January 2018 Newsletter

I. GENERAL LITIGATION

Insured’s Demand for Arbitration and Selection of Arbitrator Did Not Toll Statute of Limitations

In Erie Insurance v. Bristol, ___.A.3d ___, 2017 WL 5617628, (Pa., November 22, 2017), Bristol was injured in a hit-and-run accident on July 22, 2005 while engaged within the scope of his employment as a lineman for RCC, Inc. Bristol had uninsured motorist coverage through an Erie policy with RCC. The Erie policy contained an arbitration clause which provided for binding resolution of disputes over liability and the amount of damages under the Endorsement, reserving other disputes, including the applicability of any statute of limitations, to the courts. Bristol’s attorney notified Erie of an uninsured motorist claim on June 19, 2007. Both parties then selected arbitrators, and Erie obtained Bristol’s statement under oath. No other action was taken other than an exchange of correspondence in September 2012. Erie then filed an action for declaratory judgment on May 29, 2013, seeking a ruling that appellant’s UM claim was barred by the applicable four-year statute of limitations. Erie then filed a motion for summary judgment on its claim for declaratory judgment.

The trial court granted Erie’s motion for summary judgment on March 18, 2014. The trial court rejected Bristol’s arguments, determining that the statute in this case commenced to run on the day of the accident, which occurred over a year prior to the selection of any arbitrators, and that, pursuant to the Superior Court case of Hopkins v. Erie Ins. Co., 65 A.3d 452 (Pa. Super. 2013), commencement of court action is required to toll the running of the four-year time limitation. Bristol timely appealed to the Superior Court.

The Superior Court held that, for the purpose of UM and underinsured motorist (UIM) claims, the statute of limitations begins to run when a claimant injured in an automobile accident first learns that the other driver is uninsured or underinsured. However, the Supreme Court determined this conclusion was not adequately grounded in the statutory text, the statute of limitations doctrine, or public policy concerns. Accordingly, the Court held that statute of limitations principles attending contract claims apply, and that the running of the statute was commenced upon an alleged breach of a contractual duty, which in this case was when the insurer denied coverage and refused to arbitrate. The Court therefore reversed the Superior Court’s order.

II. INSURANCE LAW

Continuous Trigger Applies to Third-Party Construction Defect Claims and Ends When Nature of Damage is Known

In Air Master & Cooling, Inc. v. Selective Insurance Company of America, 2017 WL 4507547, 452 N.J. Super 35, 171 A.3d 214 (2017), the coverage issues arose out of lawsuits brought by a condominium association and unit owners to remediate construction defects within a residential building. The insured, Air Master & Cooling, Inc. (“Air Master”), had performed work as a subcontractor on the roof and elsewhere in the building. The construction defects concern property damage resulting from, among other things, the apparent progressive infiltration of water within the building. After Air Master was named as a third-party defendant in the underlying construction defects cases, it sought a defense and indemnity from Selective Insurance Company of America (“Selective”). Selective was one of a series of different insurers that had issued CGL policies to Air Master over successive policy periods.

The trial court initially granted summary judgment to Selective because it found that the continuous trigger did not apply to first-party claims. Air Master moved for reconsideration. The trial judge amended its ruling on the application of a continuous trigger since third-party claims were in fact at issue but still found for Selective on the ground that the damage had manifested before its policy period began, rejecting Air Master’s arguments that manifestation does not take place until damage is attributed to the insured. Air Master appealed.

The Appellate Court agreed that the continuous trigger theory applies to a dispute over whether coverage was owed by one of its insurers. The court also found that the last pull of the trigger occurs when the essential nature and scope of the alleged property damage first becomes discoverable. The panel disagreed with Air Master’s argument that the last pull of the trigger does not occur until an expert attributes the damage to the faulty conduct of the insured.

III. EMPLOYMENT LAW

Employee’s Protected Activity Must Be the “But-For” Cause of Adverse Actions to Support a Retaliation Claim Under the False Claims Act

In DiFiore v. CSL Behring, LLC, No. 16-4297 (3d Cir. 2018, January 3, 2018), plaintiff Marie DiFiore worked for CSL Behring from 2008 until her resignation in 2012, first as an Associate Director of Marketing/New Products, and then, after a promotion in August 2011, as Director of Marketing. While at CSL, and particularly after her promotion, DiFiore became concerned about the activities of CSL and its employees in marketing drugs for off-label use and including off-label use in sales forecasts. DiFiore expressed her concerns to her supervisors, and she contended that CSL initiated a third-party compliance audit in part because of her complaints. Plaintiff alleged that as a consequence of expressing her concerns, she suffered several adverse employment actions. Plaintiff eventually submitted her resignation.

DiFiore filed a lawsuit alleging that CSL wrongfully discharged her under Pennsylvania law and retaliated against her in violation of the False Claims Act. After discovery, CSL moved for summary judgment. The District Court granted summary judgment on the wrongful discharge state law claim and held that DiFiore could not rely upon constructive discharge as an adverse action in her FCA claim. However, the court denied summary judgment on the retaliation claim.

At trial, the District Court in DiFiore instructed the jury to use the “but for” standard when analyzing whether the employer took adverse action against DiFiore because she blew the whistle on the company. The jury returned a verdict for the defendant employer. CSL appealed arguing, among other things, that the district court should have instructed the jury on the “motivating factor” standard.

The Third Circuit affirmed. In deciding that the District Court’s application of the “but for” standard was correct, the Third Circuit relied on the Supreme Court’s opinions in two cases, Gross v. FBL Financial Services, Inc. and University of Texas Southwestern Medical Center v. Nassar. The Court held that the FCA anti-retaliation provision used the same “because of” language that compelled the Supreme Court to require “but-for” causation in those cases. Consequently, the district court correctly instructed the jury that to find retaliation, it had to find that the employee’s protected conduct was the “but-for” cause of the adverse employment action.

Copies of the full text of any of the cases discussed in this Newsletter may be obtained by calling our office. The articles contained in this Newsletter are for informational purposes only and do not constitute legal advice.

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