Kentucky Court of Appeals
Product Liability - Design Defect - Seatbelts
Nissan Motor Company, LTD v. Maddox, ___ S.W.3d ___, 2013 WL 4620488 (Ky.App. August 30, 2013), motion for discretionary review granted August 13, 2014 (2013-SC-685-DG)

The plaintiff was a passenger in a Nisson Pathfinder when it was struck head on by a drunk driver. She and her husband, the driver, had previously undergone a gastric bypass. While the husband's weight had normalized, the plaintiff remained obese, weighing 240 pounds. The husband had relatively minor injuries, while the injuries to the plaintiff were substantial. In addition to numerous fractures, the gastric bypass ruptured during the collision. The description of the injuries clearly would generate a risk of a sympathy verdict.

The plaintiff was critical of the design of the seatbelt system. There was no allegation that it failed to comply with federal regulations governing seatbelts. There was no allegation of a defect in the belt. Instead, plaintiff argued that Nisson engaged in testing using a normal size dummy, and designed the belt in order to get the best results, and therefore the best rating, using a normal size dummy. Plaintiff alleged that this made it more dangerous for obese people like the plaintiff.

While the opinion appears to be parroting statements from the briefs, the focus seems to be the use of load limiters. The opinion focuses on the fact that more webbing was released for plaintiff than was released for her husband, but it is not clear that the Court understood why. In a head on collision, the vehicle is subjected to a rapid negative acceleration. A passenger inside will continue to travel at the original rate of speed until something exerts a force upon the passenger to decelerate him. Before seatbelts, this was the dash, windscreen, steering wheel, etc. Seatbelts apply a force to the passenger earlier, which causes the passenger to decelerate with the car. In a high speed head on collision, the force applied by the seat belt is a substantial one, and the belt itself caused injuries to passengers. At the risk of oversimplification, the load limiter releases webbing in an effort to "spread" the deceleration over time, reducing the force applied to the torso of the passenger. It only makes sense that since the vehicular deceleration is the same for both passengers, the greater the mass the greater the force (f=ma). So for the seatbelt to function properly, the larger mass requires more time to achieve the same protective result, which could only be accomplished by allowing more webbing to release. The fact that more webbing was released for the obese plaintiff is not a defect at all but a response to the law of physics. By the same token, if no load limiter is used, the forces applied to the obese passenger's body will be greater than a normal passenger, and one would expect greater injuries there as well. It is simply absurd to claim that Nisson ignored obese people in this context. With or without a seatbelt, with or without a load limiter, an obese person is at an increased risk of more serious injury just because of the way force acts upon mass, all other things being equal.

In effect, the holding of the court is that a manufacturer can be held liable if one narrow class of user may have a higher risk of injury than others. There is no evidence cited in the lengthy opinion that an obese person without a failed gastric bypass, and without intrusion and seat failure specific to this case, was at a higher risk of injury beyond that attributable to weight alone. Further, if we suppose that Nissan had focused on obese passengers, any change would have been at the expense of the safety of those with normal weight. So while the manufacturer might theoretically be able to redesign to make the seat belt more effective for the obese, all the normal sized passengers would have a claim that they were not the center of the designer's attention and that the seatbelt was not optimized for them. This type of decision must be made with a view towards all user, and in a trial of this type a jury cannot help but focus on ability to prevent this injury as opposed to the prevention of injuries generally.

The opinion offers little in the way of analysis that might be helpful in future cases, and effectively says that public policy can be set by anyone who calls themselves an expert even though we all know that there is an entire industry who makes a living off offering opinions for hire. If there was a better way to balance the competing safety concerns the opinion did not disclose it. Even if there were options, this type of issue is at best a matter of judgment. The real point of this opinion is that courts are not a competent mechanism for making decisions of this type, and the whole idea of crashworthiness liability is really little more than a welfare program (or no-fault program if you prefer). The fact that two judges on the panel did not understand the absurdity of an award of punitive damages is in this context says it all.

Kentucky Supreme Court
Fiduciary Duty - Contract for Contingency Fees
Abbott v. Chesley, 413 S.W.3d 589, 2013 WL 4635160 (Ky. August 29, 2013)

This is another phase of the longstanding Fen-Phen litigation, which has both criminal and civil tentacles. This opinion addresses aspects of the civil liability of the three primary Fen-Phen attorneys, two of whom are currently incarcerated. We would note that in this opinion the Supreme Court agreed with our criticism of the Court of Appeals opinion in our February 2011 discussion.

The three Kentucky attorneys each clients who claimed injury resultant to the taking of Fen-Phen, and each attorney had separate contingency contracts with their clients, with different terms. The three attorneys worked together in prosecuting the case. The case was certified as a class action, and the three, along with two other attorneys, entered into a written agreement outlining the role each attorney would play and how any fees would be shared. A settlement was reached, and the agreement provided that the class would be decertified, the three attorneys would allocate among their combined 431 clients, and that they would provide an accounting to their clients. To make a long story short, they paid themselves more than they were entitled from the settlement fund. The attorneys not only failed to make an accounting to the clients as required by the agreement, but also falsely represented that the defendant had determined the amount of each client's recovery. The attorney fees taken were approved by the trial judge, but in a thinly disguised kickback also received a portion of the settlement proceeds.

The trial Court determined that the three attorneys had breached their fiduciary duties by retained settlement funds in excess of the amounts to which they were entitled under their fee contracts. The Court of Appeals held that it was error to find liability as a matter of law. The attorneys offered an affidavit from Kenneth Feinberg, who was identified as an expert in the settlement of mass tort litigation, who the attorneys suggested basically said that it was normal for attorneys in class action cases to take more money than they were entitled to take, and that the client contracts did not control the amount the attorneys were entitled to take as fees. The Supreme Court correctly concluded that his opinion was not material to the amount of fee that the attorneys were entitled to take. In class actions, the Court must approve the attorney fees, and the fees the lawyers received in this case were approved, albiet by a judge who also received some of the money. This contention was rejected because under the settlement agreement, the class was to be decertified. But this approval in class actions is designed to protect the clients from excessive fees, not to allow attorneys to obtain higher fees than the clients authorized. Ususally, there is no fee agreement between the lawyers and most members of the class. So, in this case, the lawyers actually breached their fidiciary duty by asking the Court to approve excessive fees, in addition to their failure to disclose their actions to their clients.

But the Court did not stop there.The tort of breach of fiduciary duty has been an amorphous cause which the Court has frequently sidestepped its obligation to define it by calling on the jury to do its job. In this case, the Court determined that whether conduct is a breach of fiduciary duty is a question of law. If the Court does not walk this back, the limits and elements of this tort will necessarily become better defined. I the Court does not walk this position back or limit it in the future, this should lead to some clarity for the public and bar.

Kentucky Supreme Court
Multiple Tortfeasors - De Facto Partnership
Abbott v. Chesley, 413 S.W.3d 589, 2013 WL 4635160 (Ky. August 29, 2013)

The three attorneys also resisted the imposition of joint and several liability and insisted that their respective liability should be determined by apportionment under KRS 411.182. The Court determined that apportionment of fault did not apply to this situation, and gave two reasons for its decision. One is quite interesting and has the potential for impacting all co-counsel arrangements. The other is so patently wrong that the best we can say is that it is disappointing to see.

By its own terms, KRS 411.182 applies to all tort actions. Breach of fiduciary duty is a tort. Thus, argued the lawyers, they were entitled to an apportionment of fault. The Court, however, determined that the three attorneys were acting in a joint adventure, which the Court held was a de facto partnership. Then the Court held that the "partners" would be jointly and severally liable under KRS 362.220. Since the partnership joint and several rule was enacted after the several liability rule set forth in KRS 411.182, it only makes sense that the latter enactment was intended to be an exception to the former.

The scope of this ruling is less than clear. The Court suggested that it would not apply as to multiple attorneys that represented separate clients even if they shared resources. However, this rule would appear to any case where attorneys serve as co-counsel for the same client. This would also seem to be applicable to lead counsel/local counsel relationships. Perhaps attorneys entering into these relationships need to start thinking about indemnity agreements.

There was no reason to take the analysis further, but the Court offered the alternative ground for its holding that KRS 411.182 did not apply to contract actions. While this is true, the suggestion that this was a contract action is just nonsense. First, there is no indication in the opinion that breach of contract was plead, and the issue before the court was plead as a tort. Second, none of the clients had a contract with the "partnership". If this is taken seriously, any tort which accompanies or depends on a contractual relationship would be outside the apportionment statute. The Court will in some future case regret this aspect of the opinion, and when that occurs the Court will have to admit its error, sidestep the language as dicta, or compound the error.

Kentucky Supreme Court
Open Records - Law Enforcement Exception
City of Fort Thomas v. Cincinnati Enquirer, 406 S.W.3d 842, 2013 WL 4609021 (Ky. August 29, 2013)

The Open Records Act has several exceptions, one of which relates to certain records of law enforcement agencies, described in KRS 61.878(1)(h). In order to claim the exemption, the agency must show that 1) the records were compiled for law enforcement purposes, 2) a law enforcement action is prospective, and 3) the premature release of the records would harm the agency. The Appellee was seeking the investigative police file relating to a murder.

The trial Court, relying on Skaggs v. Redford, 844 S.W.2d 389 (Ky. 1992), held that the records were entitled to a blanket exemption because the criminal was still serving her sentence and the conviction could be challenged under R. Cr. 11.42. The Court of Appeals reversed, directing that the records be divided into exempt and non-exempt portions. The Supreme Court agreed that any exemption was not a blanket one as directed by the Court of Appeals, and the statute is quite explicit in this regard. KRS 61.878(4). But the Court went much further, and provided significant clarification as to the proper application of this exception.

The most important aspect of the Court's ruling relates to the connection between prospective action and harm. In Skaggs the Court held that the Commonwealth Attorney's file was exempt until the sentence was carried out, effectively holding that harm could be inferred from the prospect of future action. In 1992, an amendment effectively adopted this view in the limited context of county and Commonwealth Attorneys. In this case, the Court overruled Skaggs in the context of other law enforcement agencies. The agency must show harm in addition to the prospect of future action.

Accordingly, an agency seeking exemption must articulate a factual basis for concluding that because of the records contents its release posed a risk of harm in the prospective action. The Court does not require a line-by-line or document-by document assessment, but the agency must identify the kinds of records it has and articulate how each category would harm the agency. The categories must be ones that allow the Court to trace a rational link between the nature of document and the alleged likely harm. In reviewing the agency claim, the Court should insist on a factual showing by affidavit, oral testimony, or in rare cases, in camera inspection.

Kentucky Court of Appeals - Unpublished
Insurance - UIM - Coots and Trial
Elam v. Smith, 2013 WL 4508004 (Ky.App. August 23, 2013), motion for discretionary review filed September 23, 2013 (2013-SC-672-D), dismissed as settled December 12, 2013.

This case arose from a two party rear end collision and the plaintiff Elam was a passenger in the rear ended automobile. Elam was a salesman and the rear ended automobile was owned by his employer, Audi of Lexington. He sued the driver Smith who rear ended him and the customer Franz. Elam also sued Harco, the liability insurer for Audi, and his own UIM insurer, Kentucky Farm Bureau. Smith's insurer tendered it limits under Coots, and Harco decided to front the money. No one tendered for Franz.

The problem then is how to apply the misguided case of Earle v. Cobb, 156 SW 3d 257 (Ky. 2004), which held that a UIM insurer should be identified at trial. This case further illustrates that the Earle Court did not understand the nature of UIM coverage and gave no thought to how the opinion would apply to cases not before it. The trial judge applied some common sense, and resolved the conflicting issues by simply bifurcating the tort and contract claims, and trying them separately. Under this scenario, there was no reason to identify the insurers, since the issue being tried had nothing to do with the contract claims.

The Court of Appeals approved this process, and made some interesting observations in the process. First, the Court noted that the trial judge has considerable discretion in determining whether severance would be helpful, once that determination is made severance is mandatory. The Court noted that the identification of Harco would have injected the issue of insurance into the case, which would have been unfair to Franz. Second, the Court held that the number of parties distinguished Earle, and that decision needed to be refined for cases with multiple parties. Third, the Court put some weight on the fact that the real fight was between the two tortfeasers, and that should be resolved before dealing with the contract claims.

This case may be a big step toward the ultimate goal of having Earle overruled. Of course, it remains to be seen whether the Supreme Court is willing to move in the same direction, so it will interesting to see if review is sought and whether it is granted or denied.

Kentucky Court of Appeals
Exclusive Remedy - Parent Corporation as Insurer
Falk v. Alliance Coal, LLC, ___ S.W.3d ___, 2013 WL 4246048 (Ky.App. August 16, 2013), motion for discretionary review granted August 13, 2014 (2013-SC-655-DG)

This negligence claim was brought by the estates of two miners who were killed while in the employ of subsidiaries of Alliance. In Boggs v. Blue Diamond Coal Company, 590 F.2d 655 (6th Cir. 1979), the Sixth Circuit held that a parent corporation was not an employer or contractor as to the employees of a subsidiary and could be held liable for its original negligence. Alliance nonetheless plead the workers' compensation's exclusive remedy as a defense, arguing that Alliance was an insurer.

The Court accepted the Alliance argument. Alliance was self insured in accordance with the regulations governing workers' compensation. Alliance had filed a joint application with its subsidiaries, which required the parent to file a guarantee that it would cover any benefits owed by the subsidiary. The Court held that the Alliance self insurance program acted like an internal insurance program. We would not be surprised if the Supreme Court found this issue interesting, and if review were sought and accepted, the Court should be asked to consider disavowing the Boggs case in its entirety.

Kentucky Court of Appeals - Unpublished
Premises Liability - Open and Obvious Conditions
Coleman v. Lowe's Home Improvement, 2013 WL 4400726 (Ky.App. August 16, 2013)

The plaintiff was a customer in a Lowe's store when she tripped on a rolling ladder in the aisle. The ladder was eight to ten feet tall and three feet wide. The trial Court found the ladder to be an open and obvious condition.

The Court of Appeals affirmed this finding, and discussed the impact of the McIntosh case. The opinion propagates the myth that McIntosh changed Kentucky law, but since the myth is created by McIntosh itself the lower courts may feel obligated to do so, More dangerous is the dicta which continues to conflate duty with the negligence of the plaintiff, again based on language in McIntosh. That such a ladder is obvious to a customer is of course a no brainer.

The plaintiff argued that Lowes should be liable notwithstanding the obvious nature of the condition because a customer could be expected to be distracted by the merchandise. This panel held that McIntosh requires that there be a foreseeable stressful or time-sensitive distraction. This distinction is dubious and the better holding may have been based on the fact that the ladder was so obvious that mere distraction could not make it unreasonably dangerous. The ramifications of a poor decision continue to manifest themselves, hopefully to be cleared up shortly when the Supreme Court decides the two pending open and obvious cases.

Kentucky Court of Appeals
Limitations - Violation of Resident's Rights Statute
Kindred Nursing Centers Limited Partnership v. Overstreet, ___ S.W.3d ___, 2013 WL 4033906 (Ky.App. August 9, 2013), motion for discretionary review granted August 13, 2014 (2013-SC-620-DG)

This suit was brought to recover personal injury and wrongful death damages on behalf of the estate of a patient in a nursing home three years after the patient's death. The Complaint specifically alleged violations of KRS 216.515. The Court rejected the plaintiff's argument that the claim was based on the five year limitation governing liability created by statute. KRS 413.120(2). The Court held that the rights established by the statute simply defined duties that would be applicable in an ordinary negligence action, and thus the personal injury limitations applied.

Circuit Court of Appeals for the Sixth Circuit
Employment - FMLA - Policies for Requesting Leave
Srouder v. Dana Light Axle Manufacturing, LLC, 547 F.3d 564, 2013 WL 4007646 (6th Cir. August 7, 2013)

In this case the Sixth Circuit updated the law relating to the effect of employer policies requiring notice on FMLA interference claims. In Cavin v. Honda of America Manufacturing, Inc., 346 F.3d 713 (6th Cir. 2003), the Court struck down an employer policy that required notice for absences exceeding one day and within three days where the reason for the leave was unforeseeable. However, the regulations governing such policies where leave is foreseeable changed in 2009, 29 C.F.R. § 825.302(d), authorizing enforcement of the employer's usual and customary notice requirements absent unusual circumstances.

In this case, the employer required the employee to call into a prescribed number before starting time to inform of the expected absence. The employee was terminated for failing to do so. While the facts were complicated and to some extent controverted, the Court rejected the employee's excuse that amounted to substantial compliance. The Court also rejected the argument that his alleged understanding that he had been excused from compliance did not constitute a waiver by the employer.

Kentucky Court of Appeals - Unpublished
Insurance - UM/UIM - Motor Vehicle
Chaney v. Safe Auto Insurance Company, 2013 WL 3968653 (Ky.App. August 2, 2013)

Mr. Rose was killed when his pick-up truck was struck by a 65 TMV wheel loader crossing the road. He was insured by State Auto, and his estate made a claim under the underinsured coverage of the policy. State Auto defended on the ground that the wheel loader was not a motor vehicle and therefore not an underinsured motor vehicle. The Court of Appeals panel applied the definition found in the Motor Vehicle Reparations Act of 1974, KRS 304.39-020(7), which excludes from the definition "such other construction equipment customarily used only on the site of construction and which is not practical for the transportation of persons or property upon the highways". The Court affirmed the trial Court's finding that the wheel loader was construction equipment and not practical for transportation of people or property, even though it had been used to haul lumber at some point in time.