January, 2005

I.FIRM NEWS

The Law Firm of Thomas Paschos & Associates, P.C. is pleased to announce the expansion of its law firm with two additional offices at the following locations:


East Brunswick, NJ

197 Route 18 South, Suite 3000, East Brunswick, N.J. 08816

(Telephone) 732-514-1507, (Fax) 732-514-1509


Allentown, Pa.

1275 Glenlivet Drive, Suite 100, Allentown, Pa. 18106

(Telephone) 610-395-3944, (Fax) 610-395-3892


The Firm's other offices continue to be at the following locations:

Philadelphia, Pa.

1617 John F. Kennedy Blvd., Suite 946, Philadelphia, Pa. 19103

(Telephone) 215-636-0555, (Fax) 215-636-0460


Haddonfield, NJ

30 North Haddon Avenue, Suite 200, Haddonfield, N.J. 08033

(Telephone) 856-354-1900, (Fax) 856-354-6040


II.EMPLOYMENT ISSUES

Requested Leave of Absence May Not Constitute a Reasonable Accommodation Under the ADA

A recent decision by the U.S. Court of Appeals for the Third Circuit has clarified when a requested leave of absence may constitute a reasonable accommodation under the American With Disabilities Act. In Fogleman v. Greater Hazleton Health Alliance, 2004 WL 2965392 (3d Cir. 12/23/04), the plaintiff was employed as a pharmacy technician with Hazleton-St. Joseph Medical Center from June 1999 until June 2000. She was terminated due to excessive absenteeism and her failure to contact her employer for three consecutive workdays. The defendants also contended that the plaintiff was disciplined on several occasions for violations of the dress code, tardiness, and excessive use of work telephones to make long distance phone calls.

The plaintiff then filed a complaint against her former employer alleging retaliation in violation of Title VII, discrimination and failure to accommodate in violation of the ADA, and violation of the Family Medical Leave Act (FMLA).

Concerning the ADA claim, plaintiff argued that she had requested a reasonable accommodation "in the nature of time off from work for treatment." The plaintiff had previously fallen at the hospital, and had been diagnosed with two herniated discs and nerve damage.

The court found that the plaintiff's request for time off from work did not constitute a reasonable accommodation in this case. The ADA prohibits "covered employers from discriminating against a qualified individual with a disability, because of the disability of such individual in regard to… hiring, advancement or discharge." The ADA states that if the qualified employee requests a reasonable accommodation, the employer must make a reasonable effort to determine the appropriate accommodation "through a flexible, interactive process that involves both the employer and the employee." In this case, the court found that the plaintiff's request for time off would not be a reasonable accommodation under the ADA. The court stated that when the federal courts have previously found that a leave of absence was a reasonable accommodation under the ADA, this has generally occurred in situations where the reasonable accommodation, i.e. time off from work, enabled the employee to perform his or her essential job functions in the near future. In this case, the court found that the plaintiff did not present evidence from which one could reasonably find that a leave of absence, beginning in June of 2000, and extending for an unknown period of time, would have enabled her to perform her essential job functions within a reasonable amount of time. The court focused on the fact that there was no duration specified for the requested leave. The court stated that there is "no evidence that permits any conclusion other than the requested leave was for an indefinite and open-ended period of time. This does not constitute a reasonable accommodation."

The court similarly found that the plaintiff could not sustain her claim of retaliation under Title VII, because she could not prove that she was engaged in a protected activity. In order to advance a prima facie case of retaliation under Title VII, "a plaintiff must show that: (1) the employee engaged in a protected employee activity; (2) the employer took an adverse employment action after or contemporaneous with the employee's protected activity; and (3) a causal link exists between the employee's protected activity and the employer's adverse action." Although the plaintiff contended that she made complaints about sexual harassment and a hostile work environment against her employer, the court found that this did not constitute protected activity, because the plaintiff did not have an objectively reasonable belief that she was subject to sexual harassment or a sexually hostile work environment.

The court also found that the plaintiff failed to sustain her claim under the FMLA, because the plaintiff could not establish that she would have been able to return to work without accommodation after the 12-week period given under the FMLA. The FMLA requires that, "an eligible employee shall be entitled to a total of twelve workweeks of leave during any twelve month period" if the employee has a "serious health condition that makes the employee unable to perform the functions of the position of such employee." The plaintiff contended that her employer did not advise her of her FMLA rights; however, the court found that the FMLA does not require the employer to provide a reasonable accommodation to an employee to facilitate his or her return to the same or equivalent position at the conclusion of the medical leave. The court stated that the employee must be able to perform the essential functions of the job without accommodation upon the return to work at the end of the twelve-week period.

III.INSURANCE ISSUES

Agreement by Insurer Not to Raise Premiums Unenforceable

In the Brickman Group, Ltd. v. CGU Insurance Co., 2004 WL 2998740 (Pa. Super. 12/29/04), the Pennsylvania Superior Court held that an agreement made outside the scope of various insurance policies issued by CGU Insurance Co. to the Brickman Group, which promised to freeze rates for six years, was not enforceable. In this case, the plaintiff brought an action alleging that the insurance company failed to comply with an agreement, which contained both oral and written promises, not to raise the premium rates on certain insurance policies for six years. Both parties agreed that the agreement concerning the premiums was not contained in any of the insurance policies issued by CGU. When CGU attempted to raise policy premiums or "non-renew" policies subject to that alleged agreement during the six-year period, the plaintiff filed an action alleging breach of contract, breach of fiduciary duty, and bad faith insurance practices under the Pa. Bad Faith Statute, Pa. CS § 8371.

The plaintiff attempted to argue that the agreement constituted illegal conduct on the part of the insurer in an effort to avoid liability to its insureds.

The trial court found that the agreement not to raise premiums was illegal, granted summary judgment to the insurer, and the Brickman Group appealed. However, the Pennsylvania Superior Court refused to overturn the trial court's finding concerning the illegality of the contracts, but found that defendant did not violate the Pa. Bad Faith Statute and did not commit fraud when it entered into the agreement not to raise the premiums.

IV.GENERAL LITIGATION ISSUES

Pa. Supreme Court Nullifies Pass Through Indemnification Clause

The Pennsylvania Supreme Court has recently nullified a "pass through" indemnification clause where the provision sought to be, "passed through" was indemnification for the acts of another party's negligence.

In Bernotas v. Super Fresh Food Markets, Inc., 2004 WL 2961156 (Pa. 12/22/04), a patron of the Super Fresh Food Market sustained serious injuries after falling into a hole in the floor at a construction area inside the Super Fresh store. A general contractor had hired a subcontractor to perform electrical work, according to plans and specifications of a general contract between the contractor and Super Fresh store's parent company. After the plaintiff sued Super Fresh for her injuries, Super Fresh filed a crossclaim joining the contractor and the subcontractor, which claimed contractual entitlement to complete indemnification. After that lawsuit was settled, Super Fresh sought indemnification under the terms of the contract with the general contractor, which required, "[t]he Contractor… [to] assume entire responsibility and liability for any and all damage or injury of any kind… caused by… the execution of the work provided for in this contract…," provided Super Fresh was not solely negligent. The trial court found that Super Fresh was not solely negligent, because both the contractor and the subcontractor had failed to provide a safe work area. Therefore, the trial court felt that the general contractor's obligation to indemnify Super Fresh was triggered. The general contractor then appealed, claiming that the subcontractor had agreed to indemnify the contractor pursuant to an incorporation clause in the subcontract. The subcontract included an incorporation clause stating that the "[prime] Contract Documents form a part of this Subcontract, and are as fully a part of this Subcontract as if attached to this agreement and as if herein set forth at length."

The Supreme Court was then called upon to decide whether the conduit or pass through indemnification theory was consistent with the court's previous holding that require negligence indemnification provisions to be expressly and unequivocally stated in a contract between the parties. The Supreme Court stated that the pass through theory is "novel in Pennsylvania", but has been examined in other jurisdictions. For example, the court stated that the Alaska Supreme Court has recognized the operation of a conduit clause in a subcontract agreement, holding that delay damages may pass through a prime contract to the subcontractor. The court also examined an Illinois opinion, where a clause requiring arbitration to settle disputes in a general contract was held to be incorporated by reference into a subcontract. However, the court found that none of the cases in other jurisdictions applied the pass through theory to a clause indemnifying one party for acts of another party's negligence.

The law in Pennsylvania is well settled "that provisions to indemnify for another party's negligence are to be narrowly construed, requiring a clear and unequivocal agreement before a party may transfer its liability to another party." Indemnification provisions are given effect by Pennsylvania courts only when clearly and explicitly stated in the contract between the two parties.

In this matter, the court held that the pass through provision was not enforceable. The court held that "pass through indemnification clauses violate the long standing policy underlying the rules narrowly construing indemnification provisions. When the provision sought to be 'passed through' involves indemnification for acts of another party's negligence, the theory will not be applied, unless the contract language is clear and specific. Sound public policy requires an unequivocally stated intention to be included in the subcontract for this particular type of provision to pass through the general contract. The general language of a standard incorporation clause cannot trump the specific language of the subcontract, when the former supports indemnification for negligent acts, but the latter is ambiguous regarding the circumstances under which indemnification will occur."


Copies of the full text of any of the cases discussed in this Newsletter may be obtained by calling our office.  The articles contained in this Newsletter are

for informational purposes only and do not constitute legal advice.



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