Key Court Verdicts Shaping Business and Law Deciphered

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Are legal battles shaping business realities? Discover our take in the latest Tort Talk.

While the nation experienced record-high heat in July, the country’s courts were heating up, too. Our latest members-only Court Watch newsletter highlighted more than one dozen key decisions from July and flagged pending cases for our members.

At ATRA, we know too well that pivotal court decisions can send ripples through the economy and hold the potential to shape industries and redefine legal landscapes. In this week’s Tort Talk, we’ll dissect the far-reaching ramifications from a few of these key decisions igniting discourse across sectors and shed light on two cases you’ll want to watch.

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U.S. Supreme Court’s Refusal to Review Racial Bias Case Raises Concerns

Thompson v. Henderson, 2023 WL 4278464 (S.C. 2023)

In a concerning move, the U.S. Supreme Court declined to review a Washington Supreme Court decision that thrusts the issue of racial bias onto the legal stage and casts a shadow on the pursuit of equitable justice. The original case involved a tort suit and a contentious jury award, triggering allegations of racial bias. The Washington Supreme Court ordered an evidentiary hearing, assuming racism tainted the verdict.

ATRA’s amicus brief underscores the need to ensure a just system but highlights that this approach could lead to unwarranted presumptions of bias, challenging established legal principles. Justice Alito’s dissent highlighted the implications and echoes ATRA’s concern that this ruling could infringe on due process and equal protection.

The court’s stance risks creating an inflexible presumption of bias, disregarding individual case merits and potentially setting an unbalanced precedent.

California Supreme Court’s PAGA Ruling Departs from U.S. Supreme Court’s Viking Decision

Adolph v. Uber Techs., Inc., No. S274671, 2023 WL 4553702 (Cal. July 17, 2023)

The recent divergence of the California Supreme Court from the U.S. Supreme Court’s Viking decision marks a concerning shift. Adolph v. Uber Techs., Inc. is centered around arbitration and claims made under California’s unique Private Attorneys General Act (PAGA). The California court’s decision, authored by Justice Lui, is a departure from the clear-cut precedent set by the U.S. Supreme Court’s stance on dividing PAGA actions based on arbitration agreements. California also is routinely named a Judicial Hellhole® by the American Tort Reform Foundation (ATRF) in part due to abuses under PAGA.

This departure has drawn attention due to its potential implications for future cases. The ruling may result in an increase in PAGA filings, impacting the business environment. Uber’s response and considerations for an appeal further highlight the significance of this decision. Uniformity and consistency are essential for our legal system to thrive.

Johnson & Johnson’s Talc Claims Bankruptcy Petition Denied: A Setback for Fair Resolution

In re: LTL Management LLC, 2023 WL 4851759 (Bkrtcy. D.N.J., 2023)   

In a significant development, a U.S. bankruptcy judge has rejected Johnson & Johnson’s second attempt to resolve talc-related claims through Chapter 11 bankruptcy. The petition aimed to consolidate thousands of claims related to its talc products and an $8.9 billion settlement. Chief Judge Kaplan of the District of New Jersey ruled that the petition lacked good faith, jeopardizing the massive settlement. Despite the setback, the company plans to appeal the ruling.

Resolving these tens of thousands of talc through the bankruptcy process is the most equitable and practical approach to address the challenges posed by talc litigation. The flaws inherent in the mass tort system, including high-dollar awards, low evidentiary standards, and minimal barriers of entry, have failed to serve the interests of all parties involved, except for plaintiffs’ lawyers and select claimants.

ATRA has consistently supported the company’s use of the bankruptcy process to address talc claims. In February 2023 and in August 2022, ATRA filed joint amicus briefs in In re LTL Management, LLC before the U.S. Court of Appeals for the Third Circuit. The briefs highlighted why the use of bankruptcy to address litigation claims is a valid bankruptcy purpose that has been historically recognized by courts across the country. Resolution of mass-tort liabilities in bankruptcy court has been a key tool for U.S. businesses since the Bankruptcy Code was first enacted in 1978.  

Georgia Supreme Court Decision Deepens Liability Concerns for Businesses: $45 Million Verdict Upheld

Georgia CVS Pharmacy, LLC v. Carmichael, No. S22G0527, 2023 WL 4247591 (Ga. June 29, 2023)

The Georgia Supreme Court’s recent decision to uphold a $45 million verdict against CVS in a premises liability case has raised concerns among businesses.

The unanimous ruling, which revived related cases, introduces a broader perspective on foreseeability of third-party criminal acts based on premises conditions. The case involved a shooting in an Atlanta CVS parking lot after a transaction went wrong.

The court’s rejection of a strict requirement to show a “substantially similar” prior crime on the premises expands liability worries for businesses, particularly those in high-crime areas. This approach may lead to increased security costs and drive businesses out of high-crime areas. Georgia was also named the No. 1 Judicial Hellhole® by ATRF in its most recent report.

Victory for Reason: New York District Court Dismisses Frivolous Action by Notorious Litigant Against Starbucks

Brownell v. Starbucks Coffee Co., 2023 WL 4489494 (N.D.N.Y., 2023)

In a triumph against frivolous litigation, a New York District Court judge has decisively dismissed a groundless lawsuit filed by Spencer Sheehan, a litigant previously highlighted in Judicial Hellholes® reports for filing absurd lawsuits.

The case, centered on trivial inaccuracies in Starbucks drink sizes, underscores the importance of discouraging meritless claims. The judge’s ruling rightly upholds the principle of responsible legal action, emphasizing that courts should focus on genuine concerns. ATRA commends this decision for curbing unnecessary legal burdens on businesses. This outcome not only helps to safeguard the integrity of our legal system but also sheds light on the significance of deterring unreasonable litigation practices.

Cases to Watch

California Supreme Court to Weigh in on Proposition 22’s Constitutionality, Posing Implications for Gig Economy

Castellanos v. State of California, 89 Cal. App. 5th 131 (2023), as modified (Apr. 12, 2023)

The impending California Supreme Court review of Proposition 22, known as the “Protect App-Based Drivers and Services Act,” has garnered attention for its potential implications on workforce flexibility and the gig economy. This ballot initiative, passed by voters in 2020, designates app-based drivers as independent contractors, sidestepping the stringent “ABC Test.” Proposition 22 empowers workers and companies alike, allowing them to embrace the gig economy’s adaptability. As the court scrutinizes the proposition’s constitutionality, it is crucial to remain mindful of the potential consequences for the gig economy’s future and the flexible earning opportunities it offers to workers.

McDonald’s Faces Lawsuit Over Parking Lot Tragedy in Philadelphia

Nguyen v. McDonald’s, Philadelphia Court of Commons Pleas, Case Number: 230700665

A lawsuit filed against McDonald’s in the wake of a fatal stabbing in a Philadelphia restaurant’s parking lot highlights the precarious expansion of premises liability claims. The estate of the victim alleges negligence, stating that the company failed to ensure customer safety. As the lawsuit unfolds, ATRA raises concerns about the implications of expanding premises liability, particularly for businesses operating in high-crime areas.

The Philadelphia Court of Common Pleas, along with the Pennsylvania Supreme Court, has been frequently ranked on the Judicial Hellholes® report, emphasizing the challenge businesses might face in such jurisdictions. The potential ripple effect may result in businesses becoming increasingly vulnerable to lawsuits arising from criminal acts beyond their control.

As we navigate the complexities of these cases, it’s paramount to grasp their far-reaching implications. ATRA invites you to engage with us on a journey of insightful analysis, aimed at comprehending the forces that shape our legal landscape. We’re committed to fostering discussions that delve into the heart of legal intricacies and seek your participation in this ongoing dialogue.

Curious about the potential impact of such decisions on your business operations? Contact us to explore how joining ATRA can play a pivotal role in rebalancing our legal system to ensure fairness and equity for all.

Stay informed, stay engaged, and let’s chart a course through the ever-evolving legal terrain together.

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