EDPA Finds No Breach of Contract or Bad Faith by Company that Raised Monthly Electricity Rates Following First Month “Teaser” Rate

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In Silvis v. Ambit Energy L.P, the Court held that Plaintiff failed to rebut Defendant’s showing that there was no genuine dispute as to any material fact and awarded summary judgment in favor of Defendant. Silvis v. Ambit Energy L.P, 170 F.Supp.3d 754, 759 (E.D. Pa. 2016). Plaintiff contracted with Defendant to supply electricity based on variable rate plan under which she paid a “teaser” rate for the first month and thereon, the rate fluctuated. Plaintiff asserted that Defendant enticed her to switch her supplier. Plaintiff became quickly disappointed after the “teaser” rate expired because her bill would swell during certain months. Ultimately, Plaintiff field a class action alleging breach of contract. Specifically, that Defendant breached its agreements with Plaintiff and the Proposed Class members by charging rates that did not meet contractual obligations.

Under Pennsylvania law, a breach of contract claim includes the following elements: “(1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract and (3) resultant damages.” Because there was no express provision in the contract requiring Defendant to provide a competitive rate, Plaintiff failed to allege a breach of an express contractual provision. Plaintiff also contended that Defendant breached the implied covenant of good faith and fair dealing by exercising its rate-adjusting discretion in bad faith. The Court explained that, while there is no separate cause of action for breach of the implied covenant of good faith and fair dealing, the Courts instead utilize the good faith duty as an interpretive tool to determine the expectations in the context of a breach of contract claim. Plaintiff did not prevail on this claim because she did not proffer any legitimate evidence of bad faith and in order to survive a motion for summary judgment, Plaintiff must show there is a genuine dispute as to a material fact. Thus, Defendant was awarded summary judgment.

Philadelphia contract lawyers at the Law Office of Sidkoff, Pincus & Green P.C. protect employees’ right to work. For assistance in any type of employment law matter, call 215-574-0600 to schedule a consultation in our Philadelphia office, where we represent clients in Pennsylvania and New Jersey, or contact us online.

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Pennsylvania Superior Court Refuses to Pierce the Corporate Veil to Hold Beneficiary of Estate Personally Liable for Corporation’s Debts

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In Mark Hershey Farms, Inc. v. Robinson, the Superior Court reversed the trial court’s ruling to pierce the corporate veil and hold the executor of an estate personally liable for the debts of the company he was operating on behalf of the estate. 171 .3d 810 (Pa. Super. Ct. 2017).  Robinson was the beneficiary of his father’s estate and after his father’s passing, Robinson operated his fathers’ businesses as the executor of his father’s will. Mark Hersey Farms, Inc. (“Mark Hershey”), a creditor of one of Robinson’s father’s businesses, brought suit for the debt. The trial court pierced the corporate veil and found Robinson, along with the business and estate, personally liable for the debts incurred.

Piercing the corporate veil allows the court to disregard the liability insulation provided by the corporate form and find the shareholders personally liable. In Pennsylvania, there is a strong presumption against not piercing the veil, and courts have only found it necessary when it is clear that the corporate form is merely a pretense to hide the shareholders’ wrongdoing. When deciding whether to pierce the corporate veil, courts are concerned with how the corporate records are kept, how the shareholders, other than the dominate shareholder actually function, and whether the dominant shareholder has used assets of the corporation as if they were his own. Appellee’s argued that Appellant gained personal benefit from the business with the company, and as a result, was unjustly enriched. In order to succeed under unjust enrichment, a plaintiff must establish that (1) a benefit was conferred on the defendant by plaintiff; (2) appreciation of such benefits by defendant; and (3) acceptance and retention of such benefits under the circumstances would be inequitable.

The Court rejected Mark Hershey’s argument because it was not convinced that Robinson received a personal benefit and found that piercing the corporate veil would be without basis. The Court was clear that unjust enrichment does not apply simply because the defendant has received a benefit, and that to succeed on such a claim, Mark Hershey was required to establish that it would be unconscionable for Robinson to retain such benefit.

For more information, call Philadelphia business lawyers at the Law Offices of Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

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EDPA Grants Summary Judgment Against Medical Laboratory Company Alleging Tortious Interference by Independence Blue Cross

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In Medical Diagnostic Laboratories, LLC. v. Independence Blue Cross, Medical Diagnostic Laboratories, LLC, (“MDL”) alleged that Independence Blue Cross (“IBC”) violated antitrust laws and was engaging in unfair competition by tortuously interfering its existing and proposed business relationships. WL 4899441 *1 (E.D. Pa. October 9, 2018). IBC filed a Motion to Dismiss that alleged MDL failed to state a claim. The Eastern District of Pennsylvania denied the motion and allowed MDL to proceed to discovery. After discovery, IBC filed a Motion for Summary Judgment which was granted. In its suit, MDL alleged that IBC had threatened doctors within its network to stop using MDL. MDL further alleged that several doctors that preferred using MDL’s laboratory to perform testing no longer did so after they received threats from IBC.

In Pennsylvania, to state a claim for tortious interference with a prospective contractual relationship, the plaintiff must prove: “(1) a prospective contract between the plaintiff and a third party; (2) a purposeful act by the defendant taken with the specific intent to harm the existing relation or prevent a prospective relation from occurring; (3) the absence of privilege or justification on the part of the defendant; (4) actual legal damage because of the defendant’s conduct and (5) reasonable likelihood that the relationship would have occurred but for the defendant’s interference.” Medical Diagnostic Laboratories, LLC., WL4899441 at *3; Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494, 530 (3d Cir. 1998); Ira G. Steffy & Son, Inc. v. Citizens Bank of Pa., 7 A.3d 278, 288–89 (Pa. Super. Ct. 2010).

The Court found no evidence in the record that MDL established prospective contractual relations with any of the providers it identified, nor any evidence that IBC specifically threatened any of these providers. Since MDL failed to establish the requisite prospective contractual relationships with any of the doctors which it alleged IBC threatened, MDL could not prove all the elements of its tortious interference claim. Upon failing to prove all the elements necessary to show that IBC was tortuously interfering with MDL’s prospective business relationships, with doctors in IBC’s coverage plan, MDL asserted that IBC’s tortious interference was really aimed towards prospective clients, not the doctors. The Court noted that for tortious interference to be present in this situation, the prospective contract needed to involve physician relationships not prospective clients. Therefore the Court granted IBC’s Motion for Summary Judgment since MDL failed to prove the requisite elements under their tortious interference claim.

Our office is conveniently located in Center City Philadelphia, allowing us to represent clients throughout the region, including Philadelphia County, Delaware County, and Montgomery County. To discuss your case with one of our highly skilled and experienced Philadelphia business lawyers at the Law Offices of Sidkoff, Pincus & Green call 215-574-0600 today or contact us online to schedule your confidential consultation.

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Supreme Court of Pennsylvania Holds That Disclosure of Truthful Information Does Not Qualify as Tortious Interference with Contractual Relations

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In Walnut Street Associates, Inc. v. Brokerage Concepts, Inc., the Supreme Court of Pennsylvania held that the disclosure of truthful information regarding an employee does not constitute tortious interference. 20 A.3d 468 (Pa. 2011). In this matter, Plaintiff, Walnut Street Associates (“WSA”), provided insurance brokerage services and provided clients with health insurance benefits for their employees. Defendants, Brokerage Concepts, Inc. (“BCI”), were the third-party administrator of the employee benefit plan of Plaintiff’s client, Procacci Brothers Sales Corp. (“Procacci”). The issue in question arose when Procacci requested that BCI lower their service costs. When BCI informed Procacci that they would not meet the requested cost, Procacci decided to leave BCI and to hire a new insurance administrator. Upon hearing the news of Procacci’s departure, BCI contacted Procacci and informed them that they could not lower the costs because BCI was required to pay WSA a certain percentage of the proceeds from Procacci. Procacci was not aware that WSA was receiving such a high percentage, and thus, terminated their contract with WSA. WSA brought suit against BCI for tortious interference with contractual relations for their disclosure of WSA compensation under the contract.

In Pennsylvania, in order to succeed on a claim for tortious interference, the plaintiff must establish that (1) a contract or a prospective contract existed between the plaintiff and a third-party; (2) purposeful action by the defendant with the intent to harm the relationship between the parties to the contract; (3) The defendant’s action was improper; and (4) actual damages resulted from defendant’s interference.

In this matter, the Court was faced with determining whether BCI’s actions constituted tortious interference. There was no dispute that there was a contractual relationship between WSA and Procacci, and BCI interfered with that relationship, but in order to satisfy the elements of the claim, WSA had to establish that BCI’s actions were improper.  In analyzing whether the actions by BCI were improper, the Supreme Court affirmed the Superior Court’s decision to adopt Section 772(a) of the Restatement (Second) of Torts, which provides that “there is of course no liability for interference with a contract or with a prospective contractual relation on the part of one who merely gives truthful information to another.” Furthermore, this disclosure of truthful information was not considered tortious even if the third-party requested the information or not. For this reason, the Supreme Court affirmed the Superior Court’s reasoning and ruled in favor of BCI.

For more information, call the Philadelphia business lawyers at the Law Office of Sidkoff, Pincus & Green, P.C. today at 215-574-0600 or contact us online.

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Eastern District Court Dismisses FLSA Claim Based on Statute of Limitations

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In Everett v. The Maternal Child Consortium, LLC, the Eastern District of Pennsylvania dismissed claims arising from a violation of the Fair Labor Standards Act (“FLSA”) which did not fall within the two-year statute of limitations. Civil Action No. 18-746 (E.D.Pa. 2018). Plaintiff began working for Defendant’s company in September of 2004 as a scheduler. Between 2004 and 2016, Plaintiff alleges that she consistently worked 41.5 hours per week and estimated that on three occasions per week, her meals were interrupted which reduced her meal time to under twenty minutes, the amount of time required by law.

Plaintiff asserted two bases for her FLSA claim. First, she asserted that she was not paid overtime compensation for work performed during her meal breaks. Second, she asserted that she performed “compensable on-call work”. The FLSA establishes federal minimum-wage, maximum-hour, and overtime guarantees that cannot be modified by contract. Under the FLSA, “employers may not employ an employee for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.”

Defendant raised a statute of limitations defense and contended that Plaintiff has to show that Defendant willfully violated the FLSA. Since Plaintiff failed to do so, the Court dismissed all of her claims arising out of a violation of the FLSA which did not fall within the two-year statute of limitations. In addition, the Court found that Plaintiff’s single allegation that she “performed compensable on-call work” was not enough to state a claim because she was required to show “onerous on-call polices and significant interference with plaintiff’s personal life.” For these reasons, the Court dismissed Plaintiff’s second FLSA claim.

For more information, call our Philadelphia employment lawyers for Fair Labor Standards Act in Philadelphia and South Jersey at the Law Office of Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

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Third Circuit Rules Upholds District Court Ruling Against Employer who Alleged Misappropriation of Trade Secrets

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In Givaudan Fragrances, Corp. v. Krivda, Plaintiff Givaudan filed suit against its former employee and the employee’s new employer for misappropriation of trade secrets. 639 F.App’x. 840, 842 (3rd. Cir. 2016). Givaudan alleged that Krivda stole over 600 fragrance formulas from its database before leaving for another employer in 2008. Givaudan alleged that the fragrance formulas were worth millions of dollars and considered them to be trade secrets. While the District Court of New Jersey granted Defendants summary judgment on the vast majority of Givaudan’s claims, it permitted Plaintiff to move forward to trial as to 34 formulas allegedly misappropriated by Krivda. After a five-week jury trial, the jury unanimously ruled in favor of Krivda on all clams, finding that Givaudan failed to prove that Krivda violated his employment contract or misappropriated any of the 34 fragrance formulas. Givaudan appealed to the Third Circuit Court of Appeals.

The Third Circuit began its analysis by preforming a de novo review of the District Court’s grant of summary judgment. For misappropriation to be proven in trade secrete cases, “it is patently obvious that trade secrets must be identified with enough specificity to put a defendant on notice of what is actually alleged to have been stolen.” Additionally, the Third Circuit notes that circumstantial evidence can be used to establish misappropriation of trade secrets, but only after enough specific information has been given to the defendant so the defendant can defend himself from the accusations. However, the availability of circumstantial evidence, to prove misappropriation of trade secrets, is tempered by the fact that it cannot be used to substantiate bald assertions

Here, the Court noted that Givaudan failed to provide Krivda with enough specific information about many of the formulas it believed to have been misappropriated. Out of the 600 formulas alleged to be stolen, Givaudan provided specific information on only 34. The Third Circuit next noted that even though the District Court allowed Givaudan to submit circumstantial evidence which showed Krivda printing out formulas, and being recruited by his new employer, the jury rejected the circumstantial evidence. The Third Circuit therefore affirmed the District Court’s decision to grant summary judgment in favor of Krivda and, finding that since the District Court did not deprive Givaudan of a fair trial, there existed no basis to overturn the District Court’s jury verdict.

At the Law Offices of Sidkoff, Pincus & Green P.C. our experienced Pennsylvania and New Jersey attorneys handle many types of legal matters, including contract law. If you are interested in having a consultation with one of our attorneys, please call us at 215-574-0600 or contact us online.

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Third Circuit Court Affirms Grant of Summary Judgment in PMWA Statutory Construction Case

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In Livi v. Hyatt Hotels Corp., No. 17-3646, 2018 WL 4944823 (3d Cir. 2018) the Third Circuit Court of Appeals affirmed the grant of summary judgment in favor of Hyatt Hotels in a Pennsylvania Minimum Wage Act (“PMWA”) and Pennsylvania Wage Payment and Collection Law (“WPCL”) action. Plaintiff, a banquet server for Hyatt, filed a class action complaint on behalf of herself and similarly situated individuals alleging that she worked more than 40 hours but was not paid overtime and that she was entitled to contractual service charge which Hyatt retained.

Under Pennsylvania law, service establishments (including hotels) are not required to pay overtime to employees working more than 40 hours per week if they are exempt from the overtime requirement under 34 Pa. Code § 231.43(f). An employer may be exempt if the “regular rate of pay of the employee is in excess of 1 ½ times the minimum hourly rate applicable” or “more than half of the employee’s compensation for a representative period, not less than 1 month, represents commissions on goods or services.” Plaintiff fell within both exemptions because the Court found her regular rate of pay at Hyatt was more than 1 ½ times the minimum wage and the service charges Hyatt paid her comprised more than half her compensation.

However, Plaintiff argued that Hyatt was not exempt from the overtime requirement because the service charges do not “represent commissions on goods or services” under the Pa. Code. The Court reasoned that although the relevant Pennsylvania statutes do not define “commission” and the Pennsylvania Supreme Court had no guidance on the issue, it was appropriate for the Court to look to Pennsylvania’s intermediate appellate court for assistance. The Court then explained that Pennsylvania’s Commonwealth Court instructed that “when the PMWA substantially parallels the federal Fair Labor Standards Act (“FLSA”), Pennsylvania courts look to federal courts’ interpretation of the parallel FLSA provision for guidance. Looking then to the FLSA’s overtime exemption, the Court agreed with the District Court that banquet service charges represent commissions. Therefore, the District Court appropriately awarded summary judgment to Hyatt.

If you have been denied overtime wages, the experienced Philadelphia employment lawyers at the Law Office Of Sidkoff, Pincus & Green will fight to get you the compensation you deserve. To schedule a consultation, call us at 215-574-0600 or contact us online today. With offices conveniently located in Philadelphia, we serve clients throughout Southeastern Pennsylvania and South Jersey.

PA District Court Declines to Dismiss PMWA Based on Factual Insufficiency

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In Philadelphia Metal Trades Council v. Konnerud Consulting West, Civil Action No. 15-5621, 2016 WL 1086709 (E.D. Pa. 2016) the Court found that Plaintiff’s Pennsylvania Minimum Wage Act (“PMWA”) claim is not preempted by the Fair Labor Standards Act (“FLSA”) and declined to dismiss Plaintiffs claim. Plaintiff was an unincorporated association consisting of a number of local union chapters. Defendants were subcontractors conducting business and employing workers at Plaintiffs shipyard. Defendants, who are foreign corporations, were required to provide a certified payroll of their employees.

According to Plaintiffs, Defendants paid workers less than one and one half times their regular hourly wage for hours worked in excess of forty. Plaintiffs filed a complaint and alleged that employees worked over forty hours a week and that Defendants failed to pay them overtime wages in violation of the PMWA and the Pennsylvania Wage Payment and Collection Law (“WPCL”).

Defendant moved to dismiss Plaintiffs Complaint based on the fact that Plaintiffs PMWA claim was factually inadequate and preempted by the Fair Labor Standards Act (“FLSA”). As to the first argument, the Court found that Plaintiff’s claim under the PMWA was factually sufficient because Plaintiff plead sufficient facts to give rise to a plausible claim for relief under the PMWA. The Court found that Plaintiffs attachment of payroll audits which supported the allegations that Defendants were violating the PMWA as dispositive. As to the second issue, the Court found that Plaintiffs PMWA claim was not preempted by the FLSA because Plaintiff did not explicitly bring an opt-out class action which Defendants argue would conflict with the FLSA. Even if Plaintiff brought an opt-out PMWA class action as described by Defendant, its claim would still not be preempted by the FLSA.

For more information, call our Philadelphia employment lawyers for Fair Labor Standards Act in Philadelphia and South Jersey at the Law Office of Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

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Pa District Court Rules That Employer Who Paid Its Employees One-And-One-Half Times the Minimum Wage Rate Was Still Required to Pay Overtime Compensations

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In Gonzalez v. Bustleton Service, Inc., the Eastern District of Pennsylvania held that an employer who paid its employees one-and-one-half times the minimum wage was still obligated to pay overtime compensation. 2010 WL 1813487 (E.D.Pa. 2010). Plaintiffs were landscape laborers who worked for a varying hourly rate. The “base” wage for each employee ranged from $8.00 – $13.50, but when the Plaintiffs were working on jobs for a government entity that set the applicable wage rate (“prevailing wage jobs”), they were paid nearly double their hourly rate. When Plaintiffs were working on normal jobs and receiving their “base” wage, they were all paid overtime wages in accordance with the FLSA, but Employer failed to pay them overtime when they were working on a prevailing wage job.

Employer argued that the overtime compensation should be based on the employees’ “base” wages, and when the employees were working on the prevailing wage jobs, they were paid above the necessary 150% of their base wage. Plaintiffs’ on the other hand argued that overtime is based on the weighted average of the rates the employee received during the workweek. For example, when an employee worked two different types of work, and received a different hourly rate for each, the overtime rate should be calculated on the average between the two hourly rates.

The Court agreed with Plaintiffs’ arguments and found that the Plaintiffs’ calculation was in accordance with the governing regulation by the Department of Labor. The Court refused to accept the employer’s calculation because, if accepted, this theory could allow employers to withhold overtime compensation if employees are paid one and one-half times the minimum wage.

If you have been denied overtime wages, the experienced Philadelphia employment lawyers at the Law Office Of Sidkoff, Pincus & Green will fight to get you the compensation you deserve. To schedule a consultation, call us at 215-574-0600 or contact us online today. With offices conveniently located in Philadelphia, we serve clients throughout Southeastern Pennsylvania and South Jersey.

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Pennsylvania’s Dragonetti Act

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Although the cause of actions of abuse of process and wrongful use of civil proceedings may seem to be one in the same, there are significant differences between them. The common law cause of action for abuse of process is defined as the use of legal process against another “‘primarily to accomplish a purpose for which it is not designed.’” Rosen v. American Bank of Rolla, 627, 426 Pa. Super. 376, 627 A.2d 190, 192 (Pa. Super. 1993). Wrongful use of civil proceedings (or more commonly known as the “Dragonetti Act”) covers a different tort. Its provisions are:

  • Elements of action. A person who takes part in the procurement, initiation or continuation of civil proceedings against another is subject to liability to the other for wrongful use of civil proceedings:
  • he acts in a grossly negligent manner or without probable cause and primarily for a purpose other than that of securing the proper discovery, joinder of parties or adjudication of the claim in which the proceedings are based; and
  • the proceedings have terminated in favor of the person against whom they are brought.

42 Pa.C.S. § 8351 et. seq.

Under the Dragonetti Act, the parties liable include the lawyer, the law firm prosecuting the case, the law firm’s client, and if applicable, the owner of a corporate client. The Dragonetti Act, including its provisions that allows actions to be brought against lawyers who file suits or prolong proceedings in violation of the Act was recently found to be valid by the Pennsylvania Supreme Court. See Villani v. Seibert, 639 Pa. 58, 83, 159 A.3d 478, 492 (2017).

The difference between the Dragonetti Act and abuse of process causes of action are well known in Pennsylvania jurisprudence. An action for abuse of process differs from a Dragonetti action (i.e., abuse of process is that the gist of an action for the improper use of process after it has been issued, that is, a perversion of it. Malicious use of civil process has to do with the wrongful initiation of such process.” Rosen, supra., 627 A.2d at 192. When civil proceedings are filed or prosecuted with a malicious motive and lacking probable cause, 42 Pa.C.S.A. § 8351(a)(1)-(2) is violated. A successful cause of action under the Dragonetti Act has three elements: (1) the proceedings were decided in favor of the defendant; (2) the lawyer, the law firm, and the client caused those proceedings to be instituted against the defendant without probable cause; and 3) the proceedings were instituted primarily for an improper cause. See Di Loreto v. Costigan, 600 F. Supp. 2d 671 (E.D. Pa. 2009) (Discussing cases).

The Dragonetti Act provides that a plaintiff is entitled to recover for (1) the harm normally resulting from any dispossession or interference with the advantageous use of his land, chattels or other things, suffered by him during the course of the proceedings; (2) the expense, including any reasonable attorney’s fees, that he has reasonably incurred in defending himself against the proceedings; (3) any specific pecuniary loss that has resulted from the proceedings; and (4) punitive damages according to law in appropriate cases.

For more information, call Philadelphia business lawyers at the Law Office of Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

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