here. Not legal jargon, mind you, but anyone who's gone to Disneyland understands. In this case, it means the words you use to get what you want.

Let me give you the setup, even though the opinion is shy on details. Diane Marie Minish went to the Mount Madonna Center of the Hanuman Fellowship (a group that teaches the theory and practice of yoga). The Mount Madonna Center is a "conference and retreat center located on 355 acres of mountain-top redwood forest and grassland overlooking Monterey Bay, between Santa Cruz and Monterey, in Northern California," according to their website.

Ohm. Are you relaxed now?

It turns out that Ms. Minish went to the Center's property to visit a sick friend, and then when asked to get someone from elsewhere on the property, the Center directed her to hop on the forks of a forklift, and off she went. Well, you know what happened next. That's right. She fell, was injured and went off to the hosptial.

Here's where the parties' stories differ. The Fellowship apparently submitted a workers' compensation claim for her and she started to get money, which she tried to return and informed the workers compensation appeal board that she was neither an employee nor a volunteer and that the work comp claim was fraud. The Fellowship listed her as a volunteer, and having previously sprinked the Pixie Dust of Labor Code section 3363.6 over its volunteers, submitted the work comp claim.

This Labor Code section allows not-for-profit organizations to ensure that its volunteers are covered by worker's compensation just like their employees. It's a good idea for the non-profits - it avoids the liability for lawsuits like Ms. Minish's because once you're covered as either an employee or volunteer, your remedies against the non-profit are limited to the benefits provided under workers compensation.

No tort or punitive damages liability. That's a big benefit for the non-profits. And if you've been following along like the diligent reader that you are, you just figured out the rub in this case. Yep. Ms. Minish didn't want the workers compensation benefits. She wanted the big money that was available in an everyday, run-of-the-mill personal injury lawsuit.

The tort refomers are rolling over in their figurative graves.

In this case, there are a series of unusual facts that resulted in reversing the trial court's judgment in favor of the non-profit, and allowing Ms. Minish to proceed to argue that she should recover tort and punitive damages and not be limited to only the workers compensation benefits. Those facts most interest the two parties - not you - because you've already learned what you came here to learn.

If your non-profit wants to avoid getting sued by volunteers who get injured on your property, you must get a "Volunteer Endorsement" on your workers compensation employee and you must have your Board of Directors adopt the resolution required by California Labor Code section 3363.6. If you are a volunteer, you've learned not to hop on the forks of a fork lift and travel across uneven ground. You might fall and get hurt, and if you do, you just might be limited to workers compensation remedies.

Especially if your non-profit got to this blog post first.

Printer friendly page Posted by J. Craig Williams on Thursday, March 14, 2013 at 09:37 Comments (0) |

When Is A 10 Charge Imposed by the Government Not A Tax?

You'll be happy to know that the 10¢ charge that Los Angelinos are required to pay to grocery stores for using a paper bag isn't a tax, even though the charge was imposed by the Los Angles County Board of Supervisors.  That's right, even though you get to pay more, it's really not a tax.


Let's think about this one for a minute.  Ok.  I'm done. How about you?  Convinced yet?  If not, then think about the argument that the County used to convince the state court (wonder why this case wasn't tried in federal court?):   the County argued that it wasn't a tax because the money wasn't paid to the County. 

Actually, the ordinance allows the grocery stores to keep the 10¢ charge to offset the "cost of compliance."  What?  How much could it possibly cost to comply with this ordinance?  There's some bagger at the end of the check out counter saying, "Hey there, customer, you have to pay 10¢ to use that paper bag."

Right.  That statement alone must cost the grocery store a whopping 10¢. 

Don't get me wrong here, I'm all for the purpose of the ordinance - eliminate the use of plastic bags, cut down on the use of paper bags and encourage grocery shoppers to bring reusable canvas bags.  You knew, didn't you, that deep down, us Angelinos are all just grown-up hippies, tree huggers, earth-shoe wearing liberals who want to save the environment? 

Well, some of us actually rail at taxes. This case, Schmeer v. County of Los Angeles, had plenty of environmental star power at the helm (Surfrider Foundation and the Environment California Research and Policy Center), but this tax case went down in flames anyway.

Judge Chalfant, an excellent judge, saw it the other way and looked past the wording of the ordinance and ruled that because the 10¢ charge didn't go to the County it wasn't a tax, reasoning that in order to be a tax, the money has to go to the County.  Where the 10¢ charge stayed with the grocery store, neither Judge Chalfant nor Justice Croskey, writing for the Court of Appeal, thought we all expect taxes to go to the government, and when the money doesn't, it's not a tax.

Sounds reasonable, until you read the wording of the definition of a tax.  Nowhere in that definition do you see the reasoning that the money has to go to the government:

"As used in this section, ‘tax' means any levy, charge, or exaction of any kind imposed by the State [County], except the following [five exceptions, none of which require that the money be paid to the State [County]]"

I don't know about you, but that 10¢ charge sounds an awful lot like a tax to me, even if the money doesn't end up in the State's hands (which some of it will anyway, because the grocery store has to pay tax on its income, but that's a different story, they say). 

Maybe one of the parties will get the California Supreme Court's attention, and perhaps they will see it differently. 

Printer friendly page Posted by J. Craig Williams on Thursday, February 21, 2013 at 18:16 Comments (1) |

The Endless Summer...Keep SurfAid Working Year 'Round

My friend Paul Riehle is an avid surfer; he's one of those guys who's up at the crack of dawn and out on his surfboard enjoying what we Californians know as the endless summer.  You can surf all year 'round here - of course you've got to wear something thicker than a 3/2 wetsuit in the winter, but as Jimmy Buffet says, "The weather is here.  Wish you were beautiful." 

While Jimmy has a way with words, Paul's got a way with surfing.  In fact, he's competing in the Malibu Cup, and is asking for your help to raise money. 

Here's Paul's plea:  "I write because I am participating in the SurfAid Malibu Cup this Saturday, September 8.  The Cup is a surfing competition to raise funds for SurfAid, a non-profit humanitarian organization with malaria eradication, emergency preparedness and response, and community health programs in Indonesia.  I have been on the SurfAid Board since its inception.  I am competing on the Beck Riehle Good Surf Team.  Our goal is to raise the most money of any team before the event starts, thereby helping SurfAid."

While you might not know Paul, you can get to know the good work that they do.  In SurfAid's own words, "SurfAid is a non-profit humanitarian organization whose aim is to improve the health, well-being and self-reliance of people living in isolated regions connected to us through surfing."

If you can't jum on your board this weekend to help raise money, you can donate by clicking on this link

Printer friendly page Posted by J. Craig Williams on Wednesday, September 05, 2012 at 09:05 Comments (2) |

Jury Awards $4.5 Million Punitive Damages Against Company With Negative Net Worth

A Jury Run Amuck Or A Well-reasoned Punishment? Don't Jump To A Conclusion Until You Read Further...

How could a jury be so insensitive?  Certainly this jury is from one of those Judicial Hellholes!  This is exactly why we need tort reform ... runaway juries ... just like that McDonald's spilled coffee cup case

You would expect to hear those comments after reading the first headline.  But there's a clue in the subheadline that may cause you to pause for a moment and think that there just might be more than the first headline communicates.

You'd be right.  And you'd be one of those critical thinkers who realizes that the sound bite does a disservice to "the rest of the story," as Paul Harvey would have said.

So here's the set up of Bankhead v. ArvinMeritor.  Now I could spin these facts for you to put you in the mood for the ultimate outcome, but rather than do that, let's let the Court of Appeal tell you what the facts were as they saw it (omitting footnotes):

ArvinMeritor [...] manufactured brake shoes for installation on commercial trucks during the time frame involved in this case. The brake shoes were fitted with asbestos-containing linings [...].

By the 1960's, ArvinMeritor knew that workers exposed to asbestos dust were at risk of developing asbestos-related diseases. Indeed, in 1973 and again in 1975, it wrote letters to [...] manufacturers complaining about the presence of asbestos dust in the brake linings it was receiving from them. Nonetheless, ArvinMeritor did not place any warnings on its products until the early 1980's, and continued to market asbestos-containing brakes until its inventory of them was exhausted sometime in the early 1990's. Not until the fall of 1987 did ArvinMeritor include an express reference to cancer in the warnings on its products.

[Gordon] Bankhead was exposed to asbestos dust from brake linings during the 30 years he worked at automotive maintenance facilities, primarily as a "parts man," starting in 1965 and continuing through his retirement in 1999. As a result of this exposure, Bankhead contracted mesothelioma, a form of lung cancer, in 2009. Before his mesothelioma was diagnosed in January 2010, Bankhead experienced difficulty breathing, and underwent painful medical treatment to drain fluid from one of his lungs. After the diagnosis, Bankhead was told he only had 12 months to live, and as his disease progressed, the quality of his life decreased significantly. At trial, Bankhead's medical experts testified that his condition would become increasingly painful until his inevitable death.

 So there you have it.  In the 1960's the company knew that it was exposing its workers to asbestos fibers, but did not warn its employees of the danger until 1987.  The jury found ArvinMeritor liable for Gordon Bankhead's exposure to asbestos as the cause of his mesothelioma.  After the liability and damages portion of the trial was completed, the Court asked the jury about punitive damages.

Here's where it gets tricky.  ArvinMeritor submitted financial statements that showed the company had a negative net worth.  Despite that "upside down" financial statement, however, the jury awarded Gordon Bankhead $4.5 million in punitive damages.

How could that possibly be, you ask? 

Well, before you get your knickers in a twist, read on and then decide (the following directly quotes the Court of Appeals): 

A separate trial was held to determine the amount of punitive damages to be assessed against each defendant. By the time of that trial, all defendants except ArvinMeritor [...] had settled. At the punitive damages trial, respondents presented an expert witness, Robert Johnson, to testify about ArvinMeritor's financial condition. In evaluating ArvinMeritor's economic status, Johnson reviewed publicly available documents filed with the Securities and Exchange Commission, including ArvinMeritor's 2008, 2009, and 2010 annual 10-K reports; its adjusted 2009 10-K reports; a 2010 proxy statement sent to shareholders; and data regarding its market capitalization. These are "generally accepted financial documents used and relied upon by economists or experts in finance to evaluate a company."

Johnson testified that between 2006 and 2010, ArvinMeritor attained over $3 billion in sales revenue each year, and an average annual cash-flow profit of $111 million. [fn. omitted]  ArvinMeritor's lowest performing year during that period was 2009, but even in that year, it had $95 million in cash available to it. In 2010, ArvinMeritor's annual sales revenues reached $3.59 billion; its annual report indicated it had earned $211 million in cash-flow profit; and it reported to its shareholders that it had earned a $12 million net profit-a conservative figure, as Johnson explained, because companies seek to reduce their reported net income, using legally available deductions such as depreciation, in order to minimize their tax liability. At the end of 2010, ArvinMeritor had on hand some $343 million in cash and cash equivalents, and its outstanding stock had a total market value of almost $2 billion.

ArvinMeritor's chief executive officer, who also served as its board chair and corporate president, earned over $7.6 million in 2010, and stood to receive between $19.9 million and $26.9 million upon leaving the company. Johnson explained that a company's willingness and ability to pay sums of this magnitude to its chief executive is an indicator of financial strength. Given all of these facts, Johnson opined that ArvinMeritor is financially sound.

Johnson acknowledged that ArvinMeritor reported that as of 2010, it had a negative net worth of $1.023 billion. He opined, however, that this number, taken on its own, did not "reflect the full context of ArvinMeritor's financial condition and ability to pay." Johnson explained that net worth is only one of "a number of different tools that we use to assess a company's financial health, wealth and condition," and opined that "net worth is probably one of the least reliable financial metrics or statistics you can use," because there are "a number of financial or accounting transactions" in which a company can engage to lower its net worth, while remaining profitable. Johnson testified that net worth "is not a measure of a company's financial condition totally or their ability to pay," because "even within the guidelines of the generally accepted accounting principles . . . net worth is something that can be pretty easily manipulated." As an example, Johnson noted that a company can reduce its net worth simply by repurchasing shares of its stock.

Johnson explained that because net worth can be unreliable, banks look instead to a company's cash flow and profits, which are the most reliable indicators of its ability to repay debt, in determining whether to lend money to it. For this reason, companies with a negative net worth are still able to borrow money. Indeed, ArvinMeritor itself borrowed a total of $245 million in 2010, and still had $539 million available on its line of credit as of September 30 of that year.

Don't believe it?  Judge for yourself with ArvinMeritor's financial statementsArvinMeritor still exists as Meritor, and was a spinoff of Rockwell. 

Now that you've read why the jury awarded what it did, does the headline accurately tell the rest of the story? 


Guess you'll have to keep a cynical eye on those headllines.

Printer friendly page Posted by J. Craig Williams on Monday, April 30, 2012 at 08:50 Comments (0) |

Legal Crackdown on Human Trafficking

Lawyer2Lawyer Internet Radio Podcast

Human trafficking is "modern-day slavery." And if you think it isn't happening near you, think again. The United Nations estimates nearly 2.4 million people may be the victims of this crime.  Please join me and my fellow Lawyer2Lawyer co-host and attorney, Bob Ambrogi, as we take a legal look at this troubling issue with Professor Bridgette Carr from the University of Michigan Law School, Attorney Ann Johnson from Houston, Texas and Mary C. Ellison, Director of Policy for Polaris Project.

Click on the link below and give a listen!


Printer friendly page Posted by J. Craig Williams on Friday, April 27, 2012 at 08:56 Comments (0) |

How Congress Takes A Congressional Junket Without Letting Anyone Know

Members of Congress and their staffers who travel at the expense of private organizations must follow a long list of legal restrictions and requirements.  However, there is a little known exemption that allows the same federal employees to travel with virtually no accountability and very little transparency.  Please join me and my fellow Lawyer2Lawyer co-host and attorney, Bob Ambrogi, as we welome reporter Justin Elliott and Washington University Law Professor Kathleen Clark to examine the ethics, legalities and secrecy of these Congressional trips abroad.


Printer friendly page Posted by J. Craig Williams on Thursday, April 19, 2012 at 21:08 Comments (0) |

Women's Rights: Who Gets To Decide What Happens To Women's Bodies? Your Favorite Government?

From the Obama Administration's decision on female contraception coverage, to the Congressional hearing on women's health featuring an all-male panel of witnesses, to the Rush Limbaugh/Sandra Fluke firestorm, legislation targeting women's health is causing quite the political controversy across the country. Please join me as I welcome Attorney Shari Rendall, Director of Legislation and Public Policy for Concerned Women for America and Attorney Gretchen Borchelt, Senior Counsel for Health and Reproductive Rights for the National Women's Law Center, to discuss current legislation aimed at women's issues, reaction from women's groups and the present state of women's rights.


Printer friendly page Posted by J. Craig Williams on Thursday, April 12, 2012 at 10:00 Comments (3) |

What Would You Do?

Driving back from LA on Friday, traffic was stopped: dead stopped.  You know, the kind of stopped you just know will turn you and several thousand of your nearest friends into a 30-second segment on the 6:00 evening news, while the rest of us watching groan with an at-too-well understanding of your plight.

Traffic started to move slowly on both sides of the freeway, but not in the middle.  Fortunately, I was on one of the the sides that was moving, not too far from the start of the traffic jam.  Within a car length or two, I saw what was going on.

One 6x6x8 piece of lumber lay askance in the middle lane, blocking traffic.  It looked like it had already been run over; a couple of chunks of lumber (the size of 2x4's) were scattered nearby.

Perhaps realizing the futility of his position, the guy driving - ok, well parked - in the middle lane immediately behind the offending tree trunk, was getting out of his car.   

On the 405 freeway.

In Los Angeles.

One of the busiest freeway in the world.  

As he got out of his car, his intent became clear.  That tree trunk was going into the back seat so he could go forward.  Into the back seat it went, but it didn't fit completely in, so part of it ended up sticking out the back window a bit, but not so far that it would interfere with anyone driving alongside him.

But the most amazing part about the whole situation on the freeway was what wasn't happening.  No one passed him.  It was as if we all realized that if our cars in the front allowed the cars in the backed up lanes behind us to speed by, someone would hit this guy and likely injure him, if not kill him.

The guy who was doing all of those cars behind him a favor.  Saving their cars from getting hit with that piece of lumber otherwise known as a tree trunk, saving those lives who surely would have been changed if hit by a large flying piece or pieces of wood.

So we stopped and waited for him to finish.  Sure, there were a few doors that opened in an attempt to offer help, but he waved us off, thinking I'm sure that it was safer if we all stayed put and let him get the lumber off the road and get it done quickly so we could all go forward again.

I have no idea who this good Samaratin was, but I sure want to thank him.  For those you who were stuck behind the six cars that stopped all traffic so this guy could do his good deed for the day, you never knew how close you may have come to changing your life for the worse, even though you were sitting in your car complaining about the traffic back-up.  

But know this.  One man and a few onlookers saved you. It didn't take a CHP traffic break.  It didn't take an accident.  It took one person who did a good deed.

Remember that the next time you see an opportunity to do your part.    

Printer friendly page Posted by J. Craig Williams on Sunday, March 11, 2012 at 10:36 Comments (0) |

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