Eleven attorneys from Underberg & Kessler LLP have been named 2013 Upstate New York “Super Lawyers” , and one has been named a 2013 Upstate New York “Rising Star”. Jim Coniglio, Steve Gersz, Ron Hull, Kate Karl, Paul Keneally, Tom Knab, Robert Koegel, Gordon Lipson, Anna Lynch, Paul Nunes and Margaret Somerset were included in the 2013 group of Upstate New York “Super Lawyers”.  This group represents the top five percent of attorneys in Upstate New York and is awarded to those attorneys who have attained a high degree of peer recognition and professional achievement. Colin Ramsey was included in the 2013 group of Upstate New York “Rising Stars”.  This group represents the top 2.5 percent of lawyers who are under 40 years old or who have been practicing for 10 years or less. The “Super Lawyer” list is produced annually, through a rigorous selection process of statewide nominations, peer review within the local legal community, and independent research of candidates. As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

As the potentially catastrophic health impacts from exposure to myriad chemicals, construction materials and other products becomes more evident, questions often arise as to when the statute of limitations accrues for exposures that may have occurred decades ago. CPLR 214-c(2) attempts to address the latent exposure issue, providing that the statute of limitations accrues from “the date of discovery of the injury by plaintiff or from the date when through the exercise of reasonable diligence such injury should have been discovered by the plaintiff, whichever is earlier.” While the language of the statute seems straightforward enough, determining the “discovery” date can prove quite difficult. For example, while the onset of symptoms is critical, it is not necessary that the plaintiff actually be aware that their injury was caused by a particular chemical or hazardous material before the limitations’ period begins to run. As stated by the court in Johnson v. Ashland Oil, 195 A.D.2d 980, 981 (Fourth Dept. 1993), the subdivision clearly indicates that “discovery of the injury” does not depend upon discovery of the cause of the injury. The New York State Court of Appeals addressed this very issue in Wetherill v. Eli Lilly & Co.(In re N.Y. County DES Litig.), 89 N.Y.2d 506 (1997), a case in which the plaintiff alleged damages resulting from the diethylstilbestrol (DES) taken by her mother. It was undisputed that plaintiff knew about the medical condition and symptoms forming the basis of her claim more than three years before the commencement of her action. However, she argued that the “discovery of the injury” is not complete within the meaning of the statute until the connection between symptoms and a plaintiff’s exposure to a toxic substance is recognized. In rejecting this interpretation, the court concluded that CPLR 214-c(2)’s reference to “discovery of the injury” was clearly intended to mean discovery of the condition on which the claim was based. It concluded that the time for bringing the action begins to run under the statute when the injured party discovers the primary condition on which the claim is based. It confirmed this holding the following year in MRI Broadway Rental v. United States Min. Prods. Co., 92 N.Y.2d 421 (1998), writing “discovery occurs when, based upon an objective level of awareness of the dangers and consequences of the particular substance, ‘the injured party discovers the primary condition on which the claim is based’.” However, latent exposures can cause multiple medical problems, and New York courts have recognized that even if the statute of limitations has expired on one exposure-related medical problem, a later exposure-related medical problem that is ‘separate and distinct’ may still be actionable under New York’s two-injury rule, see Braune v. Abbott Labs., 895 F. Supp. 530, 555 (E.D.N.Y. 1995) (citing Fusaro v. Porter-Hayden Co., 145 Misc. 2d 911 [N.Y. Sup. Ct. 1989], affd., 565 N.Y.S.2d 357 [App. Div. First Dept. 1991]). Under the two-injury rule, diseases that share a common cause may nonetheless have separate accrual dates for statute of limitations purposes where the diseases’ biological manifestations are different, and where the presence of one is not necessarily a predicate for the other’s development. The Fusaro case provides a classic example of where the two-injury rule may be applied. The plaintiff in Fusaro claimed exposure to asbestos decades before the onset of any symptoms. He was first diagnosed with asbestosis, and subsequently with mesothelioma. The defendant argued that both causes of action should be time-barred, as plaintiff’s onset of symptoms leading to the asbestosis diagnosis occurred more than three years prior to the commencement of the lawsuit. The plaintiff argued that even if the claims relating to asbestosis were barred, a separate statute of limitations should apply for his mesothelioma symptoms, which developed later. The court agreed with plaintiff, finding that there was a clear distinction between asbestosis and the more virulent mesothelioma. The court explained that while asbestosis and mesothelioma are both causally connected to asbestos fiber exposure, almost every other aspect of the diseases is different. The effects of asbestosis are generally cumulative in that the continued exposure to asbestos dust increases both the risk and severity of the disease, and symptoms include shortness of breath and a dry hacking cough. Conversely, mesothelioma is a rare malignancy which may occur as a result of only a short exposure to asbestos fibers. Symptoms of mesothelioma include severe chest pain, shortness of breath and weight loss. Further, mesothelioma may develop without any manifestation of asbestosis, and one is not an outgrowth, maturation or complication of the other. The court concluded that in view of the fact that the diseases were separate and distinct, and as a party with asbestosis has no way of knowing whether or not he will develop mesothelioma, separate statutes of limitations were appropriate and consistent with CPLR § 214-c. The question then both for defense counsel seeking to invoke a statute of limitations defense in latent exposure cases, and plaintiffs seeking to avoid a dismissal, is when did a plaintiff “discover” his injury within meaning of CPLR § 214-c(2). This fact-specific determination may prove more difficult than the language of the statute suggests, but is critical to determining whether the action is time-barred. Download the Reprint from The Daily Record As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

There is more and more emphasis on improving physician communication with patients to provide better outcomes at reduced cost. I am concerned, however, that some of my patients have difficulty understanding my discussion of their diagnoses and possible treatments or simply want me to take charge, saying that because I am the doctor, I know best. What are my risks and options? As you know, under ethical rules and the regulations of the Board of Regents related to professional misconduct, physicians must obtain consent from patients or their representatives for any proposed medical services. Your ability to effectively communicate with your patients is crucial to obtaining their informed consent. That said, many studies indicate that a majority of patients prefer to let their doctors make treatment decisions for them. Therefore, it is important that you document the information you provide the patient about any treatment options, including the risks, efficacy and likely or possible side effects, and the patient’s questions or comments. Patient refusal of treatment deserves extra vigilance on your part, especially when a proposed treatment is widely accepted in the local medical community as appropriate for patients with the same diagnosis. In such circumstances, in addition to thoroughly documenting your consultation, you should reflect on how you handled the discussion with the patient to be certain that your communication style did not contribute to the refusal. You may also want to suggest to a patient who is having difficulty with a decision that he or she have a family member or trusted friend participate in future consultations. At the earliest opportunity, have your patient sign an authorization that will allow you to communicate directly with this individual. A signed authorization in the chart will avoid any delays or confusion should it become necessary in the future for a member of your staff to contact this person. Keep in mind that a person covered by a HIPAA-compliant authorization to receive the patient’s PHI is not empowered to make health care decisions for the patient. In general, only a health care agent holding a legitimate health care proxy or a surrogate under the Family Health Care Decisions Act has that power. If the patient does not have a health care agent, you should suggest that he or she also appoint someone to act in this capacity. A physician may look to the agent to make decisions for the patient when the patient does not have “capacity to make health care decisions”. This phrase is defined by law as “…the ability to understand and appreciate the nature and consequences of health care decisions, including the benefits and risks of and alternatives to any proposed health care, and to reach an informed decision.” We recommend that you encourage your patients to ask questions and discuss their decisions with close family and friends. This sets the table for better communication and increases the patients’ ability to make informed decisions. Download the Reprint from The February/March 2014 Edition of 'The Bulletin' by MCMS As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

We litigators spend most of our time applying precedent and on rare, special occasions, shaping it. We are on the threshold of one of those rare experiences. In June 2009, the state Public Health Law was amended, as it pertains to claims against nursing homes for alleged violations of a resident’s rights, which could mark a sea-change in the test for the recovery of emotional harm in New York. The bill stated that it was intended to “clarify the grounds for liability claims against nursing homes.” Specifically, Public Health Law Section 2801-d was amended to specify that injuries for which a nursing home may be held liable under the statute include physical, emotional and financial harm to the patient. The amendments clarified that liability for such injuries is not solely limited to violations of Section 2803-c of the Public Health Law, which enumerates certain rights to nursing home residents (often called the Resident Bill of Rights). Proponents stated that the “bill would make it clear that ... that the right to sue applies to any injury to the patient by the nursing home.” Importantly, the statutory amendment does not require that a claim for emotional harm be linked to any physical injury, or be the result of intentional or outrageous conduct. What will it really mean in the context of historical precedent in New York governing claims for emotional distress? Historically in New York, there have been very limited bases for recovering damages for emotional distress. In the case of a negligent act causing emotional distress, the emotional injury had to be associated either with a physical injury caused by the defendant, or the plaintiff had to prove the defendant’s negligent conduct either unreasonably endangered or caused the plaintiff to fear for her physical safety. That burden often has not been fulfilled. To recover for intentional infliction of emotional distress, the plaintiff must prove that the defendant’s conduct was so outrageous in character, so extreme in degree as to go beyond all possible bounds of decency and be regarded as atrocious and utterly intolerable in a civilized community. That has been an almost insurmountable hurdle for most plaintiffs. For example, the fear of contracting rabies from a dog bite was not sufficient fear of physical suffering to warrant recovery for negligent infliction of emotional distress, and false information as to the dog’s vaccinations was not sufficiently outrageous to sustain a cause of action for intentional infliction of emotional distress. Fairman v. Santos, 174 Misc. 2d 85 (Sup. Ct. Queens Co. 1997). The negligent repair of a car that left the plaintiff stranded on highway was an insufficient allegation of fear for one’s own safety to warrant recovery for negligent infliction of emotional distress. Ford v. Village Imports Ltd., 92 AD2d 717 (Fourth Dept. 1983). An allegation that the plaintiff was raped by a television show’s employee failed to allege sufficient extreme and outrageous conduct to warrant recovery for either negligent or intentional infliction of emotional distress. Sheila v. Povich, 11 AD2d 120 (First Dept. 2004). The easier cases under the new amendment will be those involving emotional harm allegedly related to, and connected with, some physical injury. But what about those cases in which the only injury is emotional harm? What about insults to the resident’s dignity? Commonly, nursing home residents will complain that staff members were rude, slow, loud or neglectful, that the linens are soiled or that the food is unpalatable. Simultaneously, the vast majority of those residents also are being treated for depression, which I suspect will be the new synonym for emotional harm. Are those allegations, in the absence of any physical injury, sufficient to sustain claims for emotional harm under the statute? In any other context, the answer would be “no.” For example, false accusations to authorities — Chinese Consol v. Benev. Ass’n v. Tsang, 254 AD2d 222 (First Dept. 1998); Vardi v. Mutual Life Ins. Co. of New York, 136 AD2d 453 (First Dept. 1988) — telephone threats to harm someone’s career — Novak v. Rubin, 129 AD2d 780 (Second Dept. 1987) — and the use of religious, ethnic or racial slurs to denigrate a person — Graham v. Gilderland Central School District, 256 AD2d 863 (Third Dept. 1998) — have not been sufficiently egregious conduct to state a cause of action for intentional or negligent infliction of emotional distress. If we are to give credence to the proponent’s statement that the “bill would make it clear that ... the right to sue applies to any injury to the patient by the nursing home,” the historical high hurdles to establish a claim for emotional harm do not seem to be contemplated. How then shall a court assess a claim whose essence is an insult to one’s dignity? A 1997 case answered that exact question in the context of hospital treatment. The decision serves as an interesting model to analyze the very same questions that face the new nursing home cases. In Afentakis v. Memorial Hospital, 174 Misc.2d 962 (Sup. Ct. New York Co. 1997), the plaintiff alleged that a hospital had breached a terminal cancer patient’s right to dignity citing inattentive care, delays in treatment and a doctor’s thoughtless and offensive statements. No physical injuries were distinguishable from the ordinary discomfort attending a hospital stay. The plaintiff argued that injury to the decedent’s dignity should be sufficient to sustain the cause of action. The court disagreed. The issues that troubled the court in Afentakis undoubtedly will haunt the courts now trying to apply the new statutory basis for the recovery of emotional harm in nursing home claims. As Afentakis underscores, dignity is an extraordinarily difficult concept to define and measure. It is almost impossible for a court to dictate a standard of care relating to such an abstraction: “Unfortunately, ordinary human experience teaches that a certain unavoidable loss of dignity attends most illnesses, terminal and otherwise, both in and out of the hospital setting. An unsuitable expansion of liability would certainly result should courts attempt to distinguish between the ordinary assaults upon a patient’s dignity which stem from the loss of power and control which is all too often the corollary to illness, and the loss of autonomy produced by even a short hospitalization, from those occasioned by the failure of a hospital and its staff to maintain a certain level of caring, respect and consideration for the feelings of its charges. It would be unsuitable for courts to attempt to dictate a standard of care relating to such an abstraction and to the precise quantum of respect and consideration which should be accorded hospital[s] and their staffs, or to arbitrate the complex emotional response a patient’s terminal illness is likely to invoke in their caretakers.” How does one measure the relative loss of dignity a resident may have felt as a result of alleged delays in responding to her call bells, allegedly unpalatable foods, torn or soiled linens or the alleged rudeness that a resident perceives in a staff member’s tone of voice? How does a court distinguish between a lack of dignity that necessarily and naturally occurs as a result of becoming institutionalized, with all of its attendant losses of privacy, autonomy, power and control, from that which allegedly flows from negligent treatment? The proof of injury in the new emotional harm cases against nursing homes also will be tainted by the feelings of the residents’ representatives, which will force courts to attempt to discern how much of what a family describes is, in fact, what the resident felt, and how much is based on a transference of a family’s concern fora resident’s well being. Such proof is nearly impossible to weigh properly. It depends so much on speculation when it comes to what someone else must have been feeling or thinking, it is easily tainted by the understandable distress of the party’s representative as they watch a loved one’s health decline. Is it not, then, inherently unreliable? The courts will have to decide whether the new statutory basis to recover emotional harm should follow the tests ascribed to the traditional tort theories of either negligent or intentional infliction of emotional distress. Alternatively, the statutory amendment may be inviting the courts to create a brand new standard to be used for the recovery of emotional harm in nursing home cases. If the new standard is developed due to a perceived need to protect an otherwise vulnerable population, what is to prevent the standard’s spreading to parallel claims for other vulnerable populations? Have the flood gates been opened? For litigators in this field, all of those questions have yet to be shaped. I suspect that, 10 years from now, we may be talking about a whole new body of law on the subject. Download the Reprint from The Daily Record As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

Underberg & Kessler LLP has been named a 2014 Rochester Tier 1 “Best Law Firm” by U.S. News - Best Lawyers®. The firm’s real estate, municipal law and environmental litigation practices were included in the top tier rankings of Rochester law firms.  The “Best Law Firms” are recognized for professional excellence with persistently impressive ratings from clients and peers. Achieving a ranking signals a unique combination of quality law practice and breadth of legal expertise. The U.S. News – Best Lawyers® “Best Law Firms” rankings are based on a rigorous evaluation process that includes the collection of client and lawyer evaluations, peer review from leading attorneys in their field, and review of additional information provided by law firms as part of the formal submission process. As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

In June, the United States Supreme Court issued two decisions under Title VII of the Civil Rights Act of 1964 (Title VII), both good news for employers. First, the court narrowed the definition of “supervisor” to include only employees with the authority to take tangible employment actions against the alleged victim of harassment. Second, the court narrowed the causation standard for retaliation under Title VII, making it harder for employees to succeed on retaliation claims. In Vance v. Ball State University, the court, for the first time, defined the term “supervisor” for the purposes of employment discrimination and harassment litigation. The court made it more difficult to hold employers liable for the actions of their supervisors, unless the supervisor is authorized to take tangible employment actions against the employee. In Vance, the employee sued her employer, claiming that someone she alleged to be her supervisor subjected her to a racially hostile work environment in violation of Title VII. In upholding the dismissal of the plaintiff’s claims, the court first looked to two of its prior decisions which established the standard of employer liability for harassment under Title VII, depending on the harasser’s identity. In its prior rulings, the court held that if the harasser was a coworker, the employer would be liable only if it knew or should have known of the harassment and was negligent in addressing the conduct. On the other hand, if the harasser was a supervisor, the employer would be strictly liable if the harassment resulted in a tangible employment action. If, however, the harassing conduct did not result in a tangible employment action, the employer would still face liability but could refute it by proving that it exercised reasonable care to prevent and correct any harassing behavior, and that the victim employee unreasonably failed to take advantage of preventative or corrective opportunities offered by the employer. While the defending employer retained the burden of proof in establishing reasonable care when supervisors engaged in discriminatory conduct, the duty to prove employer negligence in correcting or remedying the offensive behavior by co-workers fell to the suing employee. The Vance court defined “supervisor” by finding that only those employees who have the authority to take tangible employment actions — hire, fire, promote, demote, transfer, discipline, reassign with significantly different responsibilities, or make a decision which causes a significant change in benefits — with respect to the victim, are considered supervisors. The court, in issuing this bright line rule, expressly rejected the EEOC’s definition of supervisor for a more strict definition. On the same day that it issued the Vance decision, the court also issued another significant employment decision, Univ. of TX Southwestern Med. Ctr. v. Nassar, where it determined how retaliation claims under Title VII of the Civil Rights Act will be analyzed. The court held that Title VII retaliation claims must be proved according to the traditional principles of but-for causation, not the lessened motivating-factor test that governs Title VII discrimination claims. The Nassar plaintiff alleged that he was retaliated against for complaining of discrimination. The trial jury was instructed that retaliation claims, like discrimination claims, require only a showing that retaliation was a motivating factor for the action, rather than its but-for cause. The jury returned a verdict for the plaintiff, which was upheld by the 5th Circuit. The Supreme Court vacated the 5th Circuit’s decision and concluded that the statute requires proof that retaliation is the “but-for” cause of the adverse employment action, rather than simply “a motivating factor” for the adverse employment action. The court reviewed the common law and concluded that it is “textbook tort law” that a plaintiff ordinarily must provide that the harm “would not have occurred in the absence of — that is, but for — the defendant's conduct.” The court noted that Title VII’s status-based discrimination provision was expressly amended in 1991 to provide that “race, color, religion, sex, or national origin” need only be “a motivating factor” for an employment practice in order to establish that the employment practice is unlawful, but Title VII’s retaliation provision was not similarly amended. Noting that retaliation claims are being made with increasing frequency, the court found that the “but-for” causation standard also struck the appropriate balance between protecting the rights of employees and protecting employers from frivolous claims. While both decisions can be seen as a “win” for employers, as always, employers must remain vigilant about harassment and discrimination in the workplace. Download the Reprint from The Daily Record As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

Effective October 1, 2009, any entity that received $500,000 or more in reimbursements from New York Medicaid were required to have in place a corporate compliance program covering at least the following elements: A written code of conduct or code of ethics for employees and others dealing with the entity; The appointment of an individual to act as the entity’s “compliance officer”, responsible for the day-to-day operation of the compliance program; Training of employees and others, including the members of the entity’s governing board, in the applicable laws, rules, regulations and the entity’s compliance program; Development and communication of the systems and procedures to be followed when a violation of the compliance program is suspected, including the protection of the identity of anyone reporting a suspicion, investigation of reports and corrective actions if problems are discovered, self-reporting to NYS Office of Medicaid Inspector General (OMIG) and repayment of overpayments; Policies to ensure compliance with the program and that those reporting suspicions will be not retaliated against or intimidated; and A process for routine self-evaluation of areas of potential risk and development of procedures to address same. Each affected entity was to make a written certification to OMIG that it had such a compliance program in place on or before December 1, 2009. This certification is to be made annually, on or before December 1 of each year. Affected entities should now be scrutinizing their compliance programs to assure they continue to meet OMIG’s requirements and then submit their certifications. Download this Legal Alert As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

Anna E. Lynch has been named one of the 2013 “Top Women in Law” by The Daily Record. The Top Women in Law award recognizes the outstanding accomplishments of women attorneys who are making notable contributions to the legal profession, while inspiring a positive change in the community. Anna is Underberg & Kessler’s managing partner, chair of the firm’s Health Care Practice Group and a member of our Corporate & Business Practice Group.  She represents hospitals, long-term care providers, physicians and other providers throughout the Upstate New York region. As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

Fourteen attorneys from Underberg & Kessler LLP have been named 2012 Upstate New York “Super Lawyers.” Jim Coniglio, Steve Gersz, Lewis Heisman, Ron Hull, Kate Karl, Larry Keller, Paul Keneally, Tom Knab, Robert Koegel, Gordon Lipson, Anna Lynch, Paul Nunes, Margaret Somerset and Ed Yankelunas were included in the 2012 group of Upstate New York “Super Lawyers”. This group represents the top five percent of attorneys in Upstate New York and is awarded to those attorneys who have attained a high degree of peer recognition and professional achievement. The “Super Lawyer” list is produced annually, through a rigorous selection process of statewide nominations, peer review within the local legal community, and independent research of candidates. This is the fifth year that the “Super Lawyer” designation has been awarded in Upstate New York. As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

I am an attending physician at a nursing home. What if a resident is unhappy that a safe discharge plan cannot be developed by our interdisciplinary team and wants to return home anyway? The nursing home should inform the resident, and/or their proxy, of the resident’s right to refuse care and leave the nursing home against medical advice (AMA). The resident must also be informed that the nursing home will notify Adult Protective Services when a resident discharges themselves AMA. The nursing home’s staff should document such conversations in the resident’s medical chart. Often times, although a resident’s goal upon admission to a nursing home is to return home, the resident’s health care needs prevent a safe discharge plan to do so. Upon admission to the nursing home, the interdisciplinary team, which includes medical, nursing, social work, and therapy, must make assessments as to the resident’s care needs. This may include the development of a discharge plan for the resident to be returned safely home, if appropriate. New York law requires a nursing home to encourage and assist in the fullest possible exercise of a resident’s civil liberties, including the right to independent personal decisions and knowledge of available choices. Therefore, the nursing home must encourage the resident to participate in care planning meetings, which may include discharge planning. One of a resident’s options is the right to refuse medical care and sign out of a nursing home, at any time, against medical advice. New York Public Health Law provides that “[e]very patient shall have the right . . . to refuse medication and treatment after being fully informed of and understanding the consequences of such actions.” This includes refusing personal care, administration of medication, and other services. Frequently, a resident’s health care needs prevent them from being safely discharged back to their home. State and federal law requires a nursing home to assess the home care that the resident will be discharged into to ensure that the environment is safe and not risk a deterioration of the resident’s quality of life. These rules and regulations also require the nursing home to plan for the safe and orderly discharge of the resident to an appropriate community housing option with the services necessary for community reintegration, and which provides for the safety and well being of the resident. If a resident no longer requires the level of care that a nursing home provides but is in need of assistance in their home, the nursing home is required to coordinate the discharge with community services such as home care agencies. If the home care agencies determine that, after assessing the resident and the resident’s family, the necessary services cannot be provided, the nursing home must not discharge the patient home unless the resident’s family can ensure that they are able to provide the required care and assistance. All of these requirements must be considered when the attending physician signs off on a resident’s discharge plan. The physician should also ensure that the resident has been informed of the right to refuse the nursing home’s care and treatment, and to leave the nursing home against medical advice. Download the Reprint from The April 2014 Edition of 'The Bulletin' by MCMS As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

General Mills, the food conglomerate, recently made headlines when it changed the legal terms on its website and reversed course after a social media backlash. General Mills’ actions, however, highlight how companies can use social media and the Internet to manage their litigation risks. According to the now-defunct terms, in exchange for benefits derived from interacting with the company in various capacities, consumers agreed to resolve any dispute with General Mills through binding arbitration and waived the right to consolidate claims. The broad language encompassed a variety of contacts between the company and consumers. Anyone who used General Mills’ websites, became a member of a General Mills website or online community, subscribed to email newsletters, downloaded or printed a digital coupon, entered a sweepstakes or contest, redeemed a promotional offer, or otherwise participated in a General Mills offering agreed to these terms. Following a New York Times article and subsequent public outcry on social media, General Mills issued an apology and returned to its previous legal terms. Media coverage focused on fears of losing the right to sue General Mills in the event of mislabeling or unintended contamination. It is likely that the backlash General Mills suffered is due in large part to the fact that it is the first large food producer to attempt to implement a mandatory arbitration clause with a class-action waiver. However, it is unlikely that General Mills’ course reversal signals a change in the prevailing corporate attitude towards arbitration and class-action waivers. Many large corporations, such as Verizon and Dropbox, currently include mandatory arbitration clauses and class action waivers in the legal terms and conditions governing contracts with consumers. Controlling the forum for dispute resolution and limiting exposure to class actions just makes sense for businesses. While consumers tend to disfavor mandatory arbitration clauses, the clauses typically do not keep consumers from purchasing a product or using a company’s service. Few consumers read the terms and conditions before clicking “I accept” when using a company’s online services. For companies of any size, dispute resolution through mandatory arbitration offers a significant advantage. The benefits of arbitration include reduced litigation costs, quicker resolutions to claims, and flexibility. Arbitration also offers participants the benefit of privacy: The proceedings and outcome are not a matter of public record. There is growing legal precedent supporting the use of arbitration clauses in consumer contacts. In a series of recent cases, the Supreme Court supports arbitration as a method of resolving disputes. In AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), AT&T customers instituted a class-action suit alleging that the company defrauded customers by charging sales tax on phones advertised as free. The cellphone contract provided that all disputes must be resolved through arbitration individually. The Supreme Court held that the Federal Arbitration Act preempts state laws which deem class action waivers in arbitration agreements unenforceable. In American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013), merchants instituted an antitrust class-action against American Express. American Express moved for individual arbitration based on the terms of the credit card company’s arbitration agreement with the merchants. The Supreme Court held that the contractual waiver of class arbitration is enforceable even if the cost of proving an individual arbitration exceeds the potential recovery. The court noted that arbitration agreements are matters of contract and must be “rigorously enforce[d].” Using coupons available on a company’s website or participation in associated social media forums to create a contract with consumers, which includes an agreement to settle disputes through mandatory arbitration and a class action waiver, helps businesses use the pervasiveness of modern technology to try to reduce their exposure to litigation. While it remains to be seen whether broad language on mandatory arbitration for online interactions like that used by General Mills is enforceable, litigating the enforce ability of such language is an expensive and formidable initial barrier to anyone wishing to avoid arbitration by bringing suit. There are potential risks, however, and use of the Internet and social media by businesses can be a double edged sword. The backlash suffered by General Mills in response to its change in legal terms provides a cautionary tale. While mitigating litigation costs and maintaining privacy are certainly appealing, negative press or consumer feedback through freely accessible social media can have a significant impact on a business. Businesses must communicate their legal terms in a manner that will not offend customers. Companies looking to bind customers with mandatory arbitration clauses and class-action waivers through use of benefits provided on websites and through social media should do so carefully. Download the Reprint from The Daily Record As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

George S. Van Nest has been elected a partner in the law firm of Underberg & Kessler LLP, effective January 1, 2012. As co-chair of the firm’s Environmental Practice Group, and partner in the Litigation and Municipal Practice Groups, Mr. Van Nest counsels businesses, municipal entities and financial institutions on matters regarding environmental, land use and development, construction, and commercial litigation law. Mr. Van Nest holds a B.A., cum laude, from Hartwick College and is a graduate of the Valparaiso University School of Law. He is a member of the Air and Waste Management Association, the Buffalo Niagara Partnership, and is a former adjunct professor, environmental law, at the State University of New York at Buffalo. He is also a member of the Clarence, New York Planning Board. As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.