http://www.backuslaw.com/ee/index.php/blog/ en gbackus@backuslaw.com Copyright 2012 2012-01-13T00:08:43+00:00 http://www.backuslaw.com/ee/blog/comments/2012-top-rated-lawyers-guide-to-healthcare-law/ http://www.backuslaw.com/ee/blog/comments/2012-top-rated-lawyers-guide-to-healthcare-law/#When:00:08:43Z Gene Backus Selected at Top Rated Healthcare Lawyer for 2012 Mr. Backus was recently selected to appear in Corporate Counsel's 2012 Top Rated Lawyers Guide to Healthcare Law.  He will be featured on corpcounsel.com this year and his selection and biography will be distributed to the General Counsel at Fortune 1000  and the Lawfirm CIO and CTO Forum.    The firm is proud to have this distinction bestowed upon its senior shareholder. 2012-01-13T00:08:43+00:00 http://www.backuslaw.com/ee/blog/comments/national-business-institute-seminar/ http://www.backuslaw.com/ee/blog/comments/national-business-institute-seminar/#When:00:02:53Z Gene Backus conducted an national telephonic seminar with West Education Law Center and National Business Institute on January 12, 2012.  The program was a 1 1/2 hour presentation titled Winning the Case at Summary Judgment:  Litigation Tips fo Submissions and Hearing Tactics.  Mr. Backus brought his years of experience in successful motion practice to the program and it was well received by approximately 78 attendees. 2012-01-13T00:02:53+00:00 http://www.backuslaw.com/ee/blog/comments/dris-voice-mentions-backus-carranza-burden-victory/ http://www.backuslaw.com/ee/blog/comments/dris-voice-mentions-backus-carranza-burden-victory/#When:04:47:58Z The “Voice of the Defense Bar,” an online publication of DRI -- the international membership organization of lawyers involved in the defense of civil litigation – published news of one of our recent victories in its February 2, 2011 edition. The Voice reported on partners Leland Eugene Backus  and Jack P. Burden having received a defense verdict on behalf of two chiropractic physicians in the case of Patricia Rushing v. Larry Holt D.C., et al. For additional details please visit this link - http://clients.criticalimpact.com/newsletter/newslettercontentshow1.cfm?contentid=3610&id=539#3610 nevada-health-care 2011-02-09T04:47:58+00:00 http://www.backuslaw.com/ee/blog/comments/nevada-supprem-court-clarifies-enforcability-of-restrictive-covenants-when-/ http://www.backuslaw.com/ee/blog/comments/nevada-supprem-court-clarifies-enforcability-of-restrictive-covenants-when-/#When:21:10:19Z 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. nevada-business-law, nevada-employment-law 2010-10-14T21:10:19+00:00 http://www.backuslaw.com/ee/blog/comments/nevada-suppreme-court-rejects-dram-shop-liability-involving-minor-patron/ http://www.backuslaw.com/ee/blog/comments/nevada-suppreme-court-rejects-dram-shop-liability-involving-minor-patron/#When:18:51:11Z In the case of Martin Rodriguez v. The Primadonna Company, LLC,  125 Nev., Advance Opinion 45   the  Nevada Supreme Court recently affirmed the Eighth Judicial District Court’s summary judgment in favor of Primadonna Company regarding Plaintiff’s claim for negligent eviction of an intoxicated  minor patron and upheld Nevada’s long standing rejection of dram shop liability.   On March 6, 2005, Fabian Santiago, 17 years old, and his two adult step-uncles Manuel and Daniel Garibay, checked into Defendant’s hotel and spent the evening gambling and drinking alcohol.  Later that evening, all three men were asked to leave Defendant’s property as a result of several altercations with hotel guests.   The men intended to sleep off their intoxication in the vehicle, however, Manuel Garibay felt sober enough to drive once he sat in the driver’s seat.  The facts also indicate that Defendant’s security personnel knocked on the car window and told the men they must leave the property.  As the men drove off Defendant’s parking lot at a high rate of speed, they lost control of the vehicle causing it to roll.  The accident caused severe and permanent injuries to Fabian Santiago.   Fabian’s Santiago’s guardian brought suit in Clark County District Court alleging that the hotel acted negligently when it evicted the minor and his step-uncles from the property and by doing so, it direcd Fabian Santiago to be a passenger in a motorized vehicle driven by an intoxicated driver. The Nevada Supreme Court affirmed the District Court’s summary judgment finding that Defendant’s security guards acted reasonably as a matter of law when they evicted the intoxicated minor patron. The Court further affirmed Nevada’s long standing rejection of dram shop liability by holding that commercial liquor vendors, including hotel proprietors do not have an affirmative duty to prevent injury to an intoxicated patron subsequent to an eviction and cannot be held liable for damages related to any injuries caused by the intoxicated patron or third party.                                                                                                                  By Jack P. Burden, Esq. nevada-premises-liability 2010-05-27T18:51:11+00:00 http://www.backuslaw.com/ee/blog/comments/new-and-differing-statutes-of-limitation-for-equitable-indemnity-and-contri/ http://www.backuslaw.com/ee/blog/comments/new-and-differing-statutes-of-limitation-for-equitable-indemnity-and-contri/#When:13:46:46Z Equitable Indemnity and contribution are two common causes of action available to a defendant seeking recovery against a co-defendant/third-party defendant which owed no duty to defendant or with which no privity of contract existed.   A claim for contribution (governed by N.R.S. 17.225) allows a tortfeasor who has paid more than his share to recover the excess amount from a joint tortfeasor.  A claim for equitable indemnity (governed by a string of Nevada case authority beginning with Reid v. Royal Insurance Co., 80 Nev. 137, 390 P.2d 45 (1964)) allows him to attempt to shift the entire burden to said joint tortfeasor.  While the doctrines are similar in many respects (and are often used interchangeably by less experienced attorneys), there are critical differences.  The Nevada Supreme Court recently established one of those differences, holding the two doctrines have different statute of limitation periods (one year for contribution, four years for equitable indemnity). In the case of Saylor v. Arcotta, 126 Nev. Adv. Op. No. 9 (March 9, 2010), a passenger in a taxi was injured in an accident, and two weeks later died of a heart attack.  The family of the passenger sued the taxi company and the driver (“Defendants”), alleging the heart attack and ultimate death were triggered by the accident.   Defendants filed a third-party complaint for equitable indemnity and contribution against the passenger’s doctors, alleging he died as a result of medical malpractice, not the accident.  The doctors moved for and were granted summary judgment on the basis that the statute of limitations for medical malpractice actions prescribed by N.R.S. 41A.097 (four years from injury or two years from the discovery of the facts that formulate the claim) had expired, thus barring the claim. On appeal, Defendants contended the statute of limitations periods for equitable indemnity and contribution were applicable, not the period for malpractice actions.  The Court agreed, holding equitable indemnity and contribution are separate, independent claims not governed by the limitations period applicable to the underlying tort.  But the question remained:  what are the applicable periods for equitable indemnity and contribution claims?  For contribution claims, the answer was simple, as N.R.S. 17.285 prescribes a specific limitation period of one year after the entering of final judgment.  However, there was no similar statute related to equitable indemnity, nor was there any guidance in Nevada case authority.  The Court fashioned a holding that since equitable indemnity claims are based on a theory of implied contract, the four year limitation period for implied contract cases prescribed by N.R.S. 11.190(2)(c) is applicable to such claim, with said period beginning to run upon the suffering of “actual loss” (i.e. the paying of a settlement or underlying judgment).  Since neither final judgment had been entered nor had any settlement been paid, neither limitations period had begun to run let alone expired.  Thus the Court reversed the granting of summary judgment. The impact of this decision is unlikely to affect cross-claims or third-party complaints as such claimants are not likely to have suffered “actual loss” or had final judgment entered against them.  However, the effect could be significant on original post-judgment/post-settlement claims.  If one waits longer than one year to file, he will lose his contribution claim, and shifting an entire burden to a joint tortfeasor as is required in an equitable indemnity claim is more difficult than merely proving he is responsible for a portion of it. By:  Leland Eugene Backus nevada-business-law 2010-04-09T13:46:46+00:00 http://www.backuslaw.com/ee/blog/comments/pharmacy-liability-to-third-parties/ http://www.backuslaw.com/ee/blog/comments/pharmacy-liability-to-third-parties/#When:10:17:46Z Nevada Supreme Court Rejects Liability For Pharmacies to Third Parties Injured by Patients Under Influence of Prescription Drugs Nevada has long been a jurisdiction that does not recognize “dram-shop liability.”  As such, bartenders and drinking establishments are not responsible to innocent third persons for injury or death due to an inebriated patron’s conduct.  Hamm v. Carson City Nugget, Inc., 85 Nev. 99, 450 P.2d 358Nev. 1969.  Recently, the Nevada Supreme Court had the opportunity to decide a similar issue in the area of prescription drug use:  whether pharmacies can be liable for injuries caused by patients under the influence of controlled prescription drugs.  In the case of Sanchez, et. al. v. Wal-Mart Stores, et. al., 125 Nev. Adv. Op. No. 60, the Nevada Supreme Court concluded they are not liable.  In that matter, Gregory Sanchez, Jr. was killed and Robert Martinez was seriously injured when they were struck by an automobile driven by Patricia Copening as they were fixing a flat tire on the side of Interstate 95.  Ms. Copening was under the influence of prescription medication at the time.  Mr. Martinez, the families of both men, and the estate of Mr. Sanchez brought a wrongful death suit against Ms. Copening as well as various pharmacies that had filled prescriptions for her.  They claimed that prior to the accident the pharmacies were given notice by the Prescription Controlled Substance Abuse Prevention Task Force of Ms. Copening’s excessive prescription filling activities, and as such owed the victims a duty of care not to fill her prescriptions. The Court, in a 5-2 vote, held a pharmacy has no duty of care to unidentifiable third parties, and as such is not liable for injuries causes by patients under the influence.  The majority reasoned there was no special relationship between the pharmacies and Sanchez/Martinez and that the two men were not known or identifiable parties within a zone of risk, but rather were “unidentifiable members of the general public who were unknown to the pharmacies.”  As such, the pharmacies’ acts of dispensing prescription drugs to Ms. Copening did not create a legal duty.  In addition, the Court concluded:  (1) N.R.S. 453.1545 and its requirement that Nevada administrative agencies track prescription fillings did not create a duty of care on pharmacies’ part; and (2) the doctrine of negligence per se was inapplicable because the pharmacies were not bound by statute to decline to fill Ms. Copening’s prescriptions. By:  Edgar Carranza nevada-health-care, nevada-products-liability 2010-03-04T10:17:46+00:00 http://www.backuslaw.com/ee/blog/comments/the-alter-ego-doctrine-and-limited-liability-companies/ http://www.backuslaw.com/ee/blog/comments/the-alter-ego-doctrine-and-limited-liability-companies/#When:10:12:44Z Business Formation Concerns:  The Problem of the Applicability to Limited Liability Companies of the “Alter Ego” and “Piercing the Corporate Veil” Doctrines One of the more popular business entity forms in Nevada is the limited liability company (otherwise known as the “LLC”).  Governed by N.R.S. Chapter 86, limited liability companies combine many of the appealing features of a partnership (a single level of taxation) with those of a corporation (protection for its members from personal liability for the companies’ debts and liabilities).  However, following a ruling of the Federal Bankruptcy Court in the matter of In Re Giampietro, 817 B.R. 814 (D.Nev.2004), there is cause for concern about exactly how much protection from personal liability the LLC form provides its members. The doctrines of “alter ego” and “piercing the corporate veil” are long-standing corporate doctrines used to determine circumstances where a corporate fiction should be disregarded to hold the officers, directors, or shareholders personally liable for the debts and liabilities of the corporation.  In Giampietro, the Court was asked to predict whether a Nevada court applying Nevada law would determine that these doctrines were applicable to an LLC in the same manner as they are to a corporation.  The Giampietro court determined that it would do so: “The question is whether Nevada law would recognize “alter ego” claims with respect to limited liability companies… If presented with the issue, this court believes it highly likely that Nevada courts would recognize the extension of the alter ego doctrine to members of limited liability companies.” Giampietro at 845-846.  While this is not binding authority on the Nevada court, but rather a mere prediction of how a Nevada court would rule, it is enough to send shivers down the spine of the member of any LLC.  N.R.S. 78.747 prescribes a three-part test for when application of these doctrines is appropriate:  (1) the corporation must be influenced and governed by the person asserted to be the alter ego; (2) there must be such unity of interest and ownership that one is inseparable from the other; and (3) the facts must be such that adherence to the corporate fiction of a separate entity would, under the circumstances, sanction fraud or promote injustice.   Application of the first of these two factors to an LLC is extremely problematic, unlike a corporation.  These two factors are designed to test the level of separation between ownership and management, with the more separation between them, the less likely the doctrine should be applied.  The problem lies therein:  while it is a requirement in a corporation that ownership and management be separate, the same requirement does not apply to LLC’s.   LLC’s are not designed with the intent that ownership and management necessarily be separate.  As such, the potential lies for an LLC to fail the first two factors of the test automatically and by virtue of their nature as closely-held entities, making it far more likely a member could be found to be personally liable for the liabilities of an LLC.    By:  Leland Eugene Backus   nevada-business-law 2010-03-04T10:12:44+00:00 http://www.backuslaw.com/ee/blog/comments/does-there-have-to-be-insurance-coverage-as-a-prerequisite-to-an-unfair-cla/ http://www.backuslaw.com/ee/blog/comments/does-there-have-to-be-insurance-coverage-as-a-prerequisite-to-an-unfair-cla/#When:10:07:51Z   Even in the absence of coverage, an insured can bring a claim for breach of Nevada’s Unfair Claims Practices Act against an insurer In an effort to ensure fair dealings with insureds by their insurers, in 1975 the Nevada Legislature enacted the Nevada Unfair Claims Practices Act (N.R.S. 686A.310).  The Act identified sixteen specific activities which, if engaged in by an insurer (such as failing to act promptly upon receipt of a claim or failure to effectuate prompt and equitable settlements of claims when the insured’s liability has become reasonably clear), could subject the insurer to a private cause of action from its insured.  However, until recent years, it was uncertain whether the existence of coverage under a policy was a prerequisite to a claim that an insurer violated the Act. That all began to change in 2007, when the issue was presented in the United States District Court, District of Nevada matter of D&L Framing, LLC v. Clarendon American Insurance Company (case no. 2:05-cv-1307).  In that case, Judge Roger L. Hunt determined in a ruling on the insured’s motion for summary judgment that insureds could assert a claim for violation of the Act without the Court first making a finding on the existence of coverage. Then, in the 2009 case of Turk v. TIG Ins. Co., 616 F.Supp.2d 1044 (D.Nev.2009), the same Judge Hunt further elaborated on the issue and the justification for allowing insureds to assert claims for violation of the Act without a finding of coverage, this time on a motion for summary judgment filed by an insurer against an insured: “TIG moves for summary judgment, arguing that a claim under this statute cannot be brought in the absence of insurance coverage. In support of its assertion, Defendant cites to a California insurance statute that allows claims to be brought only if the insured is entitled to coverage. Cal. Ins.Code. § 790.03. The Court disagrees with Defendant's argument and holds that an insured can bring a claim for violation of § 686A.310 in the absence of actual coverage. The plain language of the statute guides the Court's decision. Under § 686A.310(1)(d) an insurer violates this statute when it fails to “affirm or deny coverage within a reasonable time,” Thus, an insured has a cause of action against an insurer if the insurer waits an inordinate amount of time before informing the insured that there is no coverage. In addition to this plain language, the fact that the statute provides a private right of action and was enacted as “part of a comprehensive plan to regulate insurance practice in Nevada” supports the conclusion that liability under the statute is not limited by whether or not insurance coverage exists. Pioneer Chlor Alkali Co., 863 F.Supp. at 1241. Finally, it should be noted that in Pioneer Chlor Alkali v. National Union Fire Insurance this Court held that “the provisions of NRS § 686A.310 address the manner in which an insurer handles an insured's claim whether or not the claim is denied.” Id. at 1243. TIG's Motion for Summary Judgment on this cause of action is denied.” Turk at 1052-1053.   This rule is obviously beneficial to insurers, particularly in the area of the duty to defend.  A duty to defend arises when there exists a potential for coverage; there need not be a finding of actual coverage for the duty to arise.  United National Insurance Co. v. Frontier Insurance Co., 120 Nev. 678, 687, 99 P.3d 1153, 1158 (2004).   A ruling to the contrary may have encouraged insurers to deny their insureds a defense until an actual determination that coverage exists is made.  As such, the ruling is in step with the comprehensive effort by the Nevada legislature to regulate activities of the insurance industry within the state to ensure fairness in an insurer’s dealings with its insureds.     nevada-insurance 2010-03-04T10:07:51+00:00 http://www.backuslaw.com/ee/blog/comments/supreme-court-rule-on-mixed-motives-jury-instruction-in-age-discrimination-/ http://www.backuslaw.com/ee/blog/comments/supreme-court-rule-on-mixed-motives-jury-instruction-in-age-discrimination-/#When:20:58:48Z In Gross v. FBL Financial Services, 129 S.Ct. 2343 (June 18, 2009), the plaintiff sued his employer claiming that his demotion was in violation of the Age Discrimination in Employment Act of 1967 (“ADEA”) which makes it unlawful for an employer to take adverse action against an employee “because of such individual’s age.”  In a 5-4 ruling, the United States Supreme Court decided that a mixed motives jury instruction “is never proper in an ADEA case.”At the trial level, the judge instructed the jury that it had to rule in favor of the plaintiff if it found that he was demoted and his age was a motivating factor in the demotion decision, and further told them to return a verdict for the employer only if it proved that it would have demoted the plaintiff regardless of age.  The jury returned a verdict for the plaintiff.  Under Title VII of the Civil Rights Act of 1964 (“Title VII”) an employee can allege that he suffered adverse employment action because of both permissible and impermissible considerations, i.e. a mixed motive case.  Price Waterhouse v. Hopkins, 490 U.S. 228, 109 S.Ct. 1775, 104 L.Ed2d 268.  This is often referred to as the Price Waterhouse standard.  This standard has often been applied to the other employment discrimination statutes, such as the ADEA.  The Supreme Court noted that while Title VII and the ADEA are both employment related statutes, Title VII is materially different with respect to the relevant burden of persuasion and that the ADEA is not governed by Title VII decisions such as Price Waterhouse. This ruling should help Nevada employers fend off the wave of baseless claims filed by employees who do not perform satisfactorily, yet choose to file an ADEA claim.  Those employees will now have to prove that they were adversely treated because of their age, and not simply hope to persuade the jury that their age played some part in the decision to discipline them. nevada-employment-law 2009-12-29T20:58:48+00:00