Supreme Court of Maryland Denies Further Appeals in Warehouse Shooting Case

In Winter 2023, firm principals Ralph Arnsdorf and Heather Rice obtained a favorable ruling from Maryland’s Appellate Court in a case resulting from a mass shooting that occurred at a warehouse in Aberdeen, Maryland. Maryland’s Appellate Court found no liability for the employer (a temp agency) or the landowner when an employee shot and killed several people at the workplace and then turned the gun on herself. The court found that the shooting was unforeseeable, and neither the employer nor the landowner could have avoided the danger the employee posed to the workplace. To read the entire article, click here.

On June 20, 2023, the Supreme Court of Maryland denied the plaintiffs’ Petition for Grant of Cert to have the appeal heard in the highest appellate Court in Maryland and will not hear any further appeals regarding this case. The judgment obtained by Ralph and Heather for their client will stand. To read the order, click here.

Mounting Pressure on the Use of Owner-Operators

Originally published in the Spring/Summer 2023 edition of the MMTA publication “Behind the Wheel.”

https://www.fandpnet.com/wp-content/uploads/2023/06/Article-by-ABR-SMB-Mounting-Pressure-on-Use-of-Owner-Operators-As-Published-in-Behind-the-Wheel-Spr-Summ-20231230AMW-1.pdf

Motor carriers have faced more than their fair share of challenges in recent years, including driver shortages, increasing fuel prices, and a myriad of other issues spurred by the COVID-19 pandemic.  Now, one of the most significant threats to the trucking industry is the issue of employee misclassification involving owner-operators.  Should an owner-operator be found to have been misclassified as an independent contractor instead of an employee, the motor carrier can be subject to a wide range of legal claims.  Class action attorneys have targeted motor carriers on these types of issues given the potential for significant attorney fee awards should they prevail on misclassification claims.

Increasing scrutiny of the misclassification issue is occurring at the state and federal level and is involving both legislative and regulatory initiatives.  Two of the most noteworthy efforts, California Assembly Bill 5 (“AB5”), passed in 2019, and the U.S. Department of Labor’s (“DOL”) recent push to redefine the term “independent contractor.”  Motor carriers that utilize owner-operators are wise to stay abreast of these legal developments and prepare for potential changes by evaluating the ways in which they classify and utilize owner-operators.

Key State Legislative Developments:

California’s Assembly Bill 5

State legislatures are increasing their focus on owner-operator relationships.  Laws such as California’s Assembly Bill 5 (“AB5”), make it more difficult for companies to use owner-operators.  Under AB5, the relationship between truckers and their carriers, brokers, and even shippers will now be governed by the “ABC” test in California to determine whether the trucker is an employee or an independent contractor.  The California Supreme Court first recognized the test in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903.  The Dynamex ruling established a presumption that all workers are employees unless the employer can prove otherwise.  Now, in order to be considered an independent contractor under the law, the below three prongs must be satisfied:

  1. The worker is free from the control and direction of the hiring entity;
  2. The worker performs work that is outside the usual course of the hiring entity’s business; AND
  3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

AB5 and similar legislation can fundamentally change the way trucking companies do business across the country.  Carriers may have to reclassify their formerly independent drivers to employees, or they will have to drastically change the way the two parties do business in order to avoid claims of misclassification.  Independent drivers will have less flexibility in choosing their work, and companies will be required to provide benefits and certain wages to their newly-recognized employees.  Many experts believe the legislation will increase labor costs, thereby creating additional costs for consumers.

It is important to recognize that AB5 does not directly ban owner-operators, but the legislation does make it much more difficult for trucking companies to utilize them without incurring sizable legal risk. to use them.  Other states, such as Illinois, New Jersey, Washington, and New York, have considered similar legislation, and there is fear that many other jurisdictions will attempt to implement these types of changes.

The Biden Administration’s Efforts

Additionally, the Biden administration has identified employee misclassification as a key objective.  President Joe Biden has vowed to be “the most pro-union president you’ve ever seen.” Shortly after President Biden took office, the Department of Labor attempted to reverse a new definition of “independent contractor” that the Labor Department published in January 2021, the final days of the Trump Administration; however, courts held that the Biden administration did not allow for enough time for public comment.  The DOL is again working on rewriting the definition.

Most recently, a DOL proposed rule would make it more difficult for companies to classify workers as independent contractors under the Fair Labor Standards Act (“FLSA”), a change that is expected to shake up many industries that rely on gig workers or owner-operators, including the trucking industry.  The proposal would require that workers be considered employees when they are “economically dependent” on a company.  This will ensure that the employees are entitled to more benefits and legal protections than if the workers were identified as independent contractors, such as minimum wage and workers’ compensation benefits.

Worker dependency would be determined by the “economic realities test,” which is made up of six factors: the extent to which the work performed is an integral part of the hiring entity’s business; the worker’s opportunity for profit or for loss; the nature and extent of the worker’s investment in his or her business; whether the work performed requires special skills or education; the permanency of the relationship between both parties; and the degree of control exercised by the employer.  While several of the factors could potentially present problems to employers, the test appears to be less restrictive than the ABC test mentioned above.

Independent Contractors in Maryland

Under general Maryland law, courts determine whether a worker is an independent contractor or employee based upon several criteria, including:  (1) who has the right to control and direct the work; (2) who has the right to select and/or discharge the worker that will perform the work; (3) how wages are paid; (4) whether the work is part of the employer’s regular business; and (6) the intention of the parties when entering into the relationship.

Two specific areas of law, involving workers’ compensation and unemployment insurance, have their own statutes and corresponding regulations that more clearly delineate the factors that the respective agencies will rely upon when determining whether an owner-operator is an employee for purposes of their respective benefits.  Motor carriers are strongly encouraged to ensure that their equipment leases and/or transportation service agreements comply with those specific statutes in order to lessen their exposure to workers’ compensation and unemployment benefits.

Practical Considerations

Motor carriers must keep a keen eye on these legal developments while continuing to evaluate their use of owner-operators.  Below are some of the ways that some motor carriers are preparing for changes to the legal landscape:

  1. Updating Owner-Operator Agreements

While the Federal Motor Carrier Safety Act (“FMCSA”) imposes many requirements on motor carriers wishing to utilize owner-operators as part of their business models, the FMCSA still allows some flexibility in the use of owner-operators.  As a result, motor carriers have choices in how they can draft these types of agreements.  By carefully exercising their discretion in what optional provisions to include or exclude, motor carriers can help limit their exposure in misclassification claims.

  1. Initiating a Brokerage Arm

A second option that some motor carriers are gravitating towards is to open a brokerage entity to govern their relationships with their owner-operators. This brokerage-type relationship will likely pass the “B” prong of the above test because brokers are technically outside of the course of the hiring entity’s and independent driver’s business.

There are additional costs in establishing a broker arm, but this is may be a viable option for some.  Many carriers now see the broker model as an option to avoid hiring full-time employee drivers if legislative measures chip away at, or eliminate altogether, the traditional owner-operator model.

Two events must occur in order to make the brokerage model sufficient:

  1. The licensed motor carrier must establish a brokerage operation.
  2. Owner-operators must secure operating licenses as Licensed Motor Carriers (LMCs).

Many owner-operator drivers, especially in California, are already beginning to establish themselves as limited liability company (“LLC”).  The drivers can then receive loads from the trucking companies’ brokerage divisions. However, it can be a lot of work and money for an independent driver to file as a business entity such as a limited liability company and may not be a feasible option for every owner-operator.

  1. Two check system

Another potential solution to stricter legislation surrounding owner-operators is for carriers to pay their drivers using a two-check system.  Two-check systems have been around for years, although they’re not commonly used.  Under this system, the driver is not classified as an independent contractor, but, rather, is an actual employee of the motor carrier; however, the driver also has an agreement to rent his or her equipment to the motor carrier.  The first check is for the employee’s wages and the second is for the equipment rental.

There are potential areas of concern with this system if implemented improperly.  For example, some motor carriers believe that they can pay the driver minimum wage and put the rest of the money toward the truck’s rental.  The Internal Revenue Service may view this as shielding income, which can lead to legal ramifications.  Another issue is that a two-check system does not usually provide the flexibility that both motor carriers and owner-operators seek.

Certainly, there is no fail-safe method to eliminate legal risk altogether when utilizing any independent contractors, much less owner-operators which pose different legal challenges.  Having said that, motor carriers that pay attention to these legal developments and act quickly can dramatically reduce their legal exposure and help avoid being targeted by class-action lawyers and governmental auditors.

Written by principal Albert B. Randall, Jr. and associate Stephanie M. Broznowicz.

 

 

F&P Principal Obtains Favorable Verdict in Recent PG County Jury Trial

Last Tuesday, May 23, F&P principal Heather Rice secured a strong verdict after a two-day jury trial in the Circuit Court for Prince George’s County. The case arose from an August 2017 motor vehicle accident which resulted in serious property damage to the two vehicles involved.  Defendant accepted responsibility for the accident and the jury was tasked with determining whether Plaintiff was injured and if so, the extent of Plaintiff’s injuries. The Plaintiff’s claimed medical specials of approximately $16,000.00 were not contested.

In his closing argument, Plaintiff’s counsel argued that his client had suffered from a permanent injury and asked the jury to award Plaintiff $416,000.00 in damages. Ms. Rice utilized surveillance and the testimony of Plaintiff’s own treating provider to convince the jury that Plaintiff’s soft tissue injuries were resolved after two months of conservative treatment. After an hour of deliberation, the jury rejected Plaintiff’s $416,000.00 suggestion and instead returned a verdict awarding the Plaintiff $61,000.00.

F&P Assists with Workers’ Compensation Garnishment Legislation

F&P Principals John Handscomb and Bert Randall played integral roles in the development and passage of Maryland Senate Bill 71 and House Bill 800, sponsored by Senator Benjamin Brooks and Delegate Scott Phillips, respectively, regarding garnishment of child support arrearages in workers’ compensation cases.  Given statutory ambiguity, there has been a longstanding debate regarding the proper amount that should be withheld from indemnity payments for workers’ compensation claimants that owe child support.  These bills, signed into law by Governor Wes Moore on May 3, 2023, will go into effect on October 1, 2023, and will resolve this issue once and for all by permitting withholding amounts of up to 25% of the indemnity benefits due.  Major thanks go to Kimberly Shiloh, Chief of Staff for Senator Brooks, who was instrumental in having these bills introduced and passing unanimously in both chambers.

 

F&P Principals Ralph Arnsdorf and Heather Rice Obtain Favorable Ruling from Maryland’s Appellate Court

Firm principals Ralph Arnsdorf and Heather Rice recently obtained a favorable and reported ruling from Maryland’s Appellate Court (formerly the Maryland Court of Special Appeals) in a case resulting from a recent mass shooting event that occurred at a warehouse in Aberdeen, Maryland.  This is an important ruling and the first reported opinion regarding a mass shooting in the state of Maryland. 

 In affirming the lower court’s ruling, Maryland’s Appellate Court found no liability for an employer (in this case, a temp agency) or a landowner where an unstable employee came to the workplace with a gun, shot and killed several people and wounded others before turning the gun on herself.  The Court found that the temp agency and warehouse owner were not liable and the shooting was unforeseeable. Neither the employer nor the landowner could have known the employee was dangerous to the workplace.

 The employer conducted proper, thorough background checks, including criminal background searches, which is the expectation for all employers and their hiring practices. Greater scrutiny may be required when employees are expected to interact with the public on a regular basis. When businesses and landowners are aware or reasonably should be aware of criminal activity in the area, they need to exercise reasonable efforts to provide adequate security in the workplace, including, but not limited to, surveillance and security personnel.

 Please contact Ralph Arnsdorf or Heather Rice with any questions on this opinion, and/or assistance evaluating future risks.

Click here to read the full opinion.

F&P Spotlight on Resource Specialist Stacy Rippetoe

What is your favorite aspect about working at F&P?
Overall, I love the people I work with. Everyone works extremely well together and is always more than willing to help each other out.

What’s your favorite restaurant?
Texas Roadhouse. I love their green beans.

What’s your proudest accomplishment?
I’d have to say my current role. I started at F&P 10 years ago as an administrative assistant. After four years I was offered the Resource Coordinator position which led me to the Resource Specialist position I am currently in. When I was little, I always wanted to grow up and be a teacher. Then in my later teens, I became obsessed with computers and technology.  So technically you can say I have landed my dream job. I teach people how to use computer programs.

What do you like to do outside the office?
I love spending time with my children. They are my everything, my best friends!

Have you read any good books or seen any good movies this year that you would recommend?
Purple Hearts. I highly recommend it. Have your tissues ready!

What was the best news you ever received?
It’s a boy!!! I love my girls of course, but always wanted that little boy and I got blessed with my main man in 2016.

What is the weirdest thing you have ever eaten?
Alligator.

If you could have lunch with anyone in the world who would it be?
My grandmother just one last time. I lost her very young, and I have so much to tell her and show her. I think she’d be pretty proud of me and my accomplishments considering the hurdles life has thrown at me.

Do you have any bizarre talents?
Ventriloquist

F&P Principal Renee Bowen Named to ATRI Research Advisory Committee

F&P would like to congratulate principal Renee Bowen, who has been named to the ATRI (American Transportation Research Institute) Research Advisory Committee effective January 1, 2023. The committee determines the predominant research priorities for the trucking industry.

“ATRI’s RAC members serve a critical role in identifying and prioritizing the trucking industry’s top research needs. We congratulate all those appointed by the ATRI Board to serve in this important role and look forward to working with them,” said ATRI President Rebecca Brewster in the ATRI press release.

The Research Advisory Committee represents members of the trucking industry including suppliers, drivers, shippers, carriers, law enforcement, education, and government.

Since 1954, ATRI has conducted testing and research studies in transportation. Focused on safety, ATRI studies Congestion and Mobility; Economic Analysis; Safety and Security; Technology and Operations; Environment; and Transportation Infrastructure.

Click here to read ATRI’s full press release.

F&P Announces 2023 Attorney Promotions

Franklin & Prokopik proudly announces that we have promoted three counsel to principal and six associates to counsel.  Our attorneys exemplify the dedication and hard work that allows F&P to stand out in the legal field, and each has demonstrated acumen in the courtroom along with their peers at F&P.

Join F&P in congratulating these attorneys and thanking them for their hard work!

Principal

Ellen Stewart concentrates her litigation practice primarily in liability and insurance defense throughout Maryland and the District of Columbia. She handles a variety of cases, including representing national and regional stores and restaurants in cases involving slip and falls and general premises liability; representing taxicabs, paratransit vehicles, and motor carriers in liability claims; and representing builders and contractors in construction defects and worksite incidents and injuries. Ellen has been selected to Maryland Super Lawyers, Rising Star, 2014-2023.

Heather Rice has been on the firm’s liability team since 2016, where she concentrates her litigation practice on the defense of healthcare providers and medical institutions in medical malpractice claims. She is also experienced in defending against premises liability claims, products liability claims, dog bite claims, construction defect claims, commercial trucking accident claims, and claims against paratransit vehicles.  She has litigated numerous complex civil suits and has tried several jury trials throughout the state of Maryland. Heather has been recognized byMaryland Super Lawyers, Rising Star, 2014–2023, and  Best Lawyers: Ones to Watch, 2022-2023.

Renee Bowen is a zealous advocate for her clients, from defending clients in litigation to negotiating contracts on behalf of her clients to serving as general counsel to provide advice on daily business operations. Renee’s practice areas include commercial transportation, premises liability, construction, products liability, intentional torts, insurance coverage, employment, regulatory compliance, commercial litigation, professional liability, landlord/tenant, and business and corporate. As part of her transportation practice, Renee serves as national counsel for numerous motor carriers and insurers on issues related to predatory towing. She has been selected by Maryland Super Lawyers, Rising Star, 2020-2023, and Best Lawyers: Ones to Watch, 2023

Counsel

April Kerns
Brian Cunningham
James Hetzel
Jessica Corace
Miranda Russell
Patrick Wachter

 

 

Ralph Arnsdorf and Heather Rice Argue One of the Final Cases Before the Maryland Court of Special Appeals

On Monday, December 12, 2022, Principal Ralph Arnsdorf and Counsel, Heather Rice, participated in the last day of oral argument at the Maryland Court of Special Appeals.  In November, voters in Maryland voted to adopt a constitutional amendment changing the name of the Court from the Maryland Court of Special Appeals to the Appellate Court of Maryland.  The Maryland Court of Appeals will now be known as the Maryland Supreme Court. Click here to read the original article regarding the court’s name change.

F&P Attorneys Selected to Super Lawyers and Rising Stars for 2023

Super Lawyers, a nationally recognized rating service of outstanding lawyers in more than 70 -practice areas,  has announced its Super Lawyers and Rising Star designees for 2023, and F&P is proud to announce that 17 of our attorneys have received this honor. Candidates are selected through peer review, professional competence, and attorney-led research staff. Each attorney is assessed on 12 indications of peer recognition and professional achievement. Rising Star qualifications include practicing for ten years or less and under 40. The Super Lawyers are comprised of the top 5% of attorneys in each state and Rising Stars 2.5%.

 

Super Lawyers

Angela Garcia Kozlowski

John Handscomb

Laura McKenzie

Maija Jackson

Michael Prokopik

Tamara Goorevitz

William “Skip” Crawford

 

Rising Stars

April Kerns

Bryce Ziskind

Ellen Stewart

Heather Rice

Kara Parker

Matthew LaFontaine

Michael Bennett

Miranda Russell

Patrick Wachter

Renee Bowen