There Is No Private Right of Action for Violation of the Tip Statute

By: Robert D. Martin, Esq.

Hardy v. Tournament Players Club at Southwind, Inc. d/b/a “TPC Southwind,” No. W2014-02286-SC-R11-CV (Tenn. March 8, 2017). 

The Tennessee Supreme Court recently held that a server may not sue her employer for violation of the Tennessee Tip Statute. The Court’s opinion overturned the decision of the Court of Appeals, who in 2015 declared that the tip statute contained an “implied right of action.”

Kim Hardy was a server and bartender at the Tournament Players Club (“TPC”) at Southwind golf course in Memphis. TPC customarily added a mandatory service charge to every bill at its bars and restaurants, in addition to allowing customers to pay optional tips. The Mandatory Service Charges were placed in a pool and were paid out to employees on their regular paychecks. The traditional tips were also not paid to employees until their regular paychecks. Ms. Hardy alleged in her Complaint that the service charges were distributed to non-service employees, which would have violated the tip statute. The tip statute requires that restaurants which automatically add a gratuity onto a customers’ bills distribute the tips only among employees who have rendered the service. The statute makes a violation of the law a misdemeanor, but does not specifically state than an employee may sue their employer for a violation. 

The trial court dismissed the case for failure to state a claim, after it determined that the Tip statute did not allow a private right of action, meaning that an employee could not sue its employer if the employer violated the statute. The Court of Appeals reversed, relying on a 1998 Court of Appeals decision that found an implied private right of action under the tip statute.

The Supreme Court disagreed, overturning the Court of Appeals. The Court held that the Tennessee General Assembly, in passing the tip statute, gave no indication that it intended for a private citizen to file a lawsuit for a violation of the statute. The statute is criminal in nature since it provides that a violation of the statute is a misdemeanor. This means that if the employer broke the law, it was up to the government to hold the employer accountable, not the employee.

The tip statute is different than other wage and hour laws. For instance, the Fair Labor Standards Act, the federal wage law, not only provides for a private right of action for violations of the statute, but also provides that an employee may file a “collective action,” remarkably similar to a class action, on behalf of fellow employees who were also not paid in accordance with the law.

If you are an employer in the food service industry, and you have questions regarding how to compensate or handle tips for your employees, contact Meridian Law for a consultation.

Tennessee Adopts Duty of Technology Competence

By: Miles Martindale

 

On July 11, 2016, the Tennessee Bar Association (“TBA”) filed a petition asking the Tennessee Supreme Court to amend Rule 8 of the Rules of the Tennessee Supreme Court. The TBA proposed to amend selected portions of Rule 8 in light of similar revisions to the American Bar Association’s Model Rules of Professional Conduct that were adopted by the ABA’s House of Delegates in August 2012. On March 6, 2017, the Tennessee Supreme Court issued an order that adopted certain amendments to Rule 8, whichwere effective immediately. Among the amendments, the Order approves adoption of the language of Comment 8 of ABA Model Rule 1.1 pertaining to technology competence, which makes Tennessee the 27th state to adopt such a rule. Tennessee’s Rule 1.1, Comment 8 (formerly Comment 6), now provides: 

“To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology, engage in continuing study and education, and comply with all continuing legal education requirements to which the lawyer is subject.” 

The Duty of Technology Competence update does not change the duty to maintain competence under Rule 1.1, it merely clarifies that maintaining technological competence is part of that duty. Thus, lawyers can no longer remain  ignorant of technology and still claim to ethically serve their clients’ needs. Technological competency does not require all lawyers to become experts in field of legal technology, and no state has published a list of technology programs that lawyers must learn or skills that lawyers must possess. However, this duty does require lawyers to stay abreast of legal technology developments and requires a baseline understanding of, and reasonable proficiency in, modern legal technology.

Technology is becoming increasingly important in the business and practice of law. This amendment is an acknowledgement that technological competence is a necessary requirement in today’s legal environment. A lawyer’s fundamental duty has always been to provide competent representation to her clients. As times have change, so has the view of what it means to provide competent representation. Competency no longer simply refers to a lawyer’s substantive knowledge of the law combined with experience and the ability to adequately represent a client. Lawyers who refuse to keep up with modern technology now risk violating ethical obligations and becoming obsolete. Meridian Law is committed to staying on the cutting-edge of legal technology and incorporating technology into our practice to provide efficient and cost-effective legal services to our clients.
 

Meridian Law WINS Summary Judgment in Uninsured Motorist Case

By: Robert D. Martin

 

In November, 2016, Judge Hamilton Gayden of the Davidson County Circuit Court granted Summary Judgment in favor of an uninsured motorist insurance provider when the insured driver delayed notifying the provider for over two years after the accident at issue occurred.

Meridian Law, representing the insurance provider, argued that the driver’s delay prejudiced the provider’s ability to fairly and effectively try the case by removing its ability to interview witnesses while they still had a fresh recollection, examine the scene, and conduct its own independent investigation of the crash. Furthermore, the driver was involved in multiple subsequent vehicle accidents before notifying the insurance provider, making it difficult, if not impossible, to determine which injuries were the result of which accidents.

The Court agreed and granted Summary Judgment for the insurance provider, effectively ending its involvement in the litigation. This is a great victory for our clients!

If you are an insurance adjuster and you are looking for attorneys to handle your claims, contact Meridian Law for a free consultation. 

Dog Groomers Are Employees, Not Independent Contractors, Holds Court of Appeals

By: Robert D. Martin, Esq.

 

The Tennessee Court of Appeals held that a Knoxville dog grooming service owed five years-worth of unpaid unemployment taxes for groomers that it treated as independent contractors, when those groomers were actually employees.

Many employers believe that if they issue workers 1099s instead of W-2s, then those workers are independent contractors. This misconception can end up being very costly for employers, as it was in Concord Enterprises of Knoxville v. Department of Labor and Workforce Development. In that case, Concord was “in the business of grooming dogs.” Their groomers each determined their own prices for services on a case-by-case basis and could work at any location they wanted, although all of their services ended up actually being performed at Concord’s place of business. The groomers were paid a 50% commission by Concord each week. Customers called Concord to set appointments, but the customers could request a particular groomer.

Tennessee’s unemployment statute provides that all workers are employees unless three distinct factors are met: (A) the worker has been and will continue to be free from control and direction of the company in connection with the performance of their service; (B) the service is performed either outside the company’s usual course of business or outside of all the company’s places of business; and (C) the worker is customarily engaged in an independently established trade, profession or business. Tenn. Code Ann. § 50-7-207(e) (paraphrased). All three factors of this so-called “ABC Test” must be met in order for workers to be classified as independent contractors for purposes of unemployment taxes and eligibility.

The Court determined that Concord failed to satisfy the B prong of the test, since Concord was admittedly “in the business of grooming dogs” which was precisely the work being done by the groomers at issue. Additionally, all of the Groomers’ work occurred at Concord’s place of business. As a result of this misclassification, Concord was forced to pay back-unemployment taxes for the years 2006-2011.

This case serves as a warning that the cost of misclassifying workers can be steep. If you own or operate a business and are worried that you might be classifying your workers incorrectly, contact Meridian Law for help. 

Meridian Law Successfully Defends Breach of Contract Claim in Benton County, TN

January 17, 2017

Stacey & Lisa Powell v. Matthew Powell, 16-CV-314

In this matter, the Plaintiffs filed a lawsuit against the Defendant in the General Sessions Court for Benton County. The cause of action was breach of contract for an alleged unpaid debt of a specified amount.

Meridian Law successfully defended the action. The trial court dismissed the case on Defendant’s motion after a trial on the merits. At trial, the Plaintiff failed to introduce any evidence of a contract memorializing any actual debt owed. Meridian Law successfully argued that on an action for an unpaid debt, the parties must have a writing, signed by the person against whom the contract is to be enforced pursuant to the statute of frauds. T.C.A. 29-2-101.

Tennessee, like many other states, has a law on the books called the Statute of Frauds. This is an important law to know and understand, especially if you are considering loaning someone money. Tennessee’s Statute of Frauds states that certain types of contracts must be in writing in order to be enforced. Absent a writing, the contract cannot be enforced. The most common mistake we see, is that creditors loan money without a written contract. As in the case above, if there is no written contract, a creditor cannot enforce the agreement and is precluded by law from filing a lawsuit to collect the debt.

If you are considering loaning someone money, or entering into any other type of monetary transaction, you should reduce your agreement to a writing and have it signed by all parties. If you have been sued, or need to file suit to collect a debt, Meridian Law may be able to assist. Meridian Law can also assist in the drafting and review of contracts.

If you think Meridian Law can help you, give us a call today at 615-229-7499 or email info@meridian.law.

Tennessee Court of Appeals Vacates a Williamson County Chancery Court’s Order of Default Judgment

Regions Bank v. Chas A. Sandford, No. M2015-02215-COA-R3-CV

November 21, 2016

Service of process is essential to the tenant of due process. Service of process, in simple terms, means the delivery of legal papers. Once a lawsuit has been filed against a defendant, the plaintiff must serve the defendant with all of the legal papers. Only then can the lawsuit move forward. If the defendant is not properly served with process, the lawsuit cannot continue. If the defendant is properly served with process, then the lawsuit may continue pursuant to the applicable rules of procedure.

The Tennessee Rules of Civil Procedure (“Tenn. R. Civ. P.”), govern all aspects of civil procedure in the Chancery Courts of Tennessee. Tenn. R. Civ. P. 4.04 states, generally, that an individual defendant must be served with process personally, or by leaving process at the defendant’s usual dwelling house with a person of suitable age and discretion. Another option for service is that the plaintiff may mail process to the defendant by certified mail requesting restricted delivery. (See Tenn. R. Civ. P. 4.04(1)-(11) for a full list of acceptable forms of service). After the defendant has been served with process by an available method, the plaintiff must file proof of service with the court. Tn. R. Civ. P. 5.03.

If a defendant is properly served with process and fails to file a responsive pleading within the appropriate amount of time, then the plaintiff may ask the court to enter a default judgment against the defendant. Tn. R. Civ. P. 55.01.

In Regions Bank v. Chas A. Sandford, No. M2015-02215-COA-R3-CV (Tn. Ct. App. November 16, 2016), the Tennessee Court of Appeals at Nashville, vacated a default judgment ordered by the Williamson County Chancery Court. In that decision, the plaintiff’s process server attempted to serve the defendant eleven times without success. Following the eleven attempts at service, plaintiff again attempted to serve the defendant by certified mail. The United States Postal Service returned the receipt marked, “Return to Sender,” “Unclaimed,” and “Unable to Forward.” The plaintiff then filed an affidavit indicating that service had been properly completed – even though service was not completed pursuant to the Tenn. R. Civ. P.

Regions Bank then filed a motion for default judgment against the defendant. Defendant finally responded by filing a “special appearance” contesting service of process. On September 25, 2015, the Williamson County Chancery Court granted plaintiff’s motion and entered a default judgment for $153,274.13 against the defendant. The defendant appealed.   

The Court of Appeals held that service cannot be completed by mail unless the record contains a return receipt showing personal acceptance by the defendant. A return receipt marked “unclaimed” does not show personal acceptance by a defendant and therefore cannot serve as a basis for an entry of a default judgment.

Regions Bank argued on appeal that the defendant was on notice of the lawsuit because he filed a “special appearance”. The Court of Appeals found that argument to be without merit because the law is clear: “actual notice of the lawsuit is not a substitute for service of process when the Rules of Civil Procedure so require.” Thus, the Court of Appeals held that the trial court abused its discretion by entering a default judgment based on service of process by mail with a return receipt marked “unclaimed.” In so finding, the Court of Appeals vacated the Williamson County Chancery Court’s order of default judgment against the defendant.

Service of process is vital in Tennessee to ensure that a defendant’s due process rights are protected. If a defendant is not properly served, no judgment may result. However, if the court does enter a judgment against a defendant that has not been properly served, that judgment could be vacated.

If you are a defendant and have had a judgment entered against you by default, you may have options to have the judgment vacated. It is important that you seek the advice of legal counsel. The attorneys at Meridian Law, PLLC, may be able to assist. Call Meridian today at (615) 229-7499.

Vacating a Judgment in Tennessee

November 12, 2016

You just discovered that a judgment has been entered against you. This happened in one of three ways: (1) you failed to respond to the plaintiff’s complaint (be it a civil warrant or summons); (2) you failed to appear in court on the scheduled trial date; or (3) you lost at trial. If you did not respond to the plaintiff’s complaint or you failed to appear in court, a default judgment was entered against you. If you lost at trial, a trial judgment was entered against you. The typical remedy after losing a case after a trial is to file for an appeal, which is outside the scope of this article. This article is about how to vacate a judgment in lieu of filing an appeal. 

Judgments are bad for many reasons and should be addressed promptly. They may appear on your credit report and lower your score significantly. The judgment-creditor can garnish your bank accounts and your wages, and can levy on real and personal property. A judgment can be generally enforced for a period of ten years, and judgments accrue interest at the statutory rate.

Depending on which court entered the judgment, the time frames, rules, and procedure differ on when you can file the appropriate motion for relief.

I.                   General Sessions Court.

The General Sessions Court in Tennessee is a court of limited jurisdiction. Each county in Tennessee has a General Sessions Court. The General Sessions Court derives its powers and authority solely by statute. “In the absence of specific statutory authority, the authority of the General Sessions Court ends when it enters judgment.” Jackson Energy Authority v. Diamond, 181 S.W.3d 735 (Tenn. Ct. App. 2005). Why does this matter if you have had a judgment entered against you? It matters because once court ends, and the court has entered a judgment against, it no longer has the authority or power to vacate or set aside the judgment – with one limited exception.

That exception is Tennessee Rule of Civil Procedure 60. The Tennessee Rules of Civil Procedure do not typically apply to the General Sessions Court unless applied by statute. Civil Procedure Rule 60 has been applied to the General Sessions Court by Tennessee Code Annotated (“T.C.A.”), § 16-15-727.

T.C.A. § 16-15-727, applies the general principal of Tenn. R. Civ. P. 60 to General Sessions Courts, but the time frames for petitioning the court have changed. A person only has ten (10) days to file a motion with the court to set aside a judgment after the date of judgment. If you just happen to discover that a judgment was entered against you within 10 days of its entry; then you need to file a motion to set aside or vacate that judgment and state the grounds that support your motion immediately. Depending on the county, you would also want to check the local rules of procedure for any additional requirements on filing such a motion.

Another, more extreme option to seek relief from a judgment in the General Sessions Court would be to file a collateral attach on the judgment in the Circuit or Chancery Court. In other words, you could file a new and separate complaint to set aside the judgment of the General Sessions Court. One such case that successfully accomplished a collateral attack is Tanner v. Harris, 150 S.W.3d 161 (2003). In that case, a property owner brought an action in the Shelby County Chancery Court to set aside a default judgment on the grounds that the defendant was not served with process. The plaintiff in that matter was successful in setting aside the judgment. So if you have ample evidence that you were not served with process, and you are outside of the time limitations of taking action in the General Sessions Court, then perhaps a collateral attack may be an option for you.

Setting aside or vacating a judgment in the General Sessions Court is difficult and is an uphill battle. But it is possible in some situations. If you have discovered a judgment against you, you should immediately consult counsel.

 II.                Circuit & Chancery Courts.

If a judgment has been entered against you in a Circuit or Chancery Court, you may have a better chance of getting that judgment set aside. That is because those courts have broader power and the Tennessee Rules of Civil Procedure apply.

Tenn. R. Civ. P. 60.02, allows parties to file a motion to vacate or set aside a judgment. This motion must be made within one year of the judgment pursuant to parts 1 and 2 of that Rule, or within a reasonable time for the other parts of the Rule. Part 5 of the Rule states, “any other reason,” which would include non-service of process, or an irregularity. However, the court must look at additional factors when determining whether a judgment may be set aside. A party seeking relief from a judgment under Rule 60 bears the burden of proving it is entitled to relief by clear and convincing evidence. McNeary v. Baptist Memorial Hosp., 360 S.W.3d 429 (2011).

The test applied to evaluate a motion to set aside a default judgment due to mistake, inadvertence, surprise, or excusable neglect requires a consideration of the following factors: (1) whether the default was willful, (2) whether the defendant has a meritorious defense, and (3) whether the non-defaulting party would be prejudiced if relief were granted. Patterson v. SunTrust Bank, 328 S.W.3d 505 (2011). Additionally, excusable neglect requires the court to look at even more factors. These include: (1) the danger of prejudice to the party opposing the late filing; (2) the length of the delay and its potential impact on proceedings; (3) the reason why the filing was late and whether the reason or reasons were within the filer's reasonable control; and (4) the filer's good or bad faith. Ferguson v. Brown, 291 S.W.3d 381 (2008).

One case in which a movant successfully set aside a default judgment was the of Reynolds v. Battles, 108 S.W.3d 249 (2003). In that case, the defendants were able to show that they were never served with process because the service returns indicated that notices were sent to a wrong address.

Once again, seeking to set aside or vacate a judgment in a Chancery or Circuit court is difficult and is an uphill battle. The time for filing such a motion is more forgiving than in General Sessions Court, but the burden lies with the moving party to meet the tests of the law and provide sufficient evidence showing why the judgment should be set aside.

III.             Conclusion.

Sometimes it is possible to set aside a judgment that you discover was entered against you. Depending on which court entered the judgment, different rules and law apply. You should consult with an attorney as quickly as you can.

If you are seeking to set aside a judgment, contact the attorneys at Meridian Law, PLLC, at (615) 229-7499 today for a free consultation. We may be able to assist you.

Disclaimer:

The information contained on this blog article is for general informational purposes only. It is not intended as legal advice. It does not create an attorney-client relationship nor does it guarantee representation or any specific outcome. The information contained herein should not be relied up if you seek relief from a court of law. The law is constantly changing and while we try to keep articles up to date, it is possible that the law is no longer applicable. Consult with an attorney if you believe that you may have a legal issue.

Supreme Court Requires Uninsured Motorist Carrier to Cover Insured Hit by Self-Insured Rental Car

By: Robert D. Martin, Esq.

November 11, 2016

The Tennessee Supreme Court held in a split decision that a rental car was an “uninsured motor vehicle” under an insurance policy, when that vehicle was used to intentionally run over the Uninsured Motorist (UM) carrier’s insured. The majority reasoned that because the rental company was exempt from liability by a federal statute for the tortious acts of its customers, the rental vehicle was uninsured specifically in the context of tort actions arising out of the vehicle’s use.

In Martin v. Powers, the plaintiff was the insured at issue. He owned a bar, and refused to serve alcohol to the defendant who he believed to be intoxicated. The defendant left the bar, and the plaintiff followed him outside. The defendant then got in his rented car and purposefully ran over the plaintiff, who was standing on the sidewalk and was not in his vehicle. The plaintiff brought a lawsuit against the defendant driver, the rental car company, and his UM carrier. The rental car was self-insured by the rental company.

The UM policy provided, as most do, that an “uninsured motor vehicle does not mean a vehicle. . . owned or operated by a self-insurer under any applicable motor vehicle law, except a self-insurer which is or becomes insolvent.”

The Court noted that when a vehicle is self-insured, it is for all intents and purposes insured. The Court made a distinction, however, for instances in which a self-insured vehicle is not insured. Under a federal law passed in 2005, rental car companies are not subject to vicarious liability for the actions of their rental customers. Because of this law, the rental car company was dismissed early from the lawsuit here. The Court reasoned that because the rental company was immune from vicarious liability lawsuits arising from the acts of its customers, the company was not self-insured against those specific types of lawsuits arising from the acts of its customers. Because it was not self-insured in that context, and the company held no separate policy on the cars, the vehicle was uninsured with respect to vicarious liability claims.

Additionally, the Court held that the qualifier “any applicable motor vehicle law” in the policy, was ambiguous and therefore interpreted it against the insurer in favor of the insured. The Court believed that because there are many different motor vehicle state, local, and federal laws that may have different definitions of what a self-insurer is, there was no way to determine which specific definition of “self-insured” the policy intended.

Justice Kirby dissented from the majority opinion, stating her belief that the case exposes a hole in Tennessee law. The Legislature did not contemplate a scenario in which a vehicle can be considered insured if owned by a self-insurer, even though the owner/self-insurer cannot legally be held liable for the damages caused by the vehicle, she reasoned.

The case leaves open all sorts of questions for insurers, namely, what can an insurer do to ensure that it will not be held liable for accidents arising out of the use of a rental car?

If you have any questions about UM coverage in the rental car context, contact the attorneys at Meridian Law, PLLC, at (615) 229-7499 today for a free consultation. 

 

PRESS RELEASE: Meridian Law Adds New Attorney

FOR IMMEDIATE RELEASE

October 14, 2016

MERIDIAN LAW ADDS NEW ATTORNEY

             Nashville, TN – Meridian Law, PLLC, (http://www.meridian.law) is pleased to announce that Robert D. Martin has been hired as an associate. The addition of Mr. Martin in the firm’s Nashville office will enable it to expand its practice areas and to continue offering excellent service to its clients.

           Robert D. Martin, Esq., is a graduate of Belmont University College of Law (’15), where he served as Editor-in-Chief of the Law Review. Prior to joining Meridian, Robert worked at a boutique labor and employment law firm in Nashville. As a law student, he worked as a Research Assistant for Professor Lynn Zehrt and as an intern-clerk for Tennessee Supreme Court Justice Jeffrey Bivins. He competed on the school’s nationally ranked Mock Trial Team. Robert also served as the Pro Bono Coordinator for the Belmont Legal Aid Society, and was awarded the title of Law Student for Justice by the Tennessee Supreme Court for dedicating over 75 hours of pro bono legal services to the community. His practice areas include employment law, landlord/tenant law, insurance defense, and civil litigation. Robert is licensed in Tennessee.

         Meridian Law, PLLC, offers a wide variety of legal services and innovative legal solutions to its clients. The firm’s business model is built around providing superior customer service and sound legal advice at a fair cost. The addition of these attorneys will allow Meridian to enhance that philosophy and expand its practice areas. For more information, contact Meridian Law today.

 

Contact:

Meridian Law, PLLC

Thomas W. Shumate IV, Managing Member

615-229-7499

tom.shumate@meridian.law