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Ohio Court of Appeals Upholds Sanctions for Attorney’s Frivolous Conduct

On August 28, 2017, the Ohio Court of Appeals for the Eleventh District upheld a trial court’s order imposing frivolous conduct sanctions in the amount of $22,926.72 on a plaintiff’s attorney and his law firm in the case of Keith-Harper v. Lake Hosp. Sys., Inc., --- N.E.3d ----, 2017-Ohio-7361 (11th Dist. Lake).

The plaintiff, Linda Keith-Harper, filed a complaint asserting seven causes of action against Defendants, alleging that they had engaged in unlawful age discrimination, wrongful termination based on age discrimination, disability discrimination based on Keith-Harper's knee replacement, wrongful termination based on disability discrimination, unlawful FMLA retaliation, workers’ compensation retaliation, and intentional infliction of emotional distress.

After the Court of Common Pleas for Lake County granted summary judgment on all of Keith-Harper’s claims, Defendants moved for an order imposing sanctions under Ohio’s frivolous conduct statute, R.C. 2323.51. Unlike a typical motion for sanctions, which may argue that a party’s allegations were frivolous from the onset, Defendants argued that Keith-Harper’s claims were rendered frivolous by the evidence adduced during the discovery process. Despite this evidence, Defendants had to incur additional fees and costs to litigate the case even after it was clear that Keith-Harper’s claims lacked any objective merit.

Granting Defendants’ motion for sanctions, the trial court agreed that by the time discovery had closed, “it was clear that there was no evidence that the plaintiff had requested or taken FMLA […] that she was disabled or perceived as disabled, […] that she was terminated for claiming workers’ compensation benefits that ended ten months earlier,” or that “she was directly targeted because of her age,” as “[t]he evidence showing she was terminated for just cause [was] overwhelming.” Because Keith-Harper’s attorneys failed to withdraw these claims after it became clear that they were not viable, the trial court awarded Defendants $22,926.72 for legal fees and costs incurred following the close of discovery. This sanction was imposed on Keith-Harper’s individual attorney and his law firm.

On appeal, Keith-Harper’s attorneys argued, among other things, that their conduct was not “frivolous” as a matter of law and that even if it was, the trial court erred by imposing joint and several liability against their law firm.

Affirming the trial court’s decision in a divided opinion, the Eleventh District adopted a deferential standard of review and drew several important distinctions between R.C. 2323.51 and its more well-known counterpart, Civ. R. 11. As an initial matter, the Court of Appeals recognized that unlike Civ. R. 11, which requires a finding of subjective bad faith before sanctions can be imposed, R.C. 2323.51 judges frivolous conduct under an objective standard “without inquiry as to what the individual knew or believed.” Recognizing that the statute provides several grounds for determining the frivolity of a claim or defense, the Court of Appeals also held that where a trial court finds that claims or defenses are factually frivolous (as opposed to legally frivolous) its determination that frivolous conduct took place will be affirmed so long as that decision is supported by competent, credible evidence. A decision that a claim is legally frivolous, on the other hand, is reviewed de novo. If the trial court makes a finding of frivolous conduct and proceeds to order an award of monetary sanctions, that decision is reviewed for abuse of discretion. Because it found that the trial court’s detailed decision outlining the factual frivolity of Keith-Harper’s claims was supported by competent, credible evidence, the Court of Appeals affirmed the lower court’s finding of frivolous conduct. 

The Court of Appeals likewise rejected the argument that it was error to award sanctions under R.C. 2323.51 against a law firm. Citing to the statutory language that permits an award of sanctions against “a party, the party’s counsel of record, or both” the Court reasoned that unlike Civ. R. 11, which was drafted to impose responsibilities and sanctions on individual attorneys who have signed a pleading, R.C. 2323.51 was drafted more broadly to “afford an avenue of relief to a party adversely affected by frivolous conduct.” Acknowledging that several Ohio appellate courts have construed “counsel of record” to include an attorney’s firm as well as an individual lawyer, the Eleventh District affirmed the trial court’s decision to impose joint and several liability on Keith-Harper’s attorneys’ law firm.

The Eleventh District’s decision in Keith-Harper highlights an attorney’s obligation to reevaluate the merits of an asserted claim at each and every stage of litigation, and to pursue only those claims that have objective factual and legal merit. A party’s or her attorney’s failure to do so may result in a violation of R.C. 2323.51 and significant exposure to compensate an opponent for legal fees and costs.

Brennan, Manna & Diamond, LLC represented the Defendants in the trial and appellate courts, with BMD attorneys Christopher Congeni and Daniel Rudary briefing the case at the court of appeals and BMD attorney Daniel Rudary presenting oral argument in defense of the trial court’s sanctions award.

DOL Proposes New Rule Regarding Independent Contractor Status - But How Will the Election Affect Its Future?

On September 22, 2020, the U.S. Department of Labor announced a new proposed rule regarding employee and independent contractor status under the Fair Labor Standards Act. The full text of the proposed rule is available here. The rule's drafters intend to reduce uncertainty and enhance the precision and predictability of the long-standing "economic reality" test, which currently relies on a multifactor balancing test.

Major Change to Franklin County, Ohio Eviction Process: Landlord Testimony Required

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UPDATE: Governor Dewine Signs HB 606 Granting Short Window of Immunity from COVID-19 Personal Injury Lawsuits

The Ohio General Assembly, in Am. Sub. H.B. No. 606, is in the final stages of passing a law that will prohibit lawsuits seeking damages from COVID-19. This includes injury, death, or loss to person or property if the lawsuits are based, in whole or in part, on the exposure to, or the transmission or contraction of the coronavirus, unless the defendant in the lawsuit acted intentionally or recklessly. In circumstances where this immunity does not apply, H.B. 606 prohibits such claims being aggregated and brought as a class action.

Revised Department of Labor FFCRA Guidance, Effective September 16, 2020

In response to attacks on the legality of the Department of Labor’s (“DOL”) Final Rule regarding the Families First Coronavirus Act (“FFCRA” or the “Act”), which took effect in April 2020, the Department of Labor issued new guidance on Friday, September 11th to formally address ongoing questions and concerns related to the COVID-19 legislation.

FCC Adds $198 Million to Strengthen Telehealth for Rural Healthcare Providers

The Federal Communications Commission (“FCC”) has added an additional $198 million in funding to its Rural Health Care Program. These funds will be used to increase broadband services and telecommunications to bolster telehealth/telemedicine services for rural healthcare providers. Funding for rural healthcare providers was initially capped at $605 million in 2020, but the added funds will now allow the FCC to provide over $800 million to eligible providers.