eNotes: Liability – September 2023 – Pennsylvania

SIGNIFICANT CASE SUMMARIES

Pennsylvania Case Summaries

The Bert Co. v. Turk
Pennsylvania Supreme Court
No. 13 WAP 2022

Decided: July 19, 2023

For multi-defendant cases, Pennsylvania Supreme Court opts to use the per-defendant approach for calculating the ratio of punitive-to-compensatory damages, emphasizing the need for tailored punitive damages for each defendant and consideration of individual case circumstances.

Background

The Bert Company, trading as Northwest Insurance Services (“Northwest”), was an insurance brokerage in northwestern Pennsylvania and western New York. From 2005 to 2017, Matthew Turk was an insurance broker and vice president at Northwest. When First National Insurance Agency, LLC, and its parent bank (“First National”), sought to expand and absorb Northwest’s operations, it tried to lure key Northwest employees, including Turk, to join them and bring their clients. Throughout late 2016, Turk engaged in a plan with First National to weaken Northwest, by hiring away its top performers, acquiring clients, and pressuring the company to sell its remaining client base. However, Northwest discovered the plan, resulting in Turk’s termination and legal action with multiple counts including theft of trade secrets, unfair competition, tortious interference with contract, and civil conspiracy against Turk and First National. All the Defendants were found liable at trial, with over $2.8 million in punitive damages.
The debate on appeal centered on how the punitive-to-compensatory damages ratio should be calculated in cases involving multiple defendants, a scenario never addressed by the U. S. or Pennsylvania’s Supreme Court. The two methods in question are per-defendant and per-judgment. Per-defendant divides each defendant’s punitive damages by their respective compensatory damages, while per-judgment divides total punitive damages by total compensatory damages. Defendants argued for per-judgment, especially when the joint tortfeasors in the case were part of the same corporate family, to prevent counting compensatory damages multiple times. Northwest supported per-defendant, stating it more accurately links punitive damages to harm it suffered. Both the Trial and Superior Courts sided with Northwest, finding a per-defendant award of punitive damages in line with precedent from various other state and federal courts.

Holding

The Pennsylvania Supreme Court affirmed, and endorsed the per-defendant approach used by both the Trial and Superior Court. The Court rejected the per-judgment method in this case, and stressed that punitive damages must be tailored to each defendant. The Court stated that the term “substantial” for compensatory damages is not always clear-cut and relies on various factors. The Court concluded by explaining that there is no fixed rule for a presumptively unconstitutional ratio, emphasizing the need to examine individual case circumstances.

Questions about this case can be directed to Rick Murphy at (412) 926-1443 or rmurphy@tthlaw.com, or to Matt Mangapora at (412) 926-1437 or mmangapora@tthlaw.com.

Petroci v. Chanes
Pennsylvania Superior Court
Nos. 348 EDA 2022, 349 EDA 2022

Decided: August 8, 2023

Motion to dissolve settlement agreement denied where a binding resolution had been reached.

Background

Petroci was terminated as President and CEO of Dumond, Chemicals Inc., a New York corporation with a headquarters in Chester County, Pennsylvania. Petroci filed suit against the Dumond Parties, including its owner Chanes. Then the Dumond Parties sued Petroci. All parties alleged, inter alia, breach of contract and of fiduciary duties. The two cases were consolidated and the matter proceeded to trial. After the third day of trial, the parties engaged in settlement discussions and reached a verbal agreement. The Trial Judge requested that the terms of the agreement be put on the record. The parties agreed that Petroci would receive a series of six payments, totaling $3.6 million, over the course of five years and payments would be personally guaranteed by Chanes. In order to cover this balance, Dumond would take a life insurance policy out on Chanes, the costs of the policy to be bore equally between the parties.

The parties also agreed Petroci was to retain possession of several expensive personal items Dumond held in storage. The parties agreed to work together in good faith to consult with tax experts and determine the best lawful tax treatment for the settlement payments. The agreement was also to include a reference for Petroci to a prospective employer, written by Chanes. Further, the terms of the written agreement were to contain provisions in the event of a breach by ether party. After these agreements, the Trial Judge dismissed the jury. While attempting to create a written provision, several disputes arose, including the tax treatment of the payments, a non-compete provision, early payment discounts, and additional assurances. With no agreement on these items, the Dumond Parties moved to dissolve the settlement. The Trial Court denied the Motion and this appeal followed.

Holding

The Superior Court affirmed the holding of the Trial Court. The Superior Court held that a binding and enforceable settlement agreement was reached between the parties, and that the parties manifested their assent to the terms of the contract in open court. There was an offer (the settlement figure) by Dumond, acceptance by Petroci, and consideration (terminating the lawsuits in exchange for payment), and so the contract was binding. The Superior Court further held that discovery or an evidentiary hearing on the settlement terms was not necessary, as they had been negotiated and identified on the record before the Trial Court. The Trial Court holding was affirmed and the Motion denied.

Questions about this case can be directed to Logan Nagle at (717) 255-7234 or lnagle@tthlaw.com.

Crump v. Sokolow
Pennsylvania Superior Court
No. 1750 EDA 2022

Decided: July 24, 2023

Medical expert was precluded from testifying at trial because his opinion was not made within requisite degree of medical certainty.

Background

Defendants, Craig Sokolow and Fran Goldsleger, filed a Motion in limine to preclude Plaintiff’s medical expert (Dr. Lance Yarus) from testifying at trial. Defendants argued that Dr. Yarus’ opinion that Plaintiff had a “suspected” internal derangement of the right knee was insufficient because a “suspected” injury was not an injury that a medical expert could find to within a reasonable degree of medical certainty. The Trial Court granted the Motion and precluded Dr. Yarus from testifying that Plaintiff suffered a suspected internal derangement as a result of the subject car accident. Plaintiff, Khaleed Crump, appealed.

In order to be admissible, an expert must base the substance of his opinion on a reasonable degree of certainty, and not mere speculation. Dr. Yarus never met or examined Plaintiff in-person. To support his opinion of “suspected” injury, Dr. Yarus relied on the subjective complaints contained in Plaintiff’s medical records and conveyed to him during a phone conversation. Dr. Yarus opined that until proven otherwise by diagnostic arthroscopy, Plaintiff’s subjective symptoms supported his conclusion that Plaintiff suffered an internal derangement.

Holding

The Superior Court affirmed the Trial Court’s decision to preclude the opinion of Dr. Yarus as speculative and inadmissible. In reaching this decision, the Superior Court emphasized the fact that Dr. Yarus’ own opinion regarding injury allegedly suffered was contingent on a surgery that had not been performed. In sum, Plaintiff’s expert medical opinion was properly precluded because mere suspicion of an injury does not meet the requisite threshold of rendering an expert opinion to a reasonable degree of medical certainty.

Questions about this case can be directed to Danielle Vols at (570) 825-6890 or dvols@tthlaw.com.

Chilutti v. Uber Techs., Inc.
Pennsylvania Superior Court
2023 Pa. Super. 126

Decided: July 19, 2023

Superior Court reverses Order compelling arbitration where the arbitration agreement was the subject of a set of hyperlinked terms and conditions on a website “never clicked on, viewed or read.”

Background

Plaintiffs, the Chiluttis, initiated suit against Uber for injuries sustained in a motor vehicle accident occurring while the Chiluttis were occupying a vehicle operated by an Uber driver. Uber moved to compel arbitration based upon an arbitration agreement contained within the “Terms and Conditions” the Chiluttis each purportedly accepted by virtue of their use of the Uber application. The Trial Court granted the Petition, and the Chiluttis appealed to the Superior Court.

Holding

In a published Opinion, the Superior Court reversed the Trial Court and held that an arbitration agreement, which was the subject of a set of hyperlinked terms and conditions on a website or application “never clicked on, viewed or read” by the party against whom arbitration was sought to be compelled, could not stand. The Court found that the minimal actions taken by such party to so “agree” to arbitration ran afoul of the Commonwealth’s important and protected constitutional right to a jury trial. In so holding, the Court was required to initially determine whether arbitration could be compelled via a two-part test: (1) whether a valid agreement to arbitrate exists; and (2) whether the dispute is within the scope of the agreement. The Court only reached the first prong of the test. The Court noted that it is critical that a party be fully informed of their right to a jury trial and the effect of waiving that right, as they would via an arbitration agreement. The Court did not suggest that an on-the record colloquy would be necessary in civil litigation like in criminal proceedings; but, rather, that a waiver must be clearly described, understood and acknowledged to be giving up a constitutional right to a jury trial.

The Court went further, offering helpful suggestions on how an internet-based entity may seek to compel arbitration: (1) explicit statement on the registration website(s) and application screen(s) to the effect that a consumer is waiving a right to a jury trial when they agree to the company’s “terms and conditions,” and the registration process cannot be completed until the consumer is fully informed of that waiver; and (2) when the agreements are available for viewing after a user has clicked on the hyperlink, the waiver should not be hidden in the “terms and conditions” provision but should appear at the top of the first page in bold, capitalized text.

Takeaway

Thorough and adequate review of all agreements entered into by the parties is always necessary in any litigated matter. However, where the “agreement” is not actively acknowledged, there very well be no agreement at all. Affirmative steps to ensure that parties to an agreement make a knowing acceptance (or waiver) of their rights and responsibilities should be employed.

Questions about this case can be directed to Ryan C. Blazure at (570) 825-3867 or rblazure@tthlaw.com.

Harrigan v. Forsythe
Pennsylvania Superior Court
No. 1421 MDA 2021, 2023 Pa. Super. Unpub. LEXIS 1623

Decided: June 30, 2023

The Superior Court, in a split, non-precedential decision, reversed the Trial Court’s Order sustaining Defendants’ Preliminary Objections based on improper service and lack of personal jurisdiction.

Background

Plaintiff filed a Complaint against three Defendants days before the expiration of the statute of limitations. Three weeks later, Plaintiff filed a Motion to admit counsel pro hac vice, which was granted. The Prothonotary mailed copies of the Order to all parties. Plaintiff filed notarized Affidavits of service stating that a process server effectuated service on each Defendant three months after filing the Complaint. Each Defendant filed Preliminary Objections for improper service and lack of personal jurisdiction, as Plaintiff had not effectuated original process, which is required to be completed by the sheriff under the Pennsylvania Rules of Civil Procedure, nor had Plaintiff met the good faith requirement to toll the statute of limitations, as she had failed to reinstate her Complaint.

Plaintiff filed oppositions to the Defendants’ Preliminary Objections, arguing that Defendants received actual notice of the commencement of the action within thirty (30) days of the Complaint being filed when the Prothonotary mailed a copy of the Order granting the Motion to admit counsel pro hac vice. Plaintiff then filed a Praecipe to reinstate the Complaint for the first time, and subsequently filed Sheriff Returns of service regarding each Defendant.

The Trial Court sustained each Defendants’ Preliminary Objections, dismissing Plaintiff’s claims. Plaintiff appealed. The crux of Plaintiff’s appeal was whether the Trial Court erred in sustaining Defendants’ Preliminary Objections because it found that, although Plaintiff’s Complaint was timely filed – and there was evidence that notice of the suit was mailed by the Prothonotary to each Defendant – the Complaint was not properly served upon Defendants in compliance with the Pennsylvania Rules of Civil Procedure.

Holding

The Superior Court, reviewing the Trial Court’s ruling for error of law, reversed the Trial Court’s Order sustaining Defendants’ Preliminary Objections. The Superior Court, looking to the Pennsylvania Supreme Court’s Lamp, McCreesh, and Gussom Opinions, reiterated that the Pennsylvania Rules of Civil Procedure are to be liberally construed, and that the purpose of the service of process requirement is to notify a defendant of the litigation. The Superior Court likened the facts of the case to McCreesh, finding that Plaintiff had effectuated (defective) service and Defendants had operative notice via the Prothonotary’s mailing of the Order on Plaintiff’s Motion to admit counsel pro hac vice. As Defendants were put on notice of the lawsuit, the Superior Court found they suffered no unfair surprise or prejudice. The Superior Court found no evidence that Plaintiff engaged in conduct to forestall the legal process, as prohibited by Lamp, and that Plaintiff met her burden of showing a good-faith effort to serve her Complaint.

President Judge Emeritus Stevens dissented. The dissent found that Plaintiff inexplicably took no action on her complaint for nearly three months, and then made defective service. The dissent found such conduct to amount to a transparent stalling of the judicial machinery and total disregard for the Rules of Civil Procedure, requiring the dismissal of the action. The dissent further opined that no case law supports the Majority’s finding that “operative notice” of the Complaint was given by the Prothonotary’s mailing of the Order admitting counsel pro hac vice. The dissent concluded that the Trial Court properly entered an Order sustaining each of the Defendants’ Preliminary Objections and dismissing Plaintiff’s claims.

Questions about this case can be directed to Laura Daube at (717) 441-3955 or ldaube@tthlaw.com.