Florida’s statute of repose for product liability actions is found at §95.031(2)(b), Fla. Stat., and provides, in part, that “[u]nder no circumstances may a claimant commence an action for products liability, including a wrongful death action or any other claim arising from personal injury or property damage caused by a product, to recover for harm allegedly caused by a product with an expected useful life of 10 years or less, if the harm was caused by exposure to or use of the product more than 12 years after delivery of the product to its first purchaser or lessee who was not engaged in the business of selling or leasing the product or of using the product as a component in the manufacture of another product.”1
With limited exception, all products, including motor vehicles, are conclusively presumed to have an expected useful life of 10 years or less.2 However, “[a]ircraft used in commercial or contract carrying of passengers or freight, vessels of more than 100 gross tons, railroad equipment used in commercial or contract carrying of passengers or freight, and improvements to real property, including elevators and escalators” are not subject to the statute of repose.3 For these products, “except for escalators, elevators, and improvements to real property, no action for products liability may be brought more than 20 years after delivery of the product to its first purchaser or lessor who was not engaged in the business of selling or leasing the product or of using the product as a component in the manufacture of another product. However, if the manufacturer specifically warranted, through express representation or labeling, that the product has an expected useful life exceeding 20 years, the repose period shall be the time period warranted in representations or label.”4
The full article can be accessed here.
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1. Fla. Stat. §95.031(2)(b)
2. Id.
3. Fla. Stat. §95.031(2)(b)(1)
4. Fla. Stat. §95.031(2)(b)(3)
With bipartisan politics virtually nonexistent, the upcoming midterm elections could have an outsized impact on federal policy, not only for the hot-button issues that have dominated the headlines since President Trump took office, but also in areas like investor protection.
Whether or not that happens depends on whether Republicans maintain control of both the House of Representatives and the Senate, or cede one or both of their majorities to the Democrats. All 435 members of the House are subject to elections, as they are every two years. For the Democrats to take back the House, they would need to add 25 new seats to their current 193. For the 100-member Senate to change hands, the Democrats would have to pick up two of the 35 seats up for election to gain a majority (if they win only one seat, the Senate would be tied 50-50, with Vice President Pence breaking any deadlock). To secure additional seats, Democrats are keenly focused on potential pickup opportunities in Arizona, Nevada and Tennessee, while the Republicans are looking to flip seats in Florida, Missouri, Montana, North Dakota and Indiana.
As of October 1, the Realclearpolitics.com “poll of polls” gives Democrats a 7.4% advantage in the generic Congressional ballot, which along with historical trends would indicate the Democrats have a good chance of winning control of the House. On September 27, Kyle Kondik, Managing Editor of Larry J. Sabato’s Crystal Ball of the University of Virginia’s Center for Politics said, “Our best guess right now is a Democratic House gain of somewhere in the low-to-mid 30s. But there are enough very close races that something like a 30-seat gain could turn into more like a 20-seat gain and leave the Democrats short of a majority. Back in July, we said the Democrats were ’soft favorites‘ to win the House. Their odds have likely gotten better since then, or at the very least have not gotten worse, but the GOP still has an opportunity to retain the House with some breaks.”
As for the Senate, most pundits think it will likely stay within a vote or two on either side, especially given the particular seats up for election, with Democrats needing to defend 26, including some in states where President Trump is very popular, and Republicans defending only nine, all but a handful considered relatively safe. Charlie Cook, Founder of The Cook Political Report, said on September 23 that: “What we are dealing with this year is actually very simple: there is a blue wave and a red sea wall. This election all turns on whether the blue wave rises above the Republican sea wall.” From Cook’s perspective, the sea wall has been created by the Republican institutional advantages from the 2010 redistricting effort and the fact Republican voters are more evenly spread out, whereas Democratic voters are clustered generally on the coasts and specifically in large cities.
By Laura H. Posner and Eric S. Berelovich
In June 2018, the Supreme Court agreed to hear Lorenzo v. SEC, a case in which the Securities and Exchange Commission (“SEC”) found Francis Lorenzo liable for emailing false and misleading statements to investors that were originally drafted by his boss. The SEC asserted claims under the scheme liability provisions of Rule 10b-5(a) and (c), as well as the false-and-misleading statements provision of Rule 10b-5(b). A divided panel of the U.S. Circuit Court of Appeals for the District of Columbia held that, under the Supreme Court’s precedent in Janus Capital Group, Inc. v. First Derivative Traders, Lorenzo did not “make” a false and misleading statement as required for liability under Rule 10b-5(b), because he did not have “ultimate authority” over the statements. The D.C. Circuit held, however, that Lorenzo was liable under the scheme liability provisions. Before his confirmation to the Supreme Court, Judge—now Justice—Kavanaugh wrote a dissenting opinion arguing Lorenzo is not liable under any provision of the federal securities laws. Lorenzo appealed the D.C. Circuit’s decision, arguing that an individual cannot be liable for false and misleading statements under the scheme liability provisions where the same individual did not “make” the statements under Rule10b-5(b). Lorenzo’s appeal raises complicated issues regarding, among other things, the line between Rule 10b-5(b) and the scheme liability provisions, the line between primary and secondary liability in SEC enforcement actions, and the scope of the scheme liability provisions.
In an amicus curiae (i.e., friend of the court) brief filed in the Supreme Court, Cohen Milstein recently argued that the Court need not decide these thorny issues. It can uphold the D.C. Circuit’s ruling simply by applying Janus to find that Lorenzo was a “maker” of the statements at issue, and thus find he is liable under Rule10b-5(b).
Janus held that “[o]ne ‘makes’ a statement by stating it.” Janus, 564 U.S. at 142. “For purposes of Rule 10b-5, the maker of a statement is the person or entity with ultimate authority over the statement, including its content and whether and how to communicate it.” Id. Similar to Lorenzo’s argument here, after Janus, corporate officers who signed documents containing untrue statements attempted to avoid liability by arguing that their company or board of directors had “ultimate authority” over the statements. See, e.g., In re Smith Barney Transfer Agent Litig., 884 F. Supp. 2d 152, 163-64 (S.D.N.Y 2012). But this strategy was roundly rejected. See id.Thus, in our amicus curiae brief, we argue that the fact that Lorenzo signed the emails is decisive. Just like a corporate officer who puts her signature on a corporate statement written by others, Lorenzo adopted the emails as his own by signing them.
Eight years after the U.S. Supreme Court ruled that the federal securities laws only applied to securities acquired domestically, courts continue to differ over how to apply that “transactional test” to American Depositary Receipts (“ADRs”), tradeable certificates issued by U.S. banks that correspond to shares of foreign stock.
In the latest example, Stoyas, et al. v. Toshiba Corp., the Ninth U.S. Circuit Court of Appeals has ordered a lower court to give purchasers of Toshiba ADRs the opportunity to pursue a case against the Japanese company under Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”). The district judge had dismissed the lawsuit, which involves ADRs acquired on an over-the-counter (“OTC”) market, not ones listed on a stock exchange.
In its July 17 ruling to reverse and remand, the Ninth Circuit said plaintiffs could successfully argue that their ADR purchases met the conditions established by the Supreme Court in its 2010 decision in Morrison v. National Australia Bank Ltd., which found the Exchange Act could only apply to “transactions in securities listed on domestic exchanges, and domestic transactions in other securities.” The three-judge panel cited plaintiffs’ claims that the Toshiba ADRs were purchased in the United States by U.S. entities from depositary banks based in New York and stated, “Accordingly, an amended complaint could almost certainly allege sufficient facts to establish that [the plaintiffs] purchased [their] Toshiba ADRs in a domestic transaction.”
The Ninth Circuit opinion explicitly rejected the Second Circuit Appeals Court’s reasoning in Parkcentral Global Hub v. Porsche Automobile Holdings, and in so doing effectively created a different set of standards in the two federal jurisdictions where most traditional securities lawsuits are brought—the Ninth Circuit, which includes California, and the Second Circuit, based in New York. The Ninth Circuit panel put the Stoyas case on hold after Toshiba said it planned to ask the Supreme Court to resolve the split.
The full article can be accessed here.
Investors in one of the world’s largest gaming companies, a bankrupt energy producer and a drug manufacturer have recently won significant procedural victories in matters in which Cohen Milstein holds court-appointed leadership positions. Here are brief summaries of the cases at issue.
In the In re Wynn Resorts, Ltd. Derivative Litigation, lead plaintiffs scored an important ruling against the Wynn Resorts Board of Directors (“Board”) and certain of its senior executives when the District Court of Clark County, Nevada, denied defendants’ motion to dismiss the case, allowing lead plaintiffs to pursue claims against the Board and executives for failing to prevent founder and director Steve Wynn’s pattern of sexual harassment when the Board had knowledge of his improper conduct, but decided to the look the other way.
Cohen Milstein is representing lead plaintiffs Thomas P. DiNapoli, Comptroller of the State of New York, as Administrative Head of the New York State and Local Retirement System Fund and Trustee of the New York State Common Retirement Fund, and a group of nine New York City public pension funds.
In denying the motion, the court found that it would have been futile for lead plaintiffs to make a pre-suit demand on the Board to pursue their claims because lead plaintiffs’ allegations raised a reasonable doubt as to whether a majority of the Board faced a substantial likelihood of liability for breaching their duty of loyalty to Wynn Resorts for “knowingly failing to take action in the face of credible and corroborated reports that Steve Wynn sexually harassed and abused Wynn Resorts employees” while they “profit[ed] on this information through insider trading that came at the Company’s and shareholders’ expense.”
These days, you don’t have to look beyond the daily headlines to find ethical and fiduciary issues involving social media. Nowhere is this more evident than on Twitter, where a wide variety of users post and share hundreds of millions of messages a day. Today’s scandals on social media are not limited to social gaffes but may include ethical breaches and even cross into the realm of civil or criminal liability.
For example, in August, a tweet by Tesla CEO Elon Musk that he had secured funding to potentially take Tesla private at $420 per share led to lawsuits against Musk claiming that he drove up the value of Tesla shares and materially misled investors. These lawsuits were followed in September by the Securities and Exchange Commission charging Musk with securities fraud and seeking to prohibit him from serving as an officer or director of a public company, and also charging Tesla with failure to have appropriate controls and procedures in place relating to Musk’s tweets. Two days later, Musk and Tesla settled with the SEC; in addition to $40 million in penalties, Musk agreed to step down as Chairman of the board for three years, and Tesla agreed to appoint independent directors to its board and implement additional controls and procedures to oversee Musk’s communications.
By Carol V. Gilden
Elad Roisman has moved one step closer to being sworn in as a U.S. Securities and Exchange Commission member. On Aug. 23, 2018, the Senate Banking Committee approved Roisman as the Republican replacement for former SEC Commissioner Michael Piwowar, who stepped down in July after serving as commissioner since 2013, including a four-month stint in 2017 as acting SEC chairman. Roisman is currently chief counsel to the Senate Banking Committee led by Chairman Mike Crapo; he previously served as counsel for former SEC commissioner Daniel Gallagher, and at one time worked in the legal department at NYSE Euronext and as a corporate and securities attorney with Milbank Tweed Hadley & McCloy LLP. Also stepping down this year is Democrat SEC Commissioner Kara Stein. Stein’s potential replacement likely will be Allison Lee, a Democrat, whose name has been submitted to the president, and who previously served as an aide to Stein and is a former SEC enforcement attorney. Despite these forthcoming changes at the SEC, the balance of power and direction of the SEC is unlikely to change, as the SEC remains in Republican hands which, since Donald Trump took office, has translated to the SEC bringing fewer enforcement actions.
The president, subject to Senate approval, appoints all five commissioners: two Democrats, two Republicans and the chair, who may be of the president’s own party. Since the chair is both the SEC’s chief executive and the tie-breaking vote, the party that controls the White House also controls the SEC’s agenda and direction. While Chairman Jay Clayton is an independent, as a longtime partner at Sullivan & Cromwell LLP specializing in advising clients on public and private mergers and acquisitions and capital-raising efforts, his ideology is viewed as aligning squarely with that of the Republicans. The commissioners’ terms last five years and are staggered, with one commissioner’s term ending each June 5, although, as with Stein whose term ended June 2017, commissioners may continue to serve an additional 18 months if they are not replaced before then or resign sooner.
Until Piwowar’s seat is filled, the commission is temporarily deadlocked, with Clayton and Republican Commissioner Hester Peirce on one end of the political spectrum, and two Democrat commissioners, Robert Jackson Jr. and Stein, on the other. Once Roisman is confirmed, the balance will tilt toward the Republicans; indeed, it is expected that Roisman will become an ally of Clayton on many issues. The vote on Roisman’s confirmation before the full Senate has not been scheduled, and many believe the Senate is waiting for a Democratic nominee to replace Stein to tee up both nominees for Senate confirmation at the same time, as was done with Peirce and Jackson in 2017. However, there are no guarantees that the Senate will abide by this tradition, particularly given the current political climate.
Read SEC Direction Unlikely To Shift Despite Agency Transitions.
The 2015 Volkswagen emissions scandal, which laid bare European consumers’ difficulties in obtaining monetary compensation for mass harm, is now fueling a continental shift toward group litigation—one that will give defrauded investors new legal options to consider.
In April, the European Commission unveiled a proposed directive that would require all 28 EU member countries to establish representative actions for collective redress. Two months later, the German parliament enacted a new law expanding the use of model proceedings.
While both measures fall far short of offering plaintiffs the advantages of U.S.-style class actions, they are seen by proponents and critics alike as a step in that direction. Under the proposed European Commission directive, the outcome of a representative action in one EU country will be binding on all similarly harmed consumers in that same country, and a finding of infringement will provide a rebuttable presumption for consumers harmed by the same behavior in any other EU country. The directive also would allow entities representing investors in various member states to join forces in a single action.
Of course, it will take years of real-life briefing, arguments, declaratory judgments, settlements, and appeals before the true impact of the new laws can be measured. Still, for institutional investors who purchase securities on international exchanges, the developments suggest legal protections will continue to expand in the European Union. This is important given that investors in non-U.S. markets cannot rely on U.S. federal law for protection since the Supreme Court’s sweeping Morrison ruling in 2010.
In announcing the two measures, both the European Commission and the German government cited the “Dieselgate” scandal that erupted in September 2015 when the U.S. Environmental Protection Agency accused VW of violating clean air laws by rigging diesel-powered vehicles to shut off anti-pollution devices when tested.
Volkswagen eventually admitted it had sold 11 million offending vehicles worldwide, including 8.5 million in Europe, where executives have been jailed and the company has paid billions of euros in fines. But while U.S. consumers benefited from class action settlements providing generous cash compensation and the right to sell their vehicles at pre-scandal prices, VW offered European owners only a free “fix” to reduce emissions to lawful (arguably still dangerous) levels.
While it is good short-term news for plaintiffs, a Ninth Circuit appeals court ruling in favor of a more relaxed standard of proof in merger-related securities lawsuits also has created a circuit split that could lead to a showdown at the Supreme Court, a decidedly less friendly venue for plaintiffs.
The decision comes amid a record increase in the number of shareholder class actions asserting violations of Section 14 of the Securities Exchange Act of 1934 (“Exchange Act”) arising out of alleged false and misleading statements made relating to a proposed merger or other strategic transaction. Most Section 14 cases have been filed in the Ninth Circuit, and in April the appeals court held in the tender offer case Varjabedian v. Emulex Corp., No. 16-55088 (9th Cir. Apr. 20, 2018) (“Emulex”) that Section 14(e) requires a showing of mere negligence, not proof of “scienter,” i.e., an intent to mislead shareholders.
Florida’s Workers’ Compensation Act sets up a self-executing system under which an employee injured in a workplace accident can receive medical care and lost wages without filing a civil lawsuit. This system, however, does not provide all the remedies that would be necessary to make an injured worker whole. For instance, noneconomic damages, such as pain and suffering, are not available under Florida’s Workers’ Compensation Act. And, the injured worker is often beholden to the employer’s workers’ compensation carrier when seeking medical treatment as the carrier may not agree with such treatment or find it causally related to the workplace accident. While the employee can seek relief through the administrative workers’ compensation system, in some cases greater relief can be found outside the system. One such situation is when a product is a cause of the worker’s injury, which provides an avenue for the employee to recover in a civil product liability lawsuit. As access to circuit court may be the only means by which the injured worker can make a full recovery of damages, it is important to be aware of opportunities that will open the courthouse doors to injured workers. For this reason, this article focuses on upcoming trends in product liability lawsuits and practice tips for making successful claims on behalf of injured workers outside the workers’ compensation system.
Trending workplace product claims
Saws
There are many different types of saws, e.g., table, horizontal, miter, all of which are common on many construction sites. Accidents are not uncommon. For instance, researchers estimate over 30,000 table saw injuries alone occur annually. From a product liability aspect, table saws have been alleged to be defectively designed for not incorporating flesh-detection safety technology, such as something like Sawstop, which is a safety system that stops a saw within 5 milliseconds of the blades contact with human flesh. Horizontal band saws have been alleged to be defectively designed for not incorporating vises that require two hand-controls to operate, and for not offering pedestal controls to allow the saws to be operated from a remote, safe position. Alternatively miter saws have been alleged to be defectively designed for not incorporating lock washers, cotter pins, c-clips, or other locking mechanisms to keep the saw arm in place when not in use.
Ladders
Among workers, approximately 20% of fall injuries involve ladders. Among construction workers, an estimated 81% of fall injuries treated in U.S. emergency departments involve a ladder. From a product liability perspective, ladders have been found defective for several reasons. For instance, from a warning or instructions perspective, ladders have been found defective for not holding an as advertised weight. These types of ladders fail for larger men or women, even though their body weight does not exceed any maximum weight requirement. From a manufacturing perspective, ladders have been found defective for having out of specification rivets. The rivets are an integral part of the support structure of a ladder and even a minimal misplacement can lead to fatigue fracture or failure. From a design perspective, ladders have been found defective for not including wider, thicker legs or longer gussets, both of which affect stability.
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Conclusion
As Florida’s Workers’ Compensation Act limits the damages available to injured workers, it is important to look for other avenues that may enable an injured worker to recover sufficient damages in order to become whole. Because the Act does not preclude an employee, or his or her family, from seeking restitution from a third party, counsel should determine whether the employee’s injuries were caused by a product and whether a civil product liability action might enable the employee to make a greater recovery than a claim merely under Florida’s Workers’ Compensation Act.
If you have a potential claim against a workers’ compensation insurance carrier, please contact Leslie M. Kroeger, Diana L. Martin or email a member of our Managed Care Abuse Team.