http://www.backuslaw.com/ee/index.php/publications/ en kentyngrey@yahoo.com Copyright 2012 2012-01-03T07:22:43+00:00 http://www.backuslaw.com/ee/publications/details/no-new-exception-to-employment-at-will-doctrine-for-attempting-to-organize-/ http://www.backuslaw.com/ee/publications/details/no-new-exception-to-employment-at-will-doctrine-for-attempting-to-organize-/#When:07:22:43Z "No New Exception To Employment At-Will Doctrine For An Employee Terminated For Attempting To Organize Fellow Employees" The Nevada Supreme Court declined to recognize a new exception to the employment at-will doctrine in Ozawa v. Vision Airlines, Inc., 125 Nev. Adv. Op. 43 (Oct. 1, 2009). The simple identification of a public policy does not, by itself, create a recognizable exception to the general employment at-will doctrine in Nevada. Leland Ozawa was employed as a pilot for Vision Airlines. While he had been offered an opportunity to sign an employment agreement with Vision, he declined to do so and instead he chose part-time, at-will employment. During his employment, some of the pilots at the company became disgruntled over a requirement to attend training for which they would receive no compensation. Ozawa took a leadership role in preparing a responsive petition requesting additional compensation for attending any training. Shortly thereafter, Ozawa was asked by Vision Airlines director of human resources to bring his pilot manuals, company identification to the office. Although there was some dispute about how Ozawa stopped working at Vision Airlines, he did stop working there which gave rise to his claim of tortious discharge. Ozawa argued that the discharging an employee for organizing co-workers to collectively seek an increase in compensation violated Nevada public policy and thus should be considered an additional exception to the general employment at-will doctrine. He pointed to various statutes, including NRS 613.220, NRS 614.090 and the National Labor Relations Act, for support. He went on to argue that failing to protect the Nevada public policy will have a chilling effect on Nevada employees who might seek collectively to better their compensation or working conditions. Vision Airlines argued, and the Supreme Court agreed, that the exceptions should not be treated lightly. While true, that the high court had recognized exceptions to the doctrine over the years, the exceptions have been "severely limited to those rare and exceptional cases where the employer's conduct violates strong and compelling public policy." Sands Regent v. Valgardson, 105 Nev. 436, 440, 777 P.2d 898, 900 (1989) (declining to create and additional exception to the at-will employment doctrine for age discrimination). The mere identification of a public policy is not the entire analysis. D'Angelo v. Gardner, 107 Nev. 704, 719-20, 819 P. 2d 206, 216-17 (1991). The Supreme Court also discussed that it would not act to create a new exception for tortious discharge when plaintiff has an adequate, comprehensive and statutory remedy. Because Ozawa failed to avail himself of the remedy available, the Supreme Court declined to create a new exception to the at-will doctrine. Thus, the Nevada Supreme Court affirmed its employment at-will doctrine and again echoed prior holdings that it will not easily allow parties to chip away at it in order to create exceptions. If an employee has a full remedy available to him, he should take advantage of the remedy rather than to try to cobble a new exception to the general doctrine.   Employment Law 2012-01-03T07:22:43+00:00 http://www.backuslaw.com/ee/publications/details/health-care-professionals-can-testify-to-help-establish-compiance-with-the-/ http://www.backuslaw.com/ee/publications/details/health-care-professionals-can-testify-to-help-establish-compiance-with-the-/#When:03:54:05Z "Health Care Professionals Can Testify About Their "Habit" To Help Estabilsh Compliance With The Standard Of Care" Health care professionals often cannot recall specific patients who they treat on one or a few occasions.  This phenomenon is not indicative of their lack of bed side manner, but rather is the result of the high volume of patients some of these professionals see on any given day.  Whether it is a medical doctor, chiropractor or dentist, their busy practices often lead to blurring of visits. Unfortunately, after a lawsuit has been filed the details of these visits become of paramount importance to the defense of these professionals.  More often than not the lawsuits come many months, if not years, after the visit which further adds to the professionals’ inability to recall the encounter.  So how does a professional defend himself/herself from claims that the professional failed to follow the standard of care, when he/she cannot recall the patient, much less what he did for that patient?  Thankfully, the Nevada Supreme Court has recently confirmed that in these types of situations, a professional can testify as to his/her habit when faced with patients in similar situations.  In Thomas v. Hardwick, 126 Nev. 16, 231 P.3d 1111 (May 2010), the surviving spouse of a patient sued the medical doctor for malpractice.  Two weeks before his fatal heart attack, the patient went to the emergency room complaining of chest pains and sweatiness and was seen by the defendant doctor.  The doctor conducted an electrocardiogram and troponin tests by which he ruled out a recent heart attack but not cardiovascular disease as the cause of the patient’s symptoms.  The core question at trial was what did the doctor tell the patient when he saw him in the emergency room: 1) did the patient leave the hospital that day against medical advice, as maintained by the doctor; or 2) was the patient told he was “fit as a fiddle” and could safely leave, as maintained by the plaintiff? A copy of the patient's hospital chart, which was authenticated in discovery and used at trial, indicated that the patient left the emergency room against medical advice or “AMA.”  It contains an order by the doctor directing hospital staff to ask the patient to sign an AMA release, but no signed release was ever produced.  The doctor sees thousands of patients each year and could not recall the patient specifically, but based on his dictated chart notes and customary practice in treating chest pain patients, he testified at trial that he urged the patient to be admitted for observation and testing but he refused.  Not surprisingly, the patient’s wife disputed this evidence at trial claiming that she came to the emergency room with her husband and sat in on his conversations with the doctor.  She recalled the doctor saying that, while he normally urged chest pain patients to be admitted, her husband's preliminary test results were good enough for him to go home, so long as he followed up promptly with a private physician. A family member arrived as the patient was preparing to leave and recalled the patient saying, within earshot of the doctor who said nothing, that the doctor had told him he was lucky and could safely leave. Like many courts, the Nevada Supreme Court echoed that “[w]e are cautious in permitting the admission of habit or pattern-of-conduct evidence under [NRS 48.059 or its federal analogue] Rule 406 because it necessarily engenders the very real possibility that such evidence will be used to establish a party's propensity to act in conformity with its general character,” in violation of NRS 48.045, and may involve “collateral inquiries [that] threaten the orderly conduct of trial while potentially coloring the central inquiry and unfairly prejudicing the party against whom they are directed.”  Nonetheless, NRS 48.059(1) deems evidence of habit or routine relevant and admissible to prove an act in conformity with the habit or routine, provided an adequate foundation is laid.  It went on to note that “Courts in many jurisdictions have allowed evidence of a medical practitioner's routine practice as evidence relevant to what the practitioner did on a particular occasion.” With the blessing of the Nevada Supreme Court, professionals will be able to testify about their professional habit and routine when seeing patients under specific circumstances.  Certainly, the decision in the Hardwick case was helped by the fact that the doctor had noted in his chart that the patient declined admission against the advice of the treating physician.  Given this decision, it is always the best practice to document the chart completely.  That is even more important when faced with a patient who declines to follow the doctor’s advice.   Health Care Law 2011-09-06T03:54:05+00:00 http://www.backuslaw.com/ee/publications/details/nevada-supreme-court-clarifies-enforceability-of-restrictive-covenants-when/ http://www.backuslaw.com/ee/publications/details/nevada-supreme-court-clarifies-enforceability-of-restrictive-covenants-when/#When:21:41:36Z Tough economic climates often bring with them opportunities for companies to acquire competitors that can benefit their organization.  More often than not, the competitors have restrictive covenants with their employees that sought to protect the competitor and its proprietary interests.  At the time the restrictive covenants were signed, the agreement was between the employee and his then employer, and in some cases occurred many years before the anticipated acquisition.  After the competitor has been acquired, the employees normally decide whether to stay with the new company or leave for potentially greener pastures.  These decisions can occur at the time of the acquisition or some time thereafter.  In cases where the employee decides to leave, what does a departing employee owe the acquiring company?  Can the acquiring company enforce the restrictive covenants against the employee?  Does it matter whether the competitor was acquired by merger or an asset purchase transaction?  The Nevada Supreme Court has clarified the issue and announced that the answer is dependent on the transaction involved in acquiring the company. In HD Supply Facilities Maintenance, Ltd. v. Bymon , a successor corporation attempted to enforce a restrictive covenant that it acquired as part of a merger with a prior company against a former employee of the prior company and his current employer.  The case was filed in the United States District Court in the District of Nevada and the former employee moved to dismiss the action on the grounds that the restrictive covenant was unenforceable because he did not consent to assignment the restrictive covenant to the successor corporation.  The former employee relied on Traffic Control Services v. United Rentals  a Nevada Supreme Court decision that held that “absent an agreement negotiated at arm’s length, which explicitly permits assignment and which is supported by separate consideration, employee noncompetition covenants are not assignable.”  In that case, the company was acquired as part of an asset purchase transaction.   The Nevada Supreme Court in Traffic Controls did not differentiate between the different types of vehicles under which a company could be acquired.  Because of the different facts involved in the acquisition, the federal court in HD Supply certified the question to the Nevada Supreme Court for guidance as to whether its decision in Traffic Control would be the same if the acquisition was part of a merger rather than an asset purchase. The Nevada Supreme Court disagreed with the former employee and found that in the context of a merger, the successor corporation can enforce restrictive covenants against former employees without the requirement  of an arm’s length agreement to permit the assignment and separate consideration.  It based its distinction on the legal differences between an asset purchase and merger. The decision in Traffic Control was a narrow one based on the non-assignability rule grounded in the common law of contracts.  In essence, the Nevada Supreme Court reasoned that restrictive covenants are personal in nature.  That is they are personal to the employee since deciding whether to refrain from competition with an employer after termination is based on an individualized assessment of that particular employer’s character and personality.   And because replacing a former employer with another party in the covenant could fundamentally change the nature of an employee’s obligation, noncompetition covenants could not be assigned without employee consent.   By conditioning the assignability of the covenant on consent, the decision protects against unbargained for changes in the scope of the restraint, i.e. barring a covenanting employee from competing against his former employer.   As a protection under contract law, the rule logically applies to the contractual setting of an asset purchase transaction because in an asset purchase transaction the transaction introduces into the equation an entirely different entity (the acquiring business).   However, in a merger context, the surviving entity includes the prior employer with whom the employee entered into the restrictive covenant.  Thus the danger of an unbargained for change in the scope of restraint is not present.  As the HD Supply Court noted, Nevada has recognized the legal distinctions between mergers and asset purchases in different contexts.  Given these distinctions in other context, it is logical to continue the distinction in the setting of restrictive covenants.   The Traffic Control decision and subsequent HD Supply decision have significant ramifications in the arena of restrictive covenants and business acquisitions in Nevada.  Care should be taken both prospectively when entering into restrictive covenants and retrospectively by an acquiring company in an asset purchase setting.     First, any company/employer should insure that when entering into restrictive covenants with its employees, it provides for the potential sale of the company down the road.  The Traffic Control decision makes three requirements for the assignability of a restrictive covenant: 1) expressed consent by the employee; 2) an express assignability clause be negotiated; and 3) separate consideration for the assignment.   Even if there is no intention to sell the company at the time of the covenants, it is best to comply with the requirements in case the economic climate changes.  Second, no harm will come if the above requirements are followed and the company with whom the covenants have been entered later opts to merge with another.  As held in HD Supply, the surviving entity will be able to enforce the restrictive covenants against the employees as the employer with whom the covenants were entered into, in effect, is part of the new company.  Finally, an acquiring company should insure that when negotiating an asset purchase of a competitor, any restrictive covenants entered into with employees meet the requirements that will allow the selling company to assign the covenants.  Without such efforts, it may negotiate for covenants that it will not be able to enforce. Business Law, Employment Law 2010-10-14T21:41:36+00:00 http://www.backuslaw.com/ee/publications/details/the-cumulative-impact-claim-where-do-we-stand-in-2010-defense-counsel-journ/ http://www.backuslaw.com/ee/publications/details/the-cumulative-impact-claim-where-do-we-stand-in-2010-defense-counsel-journ/#When:15:47:48Z Article Summary / Conclusion (downlad full article as a PDF file) Cumulative impact is the disruption that happens between multiple change orders and basic work, but does not include local disruption directly attributable to a specific change order. A cumulative impact claim does not logically have to amount to a cardinal change in the contract, it is the aftermath of the inability of the contractor to accurately foresee or account for all impact costs resulting from the multiplicity of change orders, not the result of a change in the purpose of the project.Nevertheless, courts have often confused cumulative impact claims with cardinal change claims. In evaluating cumulative impact, courts will be inclined to focus on waiver and reservation language in the change orders to resolve these disputes, and may be swayed by the arguments of owners that other factors (not cumulative impact) caused the reduction in productivity.Practitioners bringing cumulative impact claims must be prepared to rebut arguments based on accord and satisfaction, as well as arguments on causation. To support their estimates of loss and causation, they should use experts that have the background and knowledge to support opinions that are testable and based upon methodologies that are generally accepted in the construction industry. Construction Law 2010-04-14T15:47:48+00:00 http://www.backuslaw.com/ee/publications/details/nevada-indemnity-and-additional-insured-endorsement-law/ http://www.backuslaw.com/ee/publications/details/nevada-indemnity-and-additional-insured-endorsement-law/#When:11:39:12Z NEVADA Common Law Indemnity in Nevada             Noncontractual Indemnity In Nevada, the law of indemnity is based upon the common law and contract law.  Nevada has not followed the trend in many states to legislate against various forms of risk transfer via indemnification clauses.[1] [2] Under most claim analysis, we are confronting parties who have no contractual relationship and thus are looking at the equitable remedy of noncontractual or implied indemnity which permits a defendant to seek recovery from other potential tortfeasors whose negligence or wrongdoing caused the injured party’s harm.  Doctors Company v. Vincent, 120 Nev. 644, 650, 98 P.3d 681, 686 (2004).  Nevada courts impose a right of noncontractual indemnity when the indemnitee has been required to pay damages caused by a third party, the indemnitor.  Rodriguez v. Primaddona Company, LLC, ___ Nev. ___, 216 P.3d 793, 801 (2009); Black & Decker v. Essex Group, 105 Nev. 344, 345, 775 P.2d 698, 699 (1989)(“when one party is subject to liability, which, as between that party and another, the other should bear, the first party is entitled to full indemnity.”)  Nevada adopts the concept that noncontractual indemnity is appropriate when there is an unfairness which resulted when one party, who did nothing wrong, is held liable for the loss of the plaintiff or claimant which was caused by another party.  Id. Passive negligence does not establish active wrongdoing for purposes of equitable indemnity.   Doctors Company, 120 Nev. at 654, 98 P.3d at 688.  “’The right of indemnity rests upon a difference between the primary [active] and the secondary [passive] liability of two persons, each of whom is made responsible by the law to an injured party.’  The difference between primary and secondary liability depends on a difference in the character or kind of wrongs that cause the injury and in the nature of the legal obligation owed by each of the wrongdoers to the injured person.”  Doctors Company, 120 Nev. at 654, 98 P.3d at 687 – 688 citing Black & Decker v. Essex Group, 105 Nev. 344, 345, 775 P.2d 698, 699 (1989) (quoting Tromza v. Tecumseh Products Company, 378 F.2d 601, 605 (3d Cir.1967)). This noncontractual indemnity remedy is available when the defendant has extinguished its own liability through settlement or judgment.  Doctors Company, 120 Nev. at 651, 98 P.3d at 686.  The elements of proof for one seeking equitable indemnity are: (1)   Indemnitee has discharged a legal obligation owed to a third party; (2)  The party from whom it seeks liability also was liable to the third party; and (3)  As between the claimant and the party from whom it seeks indemnity, the obligation ought to be discharged by the latter.[3] Furthermore, Nevada courts do not permit parties to proceed against just any other party for equitable indemnity.  There must be some nexus or special relationship between the indemnitee and indemnitor.  Rodriguez, 216 P.3d at 802 [“We adopted the warning found in Pender v. Skillcraft Industries, Inc., 358 So.2d 45, 47 (Fla.Dist.Ct.App.1978), that implied indemnification ‘should not be construed as permission to open a floodgate for cross-claims seeking indemnification where there is no connection between the cross-claimant and the party from whom indemnification is sought.’  Piedmont Equip. Co., 99 Nev. at 527-28, 665 P.2d at 259 (quoting Pender, 358 So.2d at 47).] When a matter is settled in good faith, NRS 17.245 insulates the settling party from both claims for contribution and equitable indemnity.  However, when a court in Nevada is determining whether a settlement is made in good faith for purposes of a discharge from further liability, the relative culpability of the parties to an implied indemnity action is something the court should consider in making its good faith determination.  Doctors Company, 120 Nev. at 655, 98 P.3d at 688.  In pertinent part, NRS 17.245 states:       1.  When a release or a covenant not to sue or not to enforce judgment is given in good faith to one of two or more persons liable in tort for the same injury or the same wrongful death:       (b) It discharges the tortfeasor to whom it is given from all liability for contribution and for equitable indemnity to any other tortfeasor.       2.  As used in this section, “equitable indemnity” means a right of indemnity that is created by the court rather than expressly provided for in a written agreement.               Contractual Indemnity Contractual indemnity arises when two parties in a contract agree that one will reimburse the other for liability resulting from the former’s work.  Medallion Dev. v. Converse Consultants, 113 Nev. 27, 33, 930 P.2d 115, 119 (1997), superseded by statute on other grounds as stated in Doctors Company v. Vincent, 120 Nev. 644, 654, 98 P.3d 681, 688 (2004).  Nevada in an unpublished decision has followed California law in holding that the “scope of a contractual indemnity clause is determined by the contract and not ‘the independent doctrine of equitable indemnity.’   Rossmoor Sanitation, Inc. v. Pylon, Inc., 532 P.2d 97, 100 (Cal.1975).”  Valucar v. Coachmen Recreational Vehicle Company, 2009 WL 3191715 (Nev. 2009) (Unpublished slip copy, may not be cited for legal precedent SCR 123). In workman’s compensation matters, the State Industrial Insurance Act, NRS 616.265 voids any indemnity provision that changes or modifies a liability created by the Act.  Corrao Const. Co., Inc. v. Curtis, 94 Nev. 569, 571, 584 P.2d 1303 (1978).  However, an employer is liable in a third-party indemnity action when an express indemnity contract exists between an employer and a third-party.  American Federal Saving Bank v. Washoe County, 106 Nev. 869, 802 P.2d 1270 (1990).  In fact, in implied contractual indemnity cases, the employer may have liability.  In Nevada Power v. Haggerty, the Nevada Supreme Court implicitly indicated that where there is an independent duty owed by the employer to a third-party, such as with Nevada’s overhead power line statutes (NRS 455.200, et. seq.), there could be implied contractual indemnity.  See NEVADA POWER CO. v. HAGGERTY: THE NEVADA SUPREME COURT'S EXPANSION OF THE INDEPENDENT DUTY DOCTRINE, Sharon Steen, 1 N.L.J. 289 (2001). Implied contractual indemnity are governed by the same principles as those that govern noncontractual or equitable indemnity.  Medallion Dev. v. Converse Consultants, 113 Nev. 27, 33, 930 P.2d 115, 119 (1997), superseded by statute on other grounds as stated in Doctors Company v. Vincent, 120 Nev. 644, 654, 98 P.3d 681, 688 (2004).  Thus, the line of cases discussing equitable indemnity are applicable to implied contractual indemnity.  See Black & Decker v. Essex Group, 105 Nev. 344, 775 P.2d 698 (1989); Reid v. Royal Insurance Co., 80 Nev. 137, 390 P.2d 45 (1964) and Piedmont Equip. Co. v. Eberhard Mfg., 99 Nev. 523, 528, 665 P.2d 256, 259 (1983).  It is unclear whether claims of implied contractual indemnity are discharged with a good faith settlement.  See Insurance Company of the West v. Gibson Tile Company, Inc., 122 Nev. 455, 466, 134 P.3d 698, 704 - 705 (2006)(Stating that “a good-faith settlement only immunizes the settling party from claims of contribution and noncontractual, i.e., implied, indemnity.”) In Calloway v. City of Reno, 113 Nev. 564, 578, 939 P.2d 1020, 1029 (1997), implied indemnity theories were held not to be viable when the parties had entered into an express indemnity agreement.  Thus, the Calloway court concluded that “[w]hen parties affirmatively deal with the question of indemnity in a written contract, it is fair to conclude that they intended what was expressed in their agreement, not that some common law rule should govern their rights and liabilities. Booth-Kelly Lumber Co. v. Southern Pacific Co., 183 F.2d 902, 906-07 (9th Cir.1950).” Additional Insured Issues in Nevada             In the world of contractual risk transfer, drafters of contracts must be vigilant regarding requiring additional insured endorsements.  When an indemnity provision in Nevada exceeds what the law permits or does not meet the Court’s “clear and unequivocal” standard of review, an indemnity clause could be held unenforceable.  Accordingly indemnitees will usually as a back-up require they be made additional insureds under the indemnitor’s liability policies. For the last several decades, “additional insured coverage” has become a significant tool for controlling liability insurance costs on large commercial ventures, particularly in the construction industry setting.  This additional insured coverage also has significance in the commercial real estate lease arena and is utilized extensively in retail establishments.  Additional insured coverage is accomplished through the attachment of a standard endorsement to a commercial general liability (“CGL”) policy.  The Insurance Services Office (“ISO”) has created over the years standard form additional insured endorsements.  Essentially all additional insured (“AI”) coverage endorsements have the same basic coverage grant extending coverage for the additional insureds’ liability arising out of (1) the named insured’s operations, (2) premises leased to the named insured, or (3) the named insured’s product sold in the regular course of the additional insured’s business. Needless to say maintaining additional insured coverage has become an integral part of construction risk management.  Additional insured coverage means that a general contractor or developer can be insured under a subcontractor’s liability policy and this type of coverage can eliminate or reduce the general contractor’s or developer’s “out-of-pocket” expenses for third-party claims.  It may also have the salutary effect of reducing premiums when the general contractor’s or developer’s own insurer appreciates that additional insured endorsements have been secured. While additional insured endorsements have a great deal of variety in their drafting, as a general rule an additional insured is an insured like any other insured and is entitled to a defense and indemnity from the insurer according to the terms and conditions of the policy issued to the subcontractor.  Courts have confirmed the difficult duties of good faith and fair dealing between insurers issuing AI endorsements and those additional insureds. Pragmatically, as often seen in complex constructional defect litigation, the AI carriers don’t really stand up to the plate initially in providing a defense through their own selected defense counsel.  Instead, they sit on the sidelines allowing the general contractor/developer CGL carriers to carry out the defense and then through separate AI counsel negotiate how much they will contribute to defense costs at or near the end of the litigation. Additional Insured Status One of the hottest areas of litigation is in the world of construction defect claims where additional insured endorsements have been issued.  Real estate developers and general contractors require their subcontractors to be covered by a policy of comprehensive, commercial general liability insurance.  The subcontract normally requires the subcontractor to obtain an additional insured endorsement naming the developer or general contractor as an insured on the subcontractor’s CGL policy. Through a “blanket” endorsement or specific additional insured endorsement, the developer or general contractor is provided coverage under the pertinent policy by being added as either a “named insured” or an “insured.” Developers and general contractors can be exposed to significantly large claims in construction defect litigation for property damage and/or bodily injury claims.  The general contractor or developer finds itself in this predicament even though it is only passively at fault and did nothing actively to contribute to the injury.  In fact in some states like California, developers find themselves in a situation where they can be held strictly liable for construction defects caused by the acts or omissions of their subcontractors.[4]  From a risk transfer management basis, the general contractor’s risk could be transferred by means of an indemnity clause in the subcontract agreement.  But as the prior section demonstrates, the indemnity tool has proved to be imperfect.  Courts and legislatures tend to be unfavorably disposed to indemnification agreements due to unequal bargaining positions and the fact there is a disincentive for the indemnitee to be vigilant in work-place safety.  Due to the anti-indemnity sentiment there have been enacted in 41 states some form of an anti-indemnity statute.  Furthermore, various courts have imposed rules of strict construction against indemnification for an indemnitee’s own negligence.[5]  Strict construction is followed everywhere but in Alaska, Massachusetts, Nevada, New Hampshire and Virginia.[6]  Additionally, even if the general contractor/developer has a strong indemnity agreement and even if it is covered by the CGL policy of the subcontractor, the indemnitee has no direct rights in that subcontractor/indemnitor’s policy.  The general contractor/developer is not an insured, simply a claimant.  The general contractor/developer is required to first go to court to obtain a judgment against the indemnitor before he can go after the insurance coverage.[7] The most common AI endorsement form is issued by Insurance Services Office (“ISO”) form CG 20 10.  The basic form that came about in 1985 is CG 20 10 11 85.  This CG 20 10 11 85 due to the manner in which it has been interpreted is often called out for in contract provisions to render a general contractor or developer as an additional insured under a subcontractor’s liability insurance policy.  That CG 20 10 11 85 endorsement states: WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown in the Schedule, but only with respect to liability arising out of “your work” for that insured by or for you.  This type of coverage which is written on an occurrence basis in the CGL policy provides the general contractor or developer with liability coverage for the work of the subcontractors.[8]  The last dependent clause in the above section starting with “but only” has been construed to disallow the additional insured from securing blanket coverage under the subcontractor’s liability policy for liability that is not related to the subcontractor’s work on the project in question.[9] The best aspect of CG 20 10 11 85 was the fact that it provided coverage for completed operations.  However, the 1993 version of the ISO CG 20 10 endorsement limited the coverage to “ongoing operations” of the subcontractor and that language has been interpreted as excluding coverage for completed operations since the issuance of that endorsement form.[10] In Jaynes Corporation v. Zurich American Ins. Co., 2007 WL 2141611 (C.A. 9(Nev.))(Slip Copy), in determining the obligations of the parties under an AI endorsement, the Court required Zurich to indemnify and defend Jaynes for Jayne’s own negligence.  This endorsement contained a provision that Jaynes would be an additional insured “only with respect to liability arising out of [Las Vegas Electric’s} ongoing operations performed for that insured.”  Id. at p. 2.  The Court found the operations were still ongoing and thus Jaynes remained covered an additional insured. Another form used by ISO is CG 20 09 11 85 which is an endorsement supposedly used when contractual liability coverage is not being provided to the named insured.  This widely used additional insured endorsement CG 20 09 11 85 excludes coverage for completed operations as stated as follows: This insurance does not apply to: (2)   “Bodily injury” or “property damage” occurring after: (a)   all work on the project (other than service, maintenance or repairs) to be performed by or on behalf of the additional insured(s) at the site of the covered operations has been completed; or (b)   that portion of “your work” out of which the injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as part of the same project. As earlier stated, additional insurers providing AI coverage for their insureds rarely step up to the plate in construction litigation and provide an immediate defense and indemnification to the claims against the general contractor/developer.  Normal practice is for the primary carrier for the general contractor/developer to undertake the defense of the litigation and then those primary carriers make additional insured claims and secondarily negotiate with additional insurers to collect as a manner of reimbursement defense costs and indemnity costs.  Coverage Issues Raised by Additional Insured Endorsement Additional coverage issues raised by the 1985 CG 20 10 Additional Insured Endorsement draws questions of (1) what did “arising out of” mean,  (2) whether the additional insured could be covered for its own negligence, and (3) whether the additional insured was covered only when the named insured was negligent. Interpretation of “arising out of” in CG 20 10. The majority of courts give very broad meaning to the phrase “arising out of.”[11] A few Federal Courts of Appeals have utilized an intermediate standard of causation to the language “arising out of.”[12] Presently, several states have adopted an intermediate standard as well.[13] In cases where the injured plaintiff is suing the additional insured and the injured plaintiff is an employee of the named insured, the courts consider this “arising out of” the work.[14] Courts also broadly construed the term “arising out of” to extend coverage to an additional insured where the work being performed by the subcontractor is not actually done by the subcontractor’s employee but someone else doing the work for the subcontractor.[15] In Federal Ins. v. Am. Hardware Mut. Ins., 184 P.3d 390 (Nev. 2008), the Nevada Supreme Court held that an AI endorsement providing coverage for claims “arising out of (the named policyholder’s) operations” did provide coverage for a lawsuit wherein an employee of the policyholder sued the additional insured for negligence in the maintenance of a warehouse and the employee was injured while performing repair services on a conveyor belt.  Ambiguity in this AI endorsement as to whether the additional insured was only covered for its vicarious liability arising from named insured’s negligent acts or whether additional insured was covered for its own independent negligence required the AI endorsement to be construed in favor of providing coverage for the additional insured’s own negligence that resulted in injury to the named insured’s employee who was working on the additional insured’s premises. What is noteworthy in this Nevada Supreme Court decision liberally construing an AI endorsement is not only did the Court use the common rule of contra proferentum (rule of construction commonly used in insurance contracts construing ambiguities against the insurance company that drafted the policy), but also stated that it would adopt a broad view that AI endorsement should favor coverage unless there was explicit limiting language. Construction Law, Insurance Law 2010-02-22T11:39:12+00:00 http://www.backuslaw.com/ee/publications/details/how-the-cumulative-impact-claim-may-affect-your-company/ http://www.backuslaw.com/ee/publications/details/how-the-cumulative-impact-claim-may-affect-your-company/#When:19:22:58Z When multiple Change Orders negatively impact a construction project, particularly a larger, complex one, such as a stadium, mall or hotel gambling complex, the builder may claim damage resulting from ‘cumulative impact.’ According to a recent article written by Gene Backus, partner at Backus • Carranza, “…The cumulative impact claim is the aftermath of the inability of the contractor to accurately account for all impact costs resulting from the multiplicity of change orders.  In other words, the multiple changes that produce the unforeseeable synergistic effect leading to a cumulative impact claim may or may not be changes that alter the fundamental nature of the contract.”What are the latest decisions with regards to Cumulative Impact and how might they affect your business in 2010? In one case – L.K. Comstock & Company, Inc. v. Becon Construction Company, Inc. – according to Backus, “The difference between the analysis of the cumulative impact claim and the cardinal change breach is what is being examined.  A cardinal change is one that alters the scope of performance so much, that it is beyond the original contemplated scope of work.A contractor must be ready to show the court or board that the change order procedure, as described within the original agreement, fell short of the cumulative impacts a number of change orders might necessitate. If he is to establish a cumulative impact claim that will hold water, he’ll have to be ready to convince listeners that there was no way to anticipate how these changes would play out, in advance. “So where are we in 2010?” asks Backus. “This author/presenter is of the opinion that a cardinal change is an inappropriate requirement in any cumulative impact claim. Proof of a fundamental alteration of the contract may be an additional theory of recover allowing the contractor another route to recovery, but should not be a predicate for recovery under a cumulative impact claim.  Certainly, if the owner has so fundamentally altered the contract that the contractor is entitled to claim a breach of contract, the contractor should be able to recover impact damages under a quantum meruit or modified total cost methodology.”In the course of the article, Backus shares extensive background and history of different cases and instances involving cumulative impact claims. The reader grows to understand the magnitude and importance of an attorney doing his homework in order to properly represent a contractor in such a case. As Backus says, “Cumulative impact experts must be prepared to have the background and knowledge to support opinions that are testable and based upon methodology that is generally accepted in the construction industry.”Clearly, a qualified expert in this field may be hard to find; but could be of almost inestimable value in convincing a judge or board. Construction Law 2009-12-29T19:22:58+00:00 http://www.backuslaw.com/ee/publications/details/age-discrimination-in-adea/ http://www.backuslaw.com/ee/publications/details/age-discrimination-in-adea/#When:22:59:41Z In General Dynamics Land Systems, Inc. v. Dennis Cline, 2004 WL 329956, the United States Supreme Court recently clarified a long-standing dispute surrounding the applicability of the protection provided by the Age Discrimination in Employment Act (ADEA) of 1967, 29 USC §621, et seq. The Court held that the Age Discrimination in Employment Act (ADEA) was not intended to protect younger employees over 40 from being treated differently than older employees over 40.In 1997, a collective bargaining agreement between General Dynamics and the United Auto Workers eliminated the General Dynamics' obligation to provide health benefits to subsequently retired employees, except as to then-current employees at least 50 years old. The Age Discrimination in Employment Act (ADEA) applies to employees and workers over the age of 40. Thus Dennis Cline and other General Dynamics employees between the ages of 40 and 50, filed suit under the Age Discrimination Act (ADEA).The Age Discrimination in Employment Act (ADEA) forbids discrimination against "any individual … because of such individual's age." The Equal Employment Opportunity Commission (EEOC) filed an amicus brief outlining their position that the provision "because of such individual's age" required protection of younger employees over 40 from being treated differently than older employees over 40. The United States Supreme Court disagreed.The Supreme Court outlined that to uphold the EEOC's interpretation would help the younger by hurting the older. The Court pointed out that in passing the Age Discrimination in Employment Act (ADEA) Congress clearly intended to protect the older employees, not the younger employees. "Social history emphatically reveals an understanding of age discrimination as aimed against the old, and the statutory reference to age discrimination in this idiomatic sense is confirmed by legislative history."The Court cited that the statutory objects are "to promote employment for older persons based on their ability rather than age; to prohibit arbitrary age discrimination in employment; [and] to help employers and workers find ways of meeting problems arising from the impact of age on employment." The Court concluded that the "prefatory provisions and their legislative history make a case that we think is beyond reasonable doubt, that the ADEA was concerned to protect a relatively old worker from discrimination that works to the advantage of the relatively young."For more information regarding the federal Age Discrimination in Employment Act (ADEA) or Nevada's comparable state age discrimination statutes, please contact Edgar Carranza. Employment Law 2009-12-02T22:59:41+00:00 http://www.backuslaw.com/ee/publications/details/male-on-male-and-female-on-female/ http://www.backuslaw.com/ee/publications/details/male-on-male-and-female-on-female/#When:22:58:26Z Generally, sexual harassment is a component of discrimination based on sex. The origin of the hostile environment sexual harassment claim can be traced back to Meritor Savings Bank v. Vinson, 477 U.S. 57, 106 S.Ct. 2399 (1986). A prima facie case of hostile environment sexual harassment requires a showing of: 1) unwelcome conduct; 2) on the basis of the complainant’s sex; 3) that affects a term or condition of employment; 4) for which the employer may be held responsible. Henson v. City of Dundee, 682 F.2d 897 (11th Cir. 1982). The EEOC defines hostile environment as “nwelcome, sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when . . . such conduct has the purpose or affect of unreasonably interfering with an individual’s work performance or creating an intimidating, hostile, or offensive working environment.” 29 CFR § 1604.11(a) (1995).While most commonly, the perpetrator and victim in a sexual harassment case are of different genders, that does not mean that the federal and state statutes will turn a blind eye to cases where victim and harasser are of the same gender. In Nevada, the state employment discrimination statute does include “sexual orientation” as a protected class. NRS 613.330(1). This dictates that same sex harassment would be a viable claim in state court cases even if the harasser and victim are of the same gender so long as the harassment is based on the victim’s “sexual orientation.” Thus a group of males harassing another male employee because of his sexual orientation, the victim/male employee could bring a claim under the Nevada state statutes.But what about cases brought under the federal statute which does not include “sexual orientation” as a protected class? The federal statute does not similarly include “sexual orientation” as a protected class. Does this mean that same sex harassment is permissible under the federal legislation? In Oncale v. Sundowner Offshore Services, Inc., 523 U.S. 75, 76, 118 S.Ct. 998, 140 L.Ed.2d 201 (1998), the Supreme Court of United States considered “whether workplace harassment can violate Title VII's prohibition against "discriminat[ion] ... because of ... sex," when the harasser and the harassed employee are of the same sex.” (Internal citations omitted).In Oncale, plaintiff, a male employee, was employed on an oil platform in the Gulf of Mexico on an 8 man crew. During his employment, plaintiff was verbally abused, threatened with physical rape and had been physically assaulted. Id. at 77. The Louisiana federal court granted summary judgment against plaintiff holding that plaintiff had no cause of action under Title VII for harassment by male co-workers. That is, that male on male sexual harassment was not a viable claim under Title VII. The United States Supreme Court disagreed. Writing for the Supreme Court, Justice Anthony Scalia noted that,“courts and juries have found the inference of discrimination easy to draw in most male-female sexual harassment situations, because the challenged conduct typically involves explicit or implicit proposals of sexual activity. . . but harassing conduct need not be motivated by sexual desire to support an inference of discrimination on the basis of sex. A trier of fact might reasonably find such discrimination, for example, if a female victim is harassed in such sex-specific and derogatory terms by another woman as to make it clear that the harasser is motivated by general hostility to the presence of women in the workplace. A same-sex harassment plaintiff may also, of course, offer direct comparative evidence about how the alleged harasser treated members of both sexes in a mixed-sex workplace. Whatever evidentiary route the plaintiff chooses to follow, he or she must always prove that the conduct at issue was not merely tinged with offensive sexual connotations, but actually constituted discrimina[tion] ... because of ... sex." Id. at 80-81. (Internal quotations omitted).Thus, the prohibition of harassment on the basis of sex does not mean that the conduct is not replete with sexual overtones. But rather is “because of . . . [the victim’s] sex.” The decision means that whether male on male or male on female, if the basis of the harassing conduct is the victim’s sex, the claim is viable under Title VII.Although Oncale did make actionable same-sex hostile environment, it is important to note that it did not extend the protections of the federal statute on the basis of “sexual orientation.” This is till a significant difference between the state and federal statutes. If the harassment is based on an employee/victim’s sexual orientation, Title VII does not provide that employee with any cause of action.For more information regarding sexual harassment or Nevada’s comparable sexual discrimination statutes, please contact Edgar Carranza. Employment Law 2009-12-02T22:58:26+00:00 http://www.backuslaw.com/ee/publications/details/employment-retaliation-standards/ http://www.backuslaw.com/ee/publications/details/employment-retaliation-standards/#When:22:57:23Z For years employers have debated the extent to which one can rightfully make personnel decisions that affect an employee who has previously been engaged in some protected activity without it being deemed employment retaliation. In Burlington Northern & Santa Fe Railway, Co. v. White, 126 S.Ct. 2405, 548 U.S. ___ (2006), the United States Supreme Court has attempted to clarify the issue and provide some guidance to employers and practitioners alike by setting a “reasonable employee” standard.In Burlington, the female employee plaintiff worked as a track laborer for defendant. Her position involved manual labor, primarily consisting of operating a forklift. Plaintiff complained to officials in September 1997 that her immediate supervisor repeatedly told her that women should not be working in the railroad’s Maintenance of Way department and other inappropriate remarks. The supervisor was disciplined as a result of the complaint. Later that month, plaintiff’s forklift duties were removed based on alleged seniority reasons. As a result, she was assigned to perform more laborious and basic track laborer functions.In October 1997, plaintiff filed a charge of discrimination with the EEOC alleging gender discrimination and retaliation. A few days after notice of the charge was sent to the employer, plaintiff was suspended without pay for alleged insubordination. She later filed an additional charge for retaliation based on the disciplinary suspension.An internal investigation eventually returned plaintiff to her former position, with the former duties, and back pay. Nonetheless, the lawsuit was initiated. At the time of the lawsuit, there was a split between the different circuit courts regarding what would constitute retaliation. Some circuits allowed a more liberal standard that any conduct which affected the general terms and conditions of employment would suffice, while other circuits used the ultimate employment decision standard (i.e. termination). Eventually this case found its way to the United States Supreme Court.The Court adopted a more middle of the road standard concluding that the anti-retaliation provision of Title VII “does not confine the actions and harms it forbids to those that are related to employment or can occur at the workplace,” rather the provision “covers those (and only those) employer actions that would have been materially adverse to a reasonable employee or job applicant.” The Court spoke of material adversity because it believed there to be an important distinction between significant harms versus trivial harms. “Title VII, we have said, does not set forth a general civility code for the American workplace. We refer to reactions of a reasonable employee because we believe that the provision’s standard for judging harm must be objective.”While it is unclear what affect the Burlington decision will have on the employment setting, what is clear is that employers have a little more guidance in what the courts will consider actionable retaliation. This may help stem the flood of charges filed with the EEOC or the Nevada Equal Rights Commission (“NERC”) if the retaliation complained of is trivial in nature. On the other hand, it may also result in additional charges being filed from employees who believed the retaliatory conduct had to rise to the level of suspension or termination. Employment Law 2009-12-02T22:57:23+00:00 http://www.backuslaw.com/ee/publications/details/employers-can-be-sued/ http://www.backuslaw.com/ee/publications/details/employers-can-be-sued/#When:22:56:11Z Employers are often under the misconception that if an employee complains about a perceived discriminatory action or harassment, which turns out to be baseless, their subsequent conduct with respect to that employee will only be considered retaliation if they the employee is demoted, suspended or otherwise unfairly disciplined. While several courts have addressed the issue of retaliatory harassment/hostile environment, a recent decision out of the 1st Circuit, articulates why these hostile environment claims are viable in addition to actual retaliatory actions and independent of whether the underlying claims are supportable.In Noviello v. City of Boston, No. 04-1719 (Feb. 16, 2005) a city employee complained about perceived incidents of sexual harassment. The employee alleged that after her complaints, she was not suspended, demoted or suffered some other form of adverse employment decision, rather that was subjected to repeated incidents of hostile behavior by her co-workers. The city employee sued for the retaliation under Title VII arguing that the hostile environment in her workplace created after the underlying complaints constituted retaliatory harassment. The First Circuit agreed outlining that “[e]ven when retaliation is derivative of a particular act of harassment, it normally does not stem from the same animus. Most often, retaliation is a distinct and independent act of discrimination, motivated by a discrete intention to punish a person who has rocked the boat by complaining about an unlawful employment practice. … That is a different animus than the sexual animus that drove the original harassment.” The court went on to explain that “[w]e .. hold explicitly that a hostile work environment, tolerated by the employer, is cognizable as retaliatory adverse employment action for purposes of [Title VII]. This means that workplace harassment, if sufficiently severe or pervasive, may in and of itself constitute an adverse employment action sufficient to satisfy the second prong of the prima facie case for Title VII retaliation cases. … [T]he verb ‘discriminate,’ as used in [Title VII], logically includes subjecting a person to a hostile work environment.”Following and even during any type of Title VII investigation, an employer should counsel its employees not to treat a complaining employee differently because of his/her complaints. The employees should be made to understand that complaints of discrimination or harassment are encouraged and make the work place better for all employees. The employers should be vigilant of any hostile environment that may have been created as a result of the Title VII investigation or may be growing following the Title VII investigation and move quickly to correct it. Employment Law 2009-12-02T22:56:11+00:00