When the Law Makes No Sense


Not all laws are good laws.  Not all laws are fair.  Not all good laws are applied fairly.  But normally there is at least some logic behind laws drafted and adopted by state legislatures and enforced by competent, adult prosecutors sworn to uphold the Constitution.  I say “normally” because on rare occasions you may hear a story of a ridiculous law struck down as unconstitutional or a rogue prosecutor missapplying an otherwise valid law.  But then there is the case of Cormega Copening, a sixteen year old North Carolina teen who was charged with multiple felony counts for sexually exploiting a minor.  Copening, you see, was caught with naked pictures of a minor on his cell phone.  Here is the thing though, the naked pictures were of HIMSELF.

I had to read the Copening case multiple times before I ultimately satisfied myself it was not an elaborate internet hoax.  Unfortunately it is true and it is unequivocally outrageous.

Last year the Cumberland County Sheriffs Office in North Carolina was investigating a claim of statutory rape.  As part of the investigation, students at Douglas Byrd High School in Fayetteville had their cell phones searched.  Copening was one such students and the police found naked pictures of himself on the phone.

In what feels like an episode of the Twighlight Zone or a bad remake of the Matrix, Copening was actually charged with a felony for exploiting a minor . . . the minor being himself.  Under North Carolina law it is illegal to take naked photographs of a minor child for purposes of sexual exploitation.  That part of the law is completely rational.  Under the law, a 16-year-old is considered a minor, which is also rational.  However, a 16-year -old who is accused of sexually exploiting a minor can be charged as an adult . . . and this is where things flew off the track for Cormega.

Because Cormega was only 16 years old when the pictures of himself were taken, he was considered a minor capable of being sexually exploited. But as the 16-year-old who took the photos he was also technically old enough to be charged as an adult for sexually exploiting a minor.  “Okay,” you may be thinking to yourself, “but no rational person or government would even think about charging a 16-year-old as an adult for exploiting himself as a minor.”  Right?  Right?  But that is exactly what happened to Cormega.

He was arrested and charged with a felony for sexually exploiting a minor, the minor being himself.  Earlier this month Cormega pled guilty to a lesser charge. Even so, you have to question how something like this could ever happen in a rational world.  How can a teenager exploit himself for having naked pictures of himself on his cell phone?  How is that any different than looking at himself in the mirror?  The answer is that it doesn’t make any sense whatsoever completely illogical and frankly embarrassing. Dont believe me?  You can read more about it here:


Pennsylvania Supreme Court Suspends Attorney General Kathleen Kane’s Law License Via Emergency Order

City Hall

In a surprising move (shocking really), the Pennsylvania Supreme Court entered a one page Order today temporarily suspending Attorney General Kathleen Kane’s law license.  Although the Order temporarily suspended Kane’s license to practice law, it specifically stated that it “should not be construed as removing [Kane] from elected office.”   The full Order can be found online here: http://www.pacourts.us/assets/opinions/Supreme/out/2202DD3%20-%201023669815398023.pdf?cb=1

Kane was indicated earlier this summer and is currently facing criminal charges in Montgomery County for allegedly leaking secrete grand jury material.  The Montgomery County District Attorney has alleged that Kane illegally leaked grand jury material in order to embarrass a fellow prosecutor she viewed as a political opponent. Kane has vehemently denied any wrongdoing.

Today’s surprising Order was entered in response to an action initiated by the Pennsylvania Attorney Disciplinary Board to suspend Kane’s law license.  In August, the Disciplinary Board filed a Complaint seeking to suspend Kane’s law license because of her “egregious conduct” in leaking the grand jury information.  The Disciplinary Board also claimed that because Kane is currently a criminal defendant, there “is a concurrent conflict of interest for Kane to continue practicing law while being prosecuted for violating the very law she is was vested with the power to enforce.”

Kane has maintained that the Disciplinary Board’s efforts to suspend her law license violates her constitutional right to due process.  In other words, Kane believes a jury of her peers must convict her of leaking grand jury material before her license can be suspended.

Today’s Supreme Court Order temporarily suspending Kane’s license is extremely surprising.  Even more so considering the Supreme Court went out of its way to make it clear that the Order was not meant to remove her from office. The upshot here is bizarre – Pennsylvania’s current Attorney General, its “lawyer in chief,” cannot practice law.  The ramifications of this Order on Kane’s ability to fully run the Attorney General’s Office are unclear, but it is safe to assume that this will not be the last word from the Supreme Court.

Updates to follow.

Kids, Clocks and the Constitution


Social media has been buzzing about Ahmed Mohamed, the 14 year-old Texas boy who was yanked from class, questioned by police and ultimately suspended from school for building a clock that school officials mistook for a bomb.  The discussion sparked by Ahmed’s detention has primarily focused on whether he was the victim of racial profiling. Many questioning if his name and ethnicity had anything to do with his hand made “clock” being mistaken for a “bomb.”  However, with reports now surfacing that Ahmed was questioned by school officials and local police and even asked to write a statement without his parents present and without an attorney, this case raises some valid legal and philosophical questions as to the rights of minors suspected of committing a crime.

Earlier this week, Ahmed Mohamed, by all accounts a studious nine-grader at MacArthur High School in Texas was removed from school and questioned by police for bringing a home-made clock to school. Ahmed is a budding engineer who wants to attend MIT someday.  He built the clock as an experiment. Rightfully proud of his work and ingenuity, he brought it to school and showed it to his teacher because he thought she would be impressed.  That’s when things started to unravel.  A second teacher discovered the clock when it made a beeping noise during class. Despite telling the teacher it was just a clock, the teacher and school officials were concerned it might in fact be a bomb.  The local police were called and Ahmed was placed in handcuffs and taken in for questioning.

The photo of Ahmed in handcuffs has been all over social media. It’s a powerful photograph.  Not just because of the confused and scared look on Ahmed’s face, but also because he is wearing a NASA t-shirt.  A NASA t-shirt . . .   This kid really likes science.  How do you not give the benefit of the doubt to a kid wearing a NASA t-shirt?

Anyway, the fact that Ahmed was placed in hand-cuffs and questioned by police because he built a clock is troubling in its own right.  From reports, there was no evidence whatsoever that would suggest that his clock was a bomb.  Ahmed never suggested it was anything other than a clock.  But from a legal perspective, what is even more troubling is that Ahmed was reportedly questioned by police and school officials and asked to write a statement without being allowed to speak with his parents and without an attorney.

It is a bedrock principle of Constitutional law that citizens have a right to speak with an attorney before being questioned by police.  The rights of children are no less than those of adults.  Although criminal suspects can invoke or waive their right to speak with any attorney, we should all seriously consider the competency of children to do the same.

It is not clear if Ahmed asked to speak with an attorney, however it has been reported that asked to speak with his parents and that request was denied.  It is true that the Constitution does not guarantee a criminal suspect the right to have his or her parents present during questioning by police. But we are not talking about a competent adult here, we are talking about a scared child in handcuffs who wants his parents.

At this point there are not enough facts to offer a credible opinion on the technical legality of Ahmed’s detention.  But the story that is emerging is troubling, from both a philosophical and legal perspective.  The thought of school officials and police questioning a young teenager without a parent present and without a lawyer raises interesting Constitutional questions.  But it also raises moral and philosophical issues that we need to consider closely.  As a nation, we have always balanced the rights of the accused against the safety and interests of society.  Protecting the rights of an accused is a fundamental moral value we have collectively adopted as a nation.  Our criminal justice system, though far from perfect, is guided by this fundamental value.

But should our values be different when the accused is a child? Should we be more zealous when dealing with the rights and interests of children?  Should we also consider the rights and interests of the parents?  Children, by and large, lack the same sophistication and competence as adults. They are more vulnerable.  That vulnerability is highlighted in serious cases such as Ahmed’s, where there is the potential that a child could face serious criminal or even terrorism charges.

Denying a child the right to speak with his parents before subjecting him to questioning seems philosophically at odds with the moral values of our criminal justice system.  It seems philosophically at odds with our inherent interests as parents.  This issue does not seem to be a big discussion point with respect to Ahmed’s detention, but it should be.

Writing Obscenities on a Speeding Ticket is Protected Speech Under the First Amendment


The First Amendment to the United States Constitution does not protect all speech. But, in what is good news for Connecticut man, it does protect a citizen’s right to scrawl “F@*! YOUR SH!TTY TOWN BITCHES” on a citation in protest of a speeding ticket. Yesterday, New York Federal Judge Cathy Seibel ruled that the District Attorney for the town of Liberty in upstate New York violated William Barboza’s civil rights after the District Attorney ordered Barboza arrested and prosecuted for using obscenities in protesting a traffic ticket.

On May 4, 2012, William Barboza was driving through the town of Liberty in upstate New York. He was pulled over and given a ticket for speeding. Barboza was clearly unhappy about the ticket. Although he decided to pay the fine, on the payment form he submitted with his check Barboza wrote “F@*! YOUR SH!TTY TOWN BITCHES” (except his version was uncensored). Barboza also crossed out the word “Liberty” from the phrase “Liberty Town Courthouse” and hand wrote “Tyranny” in its place.

The authorities in Liberty were not too pleased with Mr. Barboza. His payment was rejected and he was ordered to appear in court. When Mr. Barboza appeared before a local Liberty judge he was lectured on the use of his foul language and eventually arrested and charged with “aggravated harassment.” As it turns out, Liberty’s District Attorney Robert Zangla ordered Barboza’s arrest.

About a year after his arrest, the criminal charges against Barboza were dropped. The judge dismissing the case against Barboza wrote that “No citation is necessary for this Court to determine that the language under the circumstances here, offensive as it is, is protected.

Barboza was not content to let matters stand and he filed a civil lawsuit in federal court against both the town of Liberty and Robert Zangla for violating his Constitutional rights under the color of state law.

Yesterday, Judge Seibel of the Southern District of New York ruled that Zangla is liable for damages for impinging upon Barboza’s “clearly protected rights” under the First Amendment. Judge Seibel rejected the notion that Barboza’s “speech” violated New York’s aggravated harassment law, determining that his choice of words, though “crude and offensive,” did not convey any imminent threat of harm. As for the town of Liberty, it would have to stand trial on Mr. Barboza’s claim that it failed to train its police officers on rights afforded by the First Amendment.

As noted by Judge Seibel, Mr. Barboza’s choice of words was clearly meant to be offensive and insulting. That said, if the First Amendment provides any protection at all, it must protect a citizen’s right to protest and criticize the actions of his government. Otherwise, what is the point? Insulting a town in response to a speeding ticket may be immature, but it is a form of protest and just the sort of speech the First Amendment was intended to protect.

Facebook, Instagram and Twitter Score a Big Win in California Court

I think it is fair to say that social media has become nearly ubiquitous in the United States and most other developed countries.  Although the number of people using social media is now in the hundreds of millions, most users don’t realize that, regardless of their “settings,” what they post online is not private and can and often is used against them in litigation.  Even otherwise innocent posts, such as status updates or photographs can be accessed by lawyers once a lawsuit is filed.

I have written about this subject many times and have tracked the legal development of social media discovery over the years.  You can read some of these articles here:





Although it is true that in civil lawsuits (think personal injury or medical malpractice cases), an injured person can be forced to turn otherwise private social media posts over to the defense, defendants are not permitted to serve subpoenas directly on the social media providers.  In other words, if you file a lawsuit against a doctor alleging medical malpractice, a court may force you to turn over your social media content, but a defendant can’t force to the social media provider to turn it over.  The reason civil litigants can’t force social media providers to turn over a user’s private information in a civil suit is because a federal law called the “Stored Communication Act” (SCA) prohibits it.

Although the SCA categorically prohibits civil litigants from subpoenaing private posts from social media providers, there are exceptions in criminal cases.  Criminal defendants have due process rights and a Constitutional right to cross exam witnesses who testify against them.  Constitutional rights are fundamental and trump all other federal laws, including the SCA.  With these rights in mind, when Congress passed the SCA, it created limited exceptions that allow prosecutors and potentially defendants to force social media providers such as Facebook and Instagram to turn over private user information.

In a recent San Francisco criminal case, the intersection between the SCA and a criminal defendant’s right to subpoena Facebook, Instagram and Twitter was squarely in the cross-hairs of the California Court of Appeals.  The Court of Appeals issued a very interesting ruling concluding that criminal defendants do not have a Constitutional right to subpoena Facebook, Instagram and Twitter for private user records before trial, but they may be able to do so during trial.

Here is the thumb-nail factual setup:  prosecutors in San Francisco charged Derrick Hunter for the gang-related murder of Jaquan Rice in connection with a drive-by shooting on June 24, 2013.  The prosecution alleged that Hunter and his younger brother (an unnamed minor) shot and killed Rice because Rice had posted messages and videos on Facebook and Instagram threatening Hunter’s younger brother.  Hunter and his minor brother were members of a gang called “Big Block,” while Rice was a member of a rival gang called “West Mob.”  Another defendant, Lee Sullivan was also alleged to be involved in the shooting and witnesses reported that a woman was driving the car involved in the drive-by.

Minutes after the shooting Renesha Lee was spoted driving the drive-by car.  She told the police that she had let the Hunter brothers and Sullivan borrow her car and they took her home just before the shooting.  Lee is Sullivan’s former girlfriend and agreed to be a witness for prosecution.

Prior to trial, Sullivan subpoenaed both Facebook, Instagram and Twitter seeking all public and private content from both Lee and Rice’s account.  Hunter subpoenaed Twitter seeking all of Lee’s public and private content.  Both defendant’s argued that, irrespective of the SCA, they had a Constitutional right to this information in order to prepare a proper cross-examination.

Sullivan argued that Lee’s private postings would show that she was jealous of his relationship with another woman and thus was motivated to testify against him out of revenge.

Hunter argued that Rice’s private postings were relevant to show that Rice was violent and threatened Hunter’s younger brother.

The trial court granted the defendants’ request to subpoena Facebook, Twitter and Instagram, concluding that the defendants had a Constitutional right to the material before trial so that they could adequately cross exam witnesses. Facebook, Twitter and Instagram appealed to the Appellate Court.

The Appellate Court disagreed with the trial court.  It noted that there is no Constitutional right to pretrial discovery.  So, according to the Appellate Court, criminal defendants do not have a Constitutional right to subpoena private user content from Facebook, Twitter, Instagram or any other social media provider before trial.  However, the Court was careful to leave the door open for criminal defendants to subpoena social media providers under certain circumstances at trial.

The Court reasoned that at the time of trial a judge would have a better understanding of the issues in the case and could better balance a defendant’s Constitutional right to cross-examination against the SCA’s goal of keeping private online material private.  According to the Appellate Court, at trial the judge would be better able to balance these competing interests because he or she would have had the opportunity to hear testimony and consider evidence.

The Appellate Court’s decision is interesting.  On the one hand it shows a keen interest in protecting social media users and providers from unlimited and unsupervised subpoenas from criminal defendants.  On the other hand, it seems impractical and potentially unfair to require a criminal defendant to wait until trial begins to get potentially relevant social media material. Criminal defendants’ risk losing their fundamental right to liberty, shouldn’t their attorneys be given time to prepare the best defense possible?

Regardless, the opinion is another big step in the ever evolving use of social media in litigation.

Governor Wolf’s Executive Powers Under the Microscope

The Pennsylvania Supreme Court is currently hearing arguments on issues that will ultimately define the scope of Governor Tom Wolf’s powers as the State’s Chief Executive. This morning the Supreme Court is hearing arguments on Governor Wolf’s executive “moratorium” on the execution of death row prisoners in Pennsylvania. Since taking office, Governor Wolf has suspended the execution of prisoners until a legislative panel completes an ongoing study on the use of capital punishment in Pennsylvania. Most view this “temporary moratorium” as the first step in eliminating capital punishment altogether in Pennsylvania.

The death penalty case revolves around death row inmate Terrance Williams who was convicted of beating a Philadelphia man to death with a tire iron over 30 years ago. Williams had unsuccessfully sought a pardon and to have his death penalty sentence overturned or commuted. Since taking office in January, Governor Wolf has granted Williams 3 reprieves, indefinitely postponing Williams’ scheduled execution.

Governor Wolf has taken the position that all executions in Pennsylvania should be suspended until the State’s legislature completes a study on the use of capital punishment. The Governor’s Office argues that as the State’s Chief Executive, Governor Wolf has “unconditional power” to grant reprieves to death row inmates and state courts have no jurisdiction to review or challenge his exercise of executive power.

Philadelphia’s District Attorney Seth Williams has challenged Governor Wolf’s actions as “flagrantly unconstitutional” and outside the scope of the Governor’s authority.

Considering Governor Wolf’s criticism of the continued use of the death penalty, the Supreme Court’s decision in Williams will likely have a significant impact on the ongoing viability of capital punishment in Pennsylvania. It will also help define the scope and breath of the Governor’s powers as chief executive. Proponents and opponents of the death penalty are watching this case closely.

In addition to the “death penalty moratorium,” the Pennsylvania Supreme Court is also hearing arguments on Governor Wolf’s authority to remove Erik Arneson from his position as Executive Director of the Office of Open Records. The Arneson case is interesting, but more nuanced than the death penalty moratorium case. Arneson centers on former Governor Corbett’s last minute appointment of Erik Arneson to the position of Executive Director of the Office of Open Records. The Office of Open Records is a new, quasi judicial state agency that is tasked with making preliminary decisions as to whether government records should be turned over to the public under the State’s “Right to Know Law.” This potentially means the Office of Open Records will decide whether the public is entitled to otherwise private records from the Governor’s Office.

On January 13, 2015, in his last week as Governor, Tom Corbett appointed Erik Arneson as Executive Director of the Office of Open Records. By statute, the Executive Director will serve a 6 year term. On January 20, 2015, Tom Wolf officially became the new Governor of Pennsylvania and one of his first acts as Governor was to fire Arneson.

Arneson appealed the decision to the State’s Commonwealth Court. On June 10, 2015, an en banc panel of the Commonwealth Court found Governor Wolf acted outside his authority in firing Arneson without cause. The Commonwealth Court ordered Arneson to be reinstated and awarded him back pay. Governor Wolf’s office appealed the decision to the Supreme Court, which is hearing arguments this morning.

The primary issue before the Supreme Court is whether the State legislature intended the Executive Director position of the Office of Open Records to be “independent” of the Governor’s Office. In other words, when the legislature created the Office of Open Records, did it intend to immunize the Executive Director from political influence, including the influence of the Governor. If it intended the office to be “independent,” then Governor Wolf would not be permitted to fire Arneson except for cause. If the legislature did not intend the Office of Open Records to be independent, then Arneson serves at the pleasure of the Governor and the Governor has unfettered authority to remove him for any reasons or no reason at all.

Governor Wolf contends that nothing on the legislation creating the Office of Open Records indicates that the office was meant to be “independent” and there are no limitations on his ability to appoint and replace the Executive Director “at will.”

Arneson obviously disagrees, arguing that by granting the Executive Director a 6 year term, which exceeds the term of the Governor by 2 years, the State legislature intended the Executive Director to operate free from political pressure or threats of removal from the Governor’s Office. Arneson also argues that the Office of Open Records is responsible for making decisions as to whether government records, including records from the Governor’s Office should be made public under the State’s Right to Know Laws. Given that authority, Arneson contends that the legislature clearly intended the office to be “independent.”

As with the death row moratorium, the Supreme Court’s decision in Arneson will help shape the limits of the Governor’s authority. It will also resolve contentious political wrangling between the outgoing Governor and Governor Wolf. Regardless, hearing both arguments at the same time means that in short order the Supreme Court will be making unprecedented decisions that influence the shape and operation of our State’s government.

Check back for updates.

Uber’s “Class” Problems

Over the past few years, a substantial number commuters have come to rely on Uber as an important mode of urban transportation.  Many commuters prefer Uber over traditional taxi cabs and are willing to pay a premium for the service. There is no question that Uber provides distinct advantages over traditional cabs, albeit at a higher cost.  One primary advantage is Uber’s mobile application platform that makes it breeze to coordinate and pay for a ride.  A credible argument can also be made that Uber cars are, generally speaking, better maintained and more comfortable than traditional cabs.

Uber’s business model has been described different ways by different people.  In essence, however, Uber is simply a market maker.  It’s mobile application connects customers looking for rides for a predetermined fare to drivers willing to provide rides for the same predetermined fare.  The application uses the GPS function on mobile devices to coordinate the pickup and drop off location. Uber gets a percentage of the ultimate fare with the remainder paid to the driver. As with most elegant solutions, brilliance lies in simplicity.

But Uber’s business model is facing some serious legal trouble.  From Uber’s perspective, it does not employ the drivers who utilize its software program.  Rather, according to Uber, the drivers are independent contractors who simply utilize its software for a fee.  This approach has a number of advantages.  One significant benefit is that by classifying drivers as independent contractors Uber is able to avoid some state and federal labor laws.  The social propriety of Uber’s business model has often been questioned, but it is now facing legal challenges by drivers who believe they should be considered “employees” under California law.

A class action lawsuit captioned O’Conner v. Uber Technologies, Inc. is currently pending in the Norther District of California. The class representatives are bringing claims on behalf of a class of California drivers alleging, among other things, that Uber has wrongfully classified them as “independent contractors” rather than “employees.”  According to the class representatives, Uber drivers in California are really “employees” under California law and, as such, are entitled to certain benefits including a “tips” paid by fare paying customers.

Uber’s defense of the class action suit took a serious blow this week when Northern District of California Judge Edward Chen granted class certification for certain claims made by the representatives. (You can read the full opinion here https://s3.amazonaws.com/pacer-documents/N.D.%20Cal.%2013-cv-03826%20dckt%20000341_000%20filed%202015-09-01.pdf).  Importantly, Judge Chen certified the class for purposes of (1) determining whether, under California law, Uber drivers were improperly classified as “independent contractors” and (2) determining whether the drivers were entitled to receive the “tips” charged to fare paying customers.

Analyzing the issue of class certification under Rule 23, Judge Chen noted that the “cardinal” issue was whether the drivers’ working relationships with Uber were “sufficiently similar so that a jury can resolve the Plaintiff’s legal claims at once.”  In other words, could a jury, considering a uniform set of facts, reach a conclusion that all of the drivers were either “employees” or “independent contractors.”   If a jury could make that determination based on a uniform set of facts the suit could be properly certified as a “class action.”  Otherwise each driver would have to bring an individual suit.  It is increasing rare for class actions to be certified, but Judge Chen concluded that this case fit the mold and granted certification.

Judge Chen began his analysis by observing that there was no real dispute under Rule 23 as to the ascertainability or numerosity of the the putative class of California drivers.  Indeed, the class would include over 160,000 members and could be easily identified from Uber’s business records.  As is normally the case with a proposed class action, the rubber meets the road with respect to issues commonality and typicality. But Judge Chen did not have trouble in concluding that the putative class met these requirements as well.  He noted that for purposes of commonality, “the lawsuit must call upon the court or jury to decide at least one factual or legal question that will generate a common answer ‘apt to drive the litigation.'”  Here, that question was whether the drivers were miss-classified as “independent contractors” under California law.

Judge Chen concluded that the central question as to whether drivers were “contractors” or “employees” not only would “drive the litigation” but that it “could in fact be outcome determinative.”

The upshot of Judge Chen’s decision is that Uber is now facing serious financial exposure to a class action lawsuit that could fundamentally change the way it does business.  Of course, it is up to the jury to decide whether or not the class members are “employees” or “independent contractors,” but jury trials are extremely risky and it seems unlikely that Uber would take such a big gamble.  Stay tuned.

Pennsylvania Superior Court Eliminates Third-Party Credit for UIM Settlements

The Pennsylvania Superior Court recently issued a significant opinion concerning the applicability of UIM credits in third-party tort claims. In Smith v. Rohrbaugh, 54 A.3d 892 (Pa. Super. 2012) the Superior Court overturned its own precedent and held that third-party defendants in motor vehicle accidents are not entitled to reduce their liability by the amount of payments made under underinsured motorist policies. This decision is important for plaintiffs injured in motor vehicle accidents in Pennsylvania because it potentially increases the amount of insurance coverage available for recovery.

The Superior Court in Rohrbaugh was asked to decide whether under Pennsylvania law, plaintiffs who settle UIM claims must give third-party defendants a “credit” for the amount of that settlement. The following hypothetical example highlights how this scenario would typically play out: A plaintiff is injured in a car accident caused by an underinsured defendant. The plaintiff sues the defendant, but before receiving a verdict settles with their own underinsured motorist carrier. Is the plaintiff’s subsequent recovery against the defendant reduced by the amount of the UIM settlement? Prior to Rohrbaugh, the answer was YES. The Superior Court had previously held in Pusl v. Means, 982 A.2d 550 (Pa. Super. 2009) that any judgment against a third-party defendant must be reduced by the amount of payment made under a UIM policy. The basis for this decision was § 1722 of Pennsylvania’s Motor Vehicle Financial Responsibility Law (“MVFRL”) which prevents double recoveries involving “first party” benefits. The Pusl court considered UIM coverage a “first-party” benefit.

In Rohrbaugh, the Superior Court explicitly overturned its decision in Pusl and held that § 1722 does not require a third-party claim to be reduced by the amount of a UIM recovery. The Rohrbaugh Court held that the Pusl incorrectly found that UIM coverage was a “first-party” benefit. The Court noted that although UIM benefits are sometimes “colloquially” referred to as “first-party benefits,” the MVFRL specifically designated UIM coverage as a separate available coverage. According to the Court “by placing first-party benefits and UIM coverage in different subchapters [of the MVFRL], the legislature was clearly designating the two as distinct entities.” Thus, § 1722 “was not designed or intended to require the offset of UIM benefits from an award against a tortfeasor.”

The result of the Rohrbaugh Court’s decision should have a significant impact on the litigation of motor vehicle accident claims in Pennsylvania. In the wake of Pusl, liability insurance carriers had an incentive to delay paying on a legitimate third-party claim until after a plaintiff settled with their UIM carrier in the hopes of receiving a credit. This sort of insurance gamesmanship is no longer available. Just as importantly, theRohrbaugh decision makes more insurance coverage available to injured plaintiffs.

“Absolute” No More – Effectively Challenging Workers’ Compensation Liens

Resolving a workers’ compensation lien is a frequent hurdle for attorneys attempting to settle third-party personal injury claims.  By statute, employers have a right to be reimbursed for workers compensation benefits provided to an injured employee if there is a third-party recovery.   Thus, employers that provide workers compensation benefits to an injured employee have an automatic lien against any financial recovery in a personal-injury lawsuit involving the same injury. In light of this statutory subrogation right, settlement demands made by plaintiffs normally incorporate the amount of an outstanding workers’ compensation lien and the lien amount is normally stipulated to as a component of damages at trial.

Because employers are entitled to be reimbursed for workers’ compensation benefits, there is a logical incentive to assist (or at least cooperate with) employees pursuing personal injury claims. After all, the employer can only be reimbursed if its employee prevails.  Because of this inherent incentive, plaintiffs’ attorneys often take for granted that employers will be cooperative during the course of litigation.  There is an expectation that the employer will assist in producing fellow employees for deposition, turn over relevant documents and appropriately comply with subpoenas.

Despite an employer’s financial incentive (and arguably moral obligation) to cooperate during litigation of its employee’s personal injury claim, it does not always happen.  For a variety of reasons employers sometimes take a more obstructive position.   In my experience, employers are more likely to adopt a more obstructive position when the lawsuit is against a third-party vendor or company with which the employer has an important, long-standing business relationship.  Whatever the reason, no matter how uncooperative an employer may be during litigation, it is safe to assume that if the plaintiff does recover in spite of the employer’s obstructive conduct, the employer will nevertheless expect reimbursement for its lien.

It naturally seems unfair that if an employer actively obstructs an employee’s personal injury claim by, for instance, refusing to turn over key documents or attempting to prevent the deposition of co-employees, it should nevertheless be entitled to reimbursement of a lien if there is a recovery.  After all, if an employer takes affirmative steps to hinder an employee’s chances of recovering in a personal injury claim, why should it get the financial benefit of any such recovery?  Yet, even when employers do obstruct an employee’s personal injury claim, they often pursue and receive lien reimbursement anyway.  The reason for this seemingly perverse result is simple.  An employer’s statutory subrogation right has often been interpreted by courts as “absolute,” thus discouraging equitable challenges from employees and counsel.

Although challenging an employer’s subrogation rights on equitable grounds is difficult, it is not hopeless. It is true that an employer’s statutory right to assert a lien against an employee’s third-party recovery has been generally recognized as “absolute,” there is one crucial exception.  The Pennsylvania Supreme Court has ruled that where an employer fails to act in good-faith or is “derelict in its duty so as to subvert its employee’s third-party claim,” as a matter of equity, that the employer will not be permitted to recover its lien.

In Thompson v. Workers’ Comp. App. Board, 781 A.2d 1146, 1154 (Pa. 2001), the Supreme Court noted that:

Although our disapproval of ad hoc equitable exceptions to the statutory right of subrogation, such as those relied upon by the Commonwealth Court below, is enough to decide this particular case, this Court is aware that there may be circumstances where an employer undertakes in deliberate bad faith to subvert a third party suit brought by its employee, circumstances which might require a different calculus.

Based upon this reasoning, the Thompson Court appears to have explicitly carved-out a bad faith and dereliction of duty equitable exception to an employer’s “absolute” right to subrogation, concluding:

Given the substantial benefits conferred upon employers by the Workers’ Compensation Act, and the inherently equitable nature of the doctrine of subrogation, it would be unreasonable to permit an employer both to act in deliberate bad faith to subvert an employee’s third party action, and then to demand subrogation arising from that action. Accordingly, nothing in this Opinion shall be construed as suggesting that subrogation would be appropriate in the face of deliberate, bad faith conduct on the part of the employer.

The rational of the Thompson court is important because it provides a legal “hook” that plaintiff attorneys can utilize to ensure that employer’s act in a good faith, cooperative manner during litigation.  But the Supreme Court’s decision to create an “equitable exception” to an employer’s absolute right to subrogation creates a novel question of jurisdiction.  Historically, the right to “adjudicate” the amount of an employer’s subrogation entitlement has been the province of a workers’ compensation judges and not the Court of Common Pleas.  This jurisdictional issue could present additional problems in challenging an employer’s right to subrogation.  First, attorney’s specializing in personal injury may be unfamiliar with proceedings before a workers’ compensation judge.  More importantly, opening a parallel proceeding before a new judge unfamiliar with the facts of the personal injury action may delay final distribution of the recovery.  For these reasons, it may be beneficial for an employee to have a Common Pleas judge make an equitable determination as to whether an employer can seek subrogation of its lien.  And, it just so happens, the Pennsylvania Supreme Court has recognized limited circumstances whereby the Court of Common Pleas can retain jurisdiction for purposes of determining an employer’s right to pursue subrogation.

In Gillette v. Wurst, 937 A.2d 430 (Pa. 2007), the Pennsylvania Supreme Court held that the Common Pleas Court could exercise jurisdiction over an employer’s subrogation claim under the Workers’ Compensation Act if resolution of the subrogation right included issues outside the scope of an administrative law judge’s authority:

The courts of common pleas lack jurisdiction to adjudicate Workers’ Compensation claims including issues involving subrogation. . . .  However, the issue here does not arise solely under the Workers’ Compensation Act; rather, it demands consideration of the interplay between . . .  unquestioned right of subrogation under the Act, Gillette’s  right to a wrongful death award, and the intestacy laws. Therefore, this matter was properly filed before the trial court rather than an administrative law judge, who would not be in position to adjudicate the wrongful death issue. It is the existence of the valid subrogation claim, not jurisdiction to adjudicate it in the first place, that answers the issue.

Arguably, this language can be interpreted to provide jurisdiction to the Court of Common Pleas in resolving “the existence” of an employer’s subrogation rights if there is substantial evidence that the employer’s failure to act in good-faith or derelict conduct subverted an employee’s ability to pursue a third-party personal injury action.  It can be credibly argued that resolution of such an equitable issue necessarily requires the exercise of the Court of Common Pleas’ broad equitable powers.  Broad equitable powers that administrative law judges do not necessarily possess.  See, e.g., Dollar Tree Stores, Inc. v. Workers’ Comp. App. Board., 931 A.2d 813, 815 (Pa. Commw. Ct. 2007) (“The doctrine of unjust enrichment is an equitable one; the Board, however, does not have its roots in equity. While we do not believe that this fact precludes the Board from employing certain equitable principles, its use of such principles must be restricted in light of its statutory constraints.”).

Although the jurisdictional issue would be a question of first impression, the Thompson decision alone is an important tool for plaintiffs’ counsel.  It can and should be used to ensure reluctant employers cooperate in personal injury actions.  The Thompson decision should also prompt counsel to make a strong record of instances of bad faith or derelict conduct by an employer.  Armed with such evidence, an employer’s historically “absolute” right to subrogation is no longer such a sure thing.