Monday, November 3, 2014

Morales, Where for Art Thou, Morales

What is Morales v. Zenith, and why is the Florida workers' compensation community watching for the Supreme Court's decision in that case?

Perhaps the community is interested because they think that this case will be instructive. It is an interesting case in at least one regard, it illustrates the interaction that can occur between the federal and state judiciary. America has these two distinct judicial systems. State courts have their responsibilities and federal courts have theirs. 

Some of their responsibilities can be said to be "exclusive," meaning only one court system may deal with an issue, and others can be described as "concurrent," meaning that while a particular court has authority to address an issue, another court or courts might have equal authority. 

America has a Federalist form of government. Power in America is distributed between the national (central) authority and the "constituent units," that is the states, counties, and municipalities. In this system, the Federal Courts have specific authority or "jurisdiction" over certain kinds of cases. The authority can come from the Constitution, but it more frequently comes from legislative definition through various "judiciary acts" approved by Congress. Issues such as federal and constitutional questions are obvious jurisdictions of the Federal Courts.

Another jurisdiction of the Federal Courts is called "diversity of citizenship." According to uscourts.gov, this jurisdiction is intended to to "ensure fairness to the out-of-state litigant." This authority allows disputes between citizens of different states to proceed in Federal court if the alleged damages exceed $75,000. Though such a suit could also usually be brought in a state court, so these are often cases in which jurisdiction is "concurrent."

In Morales, the dispute began when Mr. Morales died in a workplace accident. His estate sued his employer in Florida state court. Mr. Morales' employer, Lawns Nursery, was insured by Zenith Insurance Company. The policy provided for workers' compensation (Part I.) and provided "employers liability insurance" (Part II.). Zenith defended the civil lawsuit "pursuant to a reservation of rights," and alleged that the lawsuit "was barred because of the Estate's receipt of workers' compensation benefits." Eventually, the attorney defending Lawns and Zenith withdrew from the case, leaving Lawns to defend itself. 

In Florida state court, the case was heard in a one day jury trial, resulting in an award against Lawns Nursery in the amount of about $9.5 million. 

While that litigation was ongoing, Mr. Morales' estate received workers' compensation benefits from Zenith. In August 2003, the entitlement to workers' compensation benefits was settled. The documents in the workers' compensation case included an "Election and Waiver"  that said the "agreement shall constitute an election of remedies by the Estate with respect to the employer and carrier as to the coverage provided to the employer."

With the jury verdict in hand, the Estate then filed a breach of contract action against Zenith, again in Florida state courts. The Estate alleged that Zenith had breached its insurance contract with Lawns Nursery when it did not pay the $9.5 million dollar judgement. Through diversity jurisdiction, Zenith elected instead to have the breach of contract case heard in the Federal courts. Again, because the jurisdiction was "concurrent," that was possible, and the case was "removed" to Federal District Court. 

The Federal District Court concluded that the "workers' compensation exclusion in Part II barred Zenith's coverage of the employee Estate's $9.525 million tort judgement against the employer Lawns." In reaching its decision, the Federal Court relied upon decisions rendered by Florida appellate courts. Three cases were noted in particular, Indian Harbor, Revoredo, and Wright. The Estate appealed that trial decision to the 11th Circuit Court of Appeals (trials in the Federal courts occur in District courts which are distributed within the various states; appeals are heard by regionally distributed courts called Circuit courts).

In April 2013, the 11th Circuit Court rendered its decision. The Court concluded that the outcome of the appeal "depends on resolution of unsettled Florida law." That is, the Federal appellate court concluded that the cited decisions of Florida appellate courts did not conclusively state how the law is interpreted in Florida. The Federal Circuit Court therefore asked the Florida Supreme Court to resolve any doubt as to what the law of Florida says on three questions. This process is called "certification." 

Certification is a specific jurisdiction or authority of the Florida Supreme Court. The Florida Constitution defines what cases can or must be considered by the Florida Supreme Court. In Article V., section 3(6), the Constitution says that the Court "may review a question of law certified by the Supreme Court of the United States or a United States Court of Appeals which is determinative of the cause and for which there is no controlling precedent of the supreme court of Florida."

The questions presented (essentially quotes from the opinion, but somewhat paraphrased for space) to the Court are:

(1) "Does the Estate have standing to bring its breach of contract claim against Zenith under the employer liability policy?"

(2) "If so, does the provision in the policy which excludes coverage for "any obligation imposed by workers' compensation law" exclude coverage for the claim against Zenith for the tort judgement?"

(3) "If the estate's claim is not barred by the workers' compensation exclusion, does the release in the workers' compensation settlement agreement otherwise prohibit the estate's collection of the tort judgement?"

The Florida Supreme Court acknowledged the case in April 2013, and assigned it case number SC13-696. Briefs were filed, motions were decided, and an oral argument was held on April 10, 2014. The question on some minds, with Morales and the other pending Supreme Court cases regarding workers' compensation, is when will there be an answer. 

First, there is no concrete answer to that question. The appellate review process can be rapid or not, and is just not predictable. In an attempt to provide some thought to this question, a review of other recent Supreme Court decisions might be of assistance. 

On Thursday, October 9, 2014, the Florida Supreme Court issued its opinion in Huggins v. Crews. The oral argument in that case was held December 4, 2013; days from oral argument to decision 309. It also issued Whitton v. State. That oral argument was held November 4, 2013; days from oral argument to decision 339. Davis v. State reflects oral argument February 3, 2014; days from oral argument to decision 248. Bryant v. State reflects no oral argument held. 

On Thursday, October 16, 2014, the Florida Supreme Court issued its opinion in Tracey v. State. The oral argument in that case was held October 7, 2013; days from oral argument to decision 374. Lafave v. State reflects oral argument September 16, 2013; days from oral argument to decision 395. Dougherty v. State reflects oral argument February 4, 2014; days from oral argument to decision 254. The Court dockets for the following October 16, 2014 decisions reflect no oral argument held: State v. Mosely,  Inquiry Concerning a Judge and Warmington v. State. The docket in State v. Perez reflects oral argument September 17, 2014; days from oral argument to decision 29 (however, this outcome was a dismissal).

This is by no means a scientific sample. These are merely the cases from two recent decision dates (the Supreme Court issues its decisions each Thursday). However, averaging the six time periods of substantive decisions yields about 320 days. (309, 339, 248, 374, 395, 254). 

Using the most rapid of these decisions (248 days) as benchmark, there might be a decision in Morales around December 11, 2014; using the average (320 days) it might be February 19, 2015; using the longest time in this sample (395 days) it might be as late as May 7, 2015. Or, of course, the decision could be rendered this Thursday or any Thursday. 

There is much interest around the workers's compensation system regarding Westphal and Castellanos also. The oral argument in Westphal occurred June 5, 2014 and the oral argument in Castellanos will be November 5, 2014. 

Using the analysis of recent decisions above, it might be that Westphal will be decided February 5, 2015 (248 days), or April 16, 2015 (320 days) or July 2, 2015 (395 days). Or, the decision could be rendered this Thursday or any Thursday. 

Using that same analysis, it might be that Castellanos will be decided July 9, 2015 (248 days), or September 17, 2015 (320 days) or December 3, 2015 (395 days).  Or, the decision could be rendered any Thursday after the oral argument that is scheduled for this Wednesday, November 5, 2014.