Act Natural When Contemplating Litigation
Changing the facts slightly to preserve confidentiality, I received a call from someone who had paid a company to create a website. When the website was up and running, the caller discovered that the web design company had, in essence, left a backdoor open. Someone with a little computer knowledge could have made changes to the website. The caller was outraged, saying that if this error had been discovered and exploited, it could have cost his company millions.
I asked if he had notified the company of the problem so it could be corrected. He told me he had not, because he wanted to keep the problem in place until he filed a lawsuit. In other words, he was leaving his company’s website vulnerable to vandals in order to preserve a possible action, rather than to fix the problem and avoid any damages. That’s a crazy case of the tail wagging the dog.
That mentality is wrong on a couple of levels. It shows that the caller is not as interested in correcting the problem as he is in getting money. Consider how a jury would react. He was so upset by the negligence of the web design company that he is asking us to give him millions, but he did nothing to fix the problem?
Also, it fails to recognize the need for actual damages. This is a simple concept that sometimes alludes even my fellow attorneys. If there are no damages, then it’s no harm no foul. If no one found the open door, then how was the caller harmed? He may have a small case for breach of contract since the designer didn’t create a proper website, but with no damages there is no actionable negligence.
Don’t act in some artificial manner to “preserve” an action. When this caller discovered the open door, the natural thing to do would be to call the company and ask that the door be closed. To leave the door open while seeking out legal representation is a very unnatural reaction. By all means, he could take a few minutes to save some screen shots as evidence in case legal action becomes necessary, but acting intentionally to leave the problem in place or even to create damages where none exist, will hurt the case far more than it helps.
Stimulus Package Includes COBRA Health Insurance Subsidies
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Before getting to today’s topic, I’m going to once again shout into the wind as I have for years that employers providing health insurance for employees was never a good idea. The conceptual flaw is apparent. Providing health insurance as a benefit puts a third party between the two real parties to the contract. The doctor is no longer in contract privity with his or her patient. When a patient is spending real dollars for health care, they have an incentive to bargain down the price. When uncle employer is paying, the sky’s the limit, and health care prices soar. The result is what we see today. Strikes are more often over health insurance than worker safety or pay, and when an employee is fired, the cost of maintaining the insurance under COBRA has grown too high. Employers can still offer health benefits, but it should be in the form of a monthly payment. “Here’s $500 a month for health insurance. Whatever you don’t spend, you can keep.” If that approach had been used, the push to offer health care at lower prices would have been far more intense than HMOs negotiating fees.
Which leads me to the issue at hand. The latest stimulus plan includes a COBRA subsidy for employees laid off between September 1, 2008 and December 31, 2009. If you have an employee that declined COBRA coverage after September 1, 2008, you must notify the employee of this subsidy. There is a needs test, but it’s pretty high – a maximum of $125,000 annual income for singles, $250,000 for couples. The employee can draw the subsidy for no more than nine months.
Incidentally, in line with what I said in my opening rant, many terminated employees call my office wanting to pursue wrongful termination actions, motivated most by the fear of losing their health insurance. They rail against the ridiculous cost of the COBRA plan, unaware that was the price their employer was paying. Often as not, they are unaware that they don’t need that COBRA coverage. COBRA only makes sense if the terminated employee is going to be uninsurable due to a pre-existing condition. Admittedly, something as simple as taking heartburn medication will constitute a pre-existing condition, but make certain your former employee knows that if they do not have such a condition, it will be far cheaper to get a bare bones bridge policy until they find another employer that is making the mistake of providing health insurance.
Ninth Circuit has Second Thoughts About Labor Law Decision
The Ninth Circuit has called for a take-back. In November the court decided and I reported that out-of-state employees are subject to California labor laws for any work performed in the state. That case involved instructors who traveled to various states, including California, to teach classes on software.
This week the Ninth Circuit withdrew its published decision in Sullivan v. Oracle, and asked the California Supreme Court for guidance on specified issues presented by the case. One of those questions was:
“Does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?”
We’ll have to wait to see if the Supremes agree to answer the question.
