1. Supreme Court
1. Insurance
2. Court of Appeals
1. Civil Procedure
2. Defamation
3. Employment
4. Insurance
5. Torts
3. Federal Court
1. Discrimination
2. Employment
3. Insurance
4. Workers' Compensation

4. Minnesota Workers' Compensation
1. Arise Out Of And In The Course Of
2. Vacate
5. Wisconsin Workers' Compensation
1. There were no updated cases for review as of the printing of this Newsletter.
6. Michigan Workers' Compensation
1. There were no updated cases for review as of the printing of this Newsletter.

In this class action by homeowner's insurance policyholders against their insurer State Farm Fire and Casualty Company, the policyholders alleged that the surcharge that was imposed by State Farm on homes whose electrical systems were more than 39 years old was racially discriminatory.

The Minnesota Supreme Court, in an extremely long opinion, held that under the filed rate doctrine, the creation by the legislature of comprehensive regulatory procedures for the review and approval of rates by a state regulatory agency and the restrictions imposed by the legislature on that agency's authority to change rates retroactively bars a private suit for damages based on a claim that a rate that was filed with and approved by the agency was unreasonable or discriminatory. The Court reasoned that the regulation of insurance rates by the Minnesota Department of Commerce is sufficiently comprehensive to avoid an exception to the filed rate doctrine.

The Court of Appeals reversed the District Court's denial of plaintiff's motion to reopen judgment. Plaintiff entered into a subcontract with defendant to install stucco on a building. In July 2005 plaintiff filed a Complaint alleging breach of contract, quantum meruit and foreclosure of a mechanic's lien. Plaintiff failed to comply with the District Court's deadline to submit an Informational Statement, which resulted in an involuntary dismissal of the case. Plaintiff brought a motion to reopen the judgment. The Court of Appeals determined that plaintiff showed the existence of a meritorious claim and it moved for reconsideration promptly after receiving notice of the dismissal. Therefore, the reopening of the judgment would not have caused defendant substantial prejudice.

In affirming the dismissal of this defamation action, the Court confirmed that proving a statement is false is essential to a defamation claim . Appellant Iverson sued an officer who had pulled him over for showing signs of impairment while driving. Shogren submitted an affidavit to the court that he had reported appellant's erratic driving to 911. Appellant Iverson then sued Shogren alleging he had made false and defamatory statements in his 911 call. KSTP, on November 7, 2002, showed a report which referred to the number of 911 calls police officers receive each day, then noted that most of the calls are from "good Samaritans who call to report bad drivers." In the report Shogren appeared on camera and explained that he called 911 after he observed a vehicle driving at varying speeds and driving over the fog line. Appellant subsequently sued Hubbard Broadcasting d/b/a KSTP-TV alleging that the news report statement was defamatory. Affirming the District Court's summary judgment dismissal, the Court found that there was no factual support in the record that the news report falsely implied that Iverson was driving while impaired.

In this case, the Court of Appeals affirmed the District Court's denial of a temporary injunction to ReliaStar, which sought to enjoin KMG from misappropriating trade secrets and using confidential information gained after KMG hired numerous ReliaStar employees. The Court of Appeals agreed with the District Court that there was no basis for a Duty-of-Loyalty claim, that ReliaStar failed to maintain secrecy such that its information was a trade secret, that the employees did not provide confidential information to KMG for its benefit, and that ReliaStar had not shown irreparable harm.

The Court of Appeals affirmed the District Court's dismissal of plaintiff's Complaint. Plaintiff was employed with defendant for approximately four years. After she was discharged from her employment, she filed a complaint against her former employer with the Minneapolis Department of Civil Rights, which made a determination of no probable cause. Plaintiff erroneously sought judicial review in the Court of Appeals; and when plaintiff finally brought a civil action in the District Court, the 45-day limitations period contained within the Minneapolis Ordinances had expired. The Court of Appeals determined that the District Court did not err in dismissing the action.

What determines (1) the jurisdiction of No-Fault arbitrators and (2) the effect of alleged provider fraud on the claimant's claim? Money and proof of fraud against the insureds, respectively.

Here, all claimants involved were insured by appellant Progressive Insurance Company and sought treatment at Alivio Chiropractic Clinic, against whom Progressive had filed suit in Federal District Court alleging racketeering and fraud through overbilling. In each case, the District Court confirmed the arbitration awards. Progressive appealed the District Court rulings alleging (1) that the arbitrators exceeded their authority when they considered claims for medical expense benefits that had not been denied but were under investigation; and (2) that it was error to deny Progressive's motion to vacate the arbitration awards based on fraud by medical service providers. The appellate court decided that (1) the amount of the claims for benefits, $10,000 or less, gave the arbitrator subject matter jurisdiction to arbitrate the claims even without a formal denial of benefits; and (2) it was proper to deny Progressive's requests to stay proceedings pending the completion of the related Alivio federal lawsuit because a stay would not have served judicial economy, the interests of the insureds, or the purposes of the No-Fault Act.

The Court of Appeals explored the issue of misrepresentation by omission. When a line of credit came due, respondent Trenholme sought a 50% contribution from appellant QRS Systems. QRS replied to Trenholme that it did not have the funds to reimburse him as all of its assets were secured against a $600,000 note. Trenholme then filed suit against QRS alleging breach of contract, promissory estoppel, breach of fiduciary duty, conversion, and fraud and misrepresentation. At a bench trial, the district court determined that Trenholme proved his cause of action for a breach of the loan agreement. On appeal QRS first argued that it did not owe a duty to disclose its financial status to Trenholme. The Court found that because the line of credit was for the benefit of Parachute, a company in which Lien, Trenholme and QRS were all shareholders, the interrelated nature of the ownership and control of the companies created a fiduciary relationship, which created the duty to disclose material financial information to Trenholme. Appellants then argued that it was not reasonable for Trenholme to rely on the omission as Trenholme was a sophisticated investor. The Court rejected this argument as it was at odds with the fiduciary relationship that the two shared. Appellants finally argued that Trenholme was not damaged by the omission. The Court rejected this argument noting that the record established that Trenholme was induced to sign the line of credit as a co-borrower, taking on additional risk and responsibilities by signing the line of credit agreement as a borrower, and that he was damaged by his reliance on the material omissions regarding the financial status of QRS.

In this case, appellant Metropolitan Painting Associates was sued for the negligent hiring of a painter whose accomplices robbed and assaulted the Hineses in their home. Metropolitan hired Allen Cain to do painting at the Hines' home, and although William Patterson, owner of Metropolitan, knew that Cain had a chemical dependency problem and criminal history that included three felony convictions for burglary, Patterson did not conduct a drug evaluation or background check of Cain. After the Hines' remodeling project was completed, Patterson fired Cain for stealing checks from the Hineses. Later, Cain, with three accomplices, returned to the Hines' home intending to burglarize it but left without burglarizing. Soon after, two of Cain's accomplices returned to the Hines' home and robbed and assaulted the Hineses. A jury found Metropolitan negligent in hiring Cain and awarded damages. The Court determined that (1) Metropolitan's duty arose when its specific employment decision subjected the Hineses to a severe risk as a direct result of that employment; (2) that the duty is owed and breached at the time of hiring, not at the time of assault; (3) that the duty and breach elements of negligent hiring claim do not require the specific type of injury to be foreseeable; and (4) that when Cain gave the conspirators key information about the house and the occupants, it was sufficient to link the perpetrators' crimes against the Hineses to Metropolitan.

The United States District Court dismissed plaintiffs' claims of (1) reprisal, business, and gender discrimination in violation of the Minnesota Human Rights Act ("MHRA"), and (2) breach of contract and promissory estoppel.

Defendant had orally agreed to use plaintiffs' taxi services. Plaintiffs' female employee later claimed that one of defendant's employees referred to her as "Shithead." Eventually, defendant terminated its agreement with plaintiffs. Plaintiffs essentially argued that defendant's refusal to do business was a breach of contract founded on discrimination. The Court concluded that plaintiffs' MHRA claims were untimely and that defendant did not have an ongoing discriminatory policy. The Court found that the oral agreement did not constitute a contract and that while plaintiffs argued that they delayed prosecution because the parties agreed to an investigation of their business relationship, defendant had no reason to know the plaintiffs would postpone prosecution based on that agreement.

The federal Age Discrimination in Employment Act ("ADEA") and the Minnesota Human Rights Act ("MHRA") both forbid an employer from taking adverse employment actions against an employee because of age. In this age discrimination claim, which relied upon only circumstantial evidence of discrimination, in order to prevail the plaintiff must first, establish a prima facie case, meaning that, (1) she was a member of the protected class, i.e., over the age of forty; (2) she was meeting her employer's reasonable expectations at the time of her termination; (3) the employer took some type of adverse employment action against her; and (4) circumstances exist which give rise to an inference of discrimination, such as showing that she was replaced by someone substantially younger. However, as was the case in the present action, when the employer claims the termination was a result of a "RIF" (Reduction in Force), a plaintiff must bring forward, "some additional showing that age was a factor in the termination," such as statistical or circumstantial evidence.

Once the plaintiff establishes a prima facie case, the defendant "must meet a burden of production in the second step to articulate a legitimate nondiscriminatory reason for the adverse employment action." Finally, if the defendant fulfills this second step, the burden returns to the plaintiff to establish that the defendant's reason is a mere pretext for discrimination. In the present case, plaintiff, through a "probability analysis," established a prima facie case to include the requisite, "additional showing." Then, defendant's RIF initiative established a legitimate nondiscriminatory reason for plaintiff's termination. Finally, because plaintiff failed to provide "independent, direct grounds for disbelieving defendant's explanation for her termination" such that she may rest on a statistical analysis with a lesser degree of certainty to establish pretext, because defendant did not shift its reasons for terminating her and because plaintiff would have been terminated even if she met the requisites for transfer based on her skills, summary judgment for defendant was appropriate and ordered.

In this case, the Eighth Circuit Court of Appeals determines the sufficiency of evidence and causal connection necessary to support an age and gender discrimination claim. On November 18, 2003, Bonnie Wittenburg, a 51-year old equity research analyst for AEFA, was terminated because her position had been eliminated along with two other employees. She subsequently brought suit against AEFA asserting claims of age discrimination and gender discrimination. AEFA filed a motion for summary judgment which the Court granted. Wittenburg appealed and argued that she presented evidence sufficient to support her age and gender discrimination claims. In affirming the summary judgment motion against Wittenburg, the Eighth Circuit noted that a plaintiff must establish some causal relationship to show the significance of non-contemporaneous statements, or statements made by persons other than the relevant decisionmaker to the resolution of the ultimate issue of intentional discrimination. In reviewing the evidence, the Court used the following criteria in determining if a causal relationship had been established, (1) whether statements were made by employees who took part in the decision or influenced the decision to terminate the plaintiff; (2) the time gap between when the statements were made and the date of termination; and (3) whether the statement itself is "an exhibition of discriminatory animus" or merely an "opinion that such animus might exist." The evidence that Wittenburg relied upon was found to be ambiguous in its meaning and not causally related to her subsequent termination.

The United States District Court granted Bon Appetit's motion to dismiss the plaintiff's assault and battery, negligent supervision and negligent retention claims, finding that these claims were preempted by the Minnesota Workers' Compensation Act ("WCA"). The plaintiff was employed with Bon Appetit as a pizza station cook and grill preparer. During his employment, the plaintiff alleged that he was the subject of sexual jokes and innuendos from an openly gay co-employee. In addition, the plaintiff alleged that he was physically assaulted by this co-employee. Plaintiff further alleged that management was aware of, and participated in, the harassment. As a result, the plaintiff felt that he could no longer tolerate the work environment and terminated his employment. The plaintiff claimed that as a result of the harassment he suffered anxiety, mental and emotional distress, humiliation, embarrassment, loss of enjoyment of life, loss of income, and loss of promotional opportunities. Bon Appetit moved to dismiss the plaintiff's assault and battery, negligent supervision, and negligent retention claims for lack of subject-matter jurisdiction, arguing that all three claims were preempted by the WCA.

The Court found that based on McGowan v. Our Savior's Lutheran Church, 527 N.W.2d 830, 833 (Minn. 1995) and Meintsma v. Loram Maintenance of Way, Inc., 684 N.W.2d 434 (Minn. 2004), the WCA is an employee's exclusive remedy regarding an employee's injuries. An exception to this exists only for injuries "caused by the act of a . . . fellow employee intended to injure the employee because of personal reasons, and not directed against the employee as an employee, or because of the employment." Minn. Stat. § 176.011, subd. 16. The Court found that the Minnesota Supreme Court has confined this so-called "assault exception" to those situations wherein the assault arises out of reasons unassociated with the employee's employment. Since the plaintiff's Complaint alleged that the plaintiff's injuries arose from workplace conduct, during work hours, while the plaintiff was engaged in his job duties, a jury would not be able to find that the co-worker's conduct "arose from circumstances unrelated to the [plaintiff's] employment." Bon Appetit's motion to dismiss the aforementioned claim, therefore, was granted. The WCA remains the exclusive remedy for such employment injuries.

In this case, the Eighth Circuit analyzed the application of the "absolute pollution" exclusion. In March 1999, Advance Terrazzo installed terrazzo flooring in the hallways of a school building using a propane-powered terrazzo floor grinder, which emitted carbon monoxide as a gaseous exhaust byproduct. James Fanjoy, an independent contractor for a painting subcontractor, was working on drywall construction on the site when allegedly the carbon monoxide caused him to fall and sustain injuries. The District Court found that the insurance companies had no duty to defend Advance Terrazzo in a lawsuit brought by the Fanjoys based on the absolute pollution exclusion contained in the policies. Advance Terrazzo argued that the absolute pollution exclusion was ambiguous when applied to routine business hazards such as the release of carbon monoxide from terrazzo grinders. The Court noted that the Minnesota Court of Appeals has had occasion to interpret absolute pollution exclusions in some policies and has consistently held that the absolute pollution exclusion is unambiguous and applies to pollutants occurring in the normal course of business activities, including indoor pollution.

In this dispute involving funds that were stolen during the refinance of a residential mortgage, the District Court held that (1) plaintiff Bank did not have insurance coverage under its Insuring Agreement because that agreement only covered loss of securities where the securities were already lost or stolen at the time funds were disbursed; (2) plaintiff Bank did not have coverage under a Fraudulent Mortgages Insuring Agreement because mortgagors knew the purpose of the mortgages, there was no evidence of misrepresentation, and the loss was due to theft; (3) an insurer does not have a duty to disclose to an insured the insurer's interpretation of a policy unless the insurer has affirmatively undertaken to do so; (4) there was no consideration for the bank notes and the mortgagors (borrowers) had a defense against liability to the bank, where the mortgagors never received the promised proceeds; and (5) the Bank was not a "holder in due course," which could preclude borrowers' defense, where the Bank did not fully perform its promise to provide funds for mortgagors' loan and the Bank did not incur an irrevokable obligation to the mortgagors.

In this case, Lexington provided $60 million in insurance coverage to UnitedHealth Group ("United") under a managed care professional liability policy. United argues that Lexington must pay another $2,000,000 or so to exhaust the policy limits, while Lexington responded that the amount is closer to $300,000. Lexington conceded that United is entitled to recover every penny of the $60 million in coverage and agreed to pay whatever amount the Court decided was due. United, however, complained that Lexington denied coverage on 35 claims and wished to interpret the plan's language to read that for payment of claims "as incurred" language requires the insurer (1) to advance defense costs not merely on the claims that it agrees to defend, but on all claims, including those that, in the insurer's view, clearly fall outside the coverage of the policy; (2) to pay defense costs the moment they are incurred and becomes obligated to pay for each hour as that hour is devoted to a claim, no matter when the time is billed, and no matter when the dispute over the coverage is resolved; and (3) gives the insured the right to litigate over how much of the policy limits should have been "attributed" to each claim. The Court found United's interpretation of the "as incurred" clause to be strained and fairly unmanageable. The Court denied United's motion for summary judgment and allowed discovery to take place on how much Lexington must pay to exhaust the $60 million in policy limits at which time the parties would appear before the Court and judgment would be entered against Lexington.

Plaintiff commenced this action against Liberty Mutual Insurance alleging that Liberty had intentionally obstructed his right to workers' compensation benefits in violation of Minn. Stat. § 176.82 (2004).

On August 20, 2001, the plaintiff sustained a work-related injury and sought workers' compensation benefits. Since Liberty discovered that the plaintiff had previously injured his back, it denied primary liability for plaintiff's injury. After plaintiff filed a workers' compensation Claim Petition seeking workers' compensation benefits, Liberty had plaintiff undergo an independent medical examination on November 5, 2003. That doctor concluded that plaintiff had indeed injured his back as a result of his work activities on August 20, 2001; thereafter, Liberty and plaintiff entered into settlement negotiations to resolve all claims except future medical expenses. The parties exchanged settlement offers until on May 25, 2004, Liberty paid plaintiff's claim to date through November 2003.

On September 14, 2004, plaintiff filed a new Claim Petition seeking additional penalties based on Liberty's failure to make timely interest, temporary partial disability, and penalty payments. A month later Liberty paid some, but not all, of plaintiff's temporary partial payments and interest. The parties negotiated for the rest of plaintiff's benefits until February 2005 when plaintiff filed a Complaint alleging a violation of § 176.82. The case was moved to Federal Court in March 2005. On May 18, 2005, after further correspondence, Liberty paid plaintiff a final payment of all his claims through May 31, 2004. Although the parties entered into a Stipulation of Settlement, plaintiff did not release his § 176.82 claim. Liberty motioned for summary judgment arguing that plaintiff could not establish by clear and convincing evidence that Liberty had intentionally obstructed his benefits since Liberty had eventually paid those benefits, and that there can never be a § 176.82 claim if the benefits are eventually paid. Upon review of case law, the Court found that under the right circumstances, an insurer who delays payment can be subjected to § 176.82 penalties. The Court found that there were genuine issues of material fact concerning whether Liberty's tactics of seeking a settlement regarding money already owed to the plaintiff was sufficiently cruel and venal so as to violate § 176.82; therefore, Liberty's motion for summary judgment was denied.

At issue in this matter was whether the employee's motor vehicle accident arose out of and in the scope and course of his employment. The employee was hired as a Pastor for two separate churches with separate facilities located approximately 12 miles apart (Cohasset and Grand Rapids). Neither church required the employee to live on church premises. On October 26, 2003, the employee was advised it was unnecessary for him to be present at the church service in Cohasset; however, the employee chose to attend the service that evening. After the service ended, the employee was involved in a motor vehicle accident while driving from Cohasset. A compensation judge found the employee did not sustain a personal injury which arose out of and in the course and scope of his employment with either of the churches and denied the employee's claim for benefits.

On appeal, the WCCA found the churches and the employee had not yet entered into an employment agreement on October 26, 2003. Thus, there is no written agreement among the parties regarding a travel allowance. However, the Court noted payment of a travel allowance is not determinative in this matter. The Court noted the rule from the Gilbert case, i.e. where an employee, who as part of his job, is required to bring his or her own vehicle for use during the workday, is injured off the employer's premises during a trip to or from work, the injury is compensable. This rule does not apply in this matter. Rather, the WCCA applied the analysis found in Wenda v. Olsten Healthcare. In Wenda, the court held an employee's travel to locations where he was required to perform registered nursing services did not meet the Gilbert exception on commuting where the employee's personal vehicle was not actually used in the performance of his nursing duties. Specifically, the Court noted that in order for a commute to or from work to be considered an exception to the general rule, the Supreme Court in Gilbert required that the employee's vehicle must be necessary "for use during the working day." In this case, as in Wenda, the employee's vehicle, although needed to get to and from work locations, was not integral to the performance of his principal pastoral duties. As such, the WCCA affirmed the compensation judge's finding that the employee's accident did not arise out of and in the scope and course of his employment.

In this matter, the WCCA was faced with the question of whether to vacate a compensation judge's December 16, 1994 Findings and Order on grounds that the employee is no longer permanently and totally disabled as a result of her work injury. In a Findings and Order filed December 16, 1994, the compensation judge found the employee suffered from chronic pain syndrome as a result of her work injury, that the work injury was a substantial contributing cause of the employee's continuing chronic depression, and that the employee had been permanently totally disabled since the date of injury. This decision was affirmed by the Workers' Compensation Court of Appeals and the Minnesota Supreme Court.

Thereafter, the employee intermittently treated with a psychologist. In April of 2006, the psychologist re-evaluated the employee after not having treated her for three years. In his April, 2006 report, the doctor noted the employee's chronic pain had been a topic of discussion during every appointment over the years and opined her disc herniation and resulting chronic pain from her March, 1981 work injury were still substantial contributing causes of her permanent total disability.

In June, 2004 and January, 2006, the employer and insurer had the employee undergo independent medical examinations wherein the IME doctor opined there had been inconsistencies in the employee's reporting of her alleged work injury, the employee exhibited signs of symptom magnification and pain behaviors, there was no objective evidence of lumbar radiculopathy, and video surveillance showed the employee walking with no visible discomfort. The IME doctor concluded the 1981 work injury was not a substantial contributing cause of the employee's condition and she was not permanently totally disabled. The insurer also had the employee undergo an independent psychiatric evaluation in January 2006. The doctor opined the 1981 work injury was one of the employee's many stressors and is not a proximal cause to her current major depressive illness. Based on the aforementioned IMEs, the employer and insurer filed a Petition to Vacate the compensation judge's 1994 Findings and Order on the basis of a substantial change in condition.

The employer and insurer's Petition to Vacate is governed by Minn. Stat. § 176.461 under which cause to vacate includes "a substantial change in medical condition since the time of the award that was clearly not anticipated and could not reasonably have been anticipated at the time of the award." The employer and insurer argued, among other things, there had been a substantial change in the employee's medical condition, no neurological deficits were found on examination by their IME doctor, their IME doctor opined the employee is not permanently totally disabled from a musculoskeletal standpoint, and the employee takes no more than Extra Strength Tylenol for her back pain. Based on the aforementioned contentions, the employer and insurer argued the employee's back condition resolved or improved to a degree not anticipated by the compensation judge's 1994 Findings and Order. However, the WCCA was not convinced. The Court noted the employer and insurer's IME doctor relied on medical records which predated the compensation judge's 1994 decision wherein he found the employee had sustained permanent partial disability of the back and was permanently totally disabled as a result of the 1981 work injury. The Court noted it had been adjudicated that the employee sustained a significant work injury in March, 1981, and that the work injury was permanent in nature. Nothing in the employer and insurer's IME report could be interpreted as showing a substantial improvement of the employee's physical condition since the issuance of the 1994 Findings and Order. Rather, the employer and insurer's doctor apparently did not believe the employee ever sustained a significant injury resulting in any permanency. As such, the WCCA found the IME's doctor's opinions insufficient to justify vacation of the compensation judge's decision. The employer and insurer also argued the employee's 1981 work injury was no longer a substantial contributing cause of the employee's mental health condition relying on the independent psychiatric evaluation they had completed. The Court instead relied upon the employee's treating doctor noting they were unconvinced the employee's long term depression somehow went from relating to the 1981 work injury as found in the 1994 Findings and Order to being related solely to other psychosocial stressors or a chemical imbalance. Psychiatric/psychological records from 1994 to the present reflected the employee's symptoms had waxed and waned, however, a constant in those records had been the continuing reference to her chronic pain, which her doctor, psychiatrist and psychologist related to her 1981 work injury. As such the WCCA found there was not a substantial change in the employee's psychiatric condition since the issuance of the 1984 Findings and Order.

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.