Limitation of Liability under the LPLA: Can Internet Retailers be Manufacturers?

For decades, Louisiana law provided a claimant or injured person an uncommon opportunity (1) to directly name an insurer in a lawsuit, and (2) to make the jury aware of the presence of insurance. This was known nationally as the “Louisiana Direct Action Statute.” This statute, embodied in LSA—R.S. 22:1269, has long been a topic of debate.

The Louisiana Legislature recently amended the “direct action statute” in Act 275 and declared that the injured person “shall have no right of direct action against the insurer” unless at least one of the exceptions applies: the insured files for bankruptcy, the insured is insolvent, service cannot be made on the insured, a tort cause of action exists against a family member, uninsured motorist claims, the insured is deceased, or when the insurer issues a reservation of rights or coverage denial (but only for the purpose of establishing coverage). The Act further provides that the insurer shall not be included in the caption of the case. And, the existence of insurance is not to be disclosed unless the Louisiana Code of Evidence requires it. This new legislation is effective August 1, 2024.

But, the Act also provides for new provisions that allow for the joinder of an insurer after settlement or in connection with a final judgment. The Act further includes specific provisions enacted to provide notice to an insurer of an action and outlines the procedures and timelines for how insurers assert reservation of rights or a denial of coverage.

The revisions to LSA—R.S. 1269 represent a significant change in how lawsuits involving insurance companies will proceed.

Ina recent case involving Keogh Cox attorneys, the Eastern District of Louisiana in MichaelBrander, Jr. v. State Farm Mutual Auto. Ins. Co., Civ. A. No. 18-982(Feb. 14, 2019), 2019 WL 636423 barred testimony of substantial projectedmedical expenses because it was not based on a reliable methodology. Thisruling stands to impact many other cases where plaintiffs seek to usefar-reaching projections of a life-long need for radiofrequency ablations("RFAs") or other pain-management modalities to "board" sixand even seven-figure numbers for future medical expenses.

InDaubert v. Merrill Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), theUnited States Supreme Court recognized the trial judge as the “gatekeeper” of expertopinion testimony and held that only reliable and relevant expert opinions maybe admitted. The reliability requirement serves to keep expert opinions“outside the gate” when they constitute unsupported speculation or meresubjective belief; only scientifically valid expert opinions are allowedinside. To ascertain whether an expert opinion is scientifically valid, Daubertinstructs the trial court to consider:

∙ whether theexpert’s theory can or has been tested;

∙ whether it hasbeen subject to peer review and publication;

∙ the known orpotential rate of error when applying the theory;

∙ applicablestandards and controls; and,

∙ the degree towhich the theory has been generally accepted in the scientific community.

InBrander, the plaintiff advanced medical testimony that he would needRFAs every year of his expected lifetime, a period of 36 years. The courtdisallowed the testimony, noting that the plaintiff’s physicians had less thanten years personal experience in administering RFAs to patients, the medicalliterature only considered the effectiveness of RFAs over a span of seven toten years, and there was no showing that the 36-year treatment plan was ingeneral acceptance by the medical community. According to the court, theexpert opinions offered by plaintiff failed Daubert “on all points.” Asa result, the plaintiff was permitted to introduce testimony of future RFAs foronly a seven-year period.

The reasoning of Brander may be equally applicable to projections of lifetime treatment involving other medical procedures, such as medial branch blocks, Botox injections, or spinal cord stimulators, for which the long-term efficacy has not been firmly established in the medical literature. Opinions unsupported by personal treatment experience and peer-reviewed medical studies are not scientifically valid and are properly halted “at the gate.”

Nancy B. Gilbert is a partner with Keogh Cox in Baton Rouge, Louisiana. She is a puzzle-solver by nature, and specializes in providing clear and in-depth analysis of complex litigation issues.

Although courts have described the outcome as “harsh,” a recent ruling shows that a judgment creditor can recover the full amount of an employee’s unpaid debt from an employer if that employer fails to comply with specific garnishment procedures.

A party that prevails in a lawsuit and is awarded damages is known as a judgment creditor. In order to collect on the judgment, Louisiana law allows a judgment creditor to garnish the wages of the judgment debtor, the party cast in judgment. Once a judgment against an employee is obtained, the judgement creditor may issue garnishment interrogatories to the employer requesting information related to the employee’s job, rate of compensation, manner of payment, and whether there are other judgments or garnishments affecting the employee’s compensation.

It is imperative that the employer file sworn answers to all garnishment interrogatories within 30 days from the date of service.^ Louisiana courts treat unsworn answers to interrogatories as a failure to answer,* and an employer’s failure to timely answer garnishment interrogatories can result in costly penalties. In fact, a Louisiana employer can be held liable for the full amount of the employee’s judgment if procedural requirements are not followed.

La. C.C.P. art. 2413(A) states that if the employer fails to answer the garnishment interrogatories within 30 days from the date of service, then the judgment creditor may proceed against the employer for the amount of the unpaid judgment, with interest and costs. La. C.C.P. art. 2413(B) provides that the employer must pay the entire amount of the judgment unless it proves the actual amount it owed to the employee at the trial on the contradictory motion. Regardless of the decision on the contradictory motion, La C.C.P. art. 2413(C) requires the employer to pay the costs and reasonable attorney’s fees of the judgment creditor.

The First Circuit Court of Appeals recently examined these procedures in Tower Credit, Inc. v. Williams.^^ The judgment creditor in the Tower Credit case issued garnishment interrogatories to the judgment debtor’s employer. However, the employer failed to timely respond to garnishment interrogatories. When the judgment creditor filed a Motion for Judgment Pro Confesso against the employer to require it to appear and present evidence regarding the amount of wages it should have withheld after receiving the garnishment interrogatories, the employer failed to appear for the hearing.

Given the employer’s failure to timely respond to the interrogatories and its failure to appear for the hearing, the First Circuit found that the creditor was entitled to a judgment pro confesso against the employer for the entire amount of the employee’s debt. Citing the unique facts of the case, which included evidence that the judgment debtor/employee no longer worked for the employer cast in judgment, the Louisiana Supreme Court recently granted vacated part of the judgment pro confesso and remanded the matter for rehearing.**

However, this case shows that Louisiana courts will enforce La. C.C.P. art. 2413 and cast an employer in judgment for its employee’s debt, even though courts have described the statute’s penalties as “harsh.” Tower Credit shows that employers should respond to garnishment interrogatories within the timeframe provided by law. In the event the deadline is passed, La. C.C.P. art. 2413(B) requires the employer to appear for the judgment pro confesso hearing if it intends to argue it should not be indebted for the judgment. Failure to do both could result in the employer being held liable for the full amount of its employee’s unpaid debt.

References:

^ See La. C.C.P. art. 2412(D).

*See All Star Floor Covering, Inc. v. Stitt, 804 So. 2d 705 (La. Ct. App. 1st Cir. 2001).

^^Tower Credit, Inc. v. Williams, 2022-0106 (La. App. 1 Cir. 9/16/22), 352 So. 3d 1029, writ granted, judgment vacated in part, 2022-01556 (La. 2/7/23), 354 So. 3d 659.

**Tower Credit, Inc. v. Williams, 2022-01556 (La. 2/7/23), 354 So. 3d 659.