A near-normal 2023 hurricane season is predicted, California seeks to phase out sales of medium- and heavy-duty combustion trucks for fleets by 2036, and Florida’s litigation landscape appears to be driving up reinsurance rates.
California
CARB Approves New Regulations on Trucks
On April 28, California’s Air Resources Board (CARB) approved new regulations that would phase out the sales of medium- and heavy-duty combustion trucks in the state by 2036. The goal is to fully transition existing fleets to zero-emissions vehicles by 2045. Known as the Advanced Clean Fleets (ACF) regulation, the ACF works hand-in-hand with the Advanced Clean Trucks rule in California that requires manufacturers to accelerate sales of new zero-emissions heavy-duty trucks by 2035. The ACF applies to fleets performing drayage operations, fleets owned by government agencies, and high-priority fleets—those that own, operate, or direct at least one vehicle into California and have $50 million or more in gross annual revenue. High-priority fleets are alternatively defined as those that own 50 or more vehicles. The regulation provides several different phases. Drayage trucks, local delivery trucks, and government fleets must transition by 2035. Work trucks and day cab trucks (such as garbage trucks) have a later transition date of 2039. All other vehicles covered by the regulation must be zero-emission by 2042.—From CLM Member Rosie Badgett, Goldberg Segalla
Nevada
FLSA Lawsuit Over Tip Allocations
Gibraltar Hospitality Services, LLC, operator of Las Vegas restaurant 7th & Carson, is facing a class-action lawsuit filed by former employee Douglas Vasquez. According to the complaint, Gibraltar required tipped employees to share their tips with “supervising employees” who were not regularly and customarily tipped and not direct service providers to customers. As a result, the plaintiff and other tipped employees were allegedly deprived of tips that were rightfully theirs. The complaint asserts causes of action for conversion, unjust enrichment, and violation of the Fair Labor Standards Act (FLSA). Under the FLSA, employers may take a tip credit to cover some of the employee’s wages, but cannot require tipped employees to share tips with managers and supervisors or keep any portion of the tips for themselves. This case highlights the importance of fair wage and compensation practices in the hospitality industry. Employers must adhere to the FLSA’s guidelines regarding minimum wage, overtime pay, and tip distribution to ensure employees are fairly compensated for their work.—From CLM Member Priscilla L. O’Briant, Tyson & Mendes
Arizona
Court Expands Respondeat Superior Liability for Employers
In a 4-3 decision, the Arizona Supreme Court ruled that a respondeat superior claim against an employer remains viable even if the underlying employee claim is dismissed with prejudice for reasons unrelated to the merits of the respondeat superior claim. In Laurence v. Salt River Project Agric. Improvement & Power Dist.(SRP), defendant SRP argued that it could not be held vicariously liable for the actions of its employee driver because the trial court granted summary judgment in favor of the driver on the negligence claim. By contrast, plaintiff Jacob Laurence argued that SRP could still be vicariously liable for its driver’s actions because summary judgment was granted for reasons unrelated to the merits of the negligence claim. In agreeing with Laurence, the Arizona Supreme Court overruled a substantial portion of its longstanding precedent in DeGraff v. Smith and undoubtedly expanded the potential exposure faced by employers in all aspects of civil litigation.—From CLM Members Taylor H. Allin, Alexis Nicole Tinucci, and Brian Del Gatto, Wilson Elser
Florida
Litigation Drives Reinsurance Rate Hikes
Reinsurance costs could increase by 50-70% for Florida-based residential insurers before the start of the hurricane season. Such a steep increase could force insurers to pay more for reinsurance than they collect in premiums, which is “an unsustainable business model over the long haul,” a recent ALIRT Insurance Research report said. ALIRT asserts Florida’s litigation landscape is secondary to its vulnerability to natural disasters in driving reinsurance rates higher this year. However, litigation abuse is weighing heavily on the Florida property insurance market, including the 280,000-plus new lawsuits filed in March 2023 before the sweeping tort reform bill was signed into law. This is evidenced by much lower expected reinsurance renewals, on average, in other hurricane-prone states, as those states do not see the level of litigation abuse experienced in Florida. The high reinsurance renewals will lead to further rate hikes for Florida homeowners, with 40% average statewide premium increases expected this year.—From Mark Friedlander, Insurance Information Institute
Washington, D.C.
NOAA Predicts Near-Normal Hurricane Season
NOAA is predicting near-normal hurricane activity in the Atlantic this year, forecasting 12-17 total named storms, with five to nine of these becoming hurricanes and one to four becoming major hurricanes. NOAA says its outlook for the 2023 Atlantic hurricane season predicts a 40% chance of a near-normal season, a 30% chance of an above-normal season, and a 30% chance of a below-normal season, adding it has 70% confidence in those ranges. NOAA notes that, after three hurricane seasons with La Niña present, scientists predict a high potential for El Niño to develop this summer, which can suppress Atlantic hurricane activity. Other factors, such as an above-normal west African monsoon and warmer-than-normal sea surface temperatures in the Atlantic Ocean and Caribbean Sea, could offset El Niño’s influence.—From Senior Managing Editor Phil Gusman
Minnesota
Juul Settles First State Lawsuit That Went to Trial
Attorney General Keith Ellison announced a $60.5 million settlement with e-cigarette makers Juul and Altria over their marketing practices. The announcement follows Minnesota’s three-week trial against the companies in March and April 2023, and the Associated Press notes Minnesota’s lawsuit was “the first and still the only one of thousands of cases nationwide against [Juul Labs] to reach trial.” AP adds the case was settled just ahead of closing arguments. According to Ellison, the settlement prohibits Juul from marketing and selling to children and young adults, restricts Juul’s ability to sponsor events and use outdoor advertising in Minnesota, prevents Juul from distributing product samples, requires that Juul accurately disclose the nicotine content of Juul products, directs how Juul products may be sold in stores and limits online sales, and creates a retailer compliance program for Minnesota stores to ensure that Juul products are being sold with proper age verification. —From Senior Managing Editor Phil Gusman