Sunday, February 22, 2015
The Unfinished Business Doctrine
The Unfinished Business Doctrine is a rule with respect to how the work of a dissolved law or other professional firm will be handled upon the firm's dissolution. Recently, even as the New York Court of Appeals rejected the Unfinished Business Doctrine with respect to fees earned by attorneys on hourly fee arrangements, the Colorado Supreme Court upheld the doctrine with respect to both hourly and contingency fee arrangements. A short article of reviewing these developments was published in the February, 19th issue of Business Law Today.
Tara McGuire, a student at the University of Louisville of Law School of Law who will be joining Stoll Keenon Ogden this fall after she passes the bar exam, served as co-author with me.
HERE IS A LINK to that article.
Friday, February 20, 2015
In a decision rendered earlier this month by the Kentucky Court of Appeals, it determined that an employee's agreement to arbitrate disputes with his employer would be enforced. Gatliff v. Firestone Industrial Products Company, LLC No. 2013-CA-001568-MR (Ky. App. February 6, 2015).
Gatliff charged her employer, Firestone Industrial Products Company, LLC, with violation of the Kentucky Civil Rights Act consequent to her termination from employment after completing gender reassignment surgery and allegations of creating a hostile work environment. The suit was initially removed to federal court, but then remanded to the Circuit Court on the basis that the claimed damages were not sufficient to meet the requirements of diversity jurisdiction. Firestone then sought to compel arbitration of the dispute, an effort which Gatliff resisted.
According to the Court of Appeals, Gatliff had agreed to arbitrate all disputes in a series of three separate documents. The first was signed when she applied for a full-time position with Firestone in 1998. Also in 1998, she acknowledged receipt of a copy of the Firestone employee dispute resolution policy, it containing an agreement to arbitrate. She is well, in 2003, signed a document referencing the employee dispute resolution policy and acknowledging that she had had opportunity to review it. Objecting to the enforcement of these agreements against her, Gatliff asserted that (i) no meeting of the minds occurred; (ii) no provision stated that she was waiving her right to a jury trial; (iii) no consideration existed for the 2003 agreement as to the revised employee dispute policy and (iv) the agreement is so unconscionable.
In support of the assertion that no meeting of the minds occurred, Gatliff claimed that “she did not read the plans referred to in the acknowledgments and the acknowledgments did not contain a jury waiver provision." The Court of Appeals rejected this assertion. Rather, the Court found that the documents signed by Gatliff referred to the dispute resolution plan and represented that the signatory acknowledged having had opportunity to review the plan, relying in part on the rule that "a signor to a contract is presumed to know the contents of the contract.” Slip. Op. at 8 (citation omitted).
The Court of Appeals stated that arbitration agreements need not contain an explicit waiver of the right to a jury trial as that waiver is an obvious consequence of an agreement arbitrate. As to the argument for a lack of consideration, the court, in reliance upon Spears v. Carhartt, Inc., 215 S.W.3d 1 (Ky. 2006), held that continued employment is itself sufficient consideration to support an agreement to arbitrate. In connection with, the court did not discuss the June, 2014 ruling of the Kentucky Supreme Court in Charles T. Creech, Inc. v. Brown, wherein it was determined that noncompete agreements require consideration to the employee (i.e., something of value) above and beyond continued employment. Seeking to avoid the agreement on the basis that it does not require that arbitration take place in Kentucky (see Ally Cat, LLC v. Chauvin, 274 S.W.3d 451, 455 (Ky. 2009)), the Court of Appeals relied upon the fact that the agreements with Firestone provided that they would be interpreted under the Federal Arbitration Act, and as the Federal Arbitration Act imposes no requirement as to the locale of the arbitration. Likewise rejected were assertions of substantive unconscionability based on the failure to agree she would be provided a free record of the proceedings and for attorney fees and costs. The Court’s rejection of these challenges is likely dicta in that first the Court found that they were not timely in that they were not raised to the trial court below.
Agreement to Arbitrate Disputes Over Nursing Home Care Enforced
It is quite typical, when a person is admitted to a nursing home or similar facility, that as part of the package of documents executed that there be an agreement to arbitrate any disputes. Often these agreements are executed by a family member or someone else acting pursuant to a power of attorney, the person being admitted not being in a position to review and execute them themselves. A significant string of Kentucky cases have held that these agreements to arbitrate are not enforceable because the power of attorney did not authorize the agent to bind the principal to arbitration. A recent case found that the power of attorney was sufficient to bind the person being admitted to arbitration. Bardstown Medical Investors, Ltd. v. Dukes, No. 2013-CA-001783-MR (Ky. App. Jan. 23, 2015).
Doris Dukes was admitted to the Life Care Center of Bardstown in connection with certain admission documents executed by Bobby Dukes, her husband and the holder of her power of attorney. That power of attorney specifically authorized Bobby too, on Doris’ behalf, “enter into contracts of any kind of [sic - or] description whatsoever, and to exercise any light [sic - right], option or election which I may have or acquire under any contract.” The power of attorney went on to give Bobby Dukes, on Doris behalf, the right “to compromise, settle renew any claim of or against me, or any right which I may be entitled to assert and which may be asserted against me.”
On behalf of Doris, Bobby had filed suit against the Life Care Center of Bardstown alleging numerous instances of negligence. Life Care Center sought an order requiring that the dispute go to arbitration. In reliance upon Ping v. Beverly Enterprises, Inc., 376 S.W.2-D 581 (KY. 2012), the trial court denied the motion to compel arbitration. In Ping, the Kentucky Supreme Court determined that there was no binding agreement to arbitrate on the basis that the person who executed the arbitration agreement held only a health-care power of attorney from the person admitted.
The Court of Appeals would reverse. In this instance, the power of attorney specifically authorized Bobby Dukes, on Doris’ behalf, to enter into commercial agreements. As such, Doris had implicitly given to Bobby authority to on her enter into an agreement to arbitrate. In connection there with, the Court of Appeal cited the Restatement (Third) of Agency § 2.02(1), it providing:
An agent has actual authority to take action designated or implied in the principal's manifestations to the agent and acts necessary or incidental to achieving the principal's objectives, as the agent reasonably understand the principal's manifestations and objectives when the agent determines how to act.
Plaintiff in Civil Rights Act Action Refused to take “Yes” for an Answer
A recent decision of the Kentucky Court of Appeals reviews and rejects the plaintiff’s claims of violation of the Kentucky Civil Rights Act when the employer did everything possible to address the alleged improper conduct and never took any negative action against the plaintiff. In effect she refused to take “Yes” for an answer. Ransom v. B.F. South, Inc., No. 2013-CA-001340-MR (Ky. App. Feb. 6, 2015).
Ransom, an employee of a Wendy’s restaurant operated by B.F. South, Inc., was undergoing (the opinion is not specific as to where Ranson was in the process) sex reassignment surgery. In the summer of 2011 another employee, T.J., made some inappropriate comments regarding Ranson to one or more other employees. Word of these comments got back to Ranson, and she went to her manager. The district manager then met with Ranson, T.J. and the store manager. Thereafter Ranson and T.J. were never scheduled to work the same shift, and shortly thereafter T.J. was transferred to another store. The store manager also met with the other employees and put a stop to their discussion of the topic.
Eventually Ranson would bring suit alleging violation by B.F. South of the hostile work environment/sexual harassment provisions of KRS 344.040 and the retaliation/wrongful discharge provisions of the same law. All claims were dismissed on summary judgment, and this appeal followed. The Court of Appeals would affirm the trial court’s dismissal of the action.
As for the claim of hostile work environment, “Ranson failed to make the requisite showing that the alleged conduct rose to the level of actionable harassment,” i.e., that it be “sufficiently severe or pervasive ‘to alter the conditions of (the victim’s) employment and create an abusive working environment.” Slip op. at 5-6 (citations omitted). In this case Ranson acknowledged that after T.J.’s comments “no one at Wendy’s has made any offensive comments about her gender.” The company had undertaken extensive efforts to prevent further inappropriate induct once it learned of it. Ranson as well testified in her deposition that the store manager and other employees “have been, and continue to be, supportive of her.” Slip op. at 7. On those basis there was no either objective or subjective basis for finding a hostile work environment.
As for the claim of retaliation, the demotion at issue took place prior to her complaints as to T.J.’s conduct, and that after the complaint was filed she received a promotion to team leader and with that a raise. Further, it was only after she filed her suit against B.F. South and had been deposed that she voluntarily quit. “Ransom was never terminated by Wendy’s.” Slip op. at 9. Ergo, Wendy’s never took any adverse action against Ranson. As such there could be no claim of retaliation.
Stettenbenz v. Butch’s Rod Shop, Inc. Ordered Not To Be Published
Stettenbenz v. Butch’s Rod Shop LLC, 2013 WL 4779862 (Ky. App. Sept. 6, 2013) the Court of Appeals addressed the standard required to award expectancy damages with respect to a breach of contract action while also rejecting rejecting a suggestion that the veil of the corporate debtor should be pierced. The opinion, which is reviewed HERE IS A LINK, was designated as “Not To Be Published.”
On February 11, 2015, the Kentucky Supreme Court denied a motion for discretionary review. In addition, and I’m not sure as to why this was done as it appears to have been redundant, the Supreme Court ordered that the Court of Appeal’s decision not be published.