Business litigators have been dealing with the economic loss rule since 1987, when Florida’s Supreme Court, in Florida Power & Light Co. v. Westinghouse Elec. Corp. first barred tort claims for economic losses arising when a product malfunctioned and damaged only itself. The fun began in that same year, when the court, in AFM Corp. v. Southern Bell Telephone & Telegraph Co., expanded the rule to bar negligence claims arising from contractual relationships.

AFM led the court down what it ultimately realized was an ill-advised road, leading to an “unprincipled extension” of the rule.  However, rather than stopping the car or making a legal u-turn, the court entered a series of half-hearted rulings, including Moransais v. Heathman and HTP, Ltd. v. Lineas Aereas Costarricences, S.A. [PDF], which scaled back the rule to exempt, for example, claims independent of the contract - like fraud in the inducement and negligent misrepresentation, statutory claims, and “established” torts - like malpractice, but never went quite far enough.

 In 2004, in Indemnity Ins. Co. of North America v. American Aviation, Inc., the court seemed ready to prune the economic loss rule back to its original “products liability” roots, but stopped short - continuing to recognize the application of the rule in the contractual context, but seemingly lamenting its decision to do so.

Then, on March 7, 2013, came the court’s ruling in Tiara Condominium Association, Inc. v. Marsh & McLennan Companies, Inc., which, at least in the majority opinion, left no question that the economic loss rule has been scaled back to its Westinghouse roots. An obstinate court refused even to consider the question it had been asked to rule on - regarding whether the professional negligence exception to the rule applied to an insurance broker – deciding, instead, to formally recede from any application of the rule in the contractual context.

Done! Right?

Well, yes – with one caveat.

Justice Pariente, in her concurring opinion, like a screenwriter leaving open the possibility that the rule’s skeletal hand may yet re-emerge from the swamp in the sequel, opined, despite the court’s determination that the economic loss rule would no longer apply in the contractual context, that the same result could nonetheless be reached, based on the common law of contracts.

So, in the end, it appears that we all remain free to advance the contractual privity argument - - - just so long as we don’t call it the economic loss rule.

How would you feel if you were a party to a lawsuit and the judge was a Facebook friend of the other side's attorney?  Would you think the judge could be fair? What if it were a criminal case? Would that make a difference? 

That is one of the questions being certified to the Supreme Court of Florida in the case Domville v. State of Florida, 38 Fla. L. Weekly D150a.  Specifically, where the presiding judge in a criminal case has accepted the prosecutor assigned to the case as a Facebook "friend," would a reasonably prudent person fear that he could not get a fair and impartial trial, so that the defendant's motion for disqualification should be granted?

The Fourth District Court of Appeal determined that the underlying judge should have disqualified himself from the case, but has certified the question to the Supreme Court as a question of great public importance.  It was noted by the judges who agreed with the majority opinion that "a person who accepts the responsibility of being a judge must also accept the limitations on personal freedom." "Judges do not have the unfettered social freedom of teenagers."

The reality is that most judges are friends with lawyers.  They are lawyers themselves.  They attend social events with lawyers all the time, but that is not always known by parties involved in litigation. So when does a friendship cross the line where the judge should recuse him/herself from a particular case?

Most judges know the answer to that question and will recuse him/herself when they feel that their relationship with an attorney would not allow them to be fair and impartial to the other side.  Judges recuse themselves from cases all the time for all sorts of reasons, including because of a relationship with a particular lawyer.

The only difference is with the advent of social media, you now have access to information that you may not have otherwise been privy to in the past.  Nonetheless, Florida does have an ethical rule prohibiting judges from being Facebook friends with lawyers who may appear before them.  Until the Supreme Court of Florida agrees to hear the question, however, the safest course of action for a judge is to not accept a friend request on Facebook.

Florida is one of ten states that has raised or will be raising its minimum wage rate for 2013.  Effective January 1, 2013, for non-tipped employees, Florida's minimum wage rate rose from $7.67 per hour to $7.79 per hour, up 12 cents.  For tipped employees, the minimum wage rate rose to $4.77 per hour.

Other states included in the wage rate increase are Rhode Island, with the largest increase, Arizona, Colorado, Washington, and Ohio.  The federal minimum wage rate was last increased in July 2009, when it was raised from $6.55 per hour to $7.25 per hour. 

Florida is one of the few states where the minimum wage rate is recalculated yearly based on the federal Consumer Price Index.  This means the minimum wage rate is linked to the cost of inflation and for Florida's low wage workers this will be protection from those rising costs. 

For Florida employers, it means a review of current pay policies to ensure that employees are being properly compensated under the law, new wage posters that must be hung, and a little bit more added to the bottom line.

Becker & Poliakoff announced that Richard C. Litman, a patent attorney and founding shareholder of the Litman Law Firm based in Manassas, Virginia has joined Becker & Poliakoff. With more than thirty years in legal practice, Mr. Litman joins Becker & Poliakoff along with five other registered patent attorneys, six registered patent agents, a trademark attorney and a staff of twenty. He will chair the firm’s Intellectual Property & Emerging Technologies Practice Group, and serve as the Managing Shareholder of the firm’s new office in Northern Virginia.

Based near the U.S. Patent and Trademark Office (USPTO) in Virginia, the new Becker & Poliakoff practice also includes former USPTO Director Richard J. Apley who leads the team of patent practitioners, and patent searchers, patent illustrators, technical specialists and client service managers. The new practice group represents universities, research centers, government programs, inventors, and emerging companies around the world and domestically which are developing and protecting inventions of all types, including energy, water and environmental technology, information and communications technology, and life sciences, medical and biotechnology.

Gary Rosen, the firm's Managing Shareholder and an IP litigation attorney noted that the addition of the Litman firm further expands the firm's capacity to handled complex IP litigation.  

"Richard's practice complements our existing practices and accelerates our efforts to grow and diversify our service offerings to clients," said Gary C. Rosen, Managing Shareholder of the firm. "Richard and his team have already begun working with attorneys in our New York and Florida offices on the formation and structuring of technology business entities, licensing and commercial contracting matters, mergers and acquisitions, international IP protection, and technology development and commercialization.

Litman, a 1979 cum laude graduate of the University of Miami School of Law, holds two advanced law degrees, a Masters in Forensic Sciences and a LL.M. in Patent and Trade Regulation Law obtained while serving as the Food and Drug Law Institute Fellow. He is a Registered Patent & Trademark Attorney and a member of the Florida, Virginia, D.C., Maryland and Pennsylvania bars. He also serves as chairman of a commercial bank in Northern Virginia.

Encountering the Seminole Tribe of Florida as a litigation opponent presents a number of practical obstacles. Besides being well-funded (recent reports peg their annual gaming revenue in excess of $2 billion), the Seminole Tribe generally enjoys sovereign immunity from suit in the United States courts, unless, of course, they contract it away or it is waived.  So not only can the Tribe outspend their opponents by huge margins, but when the going gets rough, they can claim that they are protected from suit by sovereign immunity.  As a consequence, businesses and individuals are at an extreme disadvantage in litigating disputes with the Tribe. Not so for AECOM Technology Corp., a large multinational contractor which entered into a series of construction contracts with the Tribe to build water and wastewater treatment plants at three of the Tribe's reservations in Florida.  The contracts between AECOM and the Tribe provided for any disputes to be resolved by a Florida state court.  When the Tribe refused to pay change orders totaling approximately $12 million, AECOM sued the Tribe for breach of contract in the Broward County Circuit Court. Despite having contracted away its sovereign immunity, the Tribe nonetheless claimed sovereign immunity from suit, arguing that the tribal representative who had signed the construction agreements lacked the authority to enter into them.  Not exactly a winning argument.  In a significant (but not entirely unexpected) victory for the plaintiff contractor, Judge Jeffrey Streitfeld rejected the Tribe's sovereign immunity defense. The Tribe has appealed his ruling.

Although Florida circuit court decisions are typically unpublished, the Daily Business Review did a nice write up of the case (subscription required). 

What is the lesson to be learned from this?  When suing the Seminole Tribe, be prepared for a sovereign immunity defense, even in the face of a contractual waiver.  Also be prepared to litigate every conceivable issue, as the Tribe will not hesitate to use its vast resources in the hopes of wearing down opponents financially.  With AECOM's annual revenues also measured in the billions, such a tactic obviously was not effective in this case. Finally, it would be naive for parties suing the Tribe to expect full disclosure and cooperation from the Tribe (at least not voluntarily). For example, in the AECOM case, the Tribe claimed that documents were "lost or missing," including tribal ordinances, resolutions, contracts and email correspondence between tribal officials.  This appeared to tip the scales in AECOM's favor (although, quite frankly, the contractual waiver of sovereign immunity should have been more than enough), as Judge Streitfeld found after discovery that the facts warranted "the imposition of adverse evidentiary inferences as well as adverse presumptions against the Tribe."  Judge Streitfeld described this case as one of first impression, and we will be carefully following the appeal for any new developments in the case.

Segways required as an accommodation under the Americans with Disabilities Act (ADA) at Disney? Maybe.  In a recent ruling in the Ninth Circuit Court of Appeals, Baughman v. Walt Disney World Corporation, the court reviewed the issue of whether Disney is required to permit Segways as an accommodation under the ADA and determined that such an accommodation might be required.

Braughman, who suffers from limb girdle muscular dystrophy, brought suit against Disney after Disney refused to make an accommodation for her under the ADA by permitting her to use a Segway instead of a wheelchair or scooter.  Braughman claimed that she needed to use a Segway because using a wheelchair was "impractical, painful, and difficult."  She further claimed that the Segway was necessary because she had difficulty moving from a seated to a standing position. 

Disney, as mentioned, refused the accommodation, arguing that the accommodation was not necessary as required by the ADA.  Disney further asserted that "necessary" under the ADA "means only one thing: can't do without," and because Braughman could use a wheelchair or scooter (both of which are permitted by Disney), the Segway accommodation was not required.    

In disagreeing with Disney's arguments, the Ninth Circuit reasoned that Disney's position, if accepted, would require very few accommodations under the ADA.  "Public accommodations must start by considering how their facilities are used by non-disabled guests and then take reasonable steps to provide disabled guests with a like experience.

The court further noted that public accommodations are not required to make any and all possible accommodations that would provide full and equal access to disabled patrons; they only need to make reasonable accommodations.  In determining what is reasonable facilities should consider: costs of the accommodations and disruption of their business as well as safety. 

The court did not go as far as holding that Disney was required to permit Segways at its parks.  It still might be able to exclude them if they can show Segways can't be operated safely in their parks.  Nonetheless, Disney, and other places of public accommodation, will need to evolve their thinking as technology advances and more devices become available for disabled persons which make their experience similar to those of non-disabled persons especially if it wants to remain the happiest place on Earth.

Somewhat overlooked amid the U. S. Supreme Court’s long-awaited ruling on the Affordable Health Care Act was another decision issued at the end of the current term that represents a big labor victory for pharmaceutical companies. In a 5-4 decision, the Court interpreted the "outside sales" exemption under the Fair Labor Standards Act (FLSA) and ruled that pharmaceutical sales representatives who work more than 40 hours per week are not entitled to overtime.

The case (Christopher v. SmithKline Beecham Corp) involved a challenge under the FLSA, which requires employers to pay nonexempt employees overtime wages. One exemption to the overtime requirement involves workers employed “in the capacity of outside salesman.” 

Pharmaceutical companies have long focused their direct marketing efforts on physicians. Pharmaceutical companies promote their products to physicians through a process called “detailing,” whereby employees known as “detailers” or “pharmaceutical sales representatives” try to persuade physicians to write prescriptions for the products in appropriate cases. The pharmaceutical industry has had a longstanding practice of treating detailers as exempt outside salesmen.

The plaintiffs in the lawsuit were employed by SmithKline Beecham as pharmaceutical sales representatives for roughly four years, and during that time they spent about 40 hours in the field calling on physicians during normal business hours and an additional 10 to 20 hours attending events and performing other miscellaneous tasks. Petitioners were not required to punch a clock or report their hours, and they were subject to only minimal supervision. Petitioners were well compensated for their efforts, and their gross pay included both a base salary and incentive pay.

The salesman filed suit, alleging that the company violated the FLSA by failing to pay them for overtime.  The company moved for summary judgment, arguing that petitioners were employed as outside salesman and therefore were exempt from the FLSA’s overtime requirement. The federal district court agreed and granted summary judgment to the company. The U.S. Court of Appeals for the Ninth Circuit, where the case arose, affirmed the lower court.

The Department of Labor filed a friend of the court (amicus) brief before the Supreme Court, arguing that, under DOL regulations, the employees did not qualify as outside salesmen, since they did not actually make “sales” within the meaning of the regulations. DOL took the position that an employee does not make a ‘sale’ unless s/he actually transfers title to the property at issue.

Normally, the courts give deference to a federal agency’s interpretation of its own regulations. However, in this case, the Supreme Court ruled that the DOL position was “plainly erroneous” and “inconsistent with the regulation.”  In addition, to defer to the DOL’s interpretation would result in “unfair surprise” as well as potentially massive liability on the company for conduct that occurred well before the DOL interpretation was announced.

The Court determined that the “detailers” made sales under the FLSA and thus are exempt outside salesmen within the meaning of the DOL’s regulations. The Court noted that its ruling is consistent with the purpose of the FLSA’s exemption – which is to ensure that workers receive fair compensation. Not lost on the Court was the fact that the workers here each earned an average of more than $70,000 per year, plus bonuses and incentives — hardly the kind of employees that the FLSA was intended to protect.

Now that the U.S. Supreme Court has resolved the constitutionality of the Patient Protection and Affordable Health Care Act (aka ObamaCare), question arise as to what potential legal challenges may lay ahead. First, let’s sort out the major components of the Court’s opinion:

Upheld the highly controversial “individual mandate” part of the law, which requires most Americans to obtain “minimum essential” health insurance coverage by 2014 or face a penalty; and

Upheld the law’s Medicaid expansion but held that the federal government could not penalize states that refuse to go along with the expansion requirements by withdrawing existing Medicaid funds.

The individual mandate was by far the most hotly disputed provision in the law, and despite the odds and popular media’s predictions that it would be struck down, the Court, led by Chief Justice John Roberts in a 5-4 vote, upheld the provision as within Congress’s power under the Taxing Clause to the Constitution.

Interesting for a number of reasons, not the least of which that this was the Obama Administration’s third, back-up argument in support of the law. The first was that the law could be enacted under the Commerce Clause, and the second was that it was authorized under the “Necessary and Proper” Clause.

Roberts wrote in his opinion that Congress did not call the penalty a “tax,” but the label does not determine whether the payment can be viewed as an exercise of Congress’ taxing power. Roberts cited several factors supporting the view that the payment is a tax, including the fact that the Internal Revenue Service will collect it. He also said that, for most Americans, the amount due will be far less than the price of insurance.

Congress’ use of the taxing clause to encourage buying something is not new, Roberts wrote. Tax incentives already promote, for example, home purchases and professional educations, he said.

“The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax,” he wrote. “Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”

So, as the dust settles, what can businesses expect? The law has a number of key dates that companies need to know. By January 1, 2014, insurers will be prohibited from discriminating against or charging higher rates for any individuals based on pre-existing medical conditions. That is sure to be an area where potential litigation may arise. In addition, by this date, the law will impose a $2,000 per employee tax penalty on employers with more than 50 employees who do not offer health insurance to their full-time workers.

Much remains to be sorted out and understood, but businesses and individuals should carefully review the law with their legal counsel and monitor these and other key compliance dates.

The case of Hamilton v. Southland Christian School is headed back to a jury.  This comes after the Eleventh Circuit Court of Appeals remanded the case back down to the trial court after it was initially dismissed on summary judgment.

Hamilton was a teacher at the School.  She got pregnant and then married the father of her child.  About a month later, she met with the School's administrator and assistant administrator to tell them she was pregnant and to request maternity leave for the following year. 

During the meeting, Hamilton admitted that she conceived the child before marriage, a sin in the eyes of the church.  The next week Hamilton was fired. Thereafter, Hamilton filed a charge of discrimination with the EEOC under Title VII asserting that she was discriminated against because of her pregnancy. 

After requesting a right-to-sue letter, Hamilton filed suit in federal court.  At the close of discovery, the School moved for summary judgment which was granted and Hamilton's claims were dismissed.  In dismissing her claim, the trial court held that because Hamilton had not produced evidence of a non-pregnant comparator who was treated differently, her case could not proceed.

Hamilton appealed and her case is now headed back to a jury.  The appellate court ruled that Hamilton did not have to show a comparator if she could show enough non-comparison circumstantial evidence to raise a reasonable inference of intentional discrimination.  Hamilton had done that by producing evidence that the School was more concerned about her pregnancy and her request for maternity leave than her admission that she had premarital sex.

So now it will be up to a jury to decide whether Hamilton was fired because of her pregnancy.  It will be interesting to see how the School's defenses play out in this second round.  The School raised the ministerial exception as a defense to Hamilton's claims, but that defense was not considered on appeal because it was not properly raised by the School. 

Earlier this year in Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC, the Supreme Court ruled that the ministerial exception barred a teacher's claim against her church employer after she was fired for filing a lawsuit against her employer for disability discrimination.  While the Supreme Court did not clarify how the exception would apply in other church related employment cases, perhaps the Hamilton case will be the first to shed some light on this issue. 

Last year, I wrote about an article written by a colleague of mine, D. Andrew Byrne regarding the billable hour and its demise.  Well, it seems that this topic has continued to generate interest in the business world and for good reason.  It simply makes sense because when it comes to clients, one size does not fit all when it comes to billing.

Alternative billing arrangements are nothing new for lawyers.  With the ever increasing cost of doing business, companies have to think about the bottom line and what makes sense when it comes to hiring and using law firms and lawyers. 

While the traditional billable hour model may make sense for some clients, not all clients can afford to do business entirely under that model.  And so, the push away from the billable hour model is occurring and the move for some is toward the alternative fee arrangement because the bottom line depends on it.

For some companies this means hiring more attorneys or assigning more work to their own company lawyers.  For others it means flat fee arrangements or contingency fee agreements but usually some form of billing other than the billable hour model. 

Either way, the message is simple: legal work needs to be cost effective for both the lawyer/law firm and the client.  Undoubtedly, the future of the billable hour is becoming less certain and staying competitive in the legal marketplace will inevitably have to include more alternative billing arrangements.