The Lawletter Vol 46 No 5

Fred Shackelford—Senior Attorney, National Legal Research Group

     The concept of bystander liability was first recognized by American courts in the landmark California case of Dillon v. Legg, 68 Cal. 2d 728, 441 P.2d 912 (1968). Today, most courts allow recovery under this doctrine, also known as negligent infliction of emotional distress ("NIED"). Under this theory of liability, a tortfeasor can sometimes be held liable to a bystander who experiences emotional distress from observing a direct injury to another person. Under Dillon, bystander liability was limited by foreseeability, and courts would take into account such factors as (1) whether the plaintiff was located near the scene of the accident as opposed to a distance away from it; (2) whether the shock resulted from a direct emotional impact upon the plaintiff from the sensory and contemporaneous observance of the accident rather than learning of the accident from others after its occurrence; and (3) whether the plaintiff and the victim were closely related, as contrasted with an absence of any relationship or only a distant relationship.

The Lawletter Vol 46 No 5

Jim Witt—Senior Attorney, National Legal Research Group

            In addition to the direct health issues caused by the COVID-19 pandemic, given the economic disruption the pandemic has caused, it is obvious that the pandemic will indirectly be giving rise to countless legal issues (for instance, in the construction/real estate field alone, with government mandates halting some projects and granting waivers as to others, and with issues related to supply chain, employee safety, construction disputes, defaults, loans, and leases, there will be important questions up for decision for a long time to come). As exemplified by the case of McLean v. Big Lots Inc., No. 2:20-CV-02000-MJH, 2021 WL 2317417 (W.D. Pa. June 7, 2021), however, there will also be COVID-19-related cases concerning far less momentous topics.

The Lawletter Vol 46 No 5

Nadine Roddy—Senior Attorney, National Legal Research Group

            One of the more difficult issues in the employment discrimination context has been the determination of whether an employee who is charged with misconduct toward another employee is a "supervisor" or a "coworker" for purposes of employer liability under Title VII and related statutes. Initially, the Equal Employment Opportunity Commission ("EEOC") took the position that an individual is qualified as an employee's supervisor if (1) the individual had authority to undertake or recommend tangible employment decisions affecting the employee, or (2) the individual had authority to direct the employee's daily work activities. EEOC Enforcement Guidance: Vicarious Liability for Unlawful Harassment by Supervisors (1999). In its 2013 decision in Vance v. Ball State University, 133 S. Ct. 2434 (2013), however, the Supreme Court narrowed the definition, holding that an employee is a "supervisor" only when empowered by the employer to take tangible employment action—such as hiring, firing, failing to promote, reassigning with significantly different responsibilities, or causing a significant change in benefits—against the employee alleging discrimination. Since then, the lower federal courts have refined this definition in relevant cases.

The Lawletter Vol 46 No 4

Paul Ferrer—Senior Attorney, National Legal Research Group

            Well-established contract law holds that when one party breaches a contract, the nonbreaching party must make reasonable efforts to mitigate its damages. The consequences of failing to mitigate are well illustrated by a recent Illinois appellate decision. See Mayster v. Santacruz, 2020 IL App (2d) 190840, 163 N.E.3d 246.

            The plaintiff owned and operated a Mathnasium math tutoring franchise. The franchisee entered into a binding purchase agreement to sell the franchise for $100,000. The parties bickered over several terms, but the disagreement did not justify the buyer's termination, which therefore constituted a breach. Soon after the breach, however, the buyer offered to reinstate the deal and buy the franchise for the same $100,000 originally agreed. The franchisee refused, choosing instead to raise the asking price to $130,000 to explore more profitable opportunities. The franchisee also declined the franchisor's suggestion that it advertise the franchise for sale in an internal publication that targeted Mathnasium owners, and would thus have been more likely to produce a new buyer. The trial court concluded that the buyer had breached the contract but that the franchisee could not recover any damages based on its absolute failure to mitigate. The only questions presented on appeal were whether the franchisee had failed to mitigate its damages and, if so, whether its failure barred it from recovering anything at all.

The Lawletter Vol 46 No 4

John Stone—Senior Attorney, National Legal Research Group

            A youth mentor brought a 12-year-old boy to his farm for a weekend of outdoor activities, where he allowed the boy to drive an all-terrain vehicle ("ATV") without a helmet or supervision. When the boy suffered permanent serious injuries, including a brain injury and partial blindness, after he lost control of the ATV, he sued the mentor for negligent entrustment and supervision. A trial court granted summary judgment dismissing the suit, concluding that the Minnesota Nonprofit Corporations Act immunized the defendant from civil liability for his alleged negligence.

            An appellate court reversed the lower court because the Act applies only to a volunteer's actions that are undertaken "within the scope of the person's responsibilities as a[n] . . . agent[.]" Hogan v. Brass, No. A20-0846, 2021 WL 852073 (Minn. Ct. App. Mar. 8, 2021). In this case, the nonprofit organization through which the mentor and the boy became associated connected adult mentors with children affected by a parent's incarceration. It provided only same-day mentoring services, encouraging each volunteer mentor to connect with the child on a weekly basis for one to four hours. In various ways, the organization expressly declined a role in interactions that involve overnight or extended arrangements.

D. Bradley Pettit, Senior Attorney, National Legal Research Group

            According to a treatise on revocable trusts,

[t]he number of individuals who own animals is staggering. As many as 56.7 million households in the United States own dogs and 45.3 million own cats.

2 George M. Turner et al., Revocable Trusts, 5th § 78:1 (Westlaw current through November 2020 update).

            As to pet trusts, the Uniform Probate Code provides as follows:

Subject to this subsection and subsection (c), a trust for the care of a designated domestic or pet animal is valid. The trust terminates when no living animal is covered by the trust. A governing instrument must be liberally construed to bring the transfer within this subsection, to presume against the merely precatory or honorary nature of the disposition, and to carry out the general intent of the transferor. Extrinsic evidence is admissible in determining the transferor’s intent.

Unif. Prob. Code § 2-907(b) (Westlaw current through 2019 Annual Meeting of the National Conference of Commissioners on Uniform State Laws).

The Lawletter Vol 46 No 4

Paul Ferrer—Senior Attorney, National Legal Research Group

            The familiar "American rule" holds that a prevailing party generally cannot recover its attorney's fees from the losing party in the absence of a statute or contract provision specifically authorizing an award of such fees. Jurisdictions are divided on the issue of whether a party can recover its attorney's fees as damages, rather than costs, for the breach of a covenant not to sue the other party. In those jurisdictions that have not permitted attorney's fees to be awarded as damages, courts have reasoned that the contract containing the covenant not to sue can itself provide for attorney's fees in the event of its breach if that is the parties' intention. See Artvale, Inc. v. Rugby Fabrics Corp., 363 F.2d 1002, 1008 (2d Cir. 1966) ("Certainly it is not beyond the powers of a lawyer to draw a covenant not to sue in such terms as to make clear that any breach will entail liability for damages, including the most certain of all—defendant's litigation expense."). By contrast, other courts have determined that the American rule does not apply in "those cases in which the attorney fees are not awarded to the successful litigant in the case at hand, but rather are the subject of the law suit itself." Zuniga v. United Can Co., 812 F.2d 443, 455 (9th Cir. 1987). Virginia recently adopted the latter view.

The Lawletter Vol 46 No 3

Trish Sifka—Senior Attorney, National Legal Research Group

        An English Judge and Jurist, Sir Edward Coke, declared in 1604: “[T]he house of everyone is to him as his Castle and Fortress as well for defence against injury and violence, as for his repose[.]” This famous quote from the Court of King’s Bench has been simplified to essentially mean that “every man’s home is his castle” and, thus, deserves special protection. Sir Coke stated this as part of his ruling in Peter Semayne v. Richard Gresham & Estate of George Berisford. Gresham and Berisford were joint tenants of a house in Blackfriars, London. Berisford died while still owing a debt to Semayne, so Semayne sued for writ of attachment against the home.

        In Virginia, real property held as tenancy by the entirety is especially sacrosanct. Where a tenancy by the entirety in the fee simple is created, the property is completely immune from the claims of creditors against either husband or wife alone. Rogers v. Rogers, 257 Va. 323, 512 S.E.2d 821 (1999); Pitts v. United States, 242 Va. 254, 408 S.E.2d 901 (1991). “The tenancy by the entirety may be severed only by mutual consent of the spouses or by divorce.”  In re Bunker, 312 F.3d 145, 151 (4th Cir. 2002); see also In re Sampath, 314 B.R. 73, 92 (Bankr. E.D. Va. 2004) (“The tenancy by the entirety estate retains its full vitality in Virginia.”). Accordingly, a spouse cannot waive contest to forfeiture of real property held as tenancy by the entirety in a plea agreement because that would result in severing of the title without the other spouse’s consent.

The Lawletter Vol 46 No 3

Nadine Roddy—Senior Attorney, National Legal Research Group

            An exotic dancer was an "employee" of an adult entertainment club under the Fair Labor Standards Act ("FLSA"), even though a written agreement disclaimed an employment relationship, a federal district court sitting in Florida recently held in Schofield v. Gold Club Tampa, Inc., No. 8:19-CV-3097-VMC-TGW, 2021 WL 533540 (M.D. Fla. Feb. 12, 2021). The summary judgment evidence showed that the economic reality of the relationship was one of employer and employee given the degree of control over the dancer's work exercised by the club, among other factors.

            An exotic dancer who worked at an adult entertainment club brought suit against the club owner and its operator ("club"), seeking a ruling that she had been misclassified as an independent contractor, that she was the club's employee, and that she was thus entitled to employee's protections under the FLSA.

The Lawletter Vol 46 No 3

Matt McDavitt—Senior Attorney, National Legal Research Group

            It is well-settled that in most states, completed inter vivos gifts are deemed irrevocable, even in circumstances where the donor’s relationship with the donee later deteriorates or the purpose of the gift dissipates. “Many gifts are made for reasons that sour with the passage of time. Unfortunately, gift law does not allow a donor to recover/revoke an inter vivos gift simply because his or her reasons for giving it have soured.” Dayal v. Lakshmipathy, 2020-Ohio-5441, ¶ 37, 163 N.E.3d 683 (quotation formatting and citations omitted). However, Louisiana has a unique statute that allows completed lifetime gifts to be revoked upon proper facts showing “ingratitude” to the donor, either through attempted murder or through cruel treatment, where an action is brought within a year of the injurious act or imputed knowledge of such.

Revocation on account of ingratitude may take place only in the following cases:

• If the donee has attempted to take the life of the donor; or
• If he has been guilty towards him of cruel treatment, crimes, or grievous injuries.