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CLM National: July 2022

News and verdicts that affect you from across the country

July 13, 2022 Photo

An outlier decision in Louisiana finds coverage for COVID-19 shutdown-related losses, a recent New York Court of Appeals decision is one of three recent rulings signaling a possible positive trend in bodily injury construction cases, and, in Illinois, a large fast-food chain seeks to dismiss a PFAS food packaging case.

Illinois

Fast-Food Chain Files Motion to Dismiss PFAS Food-Packaging Case

Recently, complaints were filed against large fast-food chains, arising from alleged PFAS-containing food wrappers. Now, one fast-food chain is hitting back. The chain filed a motion to dismiss the proposed class action, proffering arguments including lack of standing for failure to allege a concrete, particularized injury; federal preemption; and insufficiency of the pleadings under Federal Rule of Civil Procedure 9(b). The complaint cites to a third-party consumer advocacy article that the plaintiffs allegedly reviewed that apparently caused buyer’s remorse after they purchased the products. But the defendants note that “apparent alarm after reading” such a report, without an actual injury, “fall[s] short of establishing a personal stake in this litigation.” The defendant points to several regulations that have approved specific PFAS for food contact. The food chain argues that the PFAS substances used presently in its packaging are also specifically approved by the FDA.—From CLM Member Oliver E. Twaddell, Goldberg Segalla

California

Delta-8 THC Ruling Could Impact Hemp, Marijuana, Insurance Industries

The Ninth Circuit Court of Appeals unexpectedly ruled in AK Futures LLC v. Boyd St. Distro, LLC that hemp-derived delta-8 THC falls within the definition of “hemp” under the 2018 Farm Bill. Delta-8 THC products have become an alternative to heavily regulated marijuana products that have higher concentrations of delta-9 THC, the primary psychoactive and intoxicating cannabinoid in marijuana. Delta-8 THC also is psychoactive and intoxicating. The 2018 Farm Bill’s definition of “hemp” includes all cannabinoids with a delta-9 THC concentration that does not exceed 0.3% on a dry weight basis. Under this legal definition, delta-8 is treated no differently than CBD or the more than 100 cannabinoids that may be directly extracted from the hemp plant. Many fear the sudden popularity of delta-8 THC could undermine the hemp, CBD, and regulated marijuana industries because it is an unregulated cannabis product that causes intoxication. Delta-8 THC remains illegal or severely restricted under state law in about 20 states.—From CLM Members Ian A. Stewart and Leia Leitner, Wilson Elser

Louisiana

Court Rules in Favor of COVID-19 Coverage

The attorney who filed the first U.S. lawsuit seeking insurance coverage for a business shut down because of COVID-19 won the first policyholder victory in a state or federal appellate court that interpreted the meaning of “direct physical loss or damage” on June 15, 2022. The Louisiana Fourth Circuit Court of Appeals reversed a trial court decision that dismissed a lawsuit filed by Cajun Conti, the owner of a 500-seat restaurant in the New Orleans French Quarter. Prior to this decision, all 77 federal and 44 state court appellate decisions, as well as a state supreme court ruling in Ohio, have held that COVID-19 did not cause tangible damage to property that was covered under standard commercial property policies. We expect this decision will be an outlier that will not impact pending cases, and we are confident courts across the country will continue to rule in favor of insurers in business-interruption cases because there is ‘no physical loss present.’”—From Mark Friedlander, Insurance Information Institute

Florida

Proposal for Settlement Rule Amended

The Supreme Court of Florida amended Florida Rule of Civil Procedure 1.442, which governs proposals for settlement. The amendment provides that “nonmonetary terms” are now expressly excluded from proposals for settlement. Most significantly, the rule amendment now prevents inclusion of a term that the plaintiff must execute a general release as part of the acceptance of the proposal for settlement. Setting forth nonmonetary terms in a proposal will now give the offeree a basis to invalidate it, preventing the offeror from recovering attorney’s fees and removing any settlement leverage. The risk to the plaintiff that they could be forced to pay an award of attorney’s fees sometimes provides helpful settlement leverage. The new amendment makes a seemingly small yet significant change that will impact defendant proposals for settlement going forward. The new rule amendment may end up eliminating the proposal for settlement as a tactical option in many cases for defendants going forward.—From CLM Member Ryan Rodriguez, Callahan & Fusco

Connecticut

Consumer Data Privacy Law Signed

Gov. Ned Lamont recently signed into law Public Act 22-15, a consumer data privacy law designed to provide greater ability for consumers to safeguard personal data collected by companies online. The new law, effective July 1, 2023, requires companies to publicly share a privacy policy that tells consumers what data of theirs is being collected and how that data is being used, and gives consumers an option to opt out of selling or sharing that data to others. It requires consumers under the age of 16 to provide consent for data collection. The law also seeks to reduce data breaches and identity theft by requiring companies to lessen the amount of data they collect, and to only use data for the purposes for which it is collected. The law is similar to ones enacted in California, Colorado, Utah, and Virginia.—From Senior Managing Editor Phil Gusman

New York

Construction Decision a Positive Sign for Defense

In Bonczar v. American Multi-Cinema, Inc., a plaintiff was injured when he fell from a ladder while working on a fire alarm system at a theatre. The ladder was not defective and became wobbly and shifted suddenly. The plaintiff does not recall if he secured the ladder properly before climbing on it. He brought suit pursuant to the provisions of Labor Code 240(1) and filed a motion for summary judgment, which the trial court granted. The Fourth Department reversed and found that several factual issues remained as to whether a violation of the statute had occurred, especially whether the plaintiff had failed to properly use the ladder before his fall. The case went to a jury and was decided in favor of the defendant. The Court of Appeals agreed on appeal that the plaintiff’s failure to check the locking mechanism on the ladder was sufficient evidence to establish the sole proximate cause defense. This case will provide important precedent for defense attorneys making arguments on this front.—From CLM Members Tracy J. Abatemarco and Bolam Kim, Wood Smith Henning & Berman

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About The Authors
Phil Gusman

Phil Gusman is senior managing editor for CLM Magazine and Construction Claims magazine.  phil.gusman@theclm.org

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