Monthly Archives: October 2016

ARE YOU PROPERLY INSURED?

For two years, Lesley Wilks had car insurance from State Farm, which she obtained through the Manobianco Insurance Agency.  Her policy included liability and both uninsured motorist and underinsured motorist coverage.

Wilks later replaced the State Farm policy with a policy from another insurance company.  A year later, she decided to switch back to State Farm.  When doing so, Wilks asked Manobianco to obtain “the exact same coverage that [she] had previously, full coverage.”  Manobianco did not look up Wilks’s prior coverage and procured insurance that did not include underinsured motorist coverage.  In the course of signing several insurance forms, Wilks signed a form document which had been filled out by Manobianco to reject underinsured motorist coverage.

Several years later, Wilks was rear-ended by an underinsured driver.  State Farm denied the underinsured motorist claim she made under her policy.  Wilks then sued Manobianco for malpractice for failing to procure the insurance coverage she had requested.

HOW TO AVOID LESLEY WILKS’ FATE

Wilks v. Manobianco raises an all too common problem:  one of the first questions I ask personal injury and business clients when they have been in a crash or suffered a loss or claim is whether they have insurance.  However, oftentimes the answer is “I don’t know” or “Yes, but I don’t know how much or what my insurance really covers.”

Many individuals and businesses do not pay attention to insurance until an unforeseen event occurs.  Then, they rush through their drawers, files, and closets to search — and hope — for an insurance policy which covers their loss.

This article is a call for individuals and businesses to understand the importance of insurance and conduct an immediate self-audit to ensure that they have adequate coverage.  A small amount of effort and thought can reap large dividends.

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A LITTLE KNOWLEDGE GOES A LONG WAY

It is not uncommon for car crash victims to be hit by a driver who is either underinsured or has no insurance whatsoever.  Typically, such drivers do not have enough assets to satisfy injury claims.  It would seem that such a client is out of luck — with no means of collecting damages from the person that hit them.  Such is not the case if the person bought uninsured or underinsured motorist insurance coverage.

Uninsured motorist coverage protects you if you’re in an accident with an at-fault driver who doesn’t carry liability insurance.  Underinsured motorist coverage, on the other hand, steps in when you’re in an accident with an at-fault driver whose liability limits are too low to cover the damage or medical expenses.

Over the last several weeks alone I have encountered no less than three situations where underinsured motorist coverage, or the lack thereof, was a client’s sole means of being made whole as a result of being hit by an underinsured driver.

To understand the importance of underinsured coverage, here is an example:  assume that your case is worth $200,000, but the negligent driver only has $100,000 of coverage. In that case, you can make an underinsured driver claim against your own insurer as long as you have more than $100,000 in underinsured driver coverage. If you had $150,000 in underinsured driver coverage, you would settle with the negligent driver for $100,000, and would settle with your insurer for $50,000. You cannot take the negligent driver’s $100,000 policy and another $100,000 from your policy. You can only take from your policy that amount that exceeds the negligent driver’s coverage.

DEALING WITH YOUR INSURANCE AGENT

Arizona law requires insurers to offer uninsured motorist and underinsured motorist coverage to their insureds.  Insurers may prove compliance with the statute by having their insureds sign an Arizona Department of Insurance approved form selecting or rejecting such coverage.

It is therefore critical to carefully review all forms you are asked to sign when  obtaining new insurance or update an existing policy.

Avoid a Wilks v. Manobianco scenario:  understand the importance of every form you sign and obtain an adequate amount of uninsured and underinsured motorist coverage.

TYPES OF BUSINESS INSURANCE TO CONSIDER

Here are types of insurance that businesses should consider obtaining:

  • General Liability Insurance:  The type of policy provides both defense and damages if you, your employees or your products or services cause or are alleged to have caused bodily injury or property damage to a third party.
  • Property Insurance:  This kind of policy typically covers office equipment, computers, inventory or tools due to fire, vandalism, theft, smoke damage etc.
  • Business owner’s policy (BOP): A business owner policy packages all required coverage a business owner would need. Often, BOP’s will include business interruption insurance, property insurance, vehicle coverage, liability insurance, and crime insurance . Based on your company’s specific needs, you can alter what is included in a BOP. Typically, a business owner will save money by choosing a BOP because the bundle of services often costs less than the total cost of all the individual coverages.
  • Commercial Auto Insurance: This policy protects a company’s vehicles. You can protect vehicles that carry employees, products or equipment. With commercial auto insurance you can insure your work cars, SUVs, vans and trucks from damage and collisions.  If you do not have company vehicles, but employees drive their own cars on company business you should have non-owned auto liability to protect the company in case the employee does not have insurance or has inadequate coverage.  Many times the non-owned can be added to the BOP policy.
  • Directors and Officers Insurance: This type of insurance protects directors and officers of a company against their actions that affect the profitability or operations of the company. If a director or officer of your company, as a direct result of their actions on the job, finds him or herself in a legal situation, this type of insurance can cover costs or damages lost as a result of a lawsuit.
  • Data Breach:  If the business stores sensitive or non-public information about employees or clients on their computers, servers or in paper files they are responsible for protecting that information.  If a breach occurs either electronically or from a paper file a data breach policy will provide protection against the loss.
  • Professional Liability Insurance: This type of insurance is also known as errors and omissions insurance. The policy provides defense and damages for failing to or improperly rendering professional services.  Professional liability insurance is applicable for any professional firm including lawyers, accountants, consultants, notaries, real estate agents, insurance agents, hair salons and technology providers, among others.

CONCLUSION

The Southwest leads the nation in uninsured motorists, with New Mexico at a staggering 29% and Arizona not far down the list at 18% (see the graphic below).

Given these depressing numbers, be sure to have a plan when you walk into your agent’s office to buy insurance.  Understand what you sign.  Your financial future may depend on your preparation and diligence.

For further information on personal injury claims, obtaining insurance or making insurance claims, and general tort and commercial matters, contact Art Bourque at Bourque Law Firm.

 

“LOCKER ROOM TALK” STARTED THE SEXUAL HARASSMENT LAWSUIT REVOLUTION

Donald Trump has re-popularized the term “locker room talk.”  The euphemism, which Trump used to explain away his comments about women on a videotape that emerged last week, has different meanings to different people.

Trump downplayed his comments as harmless. Many others, however, viewed Trump’s words as harassing, threatening, and demeaning.  Whatever your belief, so-called locker room talk was the main catalyst behind the explosion of sexual harassment lawsuits some 30 years ago and clearly has not gone away.

Through the real-life story of Beth Ann Faragher, this article provides readers with a historic and revealing look at Title VII — the main law which prohibits sexual harassment and discrimination.  Equally valuable, this edition of the HR Law Insider explains how and why “locker room talk” gets companies sued, and provides businesses specific tools to prevent sexual harassment.

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TITLE VII:  HOW A YOUNG WOMAN LIFEGUARD CHANGED THE WORLD 

I had a Forrest Gump moment in 1986.  As a young  ocean lifeguard in Hollywood, Florida, I  witnessed first-hand the male-dominated culture of the Beach Patrol — in our locker room and on the beach.

Little did I know, just up the road, working with men I knew and competed against in lifeguard competitions, Beth Ann Faragher, a lifeguard with the City of Boca Raton, was on her way to making US Supreme Court history.

Sexually harassed for the better part of five years, Faragher brought claims against Boca Raton under Title VII.  After a hard-fought trial, the court found:

“From time to time over the course of Faragher’s tenure at the Marine Safety Section, between 4 and 6 of the 40 to 50 lifeguards were women.  During that 5-year period, Chief of the Marine Safety Division Terry repeatedly touched the bodies of female employees without invitation,  would put his arm around Faragher, with his hand on her buttocks, and once made contact with another female lifeguard in a motion of sexual simulation. He made crudely demeaning references to women generally, and once commented disparagingly on Faragher’s shape. During a job interview with a woman he hired as a lifeguard, Terry said that the female lifeguards had sex with their male counterparts and asked whether she would do the same.”

Marine Safety lieutenant David Silverman behaved in similar ways. He once tackled Faragher and remarked that, but for a physical characteristic he found unattractive, he would readily have had sexual relations with her.  Another time, he pantomimed an act of oral sex. Within earshot of the female lifeguards, Silverman made frequent, vulgar references to women and sexual matters, commented on the bodies of female lifeguards and beachgoers, and at least twice told female lifeguards that he would like to engage in sex with them.”

The court of appeals, however, reversed the trial court and found in favor of Boca Raton.  This led to the landmark US Supreme Court decision in favor of Faragher in 1998.

Faragher’s odyssey began in the 1980s, a decade which witnessed an explosion of sexual harassment cases under Title VII.  That’s right, it took about 20 years for a cultural shift to “allow” cases to be brought under a law that was passed the year The Beatles started the British Invasion in America.

The Faragher decision is obviously important for its legal precedent in holding employers liable for sexual harassment.   The historic ruling also provides businesses with a road map as to how to avoid sexual harassment claims.

HOW BUSINESSES CAN PREVENT SEXUAL HARRASSMENT

The facts in Faragher lawsuit are very typical of the sexual harassment allegations I have observed over 25 years of representing businesses and individuals:  uncontrolled behavior by men in positions of power and/or an overall work culture that enables, encourages, or permits bad behavior.

Regardless of one’s beliefs about the Trump situation, allowing such talk in a work environment is a sure-fire way to be on the receiving end of an EEOC charge of discrimination.  Here are specific, time-tested tools to prevent locker room talk in your workplace and avoid the fate of Boca Raton :

  • Management and employees should receive sexual harassment and discrimination training from counsel once a year.
  • Employee handbooks should be carefully drafted and specifically reviewed during the training.
  • Sexual harassment and discrimination policies should be discussed in detail; hypotheticals should be played-out to understand how the policy will work in real time/life.
  • All businesses should have a personal relationship policy, particularly regarding supervisors and managers having relationships with those that they supervise/manage.
  • Managers should read the Faragher case — it takes 20 minutes; by understanding the underpinnings of the law, managers will know why their handbook says what it says, how to identify and prevent harassment, and what to do, and what not to do, when harassment is alleged.
  • Leaders should constantly assess company culture; live by the credo:  “There are no bad teams, only bad leaders.”
  • Leaders should focus on hiring and training those people who will fit within a culture that condemns and punishes discrimination and harassment.
  • Contact counsel when there is a potential complaint about harassment or discrimination; such complaints rarely occur, and, in my experience, are often addressed and resolved quickly and inexpensively with an experienced hand and laser focus.
  • Once a complaint of harassment is reported, understand that any discipline or negative treatment towards the complainant will bring a high risk of a retaliation claim.
  • Do not overlook inappropriate, stray comments; instead, view them as red flags to monitor or act on immediately to get ahead of a larger problem.
  • Detach and observe how managers and employees treat each other at the office, in the field, and at social events.  Thinking or saying “he’s just like that” or “that’s just who he is” is unacceptable when dealing with someone conducting themselves in a way that is unaligned with your company’s culture.
  • Do not slide:  review this bullet point list once every quarter and ask:  “is our company doing these relatively simple things to prevent and/or deal with sexual harassment and discrimination”?

CONCLUSION

To understand the root problem and cure for sexual harassment one should do more than adopt wooden, form policies from attorneys or websites.  Instead, endeavor to understand the “culture” in which sexually harassment thrives.

Once one understands the roots of sexual harassment, it is far easier to avoid it in the first instance and, failing avoidance, to identify, combat and eradicate the ugly disease.

EPILOGUE

Here is a fascinating footnote about Title VII’s enactment:  Unlike today, when congressional votes are typically cast along party lines, in 1964 Title VII’s vote occurred along geographical lines — with the North for Title VII and the South against.

The House vote:

  • Southern Democrats: 7–87   (7–93%)
  • Southern Republicans: 0–10   (0–100%)
  • Northern Democrats: 145–9   (94–6%)
  • Northern Republicans: 138–24   (85–15%)

The Senate vote:

LAST NIGHT’S DEBATE: DO NOT TRY THIS AT HOME OR IN THE WORKPLACE

Any momentary triumph you think gained through argument is really a Pyrrhic victory: The resentment and ill will you stir up is stronger and lasts longer than any momentary change of opinion. It is much more powerful to get others to agree with you through your actions, without saying a word. Demonstrate, do not explicate.

Robert Greene

Many will view last night’s debate as a national embarrassment.  Most, of course, will take their candidate’s side:  if one is a Clinton fan, the debate will confirm the position that she is the only choice; and if Trump is your pick you may well have experienced a vicarious rush and excitedness when he threatened to send Clinton to jail.

But was either candidate’s argument truly effective?  Would you counsel a workplace manager, employee, or spouse to debate contentious issues this way?  Of course not.

This article explores how to persuade others not with argument, but through effectively demonstrating the merits of one’s position.  Such a skill is critical in the workplace and beyond.

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MICHELANGELO KNEW THE POWER OF DEMONSTRATION OVER ARGUMENT

Robert Greene’s The 48 Laws of Power captures the power of demonstration over argument with the true story of one of the greatest pieces of art ever created — David by Michelangelo:

In 1502, in Florence Italy, an enormous block of marble stood in the works department of the church of Santa Maria Del Fiore.  It had once been a magnificent piece of raw stone, but an unskilled sculptor had mistakenly bored a hole thru it where there should have been a figure’s legs, generally mutilating it.  Piero Soderini, Florence’s mayor, had contemplated trying to save the block by commissioning Leonardo da Vinci  to work on it, or some other master, but had given up because everyone agreed that the stone had been ruined.  So, despite the money that had been wasted on it, it gathered dust in the dark halls of the church.

This is where things stood until some Florentine friends of the great Michelangelo decided to write the artist, then living in Rome.  He alone, they said, could do something with the marble, which was still magnificent raw material.  Michelangelo travelled to Florence, examined the stone, and came to the conclusion that he could in fact carve a fine figure from it, by adapting the pose to the way the rock had been mutilated.  Soderini argued that this was a waste of time — nobody could salvage such a disaster — but he finally agreed to let the artist work on it.  Michelangelo decided that he would depict a young David, sling in hand.

Weeks later, when Michelangelo was putting the final touches on the statue, Soderini entered the studio.  Fancying himself a bit of a connoisseur, he studied the huge work, and told Michelangelo that while he thought it was magnificent, the nose, he judged, was too big.  Michelangelo realized that Soderini was standing in a place right under the giant figure and he did not have the proper perspective.  Without a word, he gestured for Soderini to follow him up the scaffolding.  Reaching the nose, he picked up his chisel, as well as a bit of marble dust that laid on the planks.  With Soderini just a few feet below him on the scaffolding, Michelangelo started to tap lightly with a chisel, letting the bits of dust he had gathered in his hand to fall little by little.  He actually did nothing to change the nose, but gave every appearance of working on it.  After a few minutes he stood aside:  “Look at it now.”   “I like it better,” replied Soderini, “you’ve made it come alive.”

Michelangelo knew that by changing the shape of the nose he might ruin the entire sculpture.  Yet Soderini was a patron who prided himself on his aesthetic judgment.  To offend such a man by arguing would not only gain Michelangelo nothing,  it would put future commissions in jeopardy.  Michelangelo was too clever to argue.  His solution was to change Soderini’s perspective (literally bringing him closer to the nose) without making him realize that this was the cause of his misperception.

Fortunately for posterity, Michelangelo found a way to keep the perfection of the statue intact while at the same time making Soderini believe he had improved it.   Such is the double power of winning through actions rather than argument.  No one is offended, and your point is proven.

PRACTICAL APPLICATION OF THE RULE

Last night’s debate once again proved that  words are a dime a dozen.  People are easily offended, often resentful, and rarely change their mindset.  As Robert Greene explains:

Everyone knows that in the heat of the argument, we will all say anything to support our cause.  We will quote the Bible, refer to unverifiable statistics.  Who can be persuaded by bags of air like that?  Action and demonstration are much more powerful and meaningful.  They are there, before our eyes, for us to see — “Yes, the statue’s nose does just look right.”   There are no offensive words, no possibility of misinterpretation.  No one can argue with a demonstrated proof.  “The truth is generally seen, rarely heard.”  Baltasar Gracian.

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CONCLUSION

Win with action and demonstration, not words.  By way of example, disciplining an employee with such invectives as they are a “poor performer” or “cannot be trusted” is wholly ineffective to turn the employee’s performance around and, at the same time, will cultivate resentfulness and dissent.  At best, you have not helped the situation.  At worst, you have created an enemy.

Similarly, do not be deceived when you are on the receiving end of “words.”  For example, as an investor, focus on facts, data, and objective metrics rather than vague promises of future success.  Otherwise, you will find yourself on the losing end of an investment and without the tools to ask the right questions and obtain real answers.

Who will win the war of words this presidential cycle?  I certainly do not know.  However, I do know that most of us are better off turning down the volume or turning off the TV and social media.  If you do, and want to be entertained by a master at the art of persuasion through demonstration, watch the movie Up in the Air [warning:  language]:

RELYING ON REPUTATION: LIVE BY THE SWORD, DIE BY THE SWORD

“A good reputation is more valuable than money.”

Publilius  Syrus

Those who cultivate a good reputation know its priceless value and almost magical quality.  Once built, a solid reputation can open the corridors of power.  Money, praise, and devotion often follow.  What’s not to like about reputation?

Blind faith in another’s reputation can, however, be very dangerous. This article peeks behind reputation’s curtain — shining the light on its sinister underbelly.  Indeed, many of us would be better served not to rely on reputation.

This edition of the HR Law Insider posits that instead of relying on reputation, one should develop his or own belief regarding potential business partners and employees.  Then, this article provides real world guidance as to how to avoid becoming entangled with those that appear to be paragons of success and virtue.

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REPUTATION’S THIN ROOTS AND SHAKY FOUNDATION

“Everyone prefers belief to the exercise of judgment.”

Seneca

Reputation is defined as “the common beliefs or opinions that are generally held about someone or something.”

Phrased in a different way, reputation is a belief one reaches not on the basis of facts, evidence, or experience, but on the beliefs of others.   Should one trust such a belief?

Bernie Madoff’s reputation was impeccable, before it wasn’t.  For decades Madoff was revered by the wealthiest, most sophisticated investors.  Before his vast Ponzi scheme was uncovered, investors clamored to give Madoff their money.  To be seen with Madoff, or to be near him,  gave many the feeling that they had entered the very corridors of power.

When one currently observes a picture of Madoff, one sees the quintiseential conman.  Now, it is “easy,” in hindsight, to see that Madoff was a fraud.

HOW TO AVOID THE REPUTATION TRAP:  DO NOT FOLLOW THE HERD

No One Would Listen is a thrilling story of how Harry Markopolos, a little-known number cruncher from a Boston equity derivatives firm, uncovered Bernie Madoff’s scam years before it made headlines, and how he desperately tried to warn the government, the industry, and the financial press.

No One Would Listen demonstrates how Madoff used his reputation as diabolical tool to woo the world’s “smartest” investors.  In the end, just before his demise, Madoff’s reputation was so good that he no longer needed to solicit investors — they came to him.

How will the next mini-Madoff you meet try and make you come to him?:

  • He will have carefully grown a social and business network of name people and companies.  How could someone so connected, with such a brilliant reputation, not be a winner and leader in his field?
  • He will make it appear as though he is doing you a favor by working with you.  Time and again a conman will tell people that his sole objective is simply to “help” people.  How fortuitous that he chose you to help!
  • Ironically, many unscrupulous types forge reputations by starting charitable organizations, making “giving back” a central theme, and/or appearing at high profile charity events.  How could a philanthropist be bad?
  • Those trading on reputation will present an appearance of wealth and success, and seem so generous as to be selfless.  Selfless people are to be trusted, right?
  • There may be a religious or spiritual component to reputation.  Religious and spiritual people are “pure” in many peoples’ eyes — their reputation is beyond reproach.
  • He will obtain the endorsement from, or membership in, seemingly well known organizations.  Here’s a little known (outside the legal community) trade secret:  did you know that lawyers pay money and have friends endorse them in order to get on those seemingly exclusive “Top 50 Lawyers” lists and magazines?
  • Reputation can be built in as little as hours or days on internet, which has made it easier than ever to cultivate reputation.

 

CRACKING THE CODE

Ignoring reputation is simple, but not easy.  Those who cultivate solid reputations are very skilled at their craft.  The siren song of a good reputation has fooled many a smart business person and investor.

Due diligence and common sense are the keys to overcoming the instinct to rely too heavily on reputation.  For example, consider a significant background check and otherwise thorough vetting when hiring a key employee or business partner.

Do not stop there, however.  Always be willing to ask challenging questions of your employees, business partners, and others with whom you trust your money or livelihood.  Defensive responses and ambiguous (non)-answers are obvious clues that something is amiss.

Asking good questions and evaluating the veracity of the answers is much easier when one is not left starry-eyed by another’s seemingly “impeccable” reputation.  In short, do not whistle past the graveyard — always be willing to be objective and proactive about your situation.

Avoid confirmation bias.  This is “the tendency to search for, interpret, favor, and recall information in a way that confirms one’s preexisting beliefs or hypotheses, while giving disproportionately less consideration to alternative possibilities.”  Time and again I have seen this bias lead successful business people to ignore hard data, stay in bad deals, or continue to believe in unscrupulous business partners or employees.

In conclusion, be your own Sherlock Holmes.  Make it your business to know who you are dealing with.  Use your cognitive tools to separate the wheat from the chaff.

As you ponder these ideas, enjoy some of my favorite — and applicable — Sherlock Holmes quotes:

  • “It is a capital mistake to theorize in advance of the facts. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts.”
  • “Never trust to general impressions, my boy, but concentrate yourself upon details.”
  • “The world is full of obvious things which nobody by any chance ever observes.”
  • “How often have I said to you that when you have eliminated the impossible, whatever remains, however improbable, must be the truth?”
  • “My name is Sherlock Holmes.  It is my business to know what other people don’t know.”
  • “I shall be my own police.  When I have spun the web they may take the flies, but not before.”

For further information on hiring and managing employees, business partnerships, employment and shareholder disputes, or other general commercial matters, contact Art Bourque at Bourque Law Firm.