1. Court of Appeals
1. Contracts
2. Damages
3. Insurance
4. Torts
5. Workers' Compensation
2. Federal Court
1. Employment
2. Insurance
3. Products Liability

3. Minnesota Workers' Compensation
1. Attorney's Fees
2. Controlling Event
3. Credits and Offsets - Credit For Overpayment
4. Wisconsin Workers' Compensation
1. There were no updated cases for review as of the printing of this Newsletter.
5. Michigan Workers' Compensation
1. There were no updated cases for review as of the printing of this Newsletter.

6. U.S. District Court

The Court of Appeals was confronted with three issues in this case. In this unpublished case, the Court of Appeals affirmed the trial court's determination that a motion for judgment as a matter of law brought by Crest should be denied. Crest brought an action against Deloitte for negligent misrepresentation for accounting services provided by Deloitte to third-party defendant Forward Technology Industries (FTI), which led to a purchase of FTI by Crest for more than FTI's worth. After a jury found no overstatement of FTI's operating profits, the District Court concluded there had been no negligent misrepresentation. The trial court then denied Crest's motion for a new trial or judgment as a matter of law, and the Court of Appeals affirmed that decision.

The second issue was whether Deloitte was entitled to indemnification from FTI based on a contractual agreement between the two. The jury found that FTI had made material misrepresentations to Deloitte and therefore indemnification was appropriate. The District Court, however, granted a motion filed by FTI for judgment as a matter of law. The Court of Appeals reversed this decision based on the fact that the jury had found that FTI made material misrepresentations to Deloitte in presenting financial papers which were inaccurate and that the jury verdict on a reasonable theory of the evidence basis should have been upheld.

Finally, the third issue was whether a sua sponte deduction of $127,825 by the District Court from the $607,902 awarded to Deloitte was legitimate. The Appellate Court upheld the jury's verdict regarding the indemnification claim and determined that Deloitte was in fact entitled to the $127,825 for pursuit of the indemnification claim.

This case was handled by Susan D. Thurmer of our office, and the appeal was argued by Andrea Reisbord. The Court of Appeals affirmed the District Court's denial of motion for a new trial finding that the jury's verdict denying past and future pain and suffering was reconcilable with its award of past and future medical expenses. However, the Court of Appeals reversed the District Court's decision denying defendant's motion for costs and disbursements in connection with defendant's Rule 68 Offer.

At trial, plaintiff made personal injury claims arising out of a car accident with defendant. Defendant admitted liability, and the issue of damages was tried. The jury made factual findings that plaintiff's medical expenses were caused by the crash and that future medical expenses were necessary but did not award general damages for pain or emotional distress. Plaintiff moved for a new trial or additur, on the basis that the jury's decision denying damages for past and future pain and suffering could not be reconciled with its award of all past and future medical expenses. The District Court denied the motion noting the jury could have concluded any pain, suffering or emotional distress suffered by plaintiff was too minimal to justify the payment of damages or that plaintiff's failure to treat to the extent authorized by his physicians was the cause of the pain such that no money damages were appropriate. Additionally, defendant presented expert medical testimony suggesting some of plaintiff's injuries were caused by a pre-existing condition.

Prior to trial, defendant made an offer of judgment, stating that "pursuant to Rule 68" defendant allowed judgment to be entered "inclusive of all costs and disbursements." Plaintiff refused the offer. The total of the costs and disbursements incurred by plaintiff through the date of the offer of judgment added to the stipulated final judgment was less than defendant's offer of judgment, entitling defendant to an award of costs and disbursements. However, the District Court concluded that because in defendant's offer of judgment it "did not specify which costs and disbursements were included in the offer . . . all of plaintiff's costs and disbursements, including those made after the offer of judgment" would be deducted from the offer of judgment to determine if the offer was more favorable than the stipulated final judgment. The Court of Appeals reversed and found that defendant's offer did not include costs and disbursements yet to be incurred because the offer was made pursuant to Rule 68. The plain language of the offer did not contemplate costs and disbursements yet to be accrued because it expressly incorporated Rule 68.

In this insurance coverage case, the Court of Appeals construed the language of a business property exclusion and an extender provision in an insurance policy covering the arena owned by the Duluth Amateur Hockey Association ("DAHA"). DAHA purchased a dasher-board system which was delivered F.O.B. for one of its arenas. Five months following delivery, the dasher-board was destroyed by fire. A declaratory judgment action was commenced, and the parties both moved for summary judgment. The District Court determined DAHA did not acquire the dasher-boards until they were completely installed which was 16 days before the fire. Pursuant to the policy language, DAHA acquired the property within the 30 day grace period described in the expiration-of-coverage provision. On appeal, the Court found that since the risk of loss for an item shipped F.O.B. passes to the purchaser upon delivery, the loss did not occur within the 30 day grace period provided by the expiration-of-coverage provision. However, the Court found the policy provided coverage because the language of the policy was ambiguous and a reasonable person could read the expiration-of-coverage provision to apply to newly acquired personal property only if the property was located at a newly acquired or constructed property and in the case at hand there was no dispute that the arena in which the system was located was not newly acquired or constructed. As such, the Court of Appeals affirmed the decision of the District Court holding the policy provided coverage.

In this case, the Court construed the limitations period in light of the Chanda Egge's Chapter 7 bankruptcy action. Nick and Chanda Egge's home was destroyed by two fires and was insured by Depositors. The Egges made a claim against Depositors for failure to cooperate which was dismissed by the District Court. The Egges appealed and attempted substitute service on Depositors. Depositors then moved to dismiss based on improper service and requested a change of venue. Before Depositor's motion could be heard, the Egges served Depositors personally. Again Depositors challenged the service arguing it was now beyond the two year contractual limitations period. The District Court determined the substitute service was improper and held the Egges' claim was time-barred. On appeal, the Court of Appeals found the District Court did not err by dismissing the Complaint for insufficient service of process. However, the Court noted Chanda Egge filed for Chapter 7 bankruptcy after the original attempted service, and the bankruptcy petition listed the insurance claim as non-liquidated personal property entitled to exemption. The Court determined that given the bankruptcy filing, the short period of time between the filing and the end of the contractual limitations period, and a lack of information in the record about the length of time between filing of the bankruptcy petition the meeting of creditors and what if any consideration the trustee gave to this claim, the District Court erred by dismissing appellants' Complaint and reversed and remanded the case for further proceedings. The Court also addressed the Egges' equitable tolling argument and found equitable tolling of the limitations period was not appropriate when no circumstances beyond the Egges' control prohibited service of the Complaint within the statutory period.

The Court of Appeals reversed and remanded the District Court's grant of summary judgment in this negligence action in which plaintiff/appellant, a passenger in a golf cart driven by defendant/respondent, sued respondent for negligently parking the golf cart in front of the tee box. Even though no special relationship existed that created a duty on the part of the driver to protect the passenger, the driver owed the passenger a duty of reasonable care - both as a matter of common law negligence and under the Restatement.

The Court of Appeals affirmed the District Court decision granting summary judgment to defendant, finding that defendant owed no legal duty to plaintiff. Plaintiff was injured in an automobile accident and asserted negligence claims against the passenger of the other vehicle. Plaintiff argued that there was a special relationship between the passenger and the driver because the passenger instructed and encouraged the driver to engage in unlawful driving conduct that led to the accident. The Court found that the plaintiff did not allege facts that would establish a special relationship which would give the passenger a legal right to control or influence the driver's conduct. Additionally, the Court did not find that the passenger actively interfered with the driving.

In this case, the Court addressed whether a school district has a duty to prevent a student's suicide and whether a school district's employee caused the student's suicide. J.S. was an 8th grade student at Anoka Hennepin Independent School District No. 11. In previous years, J.S. received failing grades at the beginning of each year, and his grades improved each year after his parents threatened he would not be able to go hunting unless his grades improved. On or around September 8, 2001, J.S. had an altercation with two boys in a city park that was off the school campus. J.S.'s mother and father complained and met with the Assistant Principal Ploeger on or around September 19 or 20. Ploeger referred J.S. to meet with school liaison police Officer Wise. Wise met with J.S. later in the same day and advised J.S. of steps he could take to protect himself. On October 3, 2001, J.S. received his mid quarter grades which included an A in physical education and an F in every other subject. When Lande, his science teacher, gave him a failing grade in science, Lande made some type of disputed negative comments to J.S. On the evening of October 3, J.S. discussed his grades with his parents. J.S. indicated he could not concentrate on his school work because he continued to have problems with the two boys. J.S. told his mother that he went to speak with Rutt, the school prevention advisor, however, she told him she did not have time to speak with him and he should come back the next day. On October 4, 2001, J.S. committed suicide at his home. J.S. left a suicide note that referenced the alleged statements made by Lande to J.S. about his grades.

J.S.'s father, Jasperson, commenced a wrongful death action against the School District alleging negligent or wrongful conduct of the School District's personnel proximately causing J.S.'s suicide. The School District moved for summary judgment, and the District Court granted summary judgment to the School District. The Court determined J.S.'s suicide was not foreseeable; therefore, the School District did not have a duty to prevent it. The Court also determined that as a matter of law the actions of the school district's personnel did not cause J.S.'s suicide. Additionally, the Court concluded the acts of Ploeger, Wise, Rutt and Lande were not actionable under the doctrine of official immunity and that the School District was entitled to vicarious-official immunity. On appeal, the Court of Appeals affirmed the decision of the District Court finding that while school districts are not liable for sudden, unanticipated misconduct, they are liable for sudden conduct that was foreseeable. In this case, J.S.'s suicide was not foreseeable. Further, the Court found that, as a matter of law, the alleged conduct of Ploeger, Wise, Rutt and Lande did not cause J.S.'s suicide. In addition, the Court affirmed the applicability of the official immunity and vicarious-official immunity doctrines.

In this matter construing the co-employee immunity privilege under the Workers' Compensation Act, the Court affirmed the District Court's award of summary judgment against the Estate of Terry Pearson. An ambulance owned by the Roseau Hospital and driven by Terry Pearson collided with a garbage truck. The truck was driven by Christianson. At the time of the accident Otto was in the back of the ambulance attending to a patient. Both Pearson and Otto were employees of Roseau Hospital. Pearson and the patient died at the accident scene. Otto sustained injuries as a result of the crash and received workers' compensation benefits. Otto commenced suit against Christianson, the owner of the garbage truck, and Roseau Hospital. She later filed a motion to amend her Complaint to add the Estate of Terry Pearson as a defendant. Roseau Hospital moved for summary judgment which was granted by the District Court. Specifically, the Court found Roseau Hospital employed both Pearson and Otto, Pearson was operating the ambulance in the ordinary and customary course of his employment, and Otto had elected to claim, has received and continues to receive workers' compensation benefits. The Pearson Estate thereafter moved for dismissal under Minnesota Rule of Civil Procedure 12.02, arguing since the Court had already determined Terry Peterson was acting in the normal course and scope of his employment at the time of the accident, his Estate was entitled to co-employee immunity under the Workers' Compensation Act. The District Court ruled since Pearson was acting in the ordinary and customary course of his employment at the time of the accident, he owed Otto no personal duty as a matter of law. On appeal, the Court of Appeals affirmed, finding that Roseau Hospital employed Pearson to operate the ambulance on highways in Roseau County for the purpose of transporting Roseau Hospital patients to various locations and at the time of the accident, Pearson was doing just that.

In this action, the Court granted summary judgment to an employer on a breach of contract claim brought by an employee where the employment relationship was clearly an at-will relationship. The Court reiterated that where an employment handbook explicitly states that there is no binding contract, a person may not succeed on a claim for breach of contract. The plaintiff in this action, James Hanson, also brought claims pursuant to Minn. Stat§§ 181.13 and 181.933 which provide for civil penalties for failure to pay unpaid wages or commissions actually earned up to the time of discharge. The Court held that because there was no definitive date of termination and because there was an issue of fact as to whether Mr. Hanson had been terminated or whether Mr. Hanson had voluntarily ceased employment that the determination of whether the Minnesota Statutes were violated was an issue for a jury and summary judgment was inappropriate.

This case revolved around a non-compete agreement which Mr. Hanson refused to sign. As he was unwilling to sign, there was a series of communications and revisions to the non-compete clause which set forth provisions to which Mr. Hanson needed to agree in order to maintain his employment with United Rentals. Mr. Hanson did not sign the non-compete agreement as he did not agree to all the terms and the issue then became whether he was terminated by United Rentals for failing to sign the non-compete agreement or whether he voluntarily ceased his employment.

The Eighth Circuit Court of Appeals affirmed the summary judgment motion by the District Court for the District of Minnesota on an age discrimination claim brought by Jerald L. Ramlet. The Appellate Court held that there was no direct evidence of discrimination. The Appellate Court further held that Mr. Ramlet failed to show he was replaced by someone sufficiently younger to permit an inference of age discrimination, which was required to meet his prima facie burden. Mr. Ramlet sought to have the court apply the burden used in reduction in force cases, which merely requires a showing that age was one factor in the termination. The Appellate Court refused to apply the reduction in force burden.

Mr. Ramlet was 42 at the time of his termination. He was replaced, and his duties were divided between a 37 year old who worked for the company at the time of his termination and a 41 year old that was hired to replace him. The support for his claim was two statements by his boss, John Suzuki, regarding hiring of "young studs."

In this declaratory judgment action, the Federal Court considered whether insurer Westchester Fire Insurance Company must provide coverage to defend defendants' underlying lawsuit. Westchester also sought reimbursement of the expenses it had paid thus far in the defense of that lawsuit.

The Federal Court addressed whether an "insured v. insured" exclusion bars coverage for an underlying lawsuit brought by both an insured and a non-insured plaintiff. Although Minnesota has no governing case law addressing this issue, this Federal Court found that the "insured v. insured" exclusion precluded coverage in this case, and that Westchester owed no defense for the underlying lawsuit. The Federal Court also considered whether Westchester had a right to recover defense costs incurred before the adjudication of coverage even began. Acknowledging that the Minnesota Supreme Court had not dealt with this issue, the Federal Court speculated that the Minnesota Supreme Court would refuse to allow reimbursement unless an agreement to the contrary is found in the insurance policy. In this case, the Policy did not contain a provision for reimbursement of defense costs in the event a court determines that Westchester owed no coverage. Therefore, the Federal Court denied Westchester's attempt to include the right to reimbursement from its reservation of rights letter.

After her daughter's hand allegedly became trapped and seriously burned inside an Easy-Bake Oven manufactured by defendant, plaintiff alleged defendant Hasbro violated certain Minnesota consumer protection statutes. Specifically, plaintiff alleged that Hasbro's advertisements contained false statements and misrepresentations which led to the injury and that it was sold under the pretense that it was safe for use by children under parental supervision. Further, plaintiff argued that her claim served a public benefit because Hasbro misrepresented the safety of the Easy-Bake Oven to the public at large and hundreds of thousands of children will continue to be exposed to the entrapment and burn hazard posed by the defective product unless Hasbro initiated a far more aggressive recall campaign to retrieve the remaining toys from the public.

The Court found that the damages sought by plaintiff did not serve a public benefit, but merely provided an exclusive remedy for plaintiff. Accordingly, the Court dismissed plaintiff's claims under the Consumer Fraud Act and False Advertising Act because she failed to demonstrate that her suit was brought to benefit the public.

The employee appealed from the compensation judge's decision on the amount of attorney fees to be awarded.

On September 9, 2004, the employee filed a Rehabilitation Request, seeking payment of $1,840.69 as reimbursement for a laptop computer and accessories he purchased for use in his schooling. The Employer and Insurer denied the request. On appeal the WCCA reversed the compensation judge's decision and ordered the Employer and Insurer to reimburse the Employee for the laptop computer. The Employee's attorney subsequently filed a Statement of Attorney Fees seeking $10,092.50 in Heaton fees based upon 34.7 hours and an hourly rate of $275. In findings and order filed on March 22, 2007, the compensation judge found the hourly rate and number of hours claimed to be reasonable, however, awarded only $4,125 in attorney fees. The Employee appealed.

The employee contended that the Court need not look at the Irwin factors where the compensation judge determined that both the time spent and the hourly rate were "reasonable, necessary, appropriate and related to the employee's rehabilitation issue." He further contended that once those determinations had been made, "the compensation judge should simply multiply the determined reasonable time spent by the determined reasonably hourly rate to arrive at the appropriate fees."

The Workers' Compensation Court of Appeals disagreed citing Borgan v. Bob Hegland, Inc., 62 W.C.D. 452 (W.C.C.A. 2002). In Borgan, the WCCA provided that a claim for Roraff/Heaton fees is not merely a matter of multiplying the attorney's hourly rate times the amount of time spent on the case less the contingent fee awarded. Rather, the WCCA stated all seven of the Irwin factors must be considered in arriving at a reasonable attorney fee. The Court further provided that the Irwin factors need not be weighed evenly.

Here, the WCCA noted the compensation judge's finding that the disputed claim was solely for rehabilitation expenses and that the issues in the case were not complex and were not difficult from a factual and legal standpoint. The WCCA also noted that the total amount of the claim was less than $2,000. Thus, the WCCA found the compensation judge's reduction of the claimed attorney's fees was not unreasonable.

The employee appeals the Compensation Judge's denial of contingency attorney fees based upon a finding that the permanent partial disability from which the fees were sought were not disputed benefits as required by Minn. Stat. § 176.081.

The employee sustained a work-related injury to his right knee on November 15, 1986 while in the employment of Lake Superior Paper/M.J. Electric. In October 2004, the employee filed a Claim Petition alleging a consequential injury to his left knee and an 8% permanent partial disability rating for an unscheduled condition. The employer and insurer denied the left knee condition was causally related to the 1986 right knee injury. A hearing was held on August 26, 2005, and a Findings and Order was issued on October 27, 2005. The Compensation Judge found the employee had sustained a consequential left knee injury and awarded 2% permanent partial disability benefits in relation to the employee's left knee.

The employee's left knee condition subsequently worsened and on March 9, 2006 he underwent a left knee total arthroplasty. In June 2006, without notice to the employee's attorney, the insurer sent the employee's physician a Health Care Provider Report form requesting a disability rating for the employee's left knee following the surgery. The doctor provided a rating of 8% body as a whole disability in relation to the left knee. However, the employer and insurer upon further examination concluded that a proper application of the disability schedules entitled the employee to 13% permanent partial disability and paid to the employee a lump sum amount representing this permanent partial disability compensation. From the award, the employer and insurer withheld amounts for previously ordered overpayment and for potential attorney fees. The employer and insurer did not at that time serve or file a Notice of Benefit Payment.

The employee's attorney learned of the permanent partial disability payment in October 2006 and inquired of the employer and insurer the amount of payment and whether a Notice of Benefit Payment had been issued. The employer and insurer responded and subsequently filed the required Notice of Benefit Payment in early November.

On February 1, 2007, the employee's attorney filed a Statement of Attorney Fees seeking attorney fees of $1,396.50, the amount withheld from the payment of permanent partial disability in August 2006. Following a hearing on the fee request, the Compensation Judge found that no genuine dispute existed as to the employee's eligibility for permanent partial disability paid and denied the fee request. The Workers' Compensation Court of Appeals affirmed this decision.

Minn. Stat. § 176.081, subd. 1(a)(3)(c) provides in pertinent part that "[i]n no case shall fees be calculated on the basis of any undisputed portion of compensation awards. Allowable fees under this chapter shall be based solely upon genuinely disputed claims or portions of claims[.]" However, the employee argued that because the underlying issue of primary liability for the left knee condition had been in dispute in 2005, the permanency later paid on that condition should also be deemed to have been in dispute. The employee further asserted that "having overcome a denial of primary liability on the left knee condition, the employee's attorney has a claim for attorney's fees for all benefits arising out of that disputed injury." The WCCA disagreed citing previous case law holding that a dispute over primary liability does not entitle an attorney to fees from any and all future benefits not at issue at the time primary liability is determined. See, e.g., Crowley v. Plehal Blacktopping, 66 W.C.D. 11 (W.C.C.A. 2005); Kohn v. A&M Advanced Business Interiors, slip op. (W.C.C.A. Jan. 27, 2005); Kelley v. Inter Faith Care Ctr., slip op. (W.C.C.A. Dec. 16, 2003).

Here, the WCCA found there was no record of any action by the employee's attorney to seek payment of the permanent partial disability payment made voluntarily by the employer and insurer. The employer and insurer, in addition, not only did not dispute the rating offered by the employee's physician, but recalculated and increased the rating before payment. The employee has never disputed the correctness of that payment. The WCCA further noted that the dispute over permanent partial disability in 2005 was over whether the Employee was entitled to a Weber rating or should be paid according to schedule. Based upon the above, the WCCA held that the Compensation Judge did not err when he found the benefit paid was not a disputed claim, and denied the claimed attorney fees.

The Workers' Compensation Court of Appeals determined the controlling event for a consequential injury is the original work-related personal injury. In this matter, the employer and insurer did not dispute that the employee sustained a consequential injury. The question presented to the Court is what should be considered the controlling event in the instance of a consequential injury. The substantive rights of the employer and employee are fixed by the law in effect on the date of the controlling event. The controlling event is normally the occurrence of a compensable personal injury, but in the case of a dependent's claim it is the date of death, and in an occupational disease case the controlling event is the date of disablement. The appellate court determined the controlling event for a consequential injury is not the date when the injury "culminated" but the date of the underlying injury. The law in effect on the date of the underlying injury then governs any consequential injuries.

The employer and insurer must prove an actual overpayment before a credit for reimbursement may be ordered even though the employee submitted false check stubs for nine years and received temporary partial disability benefits based on those check stubs. The employer and insurer filed a Petition for Reimbursement alleging a significant discrepancy between the employee's tax returns and the payroll information that had been regularly submitted by the employee to support a claim for temporary partial disability benefits. The employer and insurer further asserted the employee had been paid $431,713.39 in wage loss benefits, some of which have been fraudulently obtained. The employer and insurer requested an order requiring the employee to make an immediate 100% reimbursement of all wage loss benefits paid to him for which he could not provide documentation or which he fraudulently obtained. The claim for reimbursement was premised upon M.S. 176.179 which is entitled "recovery for overpayments."

The Workers Compensation Court of Appeals held the mere fact that benefits may have been paid based upon a false record does not prove necessarily that benefits have been overpaid. Even if the false record were shown to be a deliberate fraudulent misrepresentation, the insurer must still establish that it suffered actual damages in the form of overpayment as a result of that misrepresentation. Filing false documents does not result in a forfeiture of all benefits. The employer and insurer must first prove an overpayment before credit or reimbursement may be ordered. Until an overpayment is proven, an analysis of the employee's good faith receipt of benefits is premature.

There were no updated cases for review as of the printing of this Newsletter.

There were no updated cases for review as of the printing of this Newsletter.