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January 28, 2009
UNITED STATES OF AMERICA, PLAINTIFF,v.SENSIENT COLORS, INC., DEFENDANT.
[Doc. Nos. 85, 91, 94]
The issue before the Court is whether to bar, stay or permit the depositions of three former or present employees of the Environmental Protection Agency ("EPA"). These individuals are Christine Todd Whitman ("Whitman"), former EPA Administrator, Jane M. Kenny ("Kenny"), former Regional Administrator of EPA Region II, and David Rosoff ("Rosoff"), the On-Scene Coordinator for the Site at issue in this litigation. Whitman and Kenny filed motions to quash deposition subpoenas, and Rosoff filed a motion for protective order. Because the relevant issues overlap, the Court will address the three motions together. The Court has exercised its discretion to decide the motions without oral argument. See Fed. R. Civ. P. 78 and L. Civ. R. 78.1.*fn1 For the reasons to be discussed, the motion as to Whitman is GRANTED and the motions as to Kenny and Rosoff are GRANTED in part and DENIED in part.
In March 2007, plaintiff, on behalf of the EPA, filed this cost recovery action against defendant, Sensient Colors Inc. ("Sensient"), pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. §§9601-9675 (2000). Plaintiff alleges Sensient is responsible for the contamination at the General Color Site ("Site") in the City of Camden, New Jersey, and is liable to reimburse it for costs in excess of $16 million that the EPA spent to respond to the release or threatened release of hazardous substances at the Site. It is alleged that from 1922 to 1988, Sensient's predecessor manufactured inorganic and organic pigments and dyes at the Site.*fn2
In addition to this case, Sensient is also a defendant in a related civil action pending in the State Superior Court of New Jersey, Law Division, Camden County (CAM-L-6579-03). In that case, Sensient's neighbor, Pleasant Gardens Realty Corp., alleges Sensient contaminated its property and is liable for the cleanup costs. The Court understands that the trial of the Pleasant Gardens case was recently postponed due to Sensient's request for additional discovery.
Part of Sensient's defense in this case focuses on its objection to the EPA's characterization of the work at the Site as a "removal action." Sensient points out that EPA's actions at the Site spanned eight years and cost $16 million. However, Sensient notes that CERCLA prohibits plaintiff from recovering removal costs in excess of $2 million, or 12 months in duration. See 42 U.S.C. §9604(c)(1).*fn3 Sensient also contends that the EPA deliberately mischaracterized its response activity at the Site as an emergency removal action in order to obtain funding to conduct a community redevelopment at Sensient's expense. (See Sensient's Answer to Plaintiff's Complaint, Eighth Affirmative Defense [Doc. No. 59].)
Sensient argues that its defense is supported by its recent discovery of Rosoff's February 7, 2006 e-mail.*fn4 Sensient believes Rosoff's e-mail, and Kenny's September 30, 2003 letter to then Camden Chief Operating Officer Randy Primas (discussed infra), confirms that the EPA purposely mischaracterized its response at the Site as a removal action instead of a remedial action. Sensient contends that these documents demonstrate that the soil excavation at the Site was motivated by a desire to assist Camden in redeveloping the Site at Sensient's expense.
Shortly after Sensient learned of Rosoff's e-mail it filed its motion for leave to amend its answer and to file a third-party complaint [Doc. No. 66]. Sensient also served the subpoenas and deposition notices that are the subject of this discovery dispute. Sensient proposes to amend its answer to add affirmative defenses, to include a counterclaim against the plaintiff and the EPA, and to assert individual third-party claims against Rosoff, Kenny, and other unknown EPA employees or agents. Sensient's motion has been fully briefed and will be decided shortly.
As noted, Sensient recently issued subpoenas and deposition notices to Whitman, Kenny and Rosoff. Plaintiff filed the motion to quash Whitman's deposition. Separately engaged counsel filed motions to quash and for protective orders on behalf of Kenny and Rosoff. Primarily relying upon United States v. Morgan, 313 U.S. 409 (1941), and subsequent cases interpreting the decision, Whitman argues her deposition should be quashed because she is a former high level government official. She also argues she does not have unique personal knowledge about relevant issues that cannot be obtained elsewhere. Kenny also relies on Morgan. In addition, Kenny argues Sensient should not be permitted to obtain discovery in this court that it could not take in the Pleasant Gardens litigation.*fn5 Kenny also argues her deposition should not take place until she finds out if she will be joined as a party and has an opportunity to present her qualified immunity defense. Rosoff argues his deposition should not take place until he has an adequate opportunity to prepare, until he knows if he will be joined and until he has an opportunity to present his qualified immunity defense. Sensient counters by arguing that Morgan does not apply to former government employees and that Whitman and Kenny are not high ranking government officials. Alternatively, Sensient argues that even if Morgan applies extraordinary circumstances justify the depositions of Whitman and Kenny. Sensient also argues discovery should not be delayed by the deponents' qualified immunity defense, and the depositions should proceed immediately after the Court decides Sensient's motion to amend.
Christine Todd Whitman*fn6
The first issue to address regarding Whitman's motion is whether her deposition is subject to the Morgan doctrine. The parties agree that the Morgan decision has come to support the general proposition that depositions of current high ranking government officials concerning their official duties should not be taken absent extraordinary circumstances. See Buono v. City of Newark, 249 F.R.D. 469, 470 n.2 (D.N.J. 2008)("top executive department officials should not be required to appear for depositions or testify at trial absent extraordinary circumstances, ...."); Bogan v. City of Boston, 489 F.3d 417, 423 (1st Cir. 2007)("The need for limited access to high government officials through the discovery process is well established"). See also In re United States, 197 F.3d 310, 313-14 (8th Cir. 1999); In re FDIC, 58 F.3d 1055, 1062 (5th Cir. 1995); In re United States, 985 F.2d 510, 512 (11th Cir. 1993); Franklin Sav. Ass'n v. Ryan, 922 F.2d 209, 212 (4th Cir. 1991). The rule recognizes that high ranking government officials have greater duties and time constraints than other witnesses, and without appropriate limitations these officials will spend an inordinate amount of time tending to pending litigation. Kessler, 985 F.2d at 512. The rule is also designed to protect officials from unwarranted inquiries into their decision-making process. Morgan, 313 U.S. at 422. See also Franklin Sav. Ass'n, 922 F.2d at 211 (citations omitted)(absent extraordinary circumstances, a government decision maker should not be compelled to testify about her mental processes in reaching a decision, including the manner and extent of her study of the record and her consultation with subordinates).
Sensient argues the Morgan doctrine does not apply to former employees. Although the Third Circuit has not addressed the issue, the Court rejects Sensient's argument and finds that Morgan applies to former high-ranking government employees. See United States v. Wal-Mart Stores, C.A. No. 01-152, 2002 WL 562301 (D. Md. March 29, 2002). It is true that the deposition of a former official may not interfere with her governmental duties to the same extent as if she were a current employee. However, the possibility that a current employee may be deposed after she leaves government service is likely to impact how the employee performs her duties. It is not far fetched to conclude that a government employee's work performance may be "chilled" if she may be deposed on her thought process after she leaves government service. Thus, the rationale behind the Morgan doctrine applies to former employees. Furthermore, the goal of limiting inquiries into a decision maker's thought process is as equally applicable to a former employee as it is to a current employee.
There are other important reasons justifying the application of the Morgan doctrine to former officials. The Court agrees with Wal-Mart that unchecked depositions of former high ranking government employees would be unduly burdensome on them and likely discourage individuals from public service positions. Id. at *3 ("Subjecting former officials decision-making processes to judicial scrutiny and the possibility of continued participation in lawsuits years after leaving public office would serve as a significant deterrent to qualified candidates for public service"). Accord Energy Capital Corp. v. United States, 60 Fed. Cl. 315, 318 (Fed. Cl. 2004)(citing cases that "have persuasively argued for the application of the Morgan doctrine to former high-ranking government officials"). See also Arnold Agency v. West Virginia Lottery Comm'n, 206 W.Va. 583, 599, 526 S.E.2d 814, 830 (1999)("Former high-ranking government administrators, whose past official conduct my potentially implicate them in a significant number of related legal actions, have a legitimate interest in avoiding unnecessary entanglements in civil litigation"). No significant public policy or interest is served by permitted unchecked depositions of former high-ranking government employees. On the other hand, as discussed, the public interest is furthered by applying a heightened scrutiny to these depositions. For these reasons, the Court finds that the Morgan doctrine applies to former high-ranking government employees.
The cases Sensient relies upon do not support its position that depositions of former high-ranking government officials should be treated the same as other depositions. In Toussie v. County of Suffolk, C.A. No. 05-1814, 2006 WL 1982687, at *2 (E.D.N.Y. July 13, 2006), the court permitted the deposition of an official to proceed but only after the movant demonstrated that the deponent was "personally involved" in the events at issue in the case. (Also noting that "depositions of former government officials should be lightly granted." Id.) In Sanstrom v. Rosa, C.A. No. 93-7146, 1996 WL 469589, at *5 (S.D.N.Y. Aug. 16, 1996)(citing American Broadcasting Companies v. United States Information Agency, 599 F. Supp. 765, 769 (D.D.C. 1984)), the court determined that former Governor Cuomo possessed "particular information necessary to the development ... of the [plaintiff's] case, which cannot be reasonably obtained by another discovery mechanism."
Having found that the Morgan doctrine applies to former employees, the Court turns to Sensient's argument that Whitman was not a high-ranking government employee.*fn7 This argument is meritless. As the head of a large executive Agency Whitman's responsibilities were undoubtedly enormous. Plaintiff has pointed out that the head of the EPA has been afforded cabinet level rank, and shares this rank with the Vice-President. See Reply Brief at 3, Doc. No. 114. Other cases apply Morgan to individuals whose rank does not surpass the Administrator of the EPA. See, e.g., Franklin Sav. Ass'n, supra, (Director of the Office of Thrift Savings); Central Valley Chrysler Valley Jeep, Inc. v. Witherspoon, CV-F-04-6663, 2006 WL 2619962 (E.D. Cal. Aug. 25, 2006)(Executive Officer of the California Air Resources Board).
Sensient primarily relies upon In re Kessler, 100 F.3d 1015 (D.C. Cir. 1997) to support its argument that Whitman was not a high ranking government employee. In its zeal to support its argument Sensient mischaracterizes the Kessler decision. In Kessler, the court addressed the issue of whether the FDA Commissioner could appeal the lower court's order permitting his deposition before he was found in contempt of court. The court did not address whether the FDA Commissioner was a high-ranking government official subject to the protections in Morgan. Sensient omitted the citation to a crucial passage in Kessler that makes it evident that the issue before this Court was not addressed:
The primary difficulty in accepting the government's argument is that it has no principled stopping point. If the Commissioner of Food and Drug is privileged to appeal a federal district judge's discovery order without being held in contempt, who in the executive branch is not? And it certainly cannot be-the government does not even suggest the proposition-that all elective branch officials fall into that category.
Kessler, 100 F.3d at 1018 (emphasis supplied). Further, after the court denied Kessler's petition for writ of mandamus it specifically stated, "we, of course, express no view on the merits of the discovery order, including Dr. Kessler's status under Simplex, see 766 F.2d at 586 [e.g., the Morgan doctrine]." Id.*fn8
Given the Court's finding that the Morgan doctrine is applicable to Whitman's deposition, the Court has no hesitation granting plaintiff's motion to quash Whitman's subpoena and to bar her deposition. Extraordinary circumstances sufficient to depose a high-ranking government official exist when the official has "direct personal factual information pertaining to material issues in an action," and "the information to be gained is not available through any other sources." Bogan, 489 F.3d at 423. There are no extraordinary circumstances that warrant Whitman's deposition and she has no unique personal knowledge of any relevant issue in the case. This is evidenced by the fact that despite Sensient's receipt of tens of thousands of documents from the plaintiff, Sensient has not cited a single document authored by or sent to Whitman regarding the Site. Plaintiff also points out that none of the EPA representatives recently deposed testified that Whitman has any personal knowledge regarding the Site.*fn9 Brief at 2, Doc. No. 114. In addition, Whitman left the EPA almost three years before Rosoff's February 7, 2006 e-mail that is at the heart of Sensient's discovey requests.
Sensient's basis for deposing Whitman is based on guesswork and speculation. Sensient argues, "[g]iven Ms. Kenny's direct involvement with the remediation efforts at the Site and her close relationship with Ms. Whitman, it is inevitable that Ms. Whitman was also acutely aware of the remediation efforts taking place." (Brief at 7 [Doc. No. 107].) No facts support Sensient's "inevitability" argument. The Morgan doctrine would be eviscerated if Sensient could take the deposition of the Administrator of the EPA based on its speculation that she "was acutely aware of the remediation" at its property.
Sensient argues that Whitman has knowledge of Kenny's interest in redeveloping Camden because Whitman was governor when Kenny was the Commissioner of the New Jersey Department of Community Affairs and she was the EPA Administrator when Kenny was the Administrator of EPA Region 2. (Id. at 2.) Sensient also "understands" that Kenny "currently works with or for" Whitman at the Whitman Strategy Group. Sensient's argument that this establishes extraordinary circumstances to take Whitman's deposition is rejected. If the Court accepts Sensient's argument then Sensient could depose almost anyone who allegedly worked with or knew Kenny well. This circumstance is clearly unacceptable. Even if the Court assumes that Kenny's interest in redeveloping Camden is relevant, Whitman most assuredly is not the only person who could testify on this subject. A high level government official should only be deposed when his or her relevant knowledge cannot be obtained by other less obtrusive means. In addition, Sensient has not established that Whitman has any relevant personal knowledge regarding the issues in dispute. Under these circumstances no extraordinary circumstances justify Whitman's deposition and her motion will be granted.
Jane M. Kenny
Kenny first argues that even if the Court permits her deposition, she should not be deposed until after the Court determines whether she will be added as a third-party defendant. The Court agrees with Kenny. Pursuant to Fed. R. Civ. P. 26(c)(1)(B), the Court may issue a protective order specifying the time and order of discovery. In order to protect Kenny from annoyance, oppression or undue burden and expense, Kenny should know the claims asserted against her before she is deposed. Sensient is asserting serious allegations against Kenny. For example, Sensient alleges Kenny knowingly certified false and misleading statements to further an improper and unauthorized scheme. (See Proposed Third Party Complaint at ¶31 [Doc. No. 91-6].) Sensient also alleges Kenny knowingly created a false administrative record to "cover-up the true nature" of the EPA's unauthorized activities at the site. (Id. at ¶33.) In addition, Sensient contends Kenny "knowingly and willfully created an increased risk to the public health" and "mischaracterized" the EPA's actions at the Site. (Id. at ¶¶34, 36.) It is self-evident that Kenny should know whether she will be a named party in the case before she is deposed. The nature of Sensient's allegations will impact her deposition preparation and perhaps even her choice of counsel. The fact that Kenny's immediate deposition is not justified is buttressed by the fact that no emergent circumstances exist that necessitate that she be deposed before her immunity status is resolved.*fn10
The Court also finds that as an Administrator of EPA Region 2, Kenny was a former high ranking government official entitled to the protection of the Morgan doctrine. Region 2 consists of New Jersey, New York, Puerto Rico, the U.S. Virgin Islands and seven f e d e r a l l y - r e c o g n i z e d I n d i a n N a t i o n s . S e e http://www.epa.gov/region02/aboutr2.htm (last visited January 27, 2009). The Region contains more than 31 million residents. Id. As the Administrator of Region 2 Kenny answered directly to the EPA Administrator who was answerable to the President of the United States. (See J. Kenny Affidavit at ¶3.) Kenny was only one of ten Regional Administrators in the country. (Id.) She also had primary responsibility for the planning, programming, implementation, control and direction of the technical, legal and administrative aspects of the activities in Region 2. (Id.) When Kenny was the Regional Administrator there were more than one thousand civil servants employed in the Region who were responsible for day to day operations. (Id. at ¶4.) The Court finds that this background qualifies Kenny as a former high ranking government official. See Simplex, 766 F.2d at 586-87 (recognizing that OSHA's Regional Administrator and Area Director are high ranking government officials).
The crux of Kenny's argument is that Sensient has not established it is entitled to her deposition under the Morgan doctrine.*fn11 Sensient requests Kenny's deposition to support its contention that the EPA conducted a redevelopment project rather than a removal action. The primary evidence of Kenny's direct involvement at the Site involves her September 30, 2003 letter. (See S. Schlossberg Certification at Exhibit C [Doc. No. 108-2].) On August 26, 2003, then Chief Operating Officer, Melvin Primas, wrote Kenny and advised her of Camden's redevelopment efforts in East Camden. Primas proposed that Camden demolish the buildings at the Site and the EPA continue its cleanup and remediate any contamination below the buildings. Kenny wrote back on September 30, 2003 and advised Primas that the EPA had no plans to address known buried hazardous waste beneath the buildings "at this time." Kenny explained that the buried waste was not an immediate threat because it was not accessible. However, Kenny advised Primas that if the City demolished the buildings the buried waste would then be exposed. Kenny then wrote that if this occurred, the EPA would investigate the Site and perform appropriate cleanup activities to mitigate risks to the public health. Kenny advised Primas that she looked "forward to working with the City of Camden to complete the revitalization efforts that we both have been working toward." According to Sensient, Kenny's letter demonstrates that she "collaborated with the City of Camden to create an alleged health hazard, and then claimed the authority to address the alleged hazard." (Brief at 9 [Doc. No. 109].)
Sensient also argues Kenny's involvement at the Site is evidenced by the fact that she "personally approved three requests to increase EPA spending at the General Color Company Site beyond CERCLA's $2 million limit and extend the so-called removal actions beyond the statutorily designated 12-month period." (Id. at 8-9.) She also submitted a request to increase the spending ceiling at the Site to $11.9 million. (Id. at 9.)
In Buono, supra, the court set forth a summary of the relevant factors to consider when deciding if the deposition of a high ranking government official should proceed: (1) whether the official's testimony is necessary to obtain relevant information that is not available from another source; (2) the official has first-hand information that could not be reasonably obtained from other sources; (3) the testimony is essential to that party's case; (4) the deposition would not significantly interfere with the ability of the official to perform his government duties, and; (5) the evidence sought is not available through any alternative sources or less burdensome means. These factors provide an appropriate framework to decide if Kenny should be deposed.
At this time, Sensient has not established that Kenny's deposition is necessary to obtain relevant information that is not available from another source. Bald assertions of bad faith are insufficient to require agency officials to submit to depositions. Schaghticoke Tribal Nation v. Norton, No. 3:06cv81 (PCD), 2006 WL 3231419, at *4 (D. Conn. Nov. 3, 2006) (citing Friends of the Shawangunks, Inc. v. Watt, 97 F.R.D. 663, 667 (N.D.N.Y. 1983)). Sensient's focus is on the reasons why the Site was remediated, why it took so long to remediate the Site, why it was not notified earlier of its potential liability, and other "nuts and bolts" issues. Sensient should first attempt to obtain this information from "rank and file" personnel, not Kenny. This case is at a relatively early stage of discovery. Sensient has not established that Kenny is the only person who has the information it requests. In Coleman, supra, at *4, the court denied the plaintiff's request to take the depositions of Governor Schwarzenegger and his Chief of Staff, and noted:
[i]t is not sufficient simply to make allegations to such effect in a conclusory manner; rather a party seeking to depose a high-ranking official must make a showing as to what efforts have been made to determine whether the information is otherwise available and the extent to which their efforts failed to uncover such information.
The same reasoning applies to this case. Kenny's deposition should be a last resort, not a first resort.
As to the second Buono factor, Sensient has not established that Kenny is the only reasonably available source for the requested information. At a minimum this proffer must await the results of additional discovery Sensient is bound to take. The fact that Kenny may have signed an official appropriation request is not in and of itself a sufficient basis to take her deposition. Buono, 249 F.R.D. at 470 n. 2 (citation omitted)(an official's pro forma approval of a matter without showing deliberations about it, will not justify ordering a deposition of the official). See also Coleman, supra, at *4 ("When the Governor acts within the parameters of his official duties by, for example, issuing orders ..., it is likely that other lower-ranking members of his office or administration would have relevant information about his actions").
The third Buono factor to consider is whether Kenny's testimony is essential to Sensient's case. Based on the present record the Court concludes Kenny's testimony is not essential. The present focus of Sensient's defense is that the EPA's actions were not consistent with CERCLA and the applicable regulatory requirements. Sensient can pursue this defense without Kenny's immediate deposition. As to the fourth Buono factor, it is obvious that since Kenny is not a current government employee her deposition will not interfere with any present government duties. However, for the reasons already discussed, it is important to apply the Morgan doctrine to former employees to ensure that current employees are not chilled in their duties by the thought that their depositions may indiscriminately be taken after they leave government service. The last Buono factor examines whether the requested information is available through alternative or less burdensome means. For the reasons already discussed, Sensient has not demonstrated that Kenny is the only reasonably available source for the requested discovery. Albeit, the Court recognizes that the case is still in the relatively early stage of discovery.
Based on the foregoing analysis, the Court grants Kenny's motion to quash her subpoena and to bar her deposition. However, at this time the Court is not ruling that Kenny's deposition may never be taken. In Whitman's case it is clear that absent an unforeseeable development her deposition will not be permitted. However, unlike Whitman, Kenny had some direct involvement with the Site. The Court is not foreclosing the prospect that future developments may justify Kenny's deposition. The Court reiterates that it is not aware of any exigent circumstances that justify Kenny's immediate deposition.*fn12
David Rosoff
Rosoff has been an EPA employee for eighteen years and is the EPA On-Scene Coordinator ("OSC") in the Removal Action Branch of the Emergency and Remedial Response Division for the Site. He has been involved with the Site since 1998. (B. Van de Weghe Certification at ¶2 [Doc. NO. 94-3]*fn13 ; Rosoff Brief at 4 [Doc. No. 94-21].) Rosoff clearly has relevant personal knowledge regarding the Site. Rosoff does not argue that he is a high ranking government employee. Instead, Rosoff argues (1) he should be given time to prepare with his recently retained counsel, (2) his deposition should be stayed until his immunity defense is resolved, (3) he should not be deposed until Sensient's motion to amend is decided, and (4) Sensient should not be permitted to obtain discovery in this action that it could not obtain in the Pleasant Gardens litigation. Most of Rosoff's arguments have already been addressed. After this Court decides Sensient's motion to amend it will schedule a status conference. If Rosoff is deposed, he will be given fair notice and an adequate opportunity to prepare for his testimony. The Court reserves decision on whether Rosoff's deposition will be stayed pending the final resolution of his immunity defense. Magistrate Judges have broad discretion to manage discovery, including the sequencing of depositions. See Gerald Chamales Copr. V. Oki Data Americas Inc., 247 F.R.D. 453, 454 (D.N.J. 2007). The Court recognizes that the Supreme court has stated that "[u]ntil ... the threshold immunity question is resolved, discovery should not be allowed." Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982). Further, the Third Circuit has recognized that discovery should ordinarily not proceed until the immunity question is resolved. Thomas v. Independence Township, 463 F.3d 285, 291 (3d Cir. 2006). However, the Court is not foreclosing the possibility that future developments may demonstrate that Rosoff's deposition is imperative even before it is finally determined whether he will be joined. Thus, at this time the Court is not foreclosing the possibility that Rosoff may be deposed on relevant issues even before his immunity defense is finally resolved. This scheduling issue will be addressed at a future date. Lastly, the Court has already ruled that the fact that Sensient may use discovery in this case in the Pleasant Gardens litigation is not determinative on any issue before this Court.
Based upon the foregoing, and for all the reasons stated in the Court's Opinion, it is hereby ORDERED this 28th day of January, 2009, that Whitman's Motion to Quash Subpoena and to Bar her Deposition [Doc. No. 85] is GRANTED; and
IT IS FURTHER ORDERED that Kenny's Motion to Quash Subpoena and to Bar her Deposition [Doc. No. 91] is GRANTED in part and DENIED in part. Sensient's present subpoena is quashed without prejudice to its right to re-new its request for Kenny's deposition based on relevant discovery developments. If Sensient intends to re-new its request it shall follow the procedure set forth in L. Civ. R. 37.1(a)(1) and first seek leave of court to file a motion on the issue; and
IT IS FURTHER ORDERED that Rosoff's Motion for Protective Order [Doc. No. 94] is GRANTED in part and DENIED in part. Sensient's present deposition notice (and subpoena) directed to Rosoff is quashed, without prejudice to its right to re-new its request for Rosoff's deposition in the future. If Sensient intends to re-new its request, it shall follow the procedure set forth in L. Civ. R. 37.1(a)(1) and first seek leave of court to file a motion on the issue.*fn14
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filed: March 18, 1983.
LOUIS GOEBEL AND HELEN GOEBEL, HIS WIFE, APPELLANTS,v.HARTFORD ACCIDENT AND INDEMNITY COMPANY
No. 931 Pittsburgh, 1981, Appeal from the Order of the Court of Common Pleas, Civil Action, of Washington County, Equity No. 7820, Book 45, Page 143.
Robert D. Beck, Washington, for appellants.
Stephen Paul McCloskey, Washington, for appellee.
Rowley, Montemuro and Van der Voort, JJ.
[ 312 Pa. Super. Page 17]
This case presents another question of first impression under the Pennsylvania No-Fault Motor Vehicle Insurance Act.*fn1 The question raised is whether § 205(d) of the No-Fault Act, 40 P.S. § 1009.205(d) (Supp.1982-83), permits a claimant to recover increased work loss benefits from his no-fault carrier based upon increases in the minimum wage required by the federal Fair Labor Standards Act.*fn2 The trial court sustained appellee's preliminary objection in the
[ 312 Pa. Super. Page 18]
nature of a demurrer and dismissed appellants' complaint. We reverse.
On appeals sustaining preliminary objections in the nature of a demurrer, we accept as true the well-pleaded averments of fact contained in the complaint. Zelik v. Daily News Publishing Co., 288 Pa. Super. 277, 431 A.2d 1046 (1981). Upon inspection, the complaint reveals the following facts.
On December 20, 1978, appellant Louis Goebel was struck by an automobile as he walked along Jefferson Avenue in Washington, Pennsylvania. As a result of this accident, Mr. Goebel suffered the fracture of both legs and his skull as well as other severe injuries. At the time of the accident, Mr. Goebel worked an average of 53 hours per month as a custodian for the Farm Credit Associations. He was paid at the then prevailing minimum wage of $2.65 an hour. The accident rendered Mr. Goebel permanently and totally disabled; he will never be able to return to gainful employment of any kind. Appellee, Hartford Accident and Indemnity Company, the Goebels' no-fault carrier, has thus far paid all hospital and medical expenses incurred due to the accident.
The dispute concerns the precise amount of work loss benefits to be paid Mr. Goebel under the No-Fault Act. Hartford commenced paying work loss benefits sometime during 1979 after Mr. Goebel's disability was determined to be permanent.*fn3 At that time, Hartford paid $153.70 per month based upon Mr. Goebel's average of 53 hours of work per month at the 1979 minimum wage of $2.90 an hour.*fn4 When, under the Fair Labor Standards Act, the minimum wage rose to $3.10 an hour in 1980 and to $3.35 an
[ 312 Pa. Super. Page 19]
hour in 1981, Mr. Goebel demanded a concomitant increase in his work loss benefits. Hartford refused and Mr. and Mrs. Goebel filed a complaint in equity seeking, 1) an injunction against Hartford's continued refusal to pay the increased amounts, 2) payment of benefits allegedly past due and owing, 3) statutory interest of eighteen percent per annum,*fn5 and 4) attorney's fees.*fn6 As mentioned above, Hartford filed a preliminary objection in the nature of a demurrer which the trial court sustained. The court ruled that appellants had no cause of action for increased benefits. The court therefore also found that appellants had no right to an injunction, interest or attorney's fees. The court dismissed the complaint and appellants appealed challenging each of the trial court's conclusions.
Initially, we note that we can discover no legal basis upon which Mrs. Goebel can recover. Only Mr. Goebel was injured and Hartford owes any benefits due under the policy of insurance to him. Therefore, the trial court was correct that, as to Mrs. Goebel, "on whose behalf no claim seems to be made," this complaint should be dismissed.
With respect to Mr. Goebel, however, we face a different situation. Appellants rely on the phrase "absent a showing that it [probable annual income] is or would be some other amount" contained in § 205(d). Appellants assert that this language permits them to claim increased work loss benefits from their no-fault carrier when an event, in this instance an increase in the minimum wage, subsequent to the original calculation of their benefits allegedly alters the amount of money the victim would have received had he continued to work. The trial court characterized this argument as "specious" and stated that "[i]f the [General Assembly] had intended to provide for indexing this loss to the cost of living, they could have done so. They didn't." That court also relied upon the speculative nature of the future relations between Mr. Goebel and his employer:
[ 312 Pa. Super. Page 20]
We have no way of knowing that Mr. Goebel's employer would have let him continue working 53 hours per month. The 53 hours a month may have been arrived at to fit the employer's budget for money allocated to custodial services . . . .
Additionally, the court opined that "it doesn't make much difference [because] . . . in 8.04 years [appellant] will get it all [the $15,000 statutory maximum work loss benefits*fn7] anyhow."
This discussion is off the point. The issue is not so broad as indexing to the cost of living. Nor is the court's consideration of a question of fact, the amount of time Mr. Goebel would have worked for his employer under the new wage structure, entirely appropriate in the present procedural posture or pertinent to the question before us. We must here discern the meaning and effect of a given statutory phrase. Because this phrase is not defined in the No-Fault Act, we turn to the Statutory Construction Act*fn8 and other sources for guidance.
We begin with the proposition that we are "to ascertain and effectuate the intention of the General Assembly," giving full effect, if possible, to each provision in the statute before us. 1 Pa.C.S.A. §§ 1921(a), 1922(2). See also, Allstate Ins. Co. v. Heffner, 491 Pa. 447, 421 A.2d 629 (1980). The General Assembly is presumed not to have intended any result which is absurd or unreasonable. 1 Pa.C.S.A. § 1922(3). The words and phrases used in legislation are to be construed "according to their common and accepted usage" with technical words to be given their technical meaning. Id. § 1903(a). Furthermore, the No-Fault Act is among those enactments which are to be construed liberally. Id. § 1928.
[ 312 Pa. Super. Page 21]
To ascertain the intent of the legislature, we look first to the findings and purposes set forth in the Act itself. The General Assembly specifically declared that "the maximum feasible restoration of all individuals injured . . . in motor vehicle accidents . . . is essential . . . ."*fn9 The Act further states that "it is hereby declared to be the policy of the General Assembly to establish . . . a Statewide system of prompt and adequate basic loss benefits for motor vehicle accident victims . . . ."*fn10 Restoration of victims by providing basic loss benefits includes assuring "every victim . . . recovery of a reasonable amount of work loss."*fn11 Of course, we are not free to determine on our own the scope of these terms, but we must follow the guide given by the definitions set forth in the No-Fault Act. Hughes v. Pittsburgh, 379 Pa. 145, 148, 108 A.2d 698 (1954).
Section 103*fn12 of the Act sets forth the following pertinent definitions:
"Loss" means accrued economic detriment arising out of the maintenance or use of a motor vehicle consisting of and limited to, allowable expense, work loss, replacement service loss and survivor's loss.
"Loss of income" means gross income actually lost by a victim . . . .*fn13
"Work loss" means:
(A) loss of gross income of a victim as calculated pursuant to the provisions of section 205 of this act; and
(B) [subject to several adjustments not here pertinent].
Section 205 sets forth the method of calculating work loss as follows:
[ 312 Pa. Super. Page 22]
§ 205 Work Loss
(a) Regularly employed. -- The work loss of a victim whose income prior to the injury was realized in regular increments shall be calculated by:
(1) determining his probable weekly income by dividing his probable annual income by fifty-two; and
(2) multiplying that quantity by the number of work weeks, or fraction thereof, the victim sustains loss of income during the accrual period.
(b) Seasonably employed -- The work loss of of a victim whose income is realized in irregular increments shall be calculated by:
(1) determining his probable weekly income by dividing his probable annual income by the number of weeks he normally works; and
(2) multiplying that quantity by the number of work weeks, or fraction thereof, the victim was unable to perform and would have performed work during the accrual period but for the injury.
(c) Not employed -- The work loss of a victim who is not employed when the accident resulting in injury occurs shall be calculated by:
(2) multiplying that quantity by the number of work weeks, or fraction thereof, if any, the victim would reasonably have been expected to realize income during the accrual period.
(d) Definitions -- As used in this section: "Probable annual income" means, absent a showing that it is or would be some other amount, the following:
(A) twelve times the monthly gross income earned by the victim from work in the month preceeding the month in which the accident resulting in injury occurs, or the average annual income earned by the victim from work during the years, not to exceed three, preceeding the year in which the accident resulting in
[ 312 Pa. Super. Page 23]
injury occurs, whichever is greater, for a victim regularly employed at the time of the accident;
(B) the average annual gross income earned by the victim from work during the years in which he was employed, not to exceed three, preceeding the year in which the accident resulting in injury occurs, for a victim seasonally employed or not employed at the time of the accident; or
(C) the average annual income of a production or non-supervisory worker in the private nonfarm economy in the state in which the victim is domiciled for the year in which the accident resulting in injury occurs, for a victim who has not previously earned income from work.
"Work week" means the number of days an individual normally works in a seven-day period; "weekly income" means income earned during a work week.
Finally § 106(a)(1) adds the general rule that benefits are payable monthly as expense and loss accrues. It also provides that "loss accrues not when the injury occurs but as allowable expense, work loss, replacement service loss or survivor's loss is sustained."*fn14
Further aid is drawn from two cases in which this Court has had an opportunity to apply § 205. In the first, Dorsey v. Harleysville Mutual Ins. Co., 285 Pa. Super. 124, 426 A.2d 1173 (1981), this Court held that a welder, unemployed at the time of his injury in 1975, could collect work loss benefits based upon his average annual income for those three years (1969, 1970 and 1973) in which he had last been employed prior to the accident. In explaining the work loss calculation, Judge Van der Voort mentioned that the calculation was based on the assumption that ". . . no evidence was introduced by any party to show that the 'probable annual income' would be some other amount." Id., 285 Pa. Superior at 125-127, 426 A.2d at 1174. Thus, at least in dictum, one panel of this Court assumed that the parties to the insurance contract could avoid the impact of the statutory
[ 312 Pa. Super. Page 24]
formulas by adducing proof to show a different amount of actual loss.
In the second case, Mattia v. Employers Mutual Companies, 294 Pa. Super. 577, 440 A.2d 616 (1982), we observed that "[s]trict application of the formula set forth in § 205(a) of the Act does not permit Mrs. Mattia to recoup a 'reasonable amount of work loss'; in fact, it causes an absurd and unreasonable result." The absurdity in that case was that Mrs. Mattia, who had not drawn a salary from her fledgling business, would have recovered no work loss benefits at all because the statutory formulas had no separate category for a person working and not paid. She would have clearly come within one such category had she not shown any initiative and remained among the unemployed. Therefore, this Court departed from the strict application of § 205 and permitted Mrs. Mattia to recover under § 205(c) and (d)(C) because she "had not previously earned income from work." Id., 294 Pa. Superior at 583, 440 A.2d at 619. In essence the Court held that the computation of a claimant's amount of work loss may be based upon events and circumstances that occur subsequent to the date of injury and is not limited to events occurring prior to the accident which resulted in the claimant's injury.
Furthermore, in other contexts, Hartford's present argument that the calculation of work loss benefits is to be set at the beginning of the payment of such benefits and not thereafter altered would lead to absurd results. For example, in § 103 of the Act, the definition of loss of income requires deduction for benefits which would have been available from substitute work, whether such work is actually taken or not. Hartford's argument would require it to refrain from reducing a victim's work loss benefits even if that victim returned to work. We believe the legislature intended, by its emphasis on actual loss, that such a deduction from loss of income be made whenever a victim unreasonably fails to undertake such substitute work. Realizing then that a victim's benefits may be reduced after the initial calculation of work loss benefits, there is no reason to
[ 312 Pa. Super. Page 25]
hold that a claimant's benefits cannot be increased by the occurrence of events subsequent to his injury that may result in an actual increased loss of income. The burden on an insurer is no greater in adjusting calculations for an increase than in adjusting for a reduction.
We thus arrive at the conclusion that § 205 is not to be applied in such a rigorous manner that the purposes of the No-Fault Act are lost to sight. Section 205 offers a framework within which each case may be settled or decided. Indeed, the specific language at issue seems especially well adapted to assuring the parties that the special circumstances of their case will not be disregarded in favor of some preordained result. As observed by one commentator:
The statutory definition of [probable annual income] for the regularly, occasionally and never-employed claimant is always subject to proof that in any individual's case his "probable annual income" is higher or lower . . . .
It is important to recall that the formulas identified in Section 205 for "probable income" are not controlling. There may be a showing that "it is or would be some other amount." Thus, the high school student injured the summer following his graduation (when presumably he would be entering the full time labor force), would insist that his "probable annual income" was higher than his historic earnings record would disclose. Conversely, the 70 year old housewife injured just prior to a holiday period when, in previous years, she had been employed, might have no "probable annual income" since it would be urged that she would not have performed any work. In every case, counsel must be alert to proof of a higher or lower probable annual income figure than identified under the statutory definition.*fn15
Permitting a claimant or insurer to adduce proof that benefits owed are different than those provided under the formulas of § 205 would serve the purposes and effectuate
[ 312 Pa. Super. Page 26]
the intent of the General Assembly. Such an interpretation would insure that benefits were paid only for losses and expenses actually sustained.*fn16 It would appear that an increase in the minimum wage could conceivably increase that amount which is actually lost if the claimant was employed in an industry to which the minimum wage provisions of the FLSA applied and claimant's wages would have gone up but for his injuries having kept him out of the work force. See Erie Ins. Exchange v. Roule, 279 Pa. Super. 40, 420 A.2d 733 (1980) (victim remains eligible for work loss benefits during strike of former employer because his injuries, not the strike, prevented him from accepting any available work).
Allowing benefits to be affected by subsequent events also comports with the "accrual" policy established by § 106. Instead of attempting to calculate all the possible elements of damages and loss which a victim suffers and paying for them in advance in one lump sum, expenses and losses are paid out by the insurer as they are incurred by the victim. There is no speculation as to what medical attention will be necessary, how much these costs will increase over time nor how much an individual would have earned over his lifetime. The Act's wait-and-see approach is thus both more definite and more accurate. We conclude that this policy supports permitting the fluctuation of work loss benefits in much the same manner. Indeed, allowing reconsideration of the work loss benefits will prevent unjust enrichment of victims who suddenly "recover" as well as more complete short-term support of those victims who are not so fortunate. To follow appellee's argument would put victims in a "Catch-22": they could not claim wages actually lost at the time of the initial calculation of these benefits because the loss had not yet accrued; but appellee would not permit them to claim such losses at any other date because the Act does not specifically allow for a recalculation of work loss benefits. We believe that the No-Fault
[ 312 Pa. Super. Page 27]
Act requires recalculation of benefits, when requested by the claimant, based upon the twin principles of accrual and actual loss, the same being of course, subject to proof. Therefore we hold that, circumscribed by the time limits for claiming and recovering no-fault benefits imposed by § 106 and by the various ceilings imposed upon the amount of benefits payable under § 202, any party to the insurance contract can require an alteration to be made in the payment schedule upon a showing that the claimant's "probable annual income . . . is or would be some other amount" than that previously calculated.*fn17
We would be chary of so interpreting § 205 if we believed that such an interpretation would substantially clog our already overburdened judicial system. For several reasons, however, we do not believe we have opened the floodgates. The No-Fault Act contains heavy interest*fn18 and attorney's fees*fn19 provisions which should act to inhibit the assertion of unmeritorious claims. Furthermore, in cases of greater merit, it would appear that the statute casts upon the party wishing to depart from the standard formula the burden of showing the propriety of such departure. These claims necessarily concern events which either did not or will not occur. Thus, the ephemeral quality of the issue is itself a substantial barrier to the success of such a claim. To insure that such claims are not based upon bare assertions and speculation, courts could rightfully subject the proof in cases such as these to close scrutiny.
[ 312 Pa. Super. Page 28]
We wish to emphasize that we do not decide whether the General Assembly intended to provide for indexing work loss benefits to the cost of living. Rather, we decide only that an increase in the minimum wage may provide an opportunity for a claimant to show that his or her "probable annual income . . . is or would be some other amount" than that provided by statutory formula. However, we do not mean to imply that the minimum wage mandated by the Fair Labor Standards Act is an automatic floor on the amount of work loss benefits payable to a victim. As we stated above, an amount other than that prescribed by formula must be "shown" with the burden of making that showing placed squarely on the shoulders of the party seeking the adoption of that other amount.
Having stated this much, however, we must still explore the proper disposition of this appeal. In light of the foregoing discussion, we believe that an injunction will not lie. Appellants have merely alleged that Hartford owes additional benefits. We have stated, in many different ways, that this issue is not etched in stone. The insurer may yet return with proof that the FLSA does not apply or that Mr. Goebel would not have been working quite so many hours or that he would not have been working at all. Furthermore, Hartford is not precluded from bringing such proof forward at a later time. We, therefore, conclude that the trial court properly sustained Appellee Hartford's preliminary objection pursuant to Pa.R.C.P. No. 1509(c) that plaintiff's remedy is one at law.
This determination does not end the matter, however, for Rule 1509(c) requires that if such a preliminary objection is sustained, "the court shall certify the action to the law side of the court." Because we have ruled that the trial court erred in concluding that, as to Louis Goebel, the complaint fails to state a cause of action, it was also error not to transfer the action to the law side.*fn20
[ 312 Pa. Super. Page 29]
The order of the trial court is affirmed insofar as it dismissed the complaint as to Helen Goebel and insofar as it sustained Hartford's preliminary objection as to the adequacy of a remedy at law. That part of the order dismissing the complaint as to Louis Goebel for failure to state a cause of action is reversed and the case is remanded for the entry of an order transferring the case to the law side for further proceedings not inconsistent with this opinion.
Jurisdiction is relinquished.
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French translation of hamlet
Example Sentences Including 'hamlet'
It was only a hamlet , half a mile or so from the village of Clareham, which was about five miles from the old market town of Maddingleigh.The Other Devil's Name
It stood on the edge of a small hamlet resting peaceably in the foothills of the Bavarian Alps.Dreams of Innocence
The purpose of her ride was to halt an execution in Bidwell, a small hamlet near Buck's border with Rippon.THE GOLDEN FOOL: Book Two of the Tawny Man (2002)
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While it is in some sense just a remake of the original game, it is still a fairly high-profile product. I could see announcing that it would be on Steam maybe a year after it had been published, but to announce it will be on Steam at this time probably means you will be able to buy it on Steam the same day it's available in brick-and-mortar stores. That's big news.
It is also interesting that Eidos has previous cut a deal with Steam's biggest competitor, GameTap. Tomb Raiders 3, 4, 5, and 6 are all available through that service and Lara has been featured in GameTap advertisements. Here's one that they're currently running on their website:
It would appear that Eidos is testing the waters with more than one online game delivery service. I wonder which will look more attractive to them in a year: the ongoing residuals from GameTap or the outright sales* of Valve.
* Yes, I know it's not an outright sale: you still have to have yourself plugged into the Steam network. I still dislike both services intensely.
Labels: gametap, online distribution, tomb raider, valve
How does GameTap compare to Steam anyway? After my miserable experience with the latter, I haven't tried it.
And it's sad - I was just thinking as I'm boxing a lot of obsolete games for charity ... I'm just the kind of guy who would love these services. If they just were customer friendly.
By Josh, at 17 March, 2007 10:59
In short, Steam is closer to a traditional buy-a-game-in-a-box model, but with a network tether. GameTap is an all-you-can-eat subscription model.
Steam: games stored on your system, many/most require network ping back to the Steam system occasionally, only play the games you've paid for, limited selection, no periodic fee to play games you've paid for.
GameTap: games exist on service's servers and downloaded on demand, requires network connection all the time, play any game on the service, large selection, regular subscription fee must be paid.
By jvm, at 17 March, 2007 14:20
Another HUGE difference between the two is the availability... For me as a European, I am unable to use gametap. I do prefer Steam over going out and getting a copy from a store though, mostly because some European countries either translate games and/or censor the best parts out of the games!


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7 Things Every Parent Should Know To Keep Kids Safe Online: jnjparents.com/content/7-thin… #cyberbullying #parenting #onlinesafety
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by Josh Rubin
We know that it is important to have good posture, but do you really know how to identify "good" versus "bad" posture? Why is posture such an important issue? How does it affect us and our clients, both in and out of the gym? What can we do to improve our clients' postures? This video will explore the intricacies of posture and assessment by answering these questions and more. Learn when to refer out and what techniques you can employ to help bring your clients back to a state of optimal static and dynamic posture.
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United States District Court, C.D. California
August 11, 2014
RAY LIOTTA ET AL.v.NERIUM INTERNATIONAL LLC ET AL.
James Slominiski Attorneys Present for Plaintiff.
Edward Rullenberg Jeffrey Daar Attorneys Present for Defendants.
CHRISTINA A. SNYDER, District Judge
Proceedings: DEFENDANT KELLY HEFFERNAN'S MOTION TO SET ASIDE DEFAULT (Dkt. 23, filed July 11, 2014)
On March 5, 2014, plaintiffs Ray Liotta and Punky, Inc. (collectively, "Liotta") filed this action against defendant Nerium International, LLC ("Nerium") and eight individual defendants, including Kelly Heffernan. Plaintiffs assert claims for (1) violation of the Lanham Act, 15 U.S.C. § 1125(a), (2) violation of the California common law right of publicity, and (3) violation of the California Statutory Right of Publicity, Cal. Civil Code § 3344. Dkt. 1. Plaintiffs allege that Nerium is a multilevel marketing company selling a skin care product called "Nerium AD" with the assistance of individuals referred to as "Nerium Brand Partners." Compl. ¶¶ 30-34. Plaintiffs allege that defendant Nerium misappropriated photographs of Liotta, distributing them to Nerium Brand Partners, in order to promote sales of Nerium AD. Compl. ¶¶ 46-47 Plaintiffs further allege that defendant Heffernan, a Nerium Brand Partner, posted Liotta's photographs on her Facebook page to promote sales of Nerium AD. Compl. ¶ 51.
In March 2014, plaintiffs' counsel contacted Heffernan and requested that she execute a Waiver of Service. Heffernan Decl. ¶ 5. Heffernan agreed, and on April 8, 2014, she executed the Waiver. Heffernan Decl. ¶ 11. At that time, Heffernan was not represented by legal counsel and based on her conversation with plaintiffs' counsel, erroneously believed that signing the Waiver excused her from responding to the complaint. Heffernan Decl. ¶ 12. Without notifying Heffernan of their intention to request an entry of default against her, Heffernan Decl. ¶ 14, plaintiffs' counsel requested entry of default on June 4, 2014. Dkt. 13. On June 9, 2014, the Clerk of the Court entered default against defendant Heffernan. Dkt. 14. On July 11, 2014, Heffernan moved to set aside this default and also presented a Proposed Answer. Dkt. 23. On July 21, 2014, Liotta filed an opposition to this motion and requested that the Court reject the Proposed Answer or, in the alternative, strike Heffernan's affirmative defenses. Dkt. 25. In addition, should the Court vacate the default, Liotta requests attorneys' fees for costs incurred to date. Id . On July 28, 2014, Heffernan replied. Dkt. 26. The Court held a hearing on August 11, 2014. After considering the parties' arguments, the Court finds and concludes as follows.
A. Motion to Set Aside the Default
The Court begins with Heffernan's motion to set aside the default. Pursuant to Fed.R.Civ.P. 55(c), a court may set aside an entry of default "for good cause." The Court considers three factors when evaluating whether "good cause" exists: (1) whether defendant's culpable conduct led to the default; (2) whether defendant has a meritorious defense; (3) whether reopening the default judgment would prejudice plaintiff. TCI Group Life Insurance Plan v. Knoebber , 244 F.3d 691, 696 (9th Cir. 2000) (noting that courts use the same factors to assess "good cause" under Fed.R.Civ.P. 55(c) as for reviewing default judgments under Fed.R.Civ.P. 60(b)).
As a general rule, cases should be decided on the merits as opposed to by default, and therefore "any doubts as to the propriety of a default are usually resolved against the party seeking a default judgment." Judge William W. Schwarzer, et al., California Practice Guide: Federal Civil Procedure Before Trial § 6:11 (The Rutter Group 2009) (citing Pena v. Seguros La Comercial, S.A. 770 F.2d 811 , 814 (9th Cir. 1985)). As such, the Court has broad discretion to overturn an entry of default. Mendoza v. Wight Vineyard Management , 783 F.2d 941, 945-46 (9th Cir. 1986). This discretion is "more liberally applied" where a defendant seeks to set aside an entry of default pursuant to Rule 55(c) rather than a default judgment pursuant to Rule 60(b). United States v. Signed Pers. Check No. 730 of Yubran S. Mesle , 615 F.3d 1085, 1091, n.1 (9th Cir. 2010). Moreover, the rules governing motions to set aside defaults "are solicitous towards movants, especially those whose actions leading to the default were taken without the benefit of legal representation." Id. at 1089. Nonetheless, the defaulting party carries the burden to demonstrate that the default should be set aside. TCI Group Life Ins. Plan , 244 F.3d at 696.
Here, the Court finds that all three factors support vacating the default. First, it appears that the default was not the result of Heffernan's culpable conduct. Although Heffernan did not respond to plaintiffs' complaint, she was not represented by counsel when she agreed to waive service and did not understand her responsibility to respond to the complaint. Merely choosing not to respond to a complaint does not render a defendant's conduct culpable. TCI Group Life Ins. Plan , 244 F.3d at 697. Rather, the defendant's failure to respond must be "willful, deliberate, or evidence of bad faith." Id . Where a defendant presents a "good faith explanation negating any intention to take advantage of the opposing party, interfere with judicial decisionmaking, or otherwise manipulate the legal process, " failure to respond does not, on its own, amount to culpable conduct. Id . Plaintiffs argue that, because the language of the Waiver provided Heffernan with actual and constructive notice of her duty to respond, her failure to do so was unreasonable and thus culpable. The Court finds this argument unpersuasive. Heffernan did not have legal representation at the time she signed the Waiver, and her failure to respond appears to be the result of her lack of familiarity with the legal system. Because Heffernan's failure to respond did not evidence any intent to take advantage of plaintiffs or to otherwise manipulate the legal process, the Court finds that Heffernan did not act culpably.
Second, Heffernan may have meritorious defenses in this action. Heffernan asserts that she posted Liotta's photographs because she thought they were "cool" and without knowledge that Liotta had not authorized such use. Heffernan Decl. ¶ 8. "A defendant seeking to vacate a default judgment must present specific facts that would constitute a defense." TCI Grp. Life Ins. Plan v. Knoebber , 244 F.3d 691, 700 (9th Cir. 2001). At this stage, the Court does not determine the ultimate merits of the defense; rather, the Court merely determines whether a potential defense exists. Yagman v. Galipo, 2013 WL 1287409 at *12 (C.D. Cal. Mar. 25, 2013). Plaintiffs allege that Heffernan violated, inter alia, California's statutory right of publicity, Cal. Civil Code § 3344, by posting photographs of Liotta on her Facebook page in connection with Nerium products. However, section 3344 only applies where a person "knowingly uses" the likeness of another without their consent. Cal. Civil Code § 3344(a). Because Heffernan asserts that she acted without the requisite knowledge, the Court finds that Heffernan may have a meritorious defense in this action.[1]
Lastly, the Court cannot discern any reason why vacating the default would prejudice plaintiff. "To be prejudicial, the setting aside of a judgment must result in greater harm than simply delaying resolution of the case. Rather, the standard is whether [plaintiff's] ability to pursue his claim will be hindered.'" TCI Group Life Ins. Plan , 244 F.3d at 701 (quoting Falk v. Allen , 739 F.2d 461, 463 (9th Cir. 1984)) (alteration in original). In particular, plaintiff is not prejudiced simply because he is deprived of a "quick victory" and must litigate his claims on the merits. Bateman v. United States Postal Service , 231 F.3d 1220, 1225 (9th Cir. 2000). Because nothing suggests that plaintiffs' pursuit of this action will be hindered should the Court set aside the default, the Court finds that the default against Heffernan should be set aside.
B. Ancillary Relief
In their opposition, plaintiffs requested that the Court reject Heffernan's Proposed Answer as frivolous, or, in the alternative, strike her affirmative defenses as lacking sufficient factual support. The Court finds this request is more properly presented in a Motion to Strike the Answer and DECLINES to strike the Proposed Answer in its entirety or in part.
Plaintiffs have further requested that, as a condition for setting aside the default, the Court order Heffernan to pay plaintiffs' attorneys' fees incurred to obtain the default and to oppose the instant motion. Such conditions are intended to serve as a sanction to rectify "any prejudice suffered by the non-defaulting party as a result of the default and the subsequent reopening of the litigation." Nilsson, Robbins, Dalgarn, Berliner, Carson & Wurst v. Louisiana Hydrolec , 854 F.2d 1538, 1546 (9th Cir. 1988) (approving imposition of monetary conditions where defendants, including a lawyer, had previously declined to respond to an arbitration notice). As discussed above, Heffernan did not act culpably and her failure to respond has not prejudiced plaintiffs. Consequently, the Court DECLINES to impose monetary conditions on Heffernan.
In accordance with the foregoing, the Court hereby GRANTS Heffernan's motion to set aside the default. Heffernan shall file a responsive pleading to plaintiffs' complaint on or before August 25, 2014.
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solution by combinatorial methods
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Port Authority boat sinks during police training
7 of 10 police officers onboard were already in water training for water-rescue certification when boat started sinking
By PoliceOne Staff
NEW YORK — N.Y. Port Authority rescuers needed rescuing themselves Sunday when a boat sank in the middle of an exercise off Breezy Point.
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United States District Court, Ninth Circuit
October 15, 2013
ELIZABETH ORTIZ and GAIL MILLER, individually and on behalf of all others similarly situated, Plaintiffs,v.CVS CAREMARK CORPORATION, et al., Defendant.
ELIZABETH D. LAPORTE, Chief Magistrate Judge.
This case is a putative class action against Defendants CVS Caremark Corporation and CVS Pharmacy, Inc., for off-the-clock work by non-exempt employees. The plaintiffs in Howard v. CVS Caremark Corp., No. 13-4009 (NC), have filed an administrative motion to relate their case to this one. Docket No. 41. Defendants oppose the motion to relate. Plaintiffs in Ortiz do not oppose the motion.
Howard v. CVS Caremark Corp. was initially filed in Los Angeles Superior Court on March 14, 2013. It alleges that CVS pharmacy employees "were not paid for all wages earned, due to a combination of being asked to work off-the-clock, being understaffed, and being told that overtime would no longer be approved." Declaration of Jennifer Zargarof ISO Opp. to Motion to Relate ("Zargarof Decl.") Ex A at 5. The case here, Ortiz, initially involved many wage and hour claims on behalf of virtually all of CVS's California employees, including missed meal and rest breaks, failure to reimburse business expenses, failure to provide accurate wage statements, and various off-the-clock allegations, mostly related to security checks. See Docket No. 5, at 4-5. However, following the proposed settlement of Murphy v. CVS, Case No. BC464785, in Los Angeles Superior Court, the Court stayed the claims in Ortiz arising from security checks. Docket No. 29. In the Class Certification Motion filed on September 6, 2013, Plaintiffs in Ortiz further narrowed their claims, seeking to certify a class for unpaid off-the-clock work for interstore merchandise deliveries and pickups, as well as for claims that Defendants did not fully reimburse employees for mileage. Docket No. 31 at 2-3.
The Howard plaintiffs initially sought to have that case related to Murphy v. CVS in state court, but that request was denied. Declaration of Janine Menhennet ISO Motion to Relate ("Menhennet Decl.") ¶ 2. CVS then removed Howard to the Central District of California, where it was deemed related to two actions previously before Judge Otero. See Docket No. 43 at 2 (August 22, 2013 Order of Judge Otero, hereafter "Otero Order"). The Howard plaintiffs filed a motion to transfer venue to the Northern District of California, which Judge Otero granted on August 22, 2013, approximately two weeks prior to the narrowing of the scope of the Ortiz claims in Plaintiff's Motion for Class Certification. Judge Otero held that "[t]he interests of justice weigh strongly in favor of transferring this case to the Northern District of California" because "there is significant overlap between the instant action and the Ortiz action that is currently pending... as both actions involve claims for off-the-clock labor, and the proposed class in Ortiz includes, inter alia, the pharmacy employees that Plaintiffs seek to represent here." Otero Order at 5. Judge Otero held that transferring the case to the Northern District was in keeping with section 1404(a)'s purposes of preventing the waste of time, energy, and money, and protecting against unnecessary inconvenience and expense. Id . CVS opposed the motion, but Judge Otero stated that it appeared that the claims in Howard were "substantially subsumed within those presented in Ortiz...." Id. at 6. The newly transferred case was assigned to Judge Cousins as No. 13-4009.
Local Rule 3-12(a) states that an action is related to another when "1) the actions concern substantially the same parties, property, transaction or event; and 2) it appears likely that there will be an unduly burdensome duplication of labor and expense or conflicting results if the cases are conducted before different judges." Civ. L.R. 3-12(a). The Howard plaintiffs' allegations appear to cover all CVS pharmacy employees in California, exempt and non-exempt, who were underpaid because of off-the-clock work, understaffing, and lack of approval of overtime. The Ortiz plaintiffs seek to represent all non-exempt CVS employees in California (including some pharmacy employees) in claims for unpaid wages for off-the-clock work for inter-store merchandise/medication deliveries and pickups, as well as for unpaid or underpaid mileage reimbursement. The interstore transfer theory of liability that is the backbone of the Ortiz claims is never mentioned in the Howard complaint. See Zargarof Decl. Ex. A. There is some overlap between the classes, since some non-exempt pharmacy employees in the putative Howard class allegedly performed uncompensated off-the-clock interstore transfers that would also put them in the Ortiz class. However, the limited overlap of some class members is not enough to reach the "substantial similarity" threshold.
In terms of the second prong, duplication of labor and the potential for inconsistent results, the Howard plaintiffs argue that they provided declarations in support of the Ortiz class certification motion and coordinated depositions of two of the Howard plaintiffs with counsel for the Ortiz plaintiffs. This minor overlap is not significant enough to show a likelihood of "unduly burdensome duplication of labor." Although there is a remote possibility of inconsistent results, the Ortiz claims are much narrower than the Howard claims, and an adjudication on the interstore transfer claims would not affect the Howard plaintiffs' ability to proceed with their other off-the-clock theories, as well as their understaffing and no-overtime claims.
When Judge Otero issued his order transferring Howard to this district, the Ortiz claims were still very broad and subsumed the claims in Howard. However, the claims that the Ortiz plaintiffs seek to certify are much narrower than those that were at issue when Judge Otero made his transfer decision. Therefore, the Court denies the Howard plaintiffs motion to relate that case to Ortiz.
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