Tuesday, October 6, 2015

Stare Decisis, Goodgame, Livingood, and Westphal

In 1982 American classic Fast Times at Ridgemont High was released. A sophomoric high school comedy, it features an interesting interrelationship between an uptight teacher, Mr. Hand, and a drug-addled student named Spicoli. At one point, Spicoli shows up late to class and Mr. Hand seeks explanation. The only Spicoli response though is “I don’t know.” A sarcastic Mr. Hand writes this on the classroom board and to the class says “I like that. ‘I Don't Know.’ That's nice.” It was not an answer, it was an expression of the lack of any answer.

When parties have conflicts, they seek resolution. Sometimes that comes from a judge or jury, but more often resolution happens at the hands of the parties. Settlements and stipulations are far more likely than trials in America. It is common in negotiating resolutions for parties to consider the probabilities of winning or losing at trial. Is their case strong or not? The answer that they do not want from their attorney is “I don’t know.”

Kentucky has recently experienced two appellate (in)decisions in August and September. These may lead to some attorneys there offering “I don’t know” as the best available advice. Some will wonder whether recent cases will remain the law there, or whether the Court will retreat from these decisions.

Trial courts hear cases. They are concerned with the facts of a case, to which they apply the law, and they render decisions. American appellate courts rarely reconsider facts. They are generally courts of “error,” considering whether the law was correctly interpreted and applied to the facts.

There are fewer state appellate courts than trial tribunals. Their decisions therefore bring a consistency in the territory over which they have authority, which could be part of a state, certain types of cases in a state, or an entire state. Their decisions control future decisions of trial tribunals, thus consistency across regions or states. Each state has an ultimate appellate court, in most states called a “supreme court,” though that is not always the title (New York is an example).

The Kentucky Supreme Court is the highest court in that state. Twice in two months it has rendered interesting decisions that may contribute more to confusion and litigation than to predictability and resolution. The cases are Livingood v. Transfreight and Consol of Kentucky v. Goodgame. They may have a fair number of Kentuckians answering questions with “I don’t know,” which Mr. Hand tells us is “nice.”

In Livingood, a unanimous supreme court interpreted a Kentucky statute (KRS 342.730), but it interpreted it differently than the same Court did just a few years earlier in Chrysalis House Inc. v. Tackett, 283 S.W.3d 671 (KY 2009). In Goodgame, the unanimous court interpreted another statute (KRS 342.185), but interpreted it differently than it had in Manalapan Mining v. Lunsford, 204 S.W.3d 601 (KY 2006). Notably, the legislature has not changed these laws in the interim. In each instance, the Court reads the same statute differently that it previously had.

KRS 342.730 provides what Kentuckians refer to as the “two multiplier.” Double indemnity benefits are awardable when employment ceases after a work accident. In 2009, the Kentucky Supreme Court decided in Chrysalis that this multiplier is permitted only “when employment ceases for reason relating to the disabling injury.” In Chrysalis, the recovering worker lost his job after “stealing a money order” from his employer’s client; not related to the injury, and no entitlement to the “two multiplier.”

The Court in Chrysalis may have been moved by the facts of the case, i.e. that the indemnity recipient was a wrongdoer. But the appellate courts are supposed to interpret the law. In Chrysalis, the Court took simple statutory language that did not require interpretation and created a constraint that the statute did not contain, i.e. the relationship to the injury. Departing from the plain language of the statute, the Court created uncertainty in the market.

Six years later in Livingood, the same court concluded that it was mistaken in 2009. It conceded that the Livingood trial judge followed the law, but said “the circumstances in the present case are very different from those in Chrysalis.” In Livingood, the recovering worker had committed no such criminal offense. The Court reversed Chrysalis reasoning that the Chrysalis analysis did not “promote the statute’s obvious purpose of encouraging continued employment,” and cited the Kentucky theme that “all statutes of this state shall be liberally construed with a view to promote their objectives and carry out the intent of the legislature.”

The Livingood Court concluded that a literal interpretation of the statute is appropriate, instead of the interpretation in Chrysalis. But it noted that such a literal interpretation would lead to “an unreasonable result if an employee . . . is allowed to benefit from his own wrongdoing.” And, citing a multitude of unrelated statutory provisions, the Court grafted a new, more constrained, “employee’s wrongdoing” exception onto the “two multiplier.”

The Kentucky “two multiplier” is now awardable “‘for any reason, with or without cause’ except where the reason is the employee’s conduct shown to have been an intentional, deliberate action with a reckless disregard of the consequences either to himself or another.” The Court created a condition in Chrysalis, one not in the statute.

In Livingood, the same Court says literal interpretation is appropriate, but then declines a literal interpretation. Instead, the Court merely narrows the exception that it legislated in Chrysalis. Some in Kentucky wonder how many appellate cases it will take to arrive at an understanding of what this new Lovingood judicially-created “reckless disregard” standard actually means.

Said the Kentucky client to the lawyer “will we win this ‘two multiplier’” case? Said the lawyer in reply “I don’t know,” and the client replied “that’s nice.”

With time to ponder changes, we examine and hopefully comprehend, then adjust. The August 20 decision in Livingood was the subject of some discussion (and confusion) and September arrived. A month later, September 24, 2015, the Kentucky Supreme Court rendered Consol of Kentucky v. Goodgame.

Goodgame was a coal miner, an occupation of decreasing demand. The employer closed a Kentucky mine and Goodgame transferred to the employer’s mine in Virginia for about six months and then retired. After retirement, he sought Kentucky workers’ compensation benefits for injuries to his arms and legs “as a result of cumulative trauma” throughout the course of his employment. The trial judge dismissed his case, concluding the statute of limitations had run. There were some other challenges to the case like whether Kentucky or Virginia benefits would be appropriate, but the point of interest here is the statute of limitations.

There are accidents, which are events. Then there are occupational diseases and exposures, which may occur over time. Then there is the hybrid which many refer to as “repetitive trivial trauma” a series of little events (even movements or postures) that result in injury over time, perhaps similarly to the way an exposure might lead to a disease.

Kentucky has a “discovery” standard for occupational disease statute of limitations, in which the worker must “file within three years after the last injurious exposure . . . or after the employee first experiences a distinct manifestation of the disease.” You do not have to file until you discover the disease, and since most of us are not doctors, in Kentucky that is when a doctor tells you of the disease and that it was work related.

For non-disease cases, Kentucky has a “date of accident method” that requires the worker to file “within two years of the accident.” There is no “last injurious” exposure language in the accident statute, “which makes sense when the injury is the result of one traumatic event or accident” but according to the Court makes less sense “with cumulative trauma injuries” that it sees as a hybrid of accident and disease.

The Court explained that there are statutes of "limitations" and statutes of "repose." “Limitation” means “time in which one may bring suit after the cause of action accrues, while . . . repose potentially bars a claimant’s suit before the cause of action accrues.” The Court focused on the presence of “repose” in the disease statute. In Kentucky disease, the claim must come within so long after discovery (limitations) but must also come within 5 years of the last exposure, which is a “repose” and could bar the claim even before the disease was discovered. The accident notice section contains no such "repose."

In 2006, in Manalapan Mining Co. v. Lunsford, 204 S.W.3d 601 (KY 2006), the Kentucky Supreme Court nonetheless concluded that the accident statute of limitations “acts as both a statute of limitations and a statute of repose in cumulative trauma cases.” In that hearing loss case, the Court held that the claim was barred because it was not filed within two years of the last injurious exposure. That is, it was barred by a judicially created statute of repose. Not a literal interpretation of the statute according to some in Kentucky.

In Consol of Kentucky v. Goodgame, The Court did not retreat from its creation of a statute of repose. Instead, it created a new definition of the repose it created in Manalapan, holding that the repose for repetitive trauma likewise begins in Kentucky when “the date a claimant is informed of a work-related cumulative trauma injury.” Thus, the accident repose, is inferred from the Kentucky occupational disease statute.

The Court then notes that “workers’ compensation is a creature of statute, and the remedies and procedures described therein are exclusive” (except apparently for those later grafted on by court decision such as the repose statute for accidents, remember the court says “the injury statute of limitations, does not contain statute of repose language.”)

Said the client to the lawyer “am I in time to pursue my” case? Said the lawyer in reply “I don’t know, today I say yes, but the Supreme Court may change the law tomorrow” and the client replied “that’s nice.”

Stare decisis means “to abide by, or adhere to, decided cases.” It is a fundamental maxim of American law.

It has been around a long time. An informative article The Principle of Stare Decisis was published in the American Law Register in 1886. It explains that “when a point of law has been once solemnly and necessarily settled by the decision of a competent court, it will no longer be considered open to examination, or to a new ruling, by the same tribunal or those which are bound to follow its adjudications.”

It goes on to explain that “if a decision has been made upon solemn argument and mature deliberation, the presumption is in favor of its correctness.” Therefore, “the community have (sic) a right to regard it as a just declaration or exposition of the law, and to regulate their actions and contracts by it.” In other words, once a competent court answers a question, it is presumed to stay answered. Parties should be able to rely on that interpretation in future cases and act accordingly. Stipulations can be reached, cases can be settled.

The Principle goes on “it would, therefore, be extremely inconvenient to the public, if precedents were not duly regarded and implicitly followed. It is by the notoriety and stability of such rules that professional men can give safe advice to those who consult them.” In other words, it is these published cases, these adjudications, that allow attorneys to predict how a set of facts may be decided in the future. The attorney can then advise a client of the potential and probable outcomes. On the strength of that knowledge agreements are reached and not all disputes have to be decided by the nation’s courts.

We have also seen a departure from stare decisis in Florida. In 2011 Matrix Employee Leasing, Inc. v. Hadley was tried, a dispute regarding temporary indemnity benefits. The trial judge decided the case following City of Pensacola Firefighters v. Oswald, an appellate court decision from 1998. That is how stare decisis and the common law works in America, parties and judges look to previous decisions to guide the decision in the present case. The prior decisions perhaps make the outcome of the current litigation predictable.

One party sought review of the Hadley outcome by the Florida First District Court of Appeal (DCA). The DCA concluded that a different interpretation of the law was more appropriate. And in 2011 Hadley was the law.

It is worth noting that the majority of appellate cases are decided by three judges working together in what is called a “panel.” Sometimes the parties seek to have the entire court consider a case, which is called an “en banc” decision. It is possible for different panels of a court, in considering different cases, to make decisions that result in confusion among attorneys and parties.

To reduce the potential for confusion the appellate court periodically hears the case en banc and issues a decision that represents the conclusion of the entire court, as opposed to a panel of the court. Hadley was an en banc decision. Thus, it was viewed as representative of the whole First District Court of Appeal’s interpretation of the temporary indemnity provisions in Fla. Stat. §440.15.

Two years later, a panel of the same court considered a similar indemnity question in Westphal v. City of St. Petersburg. That panel did not follow the interpretation of Hadley, and instead decided that Fla. Stat. §440.15 is unconstitutional. The Court panel concluded that this statute was inconsistent with “natural law.” This has since been referred to as the “Westphal panel decision,” because later in 2013 the entire First District Court rendered an en banc decision in Westphal. The Court as a whole did not find a constitutional problem with the statute. The Court did interpret Fla. Stat. §440.15 in Westphal differently than it had in Hadley.

So, Florida is left with an en banc decision interpreting Fla. Stat. §440.15. In many contexts, that would bring stability and predictability. But with three interpretations in three years (Hadley en banc, Westphal panel, Westphal en banc), some in the marketplace doubt that Westphal en banc is the “last word” and wonder what the next interpretation of this statute might be.

The Westphal case is currently pending review by the Florida Supreme Court. The There is some probability that the Florida Supreme Court will bring clarity to the interpretation. The oral argument in Westphal was held June 5, 2014. And so the market has waited about 480 days. Some feel that a decision in Westphal will come soon.

In total, Florida workers’ compensation awaits two or three decisions from the Florida Supreme Court. Castellanos v. Next Door Company ("Castellanos") is a challenge to the constitutionality of Fla. Stat. §440.34 (attorneys fees). This is an issue upon which the First District has been clear, concluding that the statute is constitutional.

Padgett v. State of Florida (Padgett) is a Circuit Court decision finding “exclusive remedy” is not constitutional under the Florida statutory framework. The Supreme Court is, at this time, merely trying to decide whether to review the decision of the Third District Court of Appeal (DCA) in Padgett (first it decides to review, then it decides the case). The Third DCA concluded that the trial decision was procedurally flawed and reversed the trial court's conclusion of unconstitutionality.

Westphal is not seen by many as being nearly as monumental. Either Castellanos or Padgett are perceived by many as potentially having profound implications for Florida workers’ compensation, if the pundits and prognosticators are to be believed. But Westphal is predicted to result in one of three outcomes. Some believe the Supreme Court will return to “natural law” and find Fla. Stat. §440.15 unconstitutional, but it seems to be a minority prediction. Most think that the Court will either adopt the District Court’s en banc decision in Westphal or its en banc decision in Hadley.

These prognosticators predict an interpretation of the statute will be adopted, the market will adjust accordingly and move on. When the Florida Supreme Court speaks, however, it is likely that the market will know how to interpret Fla. Stat. §440.15. Westphal is not seen by many as having the probable impact of Castellanos or Padgett. Some question why the Supreme Court need review Westphal at all, while others believe that the highest court must speak due to the perception of vacillation seen by some in the three DCA interpretations (Hadley en banc, Westphal panel, Westphal en banc). These pundits say predictability is needed and that the Supreme Court's decision is what will deliver it.

The uncertainty from Hadley en banc, Westphal panel and Westphal en banc will soon conclude. Castellanos will soon be decided. We will learn whether the Court will address Padgett. In Florida, the uncertainty will give way, and the answer here will not be “I don’t know” and many feel “that’s nice.” As Spicoli might note, we will not be "bogus."

It is interesting that so much is going on in the national workers’ compensation market. These decisions like Goodgame and Livingood make for interesting reading. Courts are struggling with statutory construction and constitutional issues. Workers' compensation is a very exciting place to be right now, and There's no other Place I Wanna Be. You might find interesting As Florida Waits, Commonwealth Court Holds Pennsylvania Statute Unconstitutional (09.20.15), Tennessee and New Mexico Provisions Deemed Unconstitutional (06.29.15), Court Watching (05.04.15), and Oklahoma Supreme Court Decides Coates (12.18.13).

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