Category: Uncategorized

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.

How to determine whether an Unemployment Compensation Claimant is an Independent Contractor in Pennsylvania

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In Pennsylvania, there is a presumption under Unemployment Compensation Law (“Law”) that an individual receiving wages is an employee and not an independent contractor engaged in self-employmentElectrolux Corporation v. Department of Labor and Industry, Bureau of Employer Tax Operations, 705 A.2d 1357, 1359–60 (Pa.Cmwlth.1998).  However, an employer can overcome this presumption by establishing that a claimant is self-employed. Id. at 1360.  If an employer can establish that a claimant is an independent contractor (and thus self-employed), the Law provides that such an individual “shall be ineligible for compensation for any week … [i]n which he is engaged in self-employment.” 43 P.S. § 802(h).

An employer establishes that a claimant is self-employed by proving that the claimant was: (1) free from control and direction in the performance of his service; and (2) customarily engaged in an independent trade or business as to that service. See, 43 P.S. § 753(l)(2)(B); see alsoBeacon Flag Car Company, Inc. (Doris Weyant) v. Unemployment Compensation Board of Review, 910 A.2d 103, 107 (Pa.Cmwlth.2006).

As to the first prong of the test , courts consider whether the employer exercised “control” as to the work to be done and the manner in which the work is to be performed.  A number of factors have been identified by the court in determining whether an individual is free of control; they include: “whether there is a fixed rate of remuneration; whether taxes are withheld from the [individual]‘s pay; whether the employer supplies the tools necessary to carry out the services; whether the employer provides on-the-job training; and whether the employer holds regular meetings that the [individual] was expected to attend.” CE Credits OnLine v. Unemployment Comp. Bd. of Review, 946 A.2d 1162, 1168 (Pa.Cmwlth.2008).  No one factor will control the outcome, but the courts will look to the entire relationship to determine whether the requisite control exists to establish an employer-employee relationship.” Tracy v. Unemployment Compensation Board of Review, 23 A.3d 612, 616 (Pa.Cmwlth.2011).

As to the second prong of the test—whether the claimant is customarily engaged in an independently established trade, occupation, profession, or business—courts consider “whether the individual was capable of performing the activities in question [for] anyone who wished to avail themselves of the services and whether the nature of the business compelled the individual to look to only a single employer for the continuation of such services.” Venango Newspapers v. Unemployment Comp. Bd. of Review, 158 Pa.Cmwlth. 379, 631 A.2d 1384, 1388 (1993). Where the employee is free to accept or reject an assignment, the individual generally is not considered to look to a single employer for the continuation of such services. Danielle Viktor, Ltd. v. Dep’t of Labor and Indus., Bureau of Employer Tax Operations, 586 Pa. 196, 229, 892 A.2d 781, 801 (2006).

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 institutionWelsh 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 partyId. 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.

Hostile Work Environment Claims under Title VII and the Pennsylvania Human Rights Act

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Title VII of the Civil Rights Act of 1964 “makes it unlawful for an employer ‘to discriminate against any individual with respect to his [or her] compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.’ ” Kunin v. Sears Roebuck and Co., 175 F.3d 289, 293 (3d Cir.1999), citing 42 U.S.C. § 2000e-2(a)(1). The scope of protection provided by Title VII includes protection against a hostile work environment.

There are five elements that a plaintiff must prove to establish a claim for hostile work environment under Title VII -1) the employee suffered intentional discrimination because of his or her protected class; (2) the discrimination was pervasive or regular; (3) the discrimination detrimentally affected the employee; (4) the discrimination would detrimentally affect a reasonable person of the same race in that position; and (5) the existence of respondeat superior liability. Clark County School Dist. v. Breeden, 532 U.S. 268, 270, 121 S.Ct. 1508, 149 L.Ed.2d 509 (2001); Andrews v. City of Philadelphia, 895 F.2d 1469, 1472 (3d Cir.1990). The same standards apply to the claims raised under the Pennsylvania Human Rights Act(“PHRA”)Jones v. School Dist. of Philadelphia, 198 F.3d 403, 410 (3d Cir.1999).

With respect to the second element, the Supreme Court has made clear that Title VII is not a “general civility code,” Faragher v. City of Boca Raton, 524 U.S. 775, 788, 118 S.Ct. 2275, 141 L.Ed.2d 662 (1998). The Court has also observed that “hostile work environment” harassment must be pervasive or severe enough “to alter the conditions of … employment and create an abusive working environment.” Meritor Sav. Bank. FSB v. Vinson, 477 U.S. 57, 67, 106 S.Ct. 2399, 91 L.Ed.2d 49 (1986), quoting Henson v. City of Dundee, 682 F.2d 897, 904 (11th Cir.1982). The test looks to the totality of the circumstances, including the frequency of the discriminatory conduct, its severity, whether it is physically threatening or humiliating or a mere offensive utterance, and whether it interferes with an employee’s work performance. Harris v. Forklift Systems, Inc., 510 U.S. 17, 21, 114 S.Ct. 367, 126 L.Ed.2d 295 (1993)

The standards governing employer liability for a hostile work environment differ depending on the source of the hostility. Imputing liability for co-worker harassment is grounded in the employer’s direct negligenceOcheltree v. Scollon Productions, Inc., 335 F.3d 325, 333-34 (4th Cir.2003). Where a co-worker is the source of the hostile environment, “liability exists where the defendant knew or should of known of the harassment and failed to take prompt remedial action.” Kunin, 175 F.3d at 293 (internal citations omitted).