Class Action Basics: What Are They and When Are They Certified?

When an employee is injured on the job and the employee’s request for workers’ compensation benefits is disputed, La. R.S. 23:1201.1 allows an employer to request a preliminary determination hearing (“PDH”) with the Office of Workers’ Compensation (“OWC”). If the workers’ compensation judge rules at the PDH that benefits are owed, the employer has ten days to comply with the judge’s ruling. The First Circuit recently ruled that an employer can find “safe harbor” if it technically complies with the rigorous deadlines of the statute, which if missed can have profound consequences, subjecting the employer to penalties and attorney fees.

In Kilbourne v. Dixon Correctional Institute, the court recently affirmed a ruling that found an employer complied with La. R.S. 23:1201.1 and could not be subject to penalties or attorney’s fees when it mailed the disputed workers compensation benefits within ten days of the judge’s ruling at the PDH. The ruling was affirmed even though the employee did not receive payment within ten days of the hearing.

The employer in Kilbourne stopped issuing weekly workers compensation benefits after two doctors found the claimant’s ongoing complaints were unrelated to the work accident and the claimant could return to full duty work. The employee then filed a disputed claim with the OWC and requested reinstatement of his benefits. He also requested an award of penalties and attorney’s fees because he claimed the employer’s suspension of indemnity benefits was arbitrary and capricious. The employer requested a PDH to address these issues.

The OWC judge issued a preliminary determination that although the employee was owed supplemental benefits from the date his payments of benefits stopped, the employer was not arbitrary and capricious in its decision to stop payment. Within ten days of the mailing of the PDH ruling, the employer issued and mailed benefit checks to the employee and filed a form with the OWC to provide notice the employer was paying the benefits. Nevertheless, the employee disagreed with the PDH ruling and the matter went to trial.

At trial, the employee argued that he should have received penalties, attorney fees, and interest on the back benefits paid after the PDH ruling. The employee argued the employer failed to comply with section 1201.1 because he did not receive the indemnity benefits until more than ten days after the PDH ruling. However, evidence showed the benefit payments were postmarked and mailed within ten days of the receipt of PDH ruling.

Accordingly, the trial court found that the employer was immune from an award of penalties and attorney fees pursuant to the “safe harbor” provision of section 1201.1. Interest also could not be owed on back pay when the employer complied with the statute. The First Circuit affirmed this decision on appeal. Although providing the claimant funds within 10 days of the PDH ruling remains the best practice for an employer, this ruling informs employers that they should find safe harbor from what could be significant penalties and attorney’s fees if they meet the technical requirements of the statute and mail their compliance with the judge’s ruling within ten days of the PDH.

Case Reference: Kilbourne v. Dixon Correctional Institute, 2022-0455,(La. App. 1 Cir. 11/4/22) ____So. 3d ___,2022 WL 16706951.

Thousands of people are currently dealing with the devastating flooding in Baton Rouge and surrounding areas. Here are a few pieces of information that may assist you as you begin to recover from this event:

1. Do your best to document your property damage claim as best you can. Take as many pictures of the damage as possible, whether of your house, commercial building, personal contents or inventory. These photos will be your proof of damage for whatever damage claim you are able to make, whether through your insurance company or otherwise.
2. Similarly, try and compile whatever pictures you can of your house or business, and its contents, from before the flood. To the extent, there is a dispute of whether a specific item was damaged or not, or even existed in the home or building before the flood, these pictures will be invaluable.
3. As soon as possible, attempt to itemize all of the contents in your home. A handwritten list is fine. Go through each room and attempt to list out every one of your possessions. Try and identify the make or model of each item, what you paid for it, and how old it is. Some insurance companies will require this specific information before you will be paid for each item. Of course, it is unlikely that you will have purchase documents for each item in your possession. Although this type of documentation is not required to prove your claim, it is obviously helpful for the insurance company to process it.
4. Keep records of what you spend to live elsewhere, including food and toiletries. If you rent a hotel room or are required to rent a house, make sure to keep records of what you pay.
5. Likewise, keep good records of any expenses you incur to repair your home or business. An organized and well-documented insurance or property damage claim is always better received and more quickly processed than one that is not.
6. With respect to insurance claims, and to the extent the policy provides coverage for your specific loss, an insurance company has an obligation, by law, to pay all undisputed amounts to you within a certain period of time. In other words, your insurance company has to at least pay you for everything that is undisputed. If there is a legitimate dispute over something, the insurance company can withhold payment for those items but must pay you for the items for which there is no disagreement. If the insurance company does withhold payment without a legitimate reason or fails to pay you within a certain amount of time, it may be responsible for certain statutory penalties and costs. You will need to discuss this with an attorney if you feel your insurance company is not treating you fairly.
7. To this point, because the insurance company must pay all undisputed amounts if there remain any disputed items, do not sign anything until the claim is fully resolved. You are not required to sign anything to receive any undisputed money under your policy.
8. If you have flood insurance, depending on the policy language, you may be eligible to receive immediate, emergency payments. Ask your insurance company what your policy provides, but do not assume what you are told is correct. Ask for a copy of your policy and read it for yourself.
9. To date, President Obama has made available federal disaster aid to residents of the parishes of East Baton Rouge, Livingston, Tangipahoa, and St. Helena. If you do not have flood insurance, you should immediately register with FEMA. You can also call FEMA at 800-621-3362. More information about the available federal assistance, including those for some businesses, can be found here.
10. The Louisiana State Bar Association and the Baton Rouge Bar Association will be providing free legal services to assist anyone with any legal issues arising from this disaster. For now, you can call the LSBA at 504-566-1600 or 800-421-5722 or the BRBA at 225-344-4803. More information will be disseminated as efforts are further coordinated.

Hopefully, this information will provide you with a little bit of information about the property damage claim process.

The longstanding rule that the analysis for "piercing the corporate veil" of an LLC is substantially the same as the analysis for piercing the veil of corporations has been called into question by the recent Louisiana Supreme Court decision in Ogea v. Travis Merritt and Merrit Construction, LLC, 2013-1085, --- So.3d ---. In Ogea, the Court addressed "the extent of the limitation of liability afforded to a member of an LLC" and the statutory basis for exceptions to this limited liability.

Typical of a veil piercing case, the Ogea Court began its discussion by citing familiar Louisiana cases on the topic: Riggins v. Dixie Shoring Co., Inc., 590 So.2d 1164 (La. 1991) and the more recent Charming Charlie, Inc. v. Perkins Rowe Associates, L.L.C., 11-2254 (La. App. 1 Cir. 7/10/12), 97 So.3d 595. However, the similarities stopped there.

The Court noted that traditional veil piercing doctrine was not invoked by the lower courts or the plaintiff. Instead, the Court's analysis turned on the interpretation of an infrequently cited statute within Title 12 that addresses the limitation of liability for LLC members. La. R.S. 12:1320(A) states that the liability of members and managers of an LLC "shall at all times be determined solely and exclusively by the provisions of this Chapter." Subsection (B) provides that members and managers are generally not liable for the debts, obligations, or liabilities of the LLC. Subsection (D) prescribes the exceptions to this limitation of liability, to include fraud, breach of professional duty, and any other negligent or wrongful act by the member or manager.

Addressing this statute as a matter of first impression, the Ogea Court applied the statute to the facts of the case. Merritt Construction, LLC was hired to build a home for plaintiff, Mary Ogea. As part of the process, Ms. Ogea requested that she have a friend prepare the site for the foundation. Travis Merritt, the sole member of Merritt Construction, LLC, informed Ms. Ogea that having someone else prepare the site would waive the warranty. Mr. Merritt subsequently operated the bulldozer to prepare the site for a subcontractor to pour the concrete slab. A dispute arose when a concrete contractor informed Ms. Ogea of problems with the home's foundation. Under these facts, the Court concluded Mr. Merritt was not personally liable under the exclusive exceptions to limited liability found in La. R.S. 12:1320(D).

The first exception, fraud, was rejected because no evidence in the record supported a finding that Mr. Merritt committed fraud.

Turning to the next exception, the Court also rejected the argument that plaintiff breached a professional duty as the sole member of the construction company. The professions recognized in Louisiana's corporate laws do not include individuals who perform construction work. Thus, Mr. Merritt could not breach a "professional duty" as contemplated by the statute. The Court also noted that the contract at issue only recognized Merritt Construction, LLC as a licensed contractor and did not reference any contractor's license held by Mr. Merritt personally.

Finally, the Court addressed the final exception to limited liability: "negligent or wrongful act." Plaintiff asserted that the term "negligence" in the statute only required proof of a tort by the individual. The Court quickly rejected this argument, noting that such an interpretation would improperly expand the liability of LLC members.

Rather, the Court set forth four factors to assist in the analysis under the last "negligence" exception: 1) whether a member's conduct could be fairly characterized as a traditionally recognized tort; 2) whether a member's conduct could be fairly characterized as a crime, for which a natural person, not a juridical person, could be held culpable; 3) whether the conduct at issue was required by, or was in furtherance of, a contract between the claimant and the LLC; and 4) whether the conduct at issue was done outside the member's capacity as a member.

It appears from the Ogea Court's focus that the prior analysis for "piercing the veil" of an LLC has perhaps been set aside and replaced with a new analysis which considers the exceptions to limited liability listed in La. R.S. 12:1320. However, the Court failed to expressly state that the prior analysis is improper and therefore no longer applicable. For now, it appears that the rules for piercing the veil of an LLC have changed but the true impact of Ogea remains to be seen.