TOV Injury and Safety Blog

A divided court recognizes wage loss where the sub-S Corporation is losing money

Under the Michigan No Fault Act, injured persons are not compensated for the loss of "earning capacity"; they can only recover actual lost wages.  AAA argued that an injured worker shouldn't be able to recover lost wages from his own sub-chapter S corporation if the corporation appeared to be losing money.  In a 5-2 decision, with Justices disagreeing over the pertinent logic, the Michigan Supreme Court handed a rare defeat to an insurer.  It held, in essence, that the statutory language and the recognition of a corporation's separate legal identity required it to honor the victim's lost wage claim.

Farm Bureau strikes again: "You expected us to pay a claim?"

  Beware of the small print in your insurance contract:  you can't negotiate the language or change it; but the insurer and some judges will strangle you with it.

19 years, 3 weeks' lost profits, and a slap at victims by the Supreme Court?

     Observers of this week's argument before the U.S. Supreme Court over the massive oil spill caused by the Exxon Valdez warned that a majority of the Justices appeared willing to further reduce the punitive damage award against Exxon.

Mortgage reform

  The Illinois Attorney General has taken an active role in investigating and prosecuting some of the more blatant abuses that have fed the mortgage and foreclosure crises.  The Michigan Attorney General, a captive of the Chamber of Commerce, has done virtually nothing to protect Michigan consumers, despite the fact that Michigan is one of the states hardest hit by the mortgage crisis.

    One of the most abusive and unscrupulous practices uncovered in Illinois was the so-called pay option adjustable rate mortgage.  It allowed consumers to pay only a fraction of the actual interest charged--thus resulting in a loan that grew each month and a constantly increasing mortgage balance.  Both Countrywide Financial and a company called One Source have been implicated in this scandal. 

     Another procedure under attack is the sale of mortgages which charge enormous penalties if a borrower attempts to pre-pay the balance.  Thus, if the adjustable rate increases above market levels, the consumer is trapped in the high rate mortgage and cannot negotiate a new loan at competitive rates without paying charges that may be as high as $10,000.00.  The Bush Administration and Congress have talked about addressing this problem, but their proposed solution would allow such pre-payment penalties for up to five years--even though many adjustable rate mortgages can be adjusted upward in the first month after the mortgage is signed!

     In an earlier case, the Illinois Attorney General forced Ameriquest, a large national lender, to pay $295 million dollars to consumers to compensate for similar abusive practices.  Unfortunately, when we elect arch conservatives to the office of Attorney General in Michigan, we can be assured that we will not benefit from this kind of aggressive consumer protection.

Delivering newspapers voids your auto coverage in Michigan

        Acting pursuant to an earlier decision by the Michigan Supreme Court, the Court of Appeals yesterday held that a woman who used her car to deliver newspapers could not avail herself of the auto liability insurance she had purchased.  In addition, the woman she had seriously injured in a car accident could not avail herself of the coverage.  In Bristol West v. Butzbach, the three Court of Appeals' judges felt constrained by a prior Supreme Court decision to invalidate Butzbach's coverage, because her auto policy contained a standard exclusion for "business pursuits." 

          In Michigan, no fault insurance is mandatory, and the coverage the carrier must provide is mandatory:  on that basis, prior court decisions had held that insurers are in a better position to evaluate and underwrite risks that include incidental money-making or "business" pursuits, and have required coverage of these activities that fall short of an actual commercial venture.  For example, a number of years ago, we prevailed against the insurer in Rossman v. State Farm, when it attempted to invalidate a volunteer fireman's coverage because he received a small per diem for fire runs. 

          This issue arises regularly because many unsophisticated insureds use their vehicle for incidental money-making activities (for example, teens delivering pizza, newspapers or other materials for an employer) that aren't normally considered to be a "business".  Even if an insured were to read his or her entire policy when it comes in the mail a month after buying it, most people wouldn't recognize this exclusion from coverage as applying to them.  And, under other activist rulings of our Supreme Court, the insured's agent owes no duty to explain the exclusion to the insured.

        Before the activist Engler Justices assumed control of the Supreme Court, these incidental income-generating activities were included in mandatory coverage, and an insured's agent owed a general duty to inform the insured:  under this Court, though, many naive or uneducated Michigan consumers who are unaware of this constraint will be purchasing illusory coverage for these poorly-compensated activities.  None of them will likely come from the neighborhood of these Republican activist jurists, however, so their concerns are ignored.

Merck settlement for Vioxx

        On November 10, 2007, the New York Times reported that the investment community considered the $5 billion settlement of Vioxx lawsuits to be a victory for the company.  The painkiller Vioxx was pulled from the market after it was shown to contribute to the likelihood of myocardial infarcts and strokes.  The settlement will occur only if 85 percent of the 27,000 pending lawsuit victims accept it, which the Federal Court apparently considers likely.  News of the settlement pushed Merck's stock value up.

        Merck had won about 2/3 of the cases that had been tried, including 8 of the last 10.  Where it had lost, however, it had also been compelled to pay significant punitive damages. To receive a settlement, victims will have to prove that they actually suffered a stroke or heart attack within 14 days of taking Vioxx for at least 30 days.  It will be difficult for Michigan resident victims to share in the recovery because the Michigan courts have granted immunity to any drug manufacturer whose product is approved by the FDA.

Judicial activism in the premise liability sphere

          The would-be "conservatives" on the Michigan Supreme Court have displayed their judicial activism in yet another context that prejudices consumers and victims for the benefit of the Chamber of Commerce.  This activism was recently emphasized when the Court summarily reversed a decision of the Court of Appeals.

          The common law of negligence starts from the basic assumption that every person must act reasonably toward others.  The Courts then carve out some exceptions from this "duty of reasonable care" where exceptional public policy reasons dictate that a person should owe no duty to others.  Our Supreme Court, since Justice Engler's personal appointees have taken control, has indulged in a prolonged binge of withdrawing rights from consumers.  That assault on civility has also included eliminating a merchant's duty to act reasonably to protect customers from the criminal act of another.

          The Supreme Court's majority, in the MacDonald v. PKT, Inc., case, acknowledged that "ordinarily [a merchant's duty to respond to criminal acts occurring on the premises] would be a question for the factfinder".  For the past several decades, the courts in Michigan had left the determination to that simple test.  In MacDonald, however, the majority went on to hold (in an exercise of activism it did not acknowledge) that "...in cases in which overriding public policy concerns arise, this Court may determine what constitutes reasonable care."  The majority then held that "...as a matter of law, fulfilling the duty to respond requires only that a merchant make reasonable efforts to contact the police."

          In September of 2007 the majority went one step further in Lamar v. Ramada Franchise Systems, Inc.   The Court of Appeals had relied upon the above language to establish the principle that whether the merchant made "reasonable efforts to contact police" was a question for the fact-finder--not a question of law for the Court.  The Supreme Court majority overruled the Court of Appeals and decided the case as a matter of law, despite questions regarding how long the confrontation on Defendant's premises was on-going and how long it took Defendant's employees to respond.  Where the MacDonald case had insisted that a merchant had no duty to anticipate criminal acts, to intervene to stop criminal acts, or even to maintain security personnel where criminal acts might be expected to occur, the majority in Lamar went further, holding that a victim cannot dispute whether the Defendant was unreasonably slow in calling authorities.

           It is not clear to us what public policy could possibly justify immunizing anyone in our society from acting "reasonably" to prevent or respond to criminal or violent behavior.  We would submit that there is an overwhelming public policy in favor of requiring everyone to act reasonably to prevent or minimize crime and violence.  Not only do we disagree with the Court's assessment of "overriding public policy concerns", but we also despise the majority's arrogation of the right to make such "overriding" changes in established law.  These are precisely the kind of decisions which, in other contexts, the judicial "conservatives" have challenged.  It is another evidence of the principle that many so-called "judicial conservatives" are simply activists with a particular agenda--or a particular constituency to protect.

The dangers associated with lead

     While the human body needs to consume tiny amounts of many non-organic minerals, lead is not one.  So far as we know, lead is of no value to the human body and consumption of lead has devastating consequences for humans--particularly during the early stages of brain development, when it has been widely documented to interfere with neurological development.  Furthermore, the neurological impact is permanent and irreversible.

     Lead is the heaviest "stable" element, however, it does break down when it interacts with certain other elements--particularly sulfur.  Because it is resistant to corrosion and discoloration, it has historically been used in many domestic products including kitchen utensils and water pipes.  More recently it has been used to improve the adhesive properties of paint.  Although its use was banned in interior paints in 1971, lead is still used in the United States to bind exterior paints.  Obviously, in China it is widely used in inferior products because it is cheaper than many other stable minerals.

Employer responsibility for rape

     The Michigan Supreme Court controlling majority once again came down firmly on the side of corporate American and the insurance industry, when it held that a woman who was raped by a plant foreman on the nightshift could not sue their employer.  The radical Republican majority held that the woman, Lisa Brown (who worked as a night-shift security guard at Samuel-Whittar Steel, Inc.), had no recourse against the employer, even though the rape was not an isolated event and Lisa had repeatedly voiced complaints to the Plant Manager about verbal threats made to her by the perpetrator. 

        The unabashed majority rationalized its holding with the dubious claim that it is not enough that the employer had warning of the rapist's "vicious tendencies"; they held that the employer is not responsible unless the employee's lewd comments "convey an umistakeable, particularized threat of rape."  If you think that your daughter or sister is a little less safe today, because of the callous majority's refusal to hold employers resposible for inappropriate and potentially-violent behavior, you are right:  employers can refuse to address escalating complaints of this nature with impunity.  If you are embarrassed by the callousness of our Justices, join the rest of us who shudder at their superficial result-oriented activism.