CLM National: January 2021

The Illinois Supreme Court rejects a proposed class action over elevated lead-contamination risk that would have overwhelmed Chicago courts with claims, voters approve Proposition 22 in California to reclassify the employment status of app-based drivers, and, in Arizona, a court finds no coverage for COVID-19 losses under a pollution policy.

California

Prop 22 Redefines Status of App-Based Drivers

In September 2019, Gov. Gavin Newsom signed AB 5 into law, which addresses the employment status of workers and requires a three-factor test adopted by the California Supreme Court to determine if workers in California are employees or independent contractors. There are exceptions in AB 5, but app-based drivers were not exempted. In the 2020 election, California voters approved Proposition 22, which classifies app-based drivers from companies such as Uber, Lyft, and DoorDash as independent contractors instead of employees, thereby exempting these companies from AB 5. As independent contractors, app-based drivers would not be covered by various state-employment laws. However, Prop 22 adds certain benefits and protections specific to these drivers and companies, including minimum earnings, health care subsidies, mileage reimbursement, and vehicle insurance. Prop 22 also mandates that these companies develop policies and training programs to enhance safety and protections for their drivers and customers.—From CLM Member Allison B. Etkin

Arizona

Pollution Policy Does Not Cover COVID-19 Losses

The U.S. District Court in Phoenix found that a plaintiff resort alleging severe revenue loss due to COVID-19 cannot recover those losses under a premises pollution liability insurance policy issued by the defendant. In London Bridge Resort LLC v. Illinois Union Insurance Company Incorporated, the plaintiff had argued that COVID-19 constitutes traditional environmental pollution because different government agencies include “virus” in the definition of certain contaminants and pollutants. However, the court stated that “a virus being considered a ‘contaminant’ or ‘pollutant’ in certain instances does not render a COVID-19 outbreak ‘traditional environmental pollution.’” The court added, “Furthermore, a virus outbreak does not closely resemble the enumerated examples provided in the policy’s definition.” The court granted the defendant insurer’s motion to dismiss.—From Managing Editor Phil Gusman

Illinois

Court Rejects Class Action Over Lead-Contamination Risk

The Illinois Supreme Court, in Gordon Berry, et al. v. The City of Chicago, rejected a proposed class action that threatened to overwhelm Chicago with claims over elevated lead-contamination risk from its old water lines. An appeals court ruling sided with the plaintiffs, with the majority stating that the plaintiffs “sufficiently alleged a present injury in consuming lead-contaminated water, even if they have yet to develop physical ailments linked to such consumption.” But on Sept. 24, 2020, the Supreme Court overturned that ruling, finding Chicago homeowners needed to do more than simply claim the lead in their water was dangerous in order to hold up their claims that the City of Chicago had harmed them. Chief Justice Anne M. Burke wrote, “In this case, plaintiffs have alleged only that the city’s replacement of water mains and meters has made the proposed class members’ property ‘more dangerous.’ The concept of ‘dangerousness’ is not susceptible to objective measurement and, thus, cannot by itself be damage under the Illinois takings clause.”—From CLM Member Larry Mason

Louisiana

Judge Releases Plan to Settle Hurricane Lawsuits

A federal judge has released a plan to quickly settle expected litigation arising from Hurricanes Laura and Delta, which struck Louisiana in late summer. In an order obtained by American Press, U.S. District Judge James D. Cain Jr. of the Western District of Louisiana proposes a streamlined settlement conference, followed by mediation if the settlement conference does not resolve the issues. Dubbed the Streamline Settlement Process (SSP), American Press notes the process mirrors protocols established in Texas after Hurricane Harvey, and in New York after Superstorm Sandy. “These disaster protocols call for prompt sharing of specified information to promote uniformity, to facilitate prompt evaluation and communication of the litigation, and to facilitate the path to expedited mediation,” said Judge Cain. The order also says parties “shall conduct an informal settlement conference” within 30 days of the disclosure deadline in all hurricane cases. Within 15 days, attorneys for plaintiffs and defendants shall meet and discuss the potential date and manner of the conference.—From Managing Editor Phil Gusman

Florida

Established Case Law Protects Assignment of Benefits

The Florida 3rd District Court of Appeal reversed a trial court and found an insurer’s anti-assignment clause invalid. In Extreme Emergency Fire & Water Restoration LLC v. Certain Underwriters at Lloyd’s of London, defendant Lloyd’s argued that the clause was valid because the parties voluntarily negotiated the anti-assignment agreement; it was not a unilateral attempt to impose an invalid restriction. The trial court granted Lloyd’s motion for final summary judgment. The Court of Appeal, though, stated, “The unbroken chain of case law since the 1917 decision in West Florida Grocery does not draw the distinction Lloyd’s invites this court to make in the instant case.” The court added, “While many arguments have been made, and competing concerns expressed, regarding the propriety of anti-assignment clauses in insurance contracts…it falls to the legislature to weigh these competing concerns and resolve this issue as a matter of public policy…. And, for agreements entered into after July 1, 2019, our legislature has now done so.”—From Managing Editor Phil Gusman

New Jersey

Judge Exceeded Role When Evaluating Experts

In 2016, Superior Court Judge Nelson Johnson, then assigned to oversee the centralized litigation in state courts over talc powder and ovarian cancer, issued rulings in two cases striking plaintiffs’ key experts as unreliable and granting summary judgment in favor of the defendants. Upon review, an appellate panel reversed, concluding Judge Johnson had exceeded his role as a gatekeeper in assessing the experts’ methodology and the soundness of their data, and had instead strayed into a credibility assessment to favor the defendants’ expert’s opinions. The panel acknowledged that a trial court’s gatekeeping decision is to be reviewed under an “abuse of discretion” standard, however the panel did not appear to afford the trial court any deference. To those on the defense side, Judge Johnson’s underlying opinion represented the kind of rigorous gatekeeping analysis a trial court should bring to bear. Hopefully, the appellate division’s reversal will not dissuade other trial courts from the time and effort required to conduct a meaningful gatekeeping analysis of expert testimony.—From CLM Member H. Lockwood Miller III