Bustos Law Firm

Archive for the ‘Litigation’ Category

Refining the Focus of Disability Discrimination

In Employment, Federal Law, Litigation on January 3, 2012 at 5:43 PM

Though persons with disabilities have constituted a protected class since the effective date of the Americans with Disabilities Act of 1990 (ADA), that class has been relatively small, due to the limitations the U.S. Supreme Court placed on the definition of “disability” under the act. In Sutton v. United Airlines, 527 U.S. 471 (1999), the Court ruled that an impairment’s limitation on a life activity must be considered in light of any mitigation to that impairment. As a result, persons whom United Airlines would not hire as pilots because of impaired but corrected vision could not successfully sue under the ADA. In Toyota v. Williams, 534 U.S. 184 (2002), the Court stated that the standard in determining whether a condition qualified as a disability was “demanding.”

With the passage of the ADA Amendments Act of 2008 (ADAAA), these definitional limitations have been removed, and covered employers (those engaged in interstate commerce and having 15 or more workers), public entities, and places of public accommodation need to be careful now more than ever not to discriminate based on a person’s disability. Though the ADAAA does not change the words for the definition of disability—a physical or mental impairment that substantially limits a major life activity—it adds numerous measures broadening that definition (for the complete text of the Act, see http://www.law.georgetown.edu/archiveada/documents/S3406FinalEngrossed Version.pdf):

  • The ADAAA explicitly overturns the standards enunciated in Sutton and Toyota, stating, “The purposes of this Act are to reject” them.
  • The Act broadens the protected class “to the maximum extent permitted by the terms of this Act.”
  • It provides a non-exhaustive list of “major life activities,” including caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, and working.
  • As part of “major life activities,” it also includes “the operation of a major bodily function,” which includes functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions.

These measures and others found in the ADAAA emphatically broaden the sweep of potential liability for discriminating against persons with disabilities by shifting the focus of the inquiry from whether an individual is disabled to whether discrimination occurred. As the case law begins to develop, employers and other covered entities should be aware that conditions held by federal courts not to constitute a disability under the ADA (such as epilepsy, HIV/AIDS, diabetes, cancer, vision in only one eye, and asthma) will (along with all other physical impairments) get a very strong second look by the same courts under the ADAAA. As a result, employers will need to defend disability discrimination lawsuits more on the merits, and cannot rely on early dismissal of such lawsuits in the future. Of course, such lawsuits can still be defeated by disproving discrimination.

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What Does Tort Reform Have in Common with Chuck Norris? Loser Pays

In Costly Litigation, Frivolous Lawsuits, H.B. 274, Humor, Litigation, Loser Pays, Texas Law, Tort Reform on August 4, 2011 at 9:18 AM

Chuck Norris may be able to beat the sun at a staring contest, yet even he has been victimized by meritless and costly lawsuits. Recently, two women sued Chuck Norris after they tried to tear each other’s hair out in the bathroom of one of his restaurants. The pugilistas based their lawsuit on the claim that a restaurant employee should have been present to stop the fight. It cost Chuck Norris $2,000 to pay them to drop their meritless suit—a resolution less expensive than litigating. Because exporting pain was a less than adequate expression of his frustration with a legal system that incentivizes such litigiousness, Chuck Norris recently co-authored an article in the Wall Street Journal, “A Texas Roundhouse for the Trial Lawyers,” in which he praised Texas’s new “loser pays.”

In his article, Chuck Norris points out that small businesses, which are the creators of 64% of American jobs, are usually the target of frivolous lawsuits, paying 81% of business tort liability costs in 2008. A small business earning $1 million must spend $20,000 annually on lawsuits, money that could have otherwise been spent on job creation or product development. Frivolous lawsuits also affect individual Americans; according to estimates, meritless lawsuits cost each American $838 a year. Additionally, groundless plaintiffs congest the legal system making the court system more difficult to navigate for those who have legitimate claims.

The “loser pays” law, Texas House Bill 274, becomes effective September 1, 2011. One of the most significant changes made by House Bill 274 is an instruction to the Texas Supreme Court to make rules for courts to dismiss meritless suits before hearing evidence on the claims. This is a landmark measure because Texas previously did not have a procedure to file a Motion to Dismiss; heretofore, the defendant had to endure costly discovery before disposing of the suit through a No-Evidence Motion for Summary Judgment.  To prevail under the new Motion to Dismiss measure, the defendant must show the court that the suit has no basis in law or in fact.

The teeth behind Texas’s new Motion to Dismiss is that it encompasses mandatory fee shifting: the party who prevails on a Motion to Dismiss, whether it is the plaintiff or the defendant, will be entitled to have their attorney’s fees paid by the losing party. For example, if the defendant files a Motion to Dismiss that is ultimately denied because the claim is based in law or fact, the case will continue through litigation and the defendant must pay the plaintiff’s attorney’s fees and costs incurred in responding to the Motion to Dismiss. The fee shifting aspect of the new Motion to Dismiss measure thus creates risk for both plaintiffs and defendants. Plaintiffs are less likely to assert frivolous lawsuits, and defendants are unlikely to move to dismiss non-frivolous lawsuits.

Other changes made by House Bill 274 include: (1) raising the caps on attorneys’ fees required to be paid by those who reject reasonable settlement offers; (2) instructions to the Texas Supreme Court to make new rules to limit discovery costs and expedite suits with claims under $100,000; (3) prohibiting joinder of responsible third  parties after the statute of limitations has expired; and (4) prohibiting defendants from designating responsible third  parties after the limitations period has expired (unless they did not know of the responsible third  party before the statute of limitations expired and they did not purposefully withhold such information).

With these significant changes, Texas is at the forefront of the effort to stop frivolous litigation and, in turn, to improve the economy by spurring job creation and product development. Come September 1, 2011, two old axioms will ring even more true: “Don’t press your luck with Chuck,” and “Don’t mess with Texas.” Those civil litigants who ignore these words of wisdom by filing frivolous lawsuits will be made to feel significant pain.

Arbitration Agreement Unconscionable? “See You in Court”

In Arbitration, Dispute Resolution, Federal Law, Litigation on March 16, 2011 at 1:12 PM

Have you made a significant purchase lately? Or perhaps agreed to “terms and conditions” to access web services? Maybe you’ve recently signed an employment agreement. If so, there is a good chance you have waived your right to an in-court trial with respect to any disputes that may arise out of your transaction.

It’s called an arbitration clause. Arbitration clauses find their way into all sorts of settings: consumer purchases, work contracts, high-dollar corporate transactions, you name it. They are agreements to resolve disputes before a private arbitrator rather than a judge or jury. By signing them, a person may be agreeing to vindicate rights arising out of the transaction in front of arbitrators sympathetic to the interests of the other party—and maybe even in a forum many hundreds of miles away! It is not surprising that folks often sign arbitration clauses without any knowledge of their meaning or effect.  Because of the Federal Arbitration Act (FAA), once signed, arbitration clauses are not easily avoided.

FAA

Congress passed the FAA with the specific intent of keeping courts and state governments from voiding arbitration clauses. Section 2 of the FAA states that arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” In other words, arbitration agreements must be treated the same as any other contract under state law.

Texas courts may void arbitration agreements for unconscionability because the doctrine of unconscionability applies to all contracts.

Applying Unconscionability to Arbitration

The general standard for unconscionability is a bit nebulous (not to mention extraordinarily difficult to establish). Fortunately, courts have further explicated this doctrine as it applies to arbitration clauses.

If a claimant’s substantive rights cannot be successfully vindicated in the arbitral forum, there is a healthy possibility a Texas court will find the arbitration clause unconscionable. See In re Olshan Foundation Repair Co., LLC, 328 S.W.3d 883, 893 (Tex. 2010). A key issue related to a claimant’s “substantive rights” is whether the arbitration proceeding will be an “adequate and accessible substitute to litigation.” Id. at 894.

The Texas Supreme Court has identified a number of factors for determining whether  an arbitration proceeding is “an adequate and accessible substitute.” These include the actual cost of arbitration compared to the total amount of damages the plaintiff is seeking and the claimant’s ability to pay the arbitration fees and costs. Id. at 895. In addition, the Texas Supreme Court has stated that the most important factor is a comparison of the costs of the arbitral and the traditional litigation forums. Id. at 894-95. An important inquiry related thereto is whether such cost differential will “deter individuals from bringing valid claims.” See Id. at 893.  

If a claimant can present substantive evidence in support of these factors, evidence that goes beyond “merely speculat[ing] about the risk of possible cost,” Id. at 895, the chances of blowing up the arbitration agreement and enforcing the claim in a court of law rather than an arbitral forum greatly improve.