Category: Business Law

Whistleblower Protection for Employees under the Toxic Substances Control Act

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1. Employees and Employers Covered

The Toxic Substances Control Act (TSCA) regulates the industrial chemicals produced or imported into the U.S. The Act imposes guidelines for the EPA’s testing, inspection, and tracking of industrial chemicals, and allows the EPA to ban the manufacture of any chemicals considered to pose an unreasonably high risk. The Act protects all employees, public and private, from retaliation for reporting potential violations of TSCA or in any way assisting in proceedings or investigations of such violations. All employers are subject to the Act, including small businesses, associations, municipalities, any interstate body, and any department or agency of the Federal Government. This section does not apply to any employee, who acting without discretion from his employer deliberately violates any requirement of this chapter.

2. Protected Activities

An employer may not discharge or otherwise discriminate against an employee for reporting potential violations of TSCA to his/her employer or to the government, or for assisting in a proceeding arising under the Act.

3. Proving Your Case

Any employee who believes he has been discharged or otherwise discriminated against by any person in violation with this provision may file, within 30 days after such violation occurs, a complaint with the Department of Labor, through the Occupational Safety and Health Administration (OSHA).

In order to make a successful claim under TSCA, the employee must have engaged in some protected activity, the employer must know of the employee’s protected activity, and the employee must have suffered some unfavorable action motivated at least in part by his/her protected activity.  In order to avoid liability, the employer must demonstrate “clear and convincing evidence” that it would have taken the same unfavorable personnel action against the employee in the absence of the employee’s protected activity.

4. Available Remedies

If an employee’s whistleblower claim is successful, he or she may be entitled to reinstatement with previous seniority and benefits, back pay with interest, and other relief including attorney’s fees and compensatory damages.

5. Time to File: 30 days from alleged violation.

If you believe you have a whistleblower claim under the TSCA, please contact an attorney at Sidkoff, Pincus & Green, located in Philadelphia, Pennsylvania. 

When Assent to a Contract is Obtained by Duress in Pennsylvania

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The formation of a valid contract requires the mutual assent of the contracting parties. Essner v. Shoemaker, 393 Pa. 422, 425, 143 A.2d 364, 366 (1958) (citation omitted). Mutual assent to a contract does not exist, however, when one of the contracting parties elicits the assent of the other contracting party by means of duress. Carrier v. William Penn Broadcasting Co., 426 Pa. 427, 431, 233 A.2d at 521 (1967). A contract obtained under duress is voidable but continues in operative effect until the injured party acts in opposition to the contract. Loizos v. Mutual of Omaha Ins. Co., 229 Pa. Super. 552, 326 A.2d 515 (1974) (citing Restatement of Contracts, s 495:”Where the duress of one party induces another to enter into a transaction, The nature of which he knows or has reason to know, and which he was under no duty to enter into, the transaction is voidable against the former and all who stand in no better position…”).

Duress has been defined as: [T]hat degree of restraint or danger, either actually inflicted or threatened and impending, which is sufficient in severity or apprehension to overcome the mind of a person of ordinary firmness…. The quality of firmness is assumed to exist in every person competent to contract, unless it appears that by reason of old age or other sufficient cause he is weak or infirm…. Where persons deal with each other on equal terms and at arm’s length, there is a presumption that the person alleging duress possesses ordinary firmness…. Moreover, in the absence of threats of actual bodily harm there can be no duress where the contracting party is free to consult with counsel….Carrier, 426 Pa. at 431 (citing Smith v. Lenchner, 204 Pa.Super. 500, 504, 205 A.2d 626, 628 (1964)). A party who has reasonable opportunity to consult with counsel before entering a contract cannot later invalidate it by claiming duress. Adams v. Adams, 2004 PA Super 130, 848 A.2d 991 (2004).

A Note on Mental Capacity and Assent

A signed document will give rise to the presumption that it accurately expresses the state of mind of the signing party. Shafer v. State Employes’ Retirement Bd., 548 Pa. 320, 696 A.2d 1186, 119 Ed. Law Rep. 1097 (1997); Estate of McGovern v. Com. State Employees’ Retirement Board, 512 Pa. 377, 517 A.2d 523 (1986), citing O’Farrell v. Steel City Piping Co., 266 Pa. Super. 219, 403 A.2d 1319 (1978); Forman v. Public School Employes’ Retirement Bd., 778 A.2d 778, 156 Ed. Law Rep. 650 (Pa. Commw. Ct. 2001). However, this presumption is rebutted where the challenger presents clear and convincing evidence of mental incompetence, and mental incompetence is established through evidence that the person was unable to understand the nature and consequences of the transaction at the very time he or she executed the instrument in question. Weir by Gasper v. Estate of Ciao, 521 Pa. 491, 556 A.2d 819 (1989); Estate of McGovern v. Com. State Employees’ Retirement Board, 512 Pa. 377, 517 A.2d 523 (1986); Sobel v. Sobel, 435 Pa. 80, 254 A.2d 649 (1969).

Enforcing a Broken Promise (The Doctrine of Promissory Estoppel)

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The doctrine of promissory estoppel allows a party to enforce a promise even though that promise is not supported by consideration. Crouse v. Cyclops Industries, 560 Pa. 394, 402, 745 A.2d 606, 610 (2000). To establish promissory estoppel, the plaintiff must prove that: (1) the promisor made a promise that would reasonably be expected to induce action or forbearance on the part of the promisee; (2) the promisee actually took action or refrained from taking action in reliance on the promise; and (3) injustice can be avoided by enforcing the promise. Id. at 403, 745 A.2d at 610 (emphasis added).

Unlike equitable estoppel, which is wholly a defensive doctrine, promissory estoppel can sustain an action brought to remedy the injustice that results from a promise not kept. Detrimental reliance is another name for promissory estoppel. Rinehimer v. Luzerne County Community College, 372 Pa. Superior Ct. 480, 539 A.2d 1298 (1988). Promissory estoppel is an outgrowth of equitable estoppel but, unlike equitable estoppel, promissory estoppel may serve as an independent cause of action. Paul v. Lankenau Hospital, 375 Pa. Superior Ct. 1, 543 A.2d 1148 (1988). Pennsylvania has long recognized promissory estoppel as a vehicle by which a promise may be enforced in order to remedy an injustice. See Fried v. Fisher, 328 Pa. 497, 196 A. 39 (1938).

Recovery on the theory of promissory estoppel, is ordinarily limited to recovery of amounts lost and expended in reliance on the promise, in order to place the plaintiff in the position he would have occupied had the promise never been made. Banas v. Matthews Int’l Corp., 348 Pa.Super. 464, 486 n. 12, 502 A.2d 637, 648 n. 12 (1985); see also, Restatement (Second) of Contracts S § 90(1) (remedy under promissory estoppel may be “limited as justice requires”).

Unjust Enrichment Claims in Pennsylvania

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Under Pennsylvania law, “when a person receives a benefit from another, and it would be unconscionable for the recipient to retain that benefit, the doctrine of unjust enrichment requires the recipient to make restitution…. This equitable doctrine imposes on the recipient an obligation in the nature of quasi contract.” Myers-Macomber Engineers v. M.L.W. Construction Corp., 271 Pa.Super. 484, 414 A.2d 357 (1979). As a previous blog post demonstrated, the doctrine of promissory estoppel can sometimes be used to enforce a promise that induced justifiable reliance even where there is not consideration.  Similarly, the concept of unjust enrichment serves the purpose of allowing for the enforcement of obligations that may not qualify as contractual.  However, restitution for unjust enrichment is not predicated on a promise but on the restoration of an unfair gain.  The cause of action of unjust enrichment arises where one party has obtained a benefit at the expense of another under circumstances that make it unfair for the recipient to retain the benefit without paying for it.

In Pennsylvania, where unjust enrichment is found, the law implies a contract, which requires the defendant to pay to the plaintiff the value of the benefit conferred. Schenck v. K.E. David, Ltd., 446 Pa.Super. 94, 666 A.2d 327 (1995). The elements necessary to prove unjust enrichment are:(1) benefits conferred on defendant by plaintiff; (2) appreciation of such benefits by defendant; and (3) acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value. Id.

The application of the doctrine of unjust enrichment depends on the particular factual circumstances of the case at issue. In determining if the doctrine applies, the court’s focus is not on the intention of the parties, but rather on whether the defendant has been unjustly enriched. Id., 666 A.2d at 328. Accord Torchia v. Torchia, 346 Pa.Super. 229, 499 A.2d 581, 582 (1985) (“[t]o sustain a claim of unjust enrichment, a claimant must show that the party against whom recovery is sought either ‘wrongfully secured or passively received a benefit that it would be unconscionable for her to retain.’ ”)

A Right to Cure Provision is not Bulletproof in Pennsylvania

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It is well established by the courts in Pennsylvania that a material breach of a contract relieves the non-breaching party from any continuing duty of performance thereunder. Berkowitz v. Mayflower Securities, 455 Pa. 531, 534–535, 317 A.2d 584, 586 (1974) (citing 6 Williston, A Treatise on The Law of Contracts, § 8[64] (3d. ed.1962)).  It is equally well established, that “[a] party also may not insist upon performance of the contract when he himself is guilty of a material breach of the contract.” Ott v. Buehler Lumber, 373 Pa.Super. 515, 541 A.2d 1143, 1145 (1988) (citing 17 Am.Jur.2d Contracts § 425; Murray, Contracts § 215 (2d. Rev Ed.1974)).  However, until the state Supreme Court handed down its decision in LJL Transp., Inc. v. Pilot Air Freight Corp., 599 Pa. 546, 560, 962 A.2d 639, 648 (2009), there was not a clear rule as to how the courts should treat the following issue:  whether a party’s conduct in breaching a contract may justify its immediate termination, even if the contract includes an express provision granting the breaching party the opportunity to cure before the contract is terminated?

In LJL Transp., Inc, the appellants-the franchisee and its owners-argued that the terms of the agreement in issue gave the franchisee an unqualified right to cure a breach, pursuant to paragraph 23(c) of the contract in issue which provided a right to cure within 90 days of notice.  LJL Transp., 962 A.2d at 643. The franchisor, Pilot Air Freight Corp. (“Pilot”), argued that the cure provisions were not the exclusive means by which the agreement could be terminated and that the parties intended cumulative remedies. Pilot pointed to the provisions in paragraph 30 of the agreement which provided that “its electionto exercise any remedy available by law or contract shall not be deemed a waiver of nor preclude exercise of any other remedy. Id. at 647.  Therefore, the franchisor argued that when the two paragraphs of the franchise agreement were considered together, the cure provisions of paragraph 23(c) were merely a cumulative remedy and not an exclusive one.

The Court in LJL Transport looked to other jurisdictions, which appeared to be in accord that, unless the termination provisions of a franchise agreement are, by their terms, exclusive, a termination clause affording the right to notice and cure is, as Pilot suggested, merely a cumulative remedy which does not bar the non-breaching party from exercising other remedies available to it in the event of a breach by the other party going directly to the heart of the contract, and destroying the fundamental trust upon which the contractual relationship is built.  Furthermore, the Court in LJL Transport also recognized that courts in other jurisdictions have likewise concluded that, in the event of an incurable breach, the non-breaching party may immediately terminate the agreement without following its notice and cure provisions. Id. at 650-51 (citing Southland v. Mir, 748 F.Supp. 969 (E.D.N.Y.1990); In re Best Film and Video, 46 B.R. 861 (Bkrtcy.E.D.N.Y.1985); L.K. Comstock v. United Engineers, 880 F.2d 219 (9th. Cir.1989).

Consequently, with the law in other jurisdictions as a guide, the Pennsylvania Supreme Court held that when there is a breach of contract “going directly to the essence of the contract, which is so exceedingly grave as to irreparably damage the trust between the contracting parties, the non-breaching party may terminate the contract without notice, absent explicit contractual provisions to the contrary”. Id. at 652.

Philadelphia Business Lawyers: The Implied Covenant of Good Faith and Fair Dealing in Pennsylvania

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Every contract imposes upon each party a duty of good faith and fair dealing in its performance and enforcement. Restatement (Second) of Contracts § 205 (1985).  In Pennsylvania, the law is clear that “[i]n the absence of an express provision, the law will imply an agreement by the parties to a contract to do and perform those things that according to reason and justice they should do in order to carry out the purpose for which the contract was made and to refrain from doing anything that would destroy or injure the other party’s right to receive the fruits of the contract. Accordingly, a promise to do an act necessary to carry out the contract must be implied.” Daniel B. Van Campen Corp. v. Building & Construction Trades Council, 195 A.2d 134, 136-137 (Pa. Super. Ct. 1963).

The covenant of good faith and fair dealing, although implied in every contract, is used to interpret the contract and generally does not give rise to a separate cause of action, either in tort or contract. Therefore, an implied duty of good faith will be read into the performance of every agreement so that the court may evaluate whether the terms of an agreement have been breached.  However, if the court determines there was a breach, the consequence will be breach of contract rather than an independent breach of a duty of good faith and fair dealing.

Furthermore, Pennsylvania law does not recognize a claim for breach of covenant of good faith and fair dealing as an independent cause of action separate from the breach of contract claim since the actions forming the basis of the breach of contract claim are essentially the same as the actions forming the basis of the bad faith claim.  McHale v. NuEnergy Group, No. 01-4111, 2002 U.S. Dist. LEXIS 3307, at *23 (E.D.Pa. Feb. 27, 2002). For that reason, a claim based on breach of the covenant of good faith and fair dealing, when embedded within a complaint that also alleges breach of contract, will be regarded by the courts as nothing more than a carbon copy of the breach of contract claim.

Philadelphia Business Lawyers: The Doctrine of Equitable Estoppel in Pennsylvania

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Equitable estoppel is thought of as a shield, not a sword.  It does not itself create a cause of action, but is used to prevent an unjust result and to preserve rights that are already acquired.  As defined by the courts in Pennsylvania, the doctrine of equitable estoppel applies when one person, by his or her acts, representations, or admissions or by his or her silence when he or she ought to speak out, intentionally or through culpable negligence induces another person to believe certain facts to exist and such other person rightfully relies and acts on such belief, so that he or she will be prejudiced if the former is permitted to deny the existence of such facts. Price v. Chevrolet Motor Div. of General Motors Corp., 2000 PA Super 410, 765 A.2d 800, 43 U.C.C. Rep. Serv. 2d 593 (2000); Zitelli v. Dermatology Educ. and Research Foundation, 534 Pa. 360, 633 A.2d 134, 87 Ed. Law Rep. 157 (1993).

The two essential elements of equitable estoppel are inducement and justifiable reliance on that inducement. The inducement may be words or conduct and the acts that are induced may be by commission or forbearance provided that a change in condition results causing disadvantage to the one induced. Novelty Knitting Mills, Inc. v. Siskind, 500 Pa. 432, 436, 457 A.2d 502, 503-04 (1983) (citing Funds for Business Growth, Inc. v. Woodland Marble and Tile Company, 443 Pa. 281, 278 A.2d 922 (1971); Ham v. Gouge, 214 Pa.Super. 423, 257 A.2d 650 (1969)).  There will be no equitable estoppel where the complainant’s act appears to be the result of his or her own will or judgment rather than the product of what the defendant did or represented.  Some courts view this issue – whether the complainant knew or should have known about the facts (duty of inquiry) – as the third element of equitable estoppel. Chester Extended Care Center v. Com., Dept. of Public Welfare, 526 Pa. 350, 586 A.2d 379 (1991); Appeal of Heim, 151 Pa. Commw. 438, 617 A.2d 74 (1992).

Generally stated, equitable estoppel applies to prevent a party from assuming a position or asserting a right to another’s disadvantage inconsistent with a position previously taken. The person inducing the belief in the existence of a certain state of facts is estopped to deny that the state of facts does in truth exist, over a different or contrary state of facts as existing at the same time, or deny or repudiate his acts, conduct or statements.  Novelty Knitting Mills, Inc. v. Siskind, 500 Pa. 432, 436, 457 A.2d 502, 503-04 (1983). (internal citations omitted).  The burden of proof rests on the party asserting the estoppel to establish such estoppel by clear, precise and unequivocal evidence. Id.

Corporate Negligence Claims Against Hospitals in Pennsylvania

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In Thompson v. Nason Hospital, 527 Pa. 330, 591 A.2d 703 (1991), the Pennsylvania Supreme Court first held that a hospital can be held directly liable for corporate negligence. The Court reasoned that the concept of corporate negligence should apply to a hospital so that a hospital is liable if it fails to uphold the proper standard of care owed the patient, “which is to ensure the patient’s safety and well-being while at the hospital.” Thompson, 527 Pa. at 339.

Corporate negligence is based on the negligent acts of the institution. Welsh v. Bulger, 548 Pa. 504, 513 (1997) (internal citations omitted). A cause of action for corporate negligence arises from the policies, actions or inaction of the institution itself rather than the specific acts of individual hospital employees. Id.  Thus, under this theory, a corporation is held directly liable, as opposed to vicariously liable, for its own negligent acts. Id.

The court in Thompson held that a hospital has the following corporate duties: (1) a duty to use reasonable care in the maintenance of safe and adequate facilities and equipment; (2) a duty to select and retain only competent physicians; (3) a duty to oversee all persons who practice medicine within its walls as to patient care; and (4) a duty to formulate, adopt and enforce adequate rules and policies to ensure quality care for the patients. Thompson, 527 Pa. at 339-40.

“Because the duty to uphold the proper standard of care runs directly from the hospital to the patient, an injured party need not rely on the negligence of a third-party, such as a doctor or nurse, to establish a cause of action in corporate negligence.” Moser v. Heistand, 545 Pa. 554, 558, 681 A.2d 1322, 1325 (1996). To establish a claim for corporate negligence against a hospital, a plaintiff must show that the hospital had actual or constructive knowledge of the defect or procedures that created the harm. Welsh, 548 Pa. at 514 (internal citations omitted). The plaintiff also must establish that the hospital’s negligence was a substantial factor in causing the harm to the injured party. Id. In terms of evidence, a plaintiff must produce expert testimony to establish that the hospital deviated from an accepted standard of care and that the deviation was a substantial factor in causing the harm to the plaintiff, unless a hospital’s negligence is obvious. Id.

Philadelphia Business Lawyers: The Basics Elements of a Breach of Contract Action

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In Pennsylvania, a breach of contract action involves (1) the existence of a contract, (2) a breach of a duty imposed by the contract, and (3) damages.  J.F. Walker Co., Inc. v. Excalibur Oil Group, Inc.,792 A.2d 1269 (Pa.Super.2002). Additionally, it is axiomatic that a contract may be manifest orally, in writing, or as an inference from the acts and conduct of the parties. John Edward Murray, Jr., Cases and Materials on Contracts 184 (3rd ed.1983) (citation omitted).

Nevertheless, the Statute of Frauds, as applied in Pennsylvania, renders oral contracts for the sale of real estate as unenforceable, although not invalid.  Therefore, such oral contracts will not be specifically enforced, but they may possibly form the basis for an action to recover damages. Hostetter v. Hoover, 378 Pa.Super. 1, 547 A.2d 1247, 1250 (1988), Alloc. denied 523 Pa. 642, 565 A.2d 1167 (1989).  The purpose of the statute is to prevent perjury and fraudulent claims. Id.

In a breach of contract action, damages are awarded to compensate the injured party for loss suffered due to the breach. The purpose of damages is to put the plaintiff in the position he or she would have been in but for the breach. Maxwell v. Schaefer, 381 Pa. 13, 21, 112 A.2d 69, 73 (1955); Harman v. Chambers, 358 Pa. 516, 521, 57 A.2d 842, 845 (1948); Mancini v. Morrow, 312 Pa.Super. 192, 204, 458 A.2d 580, 586 (1983). The measure of recovery and the method of evaluation that are adopted should in every case be so adjusted as to attain as nearly as possible the purpose of our system of remedial justice. This purpose is to put the injured party in as good a position as the promised performance would have put him, having regard both to the reasonable foreseeability of the harm and to the extent that it could reasonably have been avoided by the injured party himself.  5 Corbin on Contracts § 1005 at 63 (1951).