Arguing the Rhode Island Supreme Court to Affirm the Individuals and Businesses Who Assist Law Enforcement are Shielded from Civil Liability for Those Actions

The background to this case is the history of acrimonious relations between car insurers and the auto body repair industry in Rhode Island. Simply put, each side has long believed that it is being cheated by the other.

David Miller, the plaintiff in this case, is the former head of the trade association of repair shops and has long played a prominent role in the ongoing dispute between the shops and insurers like Amica. In 2001 he was the target of two sting operations. Apparently allegations had been made by several sources that Miller inflated the costs of repairs; in other words, Miller was alleged to have committed insurance fraud. As part of the undercover investigation, Metropolitan Property and Casualty Insurance Co. provided the Rhode Island State Police with a vehicle that was taken into Miller’s shop for repairs. This sting operation led to Miller’s being charged with billing more than $1,100 in fraudulent repairs. In a second sting operation, Amica provided a damaged vehicle and a fake insurance policy, and Miller supposedly billed $1,050 in fraudulent repairs on that job. Miller was arrested and charged with insurance fraud and with attempting to obtain money under false pretenses. The charges were later dismissed because of evidentiary problems, but Miller was required to surrender his license to run his repair shop.

In this case, he claimed that Amica and Metropolitan vindictively abused legal process in order to get him arrested. The case went to a jury, which found against both insurers. The trial judge, however, finding a dearth of evidence against Amica, granted Amica’s motion for judgment notwithstanding the verdict (he, however, found ample evidence to justify the jury’s verdict against Metropolitan). Miller appealed. Miller’s argument urging reinstatement of the abuse of process verdict rested entirely upon an analysis of the sufficiency of the evidence presented at trial. He claims that the evidence is sufficient to support a jury-finding that Amica initiated the investigation against him, rather than Amica’s having merely assisted the police when called upon to do so.

On appeal, Amica argued that the evidence presented at trial was insufficient, as a matter of law, to support the verdict against it. It also responded that it merely did its civic duty in assisting police in an investigation that the insurer played no role in initiating.

NELF filed an amicus brief in support of Amica. While NELF was in no position to decide between conflicting views of the trial evidence, it laid out for the Court the ancient, widely-recognized Anglo-American public policy of protecting private individuals from civil liability when they have rendered assistance to law enforcement officials at the latter’s request. First, NELF reviewed the numerous Rhode Island statutes, including insurance law statutes, that codify this policy, some of which acknowledge the living common law background of the policy. Then NELF discussed the policy’s broader common law background as most memorably embodied in Justice Cardozo’s decision in Babington v. Yellow Taxi Corp., 250 N.Y. 14, 164 N.E. 726 (1928). NELF concluded by examining two federal cases that it suggests clarify the situation in which Amica finds itself in this case. In filing its brief, NELF hoped to spur the Court to use the occasion of this appeal to acknowledge, for the first time in Rhode Island decisional law, the vitality of the common law principle.

In its March 20, 2015 decision, Miller v. Metropolitan Property and Cas. Ins. Co., 111 A.3d 332 (R.I. 2015), the Court decided the appeal in Amica’s favor on the basis of a release Miller had given as part of the dismissal of the criminal case against him. Unfortunately, therefore, the Court did not reach the issue of common law immunity.

Defending the Right of Business Parties to Contract for a Reasonable Limitation of the Period Within Which a Suit May be Brought

This case raised essentially the same issue recently decided by the Massachusetts SJC in Creative Playthings Franchising Corp. v. Reiser, 463 Mass. 758 (2012), which NELF also briefed. The issue is the extent to which parties to a contract are free under the common law to determine the time within which litigation may be brought on claims arising under the contract.  Here the issue has been certified to the Rhode Island Supreme Court by the U.S. Court of Appeals for the First Circuit, which phrased the question as follows:“ Under Rhode Island law, may an insurance policy providing uninsured/underinsured motorist coverage limit the period for suit against the insurer to less than the ten-year statutory period…?” 

The case arose out of injuries suffered by the insured, LaFlam, in an automobile accident while she was driving a car insured under a policy issued to her employer by American States Insurance Company (ASIC). The policy indemnified insureds like LaFlam from injuries caused by negligent underinsured motorists; it also contains a contractual limitation of action period of three years, displacing the statutory ten-year period. More than three years after the accident, LaFlam’s attorney sent ASIC a letter asserting a claim under the policy.  Believing the claim to be unenforceable because of the contractual limitations period, ASIC brought a declaratory judgment action in the Rhode Island Federal District Court seeking a declaration that LaFlam’s claim was time-barred under the policy. The district court granted ASIC’s motion for judgment on the pleadings, and LaFlam appealed to the First Circuit which, as noted, referred the limitations question to the Rhode Island Supreme Court. 

In the course of arguing her case to the Court of Appeals, LaFlam took the position that parties to a contract may not validly agree to shorten the statutory limitations period unless a statute expressly authorizes them to do so for the given type of contract.  NELF filed an amicus brief in the case supporting ASIC and pointing out that for more than a century and a half the courts of Rhode Island have upheld as valid contractual agreements that reasonably shorten the statutory limitations period, a position from which the Rhode Island Supreme Court has never deviated.  In addition to tracing some of the history of this ubiquitous and ancient Anglo-American common law right, NELF also argued that no statutory authorization is required to enable parties to agree freely in their contracts to a reasonable time limit for bringing suit on the agreement. In particular, NELF rebutted LaFlam’s use of one section of the Rhode Island UCC, which she claims was an example of the legislature granting the right to shorten the limitations period.  NELF also asked the Court to take the opportunity offered by the case to announce the precise common law rule, never previously formulated though implicit in some form in its earlier decisions.

Unfortunately, in its July 2013 decision, the Court resolved the insurance coverage questions before it, tacitly acknowledging the validity of agreements to shorten the limitations period, but without clarifying the principles governing such agreements in Rhode Island.

Arguing for the Enforcement of Class-Action Waivers in Consumer Arbitration Contracts

This is a consumer class action raising the same issues before the Rhode Island Supreme Court as were raised in Massachusetts in Feeney v. Dell Computer Corp. (see supra at p. 1).  As in the Feeney case, the plaintiffs purchased computers and optional service contracts from Dell and were allegedly wrongfully charged sales tax on the service contracts.  The question that NELF briefed was whether Rhode Island would enforce a class-action waiver in the arbitration clause of the service contracts where the waiver was enforceable under the agreement’s chosen law (in these cases, the law of Texas).  This question resolved into the question whether Rhode Island had a fundamental public policy against the waiver of class actions in consumer arbitrations, and NELF argued in its brief in support of Dell that Rhode Island does not have such a substantial public policy.  

In its December 2009 decision, the Rhode Island Supreme Court never reached the issue that NELF had briefed, holding instead that, as a whole, the “shrinkwrap” terms and conditions agreement containing the arbitration provision was not enforceable because it failed to inform consumers adequately of their right to reject the agreement by returning the goods. Therefore, consumers’ retention of the goods did not indicate overall assent to the terms and conditions agreements, including the arbitration provision.  “We are not persuaded that a reasonably prudent [consumer] would understand that by keeping the Dell computer he or she was agreeing to be bound by the terms and conditions agreement and retained, for a specified time, the power to reject the terms by returning the product.”

Opposing Expansion of Public Nuisance Liability

In this case, which garnered national attention, the Rhode Island Supreme Court agreed with NELF and others that the jury verdict below improperly imposed liability on lead pigment manufacturers for abatement of alleged lead paint hazards in Rhode Island buildings.  The 2006 jury verdict was the first in the nation ever to hold lead pigment manufacturers liable on a public nuisance theory and a decision upholding that verdict would have vastly expanded public nuisance doctrine, with far-reaching potential ramifications for all who make, market, or sell products.  The trial court rejected traditional limitations on common law public nuisance liability, including the need to prove both actual and proximate causation of the alleged harm and control by the defendants over the instrumentality allegedly causing that harm.  In fact, there was no proof that any defendant’s product was even present in any Rhode Island building allegedly requiring abatement; and, of course, it is the building owners, not manufacturers who sold lead pigment to paint makers decades ago, who have had the ability to maintain and repair lead paint on building surfaces so as to prevent the risk of exposure.  

Recognizing that an adverse decision in this appeal would have troubling implications that would not be limited to lead paint cases, NELF filed an amicus brief in support of the pigment manufacturers.  NELF’s brief reviewed out-of-state decisions and academic commentary to demonstrate that a decision upholding the jury verdict would place Rhode Island far outside the mainstream.  The Court, which relied heavily in its decision on the authorities cited in NELF’s brief, embraced the point, noting that Rhode Island’s definition of public nuisance is “largely consistent with that of many other jurisdictions … and several scholarly commentators” and concluding that “[t]he law of public nuisance never before has been applied to products, however harmful.”  NELF had further argued that there was no deterrent value to imposing retroactive, unforeseeable, no-fault liability on parties who lawfully manufactured and sold products many decades before those products allegedly caused harm and that doing so would discourage product development that is critical to a vibrant economy.  

The Court, agreeing that the Attorney General was attempting to skirt the proof requirements of product liability law and vastly expand public nuisance liability, concluded that “the state has not and cannot allege any set of facts to support its public nuisance claim that would establish that defendants interfered with a public right or that defendants were in control of the lead pigment they, or their predecessors, manufactured at the time it caused harm to Rhode Island children.”

Advocating a One-Year Statute of Limitations for All Employment Discrimination Claims Brought Under Rhode Island’s Anti-Discrimination Statutes

Unlike the Rhode Island Fair Employment Practices Act, R.I. Gen. Laws §§ 28-5-1 et seq., (“FEPA”), which expressly provides for a one-year statute of limitations, the Rhode Island Civil Rights Act, R.I. Gen. Laws §§ 42-112-1 et seq., (“RICRA”) includes no express limitations period.  In Horn v. Southern Union Co., 927 A.2d 292 (R.I. 2007), the Rhode Island Supreme Court was faced with the question whether, as NELF and its co-amicus Defense Counsel of Rhode Island argued, employment discrimination claims under RICRA should also be governed by a one-year limitations period or whether they should instead be governed by Rhode Island’s residual three-year statute of limitations for personal injury actions.  

In a decision rendered on June 27, 2007, the majority of the Court agreed with NELF that FEPA and RICRA are in pari materia with respect to employment discrimination claims—i.e., that they address the same subject and, hence, must be harmonized by “engrafting onto the RICRA the one-year statute of limitations contained in the FEPA.”  The Court found, as NELF had argued, that setting a three-year limitations period for RICRA employment discrimination claims would effectively repeal FEPA’s protection of employers from stale claims, since plaintiffs could obtain the same remedy without the burden of the one-year limitations period by proceeding under RICRA.  As NELF explained in its amicus brief, requiring claims to be brought promptly is especially important in the employment discrimination area because those claims are often based on alleged oral communications, memories of which can quickly fade, and because witnesses can readily become unavailable given today’s high worker turnover.  Dissenting Justices Suttell and Flaherty, who would have applied the three-year statute of limitations, faulted the majority for fashioning a special limitations period under RICRA limited to employment discrimination claims.

Arguing That Rhode Island’s “Quick Take” Eminent Domain Statute Violates Due Process

This case challenged the constitutionality of Rhode Island’s “quick take” statute, R.I.G.L. 1956 §§ 42-64-9, which permits the taking of property without notice to the owner. The Parking Co., LP (“TPC”) is the parking concessionaire of the Rhode Island Airport Corp. (“RIAC”), a subsidiary of the Rhode Island Economic Development Corporation (“EDC”). Under its Concession and Lease Agreement with RIAC, TPC was required, among other things, to build Garage B at the Airport. Under the agreement, TPC owned Garage B in fee, but was required to deed it to RIAC gratis after twenty years, i.e., on or after December 31, 2007. The agreement also granted RIAC the right to purchase the garage prior to that date, upon payment of a sum to be calculated under a formula. Apparently, at a certain point RIAC decided that it could make more money operating Garage B directly than through its concessionaire TPC. Rather than pay the contractual price, however, RIAC arranged to have TPC’s interest in the garage taken by its parent EDC by eminent domain (RIAC itself does not have eminent domain powers), which then conveyed the interest to RIAC. It was thought that, through the use of eminent domain, RIAC would be able to obtain the interest for less than if it had used the purchase price formula in the agreement. Because EDC used the unique procedures under the Rhode Island “quick take” statute TPC received no prior notice of the taking, and was only able to challenge its validity through the appellate process. TPC appealed the case to the Rhode Island Supreme Court and NELF filed an amicus brief supporting TPC. While TPC challenged the taking and the compensation on a number of grounds, NELF’s brief focused on the constitutionality of the “quick take” procedure itself, which allowed EDC to take TPC’s parking garage ex parte, without even a post-taking procedure available to challenge the validity of the taking. Building on the arguments that it made successfully in Gem Plumbing & Heating Co. v. Rossi, 867 A.2d 796 (R.I. 2005), NELF argued that due process requires a pre-deprivation hearing and an opportunity to challenge the validity of the proposed taking before a state agency can take property by eminent domain.  The case was decided on February 23, 2006.  The Court decided that, despite the language of the “quick take” statute, the law must be interpreted to allow a post-taking hearing and determination of the validity of the taking and amount of damages.  The Court overruled the taking on the ground that a taking to avoid contractual payment is in bad faith and not a legitimate public use.

 

Fighting Regulatory Takings

Rhode Island’s Coastal Resources Management Council (CRMC) determined that Anthony Palazzolo could not fill fifteen wetland acres on his property and could only build a single home on a small upland portion of the lot. Because Palazzolo acquired title in his own name following the dissolution of his solely owned corporation after CRMC’s enabling legislation was enacted, the Rhode Island Supreme Court held that his investment-backed expectations were not reasonable. The Court relied on the “post-enactment purchaser” theory — that a purchaser on notice of a regulation cannot contest its validity. The United States Supreme Court granted certiorari. 

At the United States Supreme Court, NELF filed a brief on behalf of similarly situated Rhode Island property owners, arguing that the “post-enactment purchaser” theory is contrary to sound public policy. The Supreme Court reversed and remanded, holding that acquisition of property with knowledge of existing regulations cannot bar challenges to such regulations. The Court also determined that the presence of one buildable lot on the 74-lot parcel was sufficient to deny treatment as a categorical (total) taking. The Court remanded for consideration as a partial regulatory taking under the test established in Penn Central Transportation Co. v. City of New York. On remand, NELF has undertaken direct representation of the plaintiff in the Rhode Island courts.  After briefing by the parties, the Rhode Island Supreme Court further remanded the case to the Rhode Island Superior Court for consideration of the Penn Central test and the other outstanding issues, including the state’s public trust defense and Palazzolo’s revival of the “total taking” theory in light of the State’s denial of a septic permit for the one “buildable” lot.  

Because NELF pressed the issue, the State ultimately granted Palazzolo all necessary permits for the single buildable lot, which he is now marketing.  Trial commenced in April, 2004 and concluded in June, 2004. Post-trial briefing was completed on September 15, 2004.  On July 5, 2005, the Superior Court issued a decision unfavorable to Palazzolo, who has decided not to file an appeal.

Upholding the Constitutionality of the Mechanics’ Lien Law in Rhode Island

These related cases involved a constitutional challenge to the Rhode Island Mechanics’ Lien Law (R.I. G.L. 1956 §§ 34-28-1 et seq.)  The Rhode Island Superior Court held in both cases that the law violates due process because it encumbers private property without adequate procedural safeguards.  Those decisions have been appealed to the Rhode Island Supreme Court.  

These cases were brought to NELF’s attention by the Rhode Island Attorney General’s Office, which had already submitted an amicus brief supporting the Mechanics’ Lien statute against the constitutional challenge.  NELF’s principal concern with the Superior Court’s decision was that it failed to recognize the long-standing purpose behind mechanics’ lien statutes, which is to ensure payment for the time, labor, and  money that the contractor invests in the affected property.  If the Superior Court’s decisions were upheld, they would deprive the owners of construction businesses in Rhode Island of a meaningful and effective remedy against delinquent customers, with adverse economic consequences on the construction industry of Rhode Island.  

On December 3, 2004, NELF filed an amicus curiae brief with the Rhode Island Supreme Court in these cases which focused on showing that the Superior Court erred when it held that Connecticut v. Doehr, 501 U.S. 1 (1991), required a finding that the Rhode Island Mechanics’ Lien Law was unconstitutional.  NELF argued that under Doehr, due process does not require a pre-deprivation hearing in every situation.  Instead, Doehr holds that due process involves a more flexible balancing test that weights the particular vulnerability of the defendant against the plaintiff’s interest in the affected property.  

On February 22, 2005, the Rhode Island Supreme Court reversed, holding that the Mechanics Lien law, as amended after the trial court’s judgment, did not violate procedural due process.

Whether a Company Has the Right to Observe the Destructive Testing of its Own Products and Obtain the Results

This case raised the issue whether a company should have the right to observe the destructive testing of its own products that are the subject of a lawsuit against it, and to obtain the results of the testing, regardless of whether the party conducting the testing will introduce the test results or expert testimony at trial.  On August 11, 1994, Richard Haldane, then 5½  years old, was hit by a truck and seriously injured while riding a toy manufactured by Hasbro. In a subsequent products liability lawsuit alleging defective design, the plaintiffs requested that Hasbro produce two copies of the toy, which is no longer manufactured, for destructive testing.  Hasbro objected, arguing that the plaintiffs had not shown why destructive testing was necessary.  Hasbro also argued that if the court did allow the destructive testing, Hasbro should be able to observe.  The Superior Court issued an order allowing plaintiffs to conduct the testing, but denied Hasbro’s request to attend the testing or to obtain testing results.  The court concluded that Hasbro would only be entitled to the results if plaintiffs intended to have their experts testify at trial.  Otherwise, the court concluded that the test results were protected work product.  Hasbro filed a petition for writ of certiorari to the Rhode Island Supreme Court, seeking interlocutory review of the order. 

NELF filed a memorandum in support of Hasbro, arguing that the trial court abused its discretion in barring Hasbro both from observing the scheduled destructive testing and from obtaining the results of the testing.  NELF argued that ex parte testing will forever deprive Hasbro of the opportunity to evaluate or replicate the circumstances and results of a one-time-only test.  Courts from other jurisdictions condition destructive testing on the attendance by the party opposing the testing, along with its counsel and experts, and allow the opposing party to obtain the results of the testing.  NELF argued that allowing the opposing party to observe the testing is a simple procedural safeguard that is indispensable to allowing that party to know the circumstances of the testing that bear upon its results.  This procedural safeguard also advances the balanced truth-seeking function of discovery. The Court denied Hasbro's petition for certiorari. The parties are in settlement negotiations.

Fighting for Separation of Powers

NELF filed an amicus brief in its own name in the Rhode Island Supreme Court in this politically charged case. Governor Almond sought a declaration that the legislation creating the Rhode Island Lottery Commission, which mandates that six of the Commission’s nine members be members of the Senate and House, violates the doctrine of separation of powers. The Superior Court held that the Lottery Commission "is exercising legislative power and… that the exercise of that power is not constrained by the constitutional legislative processes… [and] is unconstitutional to the extent that it requires appointments by the House Speaker and the Senate Majority Leaders of members of the General Assembly to sit on and comprise a majority of the Lottery Commission membership." The Lottery Commission appealed. NELF argued that the General Assembly’s attempt to evade the Governor’s veto power violates the separation of powers doctrine. NELF contended that, if the decision below were reversed, the General Assembly would be allowed to arrogate to itself, through the creation of law-making boards and commissions, the plenary legislative power that the people denied it by amending the Constitution to give the Governor the veto. NELF also argued that the continued blending of the legislative and executive powers creates the appearance that Rhode Island is governed by men not laws. The Court rejected these arguments and held that the Legislature has plenary power over lotteries and that it may appoint its own members to the Lottery Commission.

Challenging the Payment of Unemployment Compensation to Striking Workers

Women & Infants’ Hospital (W&I) petitioned the Rhode Island Supreme Court to review a decision of the Department of Labor and Training awarding unemployment benefits to striking workers. NELF urged the Court to take the case. The principal issue was the interpretation of a Rhode Island law which details when employees are entitled to receive unemployment compensation during a labor dispute. If employees begin a labor stoppage by striking, they are not entitled to unemployment compensation; if management begins a labor stoppage by a lockout, the employees receive unemployment benefits. The lockout provision includes an exception: unemployment compensation is not paid if management demonstrates that it offered the union an extension of the existing contract for up to three days and the union refused to agree to an extension. The Department held that the exception did not apply because the lockout was not solely to secure the extension, but also to enhance W&I’s bargaining position generally. NELF was prepared to argue that this interpretation added a condition to the plain language of the statute and vitiated the Legislature’s carefully crafted balance of employer/employee rights. The Court refused to review the decision.