Philadelphia Business Lawyers: Prompt Payment Law Decision

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Prompt Payment Law Does Not Always Mandate Bad Faith Awards

In an important decision regarding public contracts, The Supreme Court of Pennsylvania reversed a Commonwealth decision automatically awarding attorney fees and a one percent penalty to contractors whose payments were breached in bad faith. The city of Allentown, Pennsylvania (Allentown) contracted A. Scott Enterprises (Scott) to complete a paving project.

After contaminated soil was discovered at the job site, the project was delayed. Allentown and Scott could not come to an agreement over the additional fees incurred because of the project’s delay and the contaminated soil. Scott then filed suit to recover losses on the delayed project. They were awarded $927,299. The jury found that the city breached its contract and acted in bad faith by refusing to pay Scott for the delays and damaged contract.

Though Scott received damages, they were not awarded attorney fees, the monthly one percent penalty, or interest. Scott then took the case to the Commonwealth Court which held that when the jury found that Allentown acted in bad faith, fees and penalties were mandated by law.

Allentown took the case to the Pennsylvania Supreme Court, arguing that the use of “may” in the Prompt Payment Law indicates that the award of attorney fees and penalties is subject to review on a case by case basis. That said, in most cases, public owners found to act in bad faith are required to pay public contractor’s attorney fees and penalties.

Does This Ruling Permit Exceptions?

Allentown has to take the case to trial court, where they may still be required to pay Scott penalties. The Supreme Court decision simply opened the door for exceptions to the rule.

Only in rare cases, very good reasons will exempt owners from paying out those awards. The Procurement Code will most likely prevail in most cases, requiring owners to pay their contractors on time and as agreed upon.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green, P.C. Tackle Tough Business Litigation

Philadelphia business lawyers at Sidkoff, Pincus & Green represent clients in a variety of business disputes. We handle cases involving OSHA investigations, wrongful termination, discrimination, overtime pay disputes, trademark infringement, business torts, and FTC cases. Call our Center City Philadelphia offices at 215-574-0600 or complete our online contact form to discuss your case.

Philadelphia Employment Lawyers: Liability for Unpaid Construction Work

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The Pennsylvania Supreme Court recently issued a ruling that limits a contractor’s ability to sue for unpaid work under the Pennsylvania Contractor and Subcontractor Payment Act, referred to as CASPA. The Court held that contractors and subcontractors do not have a right to sue the agents of a property owner if they are not paid for work that they have performed.

In this case, Robert DeBolt, the majority shareholder of a development company, verbally requested that contractor Scungio Borst & Associates (SBA) perform additional work on an ongoing project. The additional work cost an estimated $2.6 million. After the developer failed to pay SBA, SBA sued the development company, another LLC property owner, and DeBolt for $1.5 million. At trial, SBA was awarded a $2 million judgment, to be paid by the property owner and development company. DeBolt, the company’s agent, was not held liable. The Superior Court and Supreme Court upheld the ruling.

Pursuant to the relevant provision of CASPA, the property owner is liable for breach of contract. SBA argued that CASPA defines “property owner” as including “agents of the owner acting within their authority.” But the court disagreed. Justice Debra Todd, on behalf of the court, said that this definition was ambiguous, and looked at the purpose and intent behind the statute to resolve the ambiguity.

The Court found that the overarching purpose of CASPA is to provide a remedy for contractors, but also to avoid some of the flaws inherent in traditional contract lawsuits. For example, without CASPA, a contractor may have to pay their own litigation, or wait until the project was completed before they could sue for payment on a theory of breach. Because an agent is not a party to the contract, SBA’s interpretation would expand a contractor’s right to payment too broadly.

Philadelphia Employment Lawyers at Sidkoff, Pincus & Green P.C. Win Compensation for Workers Denied Overtime Pay

There is nothing more unsettling than the thought of putting in honest work and not getting paid for it. The Fair Labor Standards Act (FLSA) protects employees by requiring employers to pay both minimum wage and overtime pay. Some states have their own, more stringent overtime laws. If you work more than 40 hours a week, in most situations, you must be paid at least one and a half times your regular pay rate for that time. At Sidkoff, Pincus & Green, our experienced Philadelphia employment lawyers have extensive experience fighting for workers denied overtime pay. We are also experienced in fighting for employees who have been involved in breach of contract actions, such as contractors who are not paid for work performed pursuant to an agreement. To schedule a consultation, call us at 215-574-0600 or contact us online today.

Philadelphia Employment Lawyers: Employer’s Overtime Obligations

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The Third Circuit recently reversed a lower court’s decision in an overtime dispute under the federal Fair Labor Standards Act (FLSA) and determined that employees should be awarded overtime for their time spent putting on and taking off uniforms and providing “shift relief” reports before and after shifts.

The ruling involved the company Dupont in the case Smiley v. Dupont. The company argued that because it paid employees for two breaks and lunchtime during a 12-hour shift despite not being required to, that it was exempted from owing overtime for the amounts claimed by its employees.  The Dupont employees claimed to be owed overtime for time related to changing into their required uniform and while performing shift relief related duties.

The Third Circuit found that there was no language in the FLSA that allows for this type of “swap” or offset of the duty to pay employees overtime under the above-mentioned circumstances.

This Ruling Could Have Far-Reaching Effects for Employees

This win for employees has larger implications that will require employers to follow the FLSA more closely and could provide more opportunities for overtime pay.

Philadelphia Employment Lawyers at Sidkoff, Pincus & Green Represent Employees in Wage and Hour Disputes 

If you are entitled to overtime pay and were not paid, or your work conditions have changed, contact the Philadelphia employment lawyers at Sidkoff, Pincus & Green at 215-574-0600, or contact us online to discuss your rights.

Philadelphia Employment Lawyers: Evidence in Retaliation Claim

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Third Circuits Allows Use of Circumstantial Evidence to Prove Retaliation Claims

On June 27, 2016, the Third Circuit vacated and remanded a Western District of Pennsylvania grant of summary judgment for Defendant Postmaster General of the United States. The District Court concluded that Plaintiff Hillary Kacian failed to put forth sufficient evidence demonstrating that she was fired in retaliation for complaining to her supervisors about sexual harassment.

Hillary Kacian starting working as a letter carrier for the Johnstown Post Office in March 2008. Starting in 2010, Kacian began complaining of instances of sexual harassment from her coworkers, specifically her supervisor George LaRue. Some of the instances of sexual harassment included LaRue asking Kacian for a copy of a photograph of her in a bikini, LaRue making comments about her weight and physical appearance, and LaRue making sexual comments such as telling Kacian to “stay off her knees”. After a year of these comments, Kacian complained to the Union President Joseph Sarosi and another supervisor Jeff Hauser about the harassment, and specifically mentioned the things LaRue had said to her. Kacian testified that Sarosi told her they were going to speak to the Postmaster General, Michael Olsavsky about her claims.

Five days after Kacian made the complaint, she was terminated from her position at the Post Office. LaRue had filed a disciplinary action against her for a driving safety infraction and recommended her termination to the Postmaster, based solely on that incident. Testimony showed that this was not the type of action that supervisors often disciplined, much less terminated someone for; furthermore, deposition testimony showed that LaRue only recommended termination of three employees for much different reasons, included falsifying scans.

Kacian filed a complaint alleging sexual harassment with the Equal Employment Opportunity Commission, who issued her a notice of her right to file a civil action. After Kacian filed suit for retaliation, the District Court granted summary judgment, holding that Kacian could not establish that LaRue knew about the sexual harassment complaint, and that all evidence was speculation based on Sarosi’s testimony.

On appeal, the Third Circuit found that Kacian made a prima facie case of retaliation because she had an objectively reasonable belief the activity she opposed constituted unlawful discrimination under Title VII, and that there was sufficient evidence to raise an inference of a causal connection between the complaint and the termination. Postmaster General argued that there could be no inference of a causal connection, because both LaRue and Olsavsky testified they lacked knowledge of the complaint, and Kacian did not present direct evidence indicating otherwise. The Third Circuit stated that a lack of direct evidence establishing knowledge does not bar a retaliation claim, and that case law allows a plaintiff to establish knowledge through circumstantial evidence. In this case, temporal proximity, combined with circumstantial evidence such as LaRue’s termination recommendation history and the Post Office’s previous disciplining policies. 

Kacian v. Postmaster General of United States, 2016 WL 3509564 (3rd. Cir. 2016)

For more information, call our employment lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

Philadelphia Employment Lawyers: SEPTA Claim

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Court Rejects Appeal by Former SEPTA Worker on Claims for Hostile Work Environment and Discrimination

On August 8, 2016, the U.S. Court of Appeals for the Third Circuit denied the appeal of former SEPTA employee Marie Selvato, who sued SEPTA after she was seen at a taping of “Live with Kelly & Michael” while on sick leave. Selvato brought an action against former employee SEPTA for hostile work environment and discrimination. Selvato claimed she was sexually harassed between 2004 until she was terminated. Selvato’s claims were dismissed last year when U.S. District Judge Wendy Beetlestone of the Eastern District of Pennsylvania granted summary judgement to SEPTA, finding that she failed to show a connection between her termination and sexual harassment allegations.

Pennsylvania law requires claimants to first file a hostile work environment claim with the EEOC which requires that claims must be filed within 300 days of unlawful employment action. Mandel v. M & Q Packaging Corp., 706 F.3d 157, 165 (3d Cir. 2013). The trial court ruled that most of Selvato’s claims fell outside of this 300 day window. Selvato’s claims stemmed from instances of alleged sexual harassment between 2004 and 2012. However, a majority of the instances occurred between 2004 and 2009. Selvato claimed her supervisor James Stevens made two remarks within the 300 day window that rise to the level of sexual harassment. Stevens told her that he was “stalking her Facebook pictures” because he had gone to school with Selvato’s sister. He also told Selvato that he would like to “pet” a flower on her blouse because it looked soft. The Eastern District granted summary judgment against Selvato, which she subsequently appealed.

To make a hostile work environment claim, Selvato had the prima facie burden of proffering evidence to show the following elements: “1) the employee suffered intentional discrimination because of his/her sex, 2) the discrimination was severe or pervasive, 3) the discrimination detrimentally affected the plaintiff, 4) the discrimination would detrimentally affect a reasonable person in like circumstances, and 5) the existence of respondeat superior liability.” Mandel, 706 F.3d at 165. The Court of Appeals agreed with the lower courts conclusion that these comments, though offensive, did not rise to the level of physical threat necessary to establish a prima facie hostile work environment claim. The Court of Appeals affirmed the dismissal of the discrimination claim as well citing lack of evidence and pure speculation by Selvato. 

Selvato v. SEPTA, No. 15-3686, 2016 U.S. App. LEXIS 14524 (3d Cir. Aug. 8, 2016)

For more information, call our employment lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

Philadelphia Business Lawyers: Pharmaceutical Drug and “Product Hopping”

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The Third Circuit recently ruled that certain changes to a drug made by a pharmaceutical company did not constitute “product hopping” and therefore did not violate federal antitrust laws. Product hopping occurs when a pharmaceutical company makes insignificant and non-substantive changes to a drug with the intent to thwart other companies from creating generics of the drugs. This creates a type of monopoly in the market that the federal  antitrust law, the Sherman Act, is designed to prevent.

A previous case in New York’s Second Circuit courts was decided in opposition to this case, wherein the court determined on summary judgment that antitrust laws were violated. The Third Circuit said that the previous case in New York was different since discovery was conducted and it could look more closely at whether the thresholds under the Sherman Act were in fact met.

The Third Circuit case, Mylan v. Warner Chilcott, analyzes whether Warner Chilcott violated the Sherman act by possessing monopoly power in the market and whether it acquired this monopoly power “by means other than superior product, business acumen, or historic accident” which is commonly known as “anticompetitive conduct.”

Determining if a Drug is Generic

It is important to note that in order for a drug to be considered by the FDA as a generic, it must be bioequivalent to the brand name drug and it must match the dosage, strength, and form. In this case, Mylan alleged that Warner Chilcott changed the form from capsule to tablet and also the dosage of the drug on a frequent basis in order to avoid other companies from developing generics.

Here, the Third Circuit found it important that Warner Chilcott’s changes to the drug did not bar or restrict Mylan from occupying a place in the market. Additionally, the court broadened the definition of the marketplace from Mylan’s arguments and found that Warner Chilcott’s share of the market never exceeded 18 percent and therefore did not constitute a monopoly. Mylan defined the market in this instance to include only the drug Doryx, which is a tetracycline drug, and more specifically a delayed release doxycycline hyclate used to treat acne. The Court determined that the market encompassed all tetraclycline drugs used to treat acne, and not just Doryx. Additionally, the Court pointed out that Mylan earned sizeable profits from a generic Doryx drug in tablet form when Doryx was sold as a tablet.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green, P.C. Work to Uphold Antitrust Laws

If your company has an antitrust legal issue, contact the Philadelphia business lawyers at Sidkoff, Pincus & Green at 215-574-0600 or contact us online to discuss your options. Our firm has extensive experience representing clients in complex business law. We represent clients throughout the greater Philadelphia area, including New Jersey.

 

Philadelphia Business Lawyers: Rainbow Apparel Legal Fees Lawsuit

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Recently, the named partner of a small law firm, Michael Kimm, and co-plaintiff Rainbow Apparel, brought a lawsuit against KCC Trading, Inc. and several individual defendants, alleging that defendants failed to pay them rightfully earned legal fees. The trial court dismissed Kimm’s case, and the appellate court affirmed, on grounds that requiring clients to pay their attorney to sue themselves constitutes as unlawful fee shifting.

KCC and Rainbow Apparel had entered into a multi-million-dollar business venture together. KCC was to supply the financing for Rainbow’s business ventures. In October 2009, KCC retained Kimm’s law firm. They agreed upon a rate of $400 per hour for work performed by Kimm himself, and $250 an hour for work performed by Kimm’s associates. In addition to these fees set forth in the retainer agreement, KCC also agreed to pay the Kimm Law Firm $15,000 a month on a rolling basis, beginning on October 15, 2009. The contract setting forth the fee arrangement also included indemnification and termination clauses.

KCC fired Kimm in April 2010. Kimm then sent KCC the billing statements from October 2009 through March 2010, which totaled nearly $50,000. Then, several months later, Kimm sent KCC a second bill, charging the company over thirty thousand dollars for hours expended litigating against KCC to collect the unpaid legal fees.

An Unenforceable Clause

Kimm sued KCC on grounds that they had breached their contract. They also sued for quantum meruit (reasonable value of services), payment on the basis of account stated, and unjust enrichment. Kimm moved for summary judgment, but the trial court denied his motion. The trial court judge dismissed Kimm’s claim for the $30,000 incurred as a result of the fee litigation. The court reasoned that the indemnification clause was unenforceable because it violated public policy. The trial court also reduced the $50,000 sought by Kimm, finding that the bill was unreasonably high.

Kimm appealed, but the appellate court affirmed the trial court’s dismissal regarding the $30,000 fee. The court noted that requiring clients to pay their attorney to sue themselves constitutes unlawful fee shifting. The appellate court also upheld the reduction of the $50,000 fee as unreasonable.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green Have Experience Litigating Indemnification Clauses and Breach of Contract

If you are involved in a contractual dispute, the Philadelphia business lawyers at Sidkoff, Pincus & Green has the experience to handle your case swiftly and effectively. To schedule a consultation with one of our reputable attorneys, call us at 215-574-0600 or contact us online today.

Philadelphia Employment Lawyers: Non-Solicitation Verdict Upheld

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Recently, a Pennsylvania appellate court upheld a $6.9 million verdict for an insurance brokerage firm that sued several former employees who violated their non-solicitation contracts. The employees allegedly tried to lure clients to a competing agency.

Things began when two executives at Balmer began considering launching a new Philadelphia office for competing firm Frank Crystal & Co. (“FCC”). Just one month after these discussions began, the Philadelphia FCC branch opened with three Balmer employees at the helm. The Balmer employees purportedly worked on transitioning to their new positions while on agency phones, computers, and time. One employee allegedly compiled a list of Balmer clients and other trade secrets. Ultimately, the Philadelphia branch of FCC solicited at least twenty-four Balmer clients. One of these clients had been with Balmer for over 25 years and was one of the agency’s biggest.

Balmer sued both FCC and the former employees, seeking damages for breach of fiduciary duty, tortious interference, unfair competition, conspiracy, and other violations. A Chester County judge awarded Balmer $2.4 million in compensatory damages and $4.5 million in punitive damages.

An Undeniable Breach in Contract

The defendants appealed to the Superior Court, urging that the punitive damages be struck, as there was no evidence of outrageous conduct. The court did not agree, finding ample evidence to support the punitive damages. Specifically, the court noted that FCC knew about the Balmer executives’ non-solicitation contracts, yet courted them anyway. Furthermore, the employees had provided FCC with privileged, protected information about Balmer clients.

The court relied on an earlier case wherein a radio station manager solicited members of his sales staff to join him in his move to a competing station. They also persuaded an advertising client to follow them to their new employer. Even though the two cases are distinguishable in that one deals with a covenant not to compete, and the other deals with non-solicitation contracts, the conduct was similar in both.

In ruling against FCC, the court found that when a company hires the entire marketing and sales staff from one agency, the sole purpose is clearly to induce clients of that agency to keep their accounts with with the sales force that is switching agencies. FCC Philadelphia earned approximately $300,000 its first year, all from Balmer Agency clients. The court upheld the punitive damage award.

Philadelphia Employment Lawyers at Sidkoff, Pincus & Green Counsel on Non-Solicitation Contracts, Non-Compete Agreements

Whether you are trying to craft a solid employment contract, or whether you need an experienced, aggressive team of litigators to handle a claim of breach of contract, the highly regarded Philadelphia employment lawyers at Sidkoff, Pincus & Green are prepared. We take pride in developing successful relationships with our clients. Contact us online or call our offices at 215-574-0600 to speak with a Philadelphia business lawyer.

South Jersey Employment Lawyers: Refusing Flu Shot Results in Lawsuit

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The Equal Employment Opportunity Commission (EEOC) recently brought a lawsuit against a hospital in Erie, Pennsylvania for religious discrimination after it fired six employees based on their flu shot refusal due to religious beliefs.

In this case, the EEOC claims some employees were granted religious or medical exemptions from the flu shot, but that six employees were denied a religious exemption from the shot despite their requests. Nowadays, it is commonplace for healthcare facilities to mandate that all employees obtain a flu shot to minimize the spread of the flu in medical facilities.

Under Title VII of the Civil Rights Act of 1964, employees cannot be discriminated against based on a “sincerely held” religious belief, and the religion does not necessarily have to be a widely recognized or organized one. Under the law, the belief must only be “sincerely held” by the individual.

In this instance, the employees claimed that they belonged to a variety of Christian faiths, such as Russian Orthodox, Methodist, Independent Fundamentalist Baptist, and Christian Mysticism. The hospital’s main defense is that the employees did not provide adequate proof regarding their religious beliefs. The hospital’s policy requires certification by a clergy member regarding the religion prior to approving an exemption.

Religious Discrimination is Not Uncommon

The EEOC has brought other claims throughout the country when employees were wrongfully terminated over religious refusals to the flu vaccines in a healthcare setting. For example, the EEOC brought claims when employees have filed for exemptions after what it called “an arbitrary deadline” and also when an employee allegedly could not be understood when she wore a mask over her mouth in lieu of getting the flu shot.

In these types of religious discrimination cases, the employee must show a sincerely held belief and a religious reason as to why they refuse the flu shot. Additionally, the employees will need to demonstrate that they requested an accommodation or exemption from the flu shot prior to the discriminatory action or termination. The employee has to show that there is no undue hardship on the employer when it grants an accommodation, or in this case, an exemption from its requirement that all employees obtain seasonal flu shots each year.

South Jersey Employment Lawyers at Sidkoff, Pincus & Green, P.C. Represent Employees in Wrongful Termination Suits

If you or someone you know was discriminated against at work as a result of religious beliefs, or wrongfully terminated, call the South Jersey employment lawyers at Sidkoff, Pincus & Green, P.C. today at 215-574-0600 or contact us online.

Philadelphia Employment Lawyers: Non-Solicitation Award

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Superior Court of Pennsylvania Upholds Non-Solicitation Agreement, Awards $6.9 Million in Damages 

On October 7, 2016 the Superior Court of Pennsylvania handed down a ruling upholding the legality of non-solicitation agreements and awarded millions of dollars in damages. In B.G. Balmer & Co. Inc. v. Frank Crystal & Company Inc., et al, 2016 PA Super 202 (Pa. Super. 2016). Plaintiff Balmer sued to former employees as well as their new employer, Frank Crystal. The former employees began planning to work for Frank Crystal six months prior to leaving Balmer. Although they had signed non-solicitation agreements with Balmer, the defendant employees worked with a recruiter during this time and gave up valuable information about Balmer, such as trade secrets and client lists. During their first year at Frank Crystal, the defendant employees generated revenue solely on former Balmer clients, and managed to bring Balmer’s largest client over to Frank Crystal. As a result of the defendant employees’ actions, Balmer lost its client base and had to be sold.

Balmer sued the former employees and Frank Crystal, alleging violation of their non-solicitation agreements, breach of fiduciary duty, tortious interference with contractual relations, unfair competition and other claims. The trial court ruled in Balmer’s favor for a majority of the claims, assessing $2.4 million in compensatory damages and $4.5 million in punitive damages. Defendants appealed the award of punitive damages, but the Pennsylvania Superior Court affirmed the lower court’s ruling and found their conduct egregious enough to warrant a large award.

For more information, call the Philadelphia employment lawyers at Sidkoff, Pinus & Green, P.C. today at 215-574-0600 or contact us online.