The First Facility Management Blog

A just released survey sponsored by the Institute of Real Estate Management (IREM®) and funded jointly by IREM and the NATIONAL ASSOCIATION OF REALTORS® (NAR), sought to identify current and emerging legal/liability issues impacting real estate management professionals.

The survey queried IREM members in leadership positions with their organizations about legal problems confronting them and their industry colleagues, and elicited perceptions about the impact of current economic conditions on these problems. An analysis of upwards of 700 relevant cases decided over the past two years as well as related legislative and regulatory activities during the same period were also included in this independently conducted survey.

IREM president Pamela W. Monroe, CPM®, explaining the rationale for the survey, stated: “A while back, IREM members identified ‘risk management’ as one of several critical issue affecting today’s real estate management industry (others included troubled properties, sustainability, technology, workforce development, and business competition). We undertook the survey to help our members and industry colleagues’ better address proliferating risk management challenges in their business practices, thereby enhancing their performance on behalf of the owners, investors, and other constituents they serve.”

Top Concerns Now: Debt Collection, Slip and Fall Disputes, Frivolous Lawsuits
The most significant current legal problems survey respondents identified are those relating to the day-to-day business of managing properties. Debt collection is a major area of concern, with 69% of respondents stating that it was a significant source of current disputes. Among the economic factors adversely affecting debt collection activities, said respondents, are the large numbers of retailers going out of business, growing lease defaults, and increasing numbers of residential tenants losing their jobs.

“Slip and fall” accidents and frivolous lawsuits, cited by 69% and 44% of respondents, respectively, also rank as top causes of current disputes. As with debt collection, many respondents believe the economic downturn is exacerbating both types of disputes. Some suggest that the depressed economy will lead more people to try to cash in on slips and falls. Others suggest that opportunists looking for easy money target landlords in frivolous suits, hoping to cheat the system in these hard economic times. Similarly, events on a property—situations in which a landlord or manager is blamed for a crime perpetrated by a third party—which ranked right under frivolous lawsuits as a key concern, is linked strongly to the recessionary environment. Some respondents cited the lack of jobs and other adverse economic conditions as reasons for the increasing the crime rate. Others observed that as the economy continues to decline, areas that were once rarely affected (by crime) have now been hard hit.

Issues On The Horizon: Wrongful Termination and Fair Housing
When asked to predict which problems would become more significant over the short term—the next two years—survey respondents again cited debt collection, frivolous lawsuits, slips and falls and events on a property. One employment issue—wrongful termination—also is seen to be increasing in importance.

By comparison, when the respondents were asked to rank potential future issues, several fair housing issues—handicap discrimination, advertising and target marketing, familial status discrimination, and race and religious discrimination—ranked at the top of, or high on, the list.

Training Needs Identified
Survey respondents also weighed in on where additional training may be needed to deal better with key legal issues and concerns. Their responses generally track the key issues identified in other parts of the survey, with training needs in the areas of debt collection and slip-and-fall incidents topping the list. Training also is perceived to be quite important to better handle issues related to potentially libelous occurrences on properties other than slips and falls; also, employee defamation and wrongful termination, and aspects of fair housing.

Key Findings Of Case Law And Statute Analysis
Following are some top-line survey findings:

• Debt Collection: Most of the 22 cases examined were dismissed or ended with a summary judgment for the defendant. The defendant was found liable in only case.
• Slip-and-Fall: 261 cases and jury-verdict reports were analyzed. In the 185 cases in which liability was determined, the landlord or management company was found not liable 70% of the time. The finding of no liability was made before trial in 22% of all cases. And most cases (56%) in which the defendant was found not liable required a trial. This is unusual as most cases involving other premises liability issues that decided for the landlord or management company did not require trials.
• Crimes on a Property: 61 case law and jury verdict reports were examined. In the 43 cases in which liability was determined, the landlord or management company was found not liable 77% of the time, most often without a trial.
• Condition of Tenant’s Premises: Although survey respondents did not indicate a significant number of current disputes in this area, the case-law survey indicated otherwise. Some 212 relevant cases were decided over the past two years. In cases in which liability was determined, the landlord or management company was found not liable 60% of the time. Moreover, the findings of no liability were made before trail in 28% of all 212 cases. No trial was required in 73% of the cases in which the defendant was found not liable. (On a separate but related note, the most common situations giving rise to large verdicts and settlements for landlords and real estate managers arose in residential settings and involved lead-based paint, fires, and dangerous dogs.)

About IREM
The Institute of Real Estate Management (IREM®) is celebrating its 75th anniversary in 2008. IREM has been the source for education, resources, information, and membership for real estate management professionals. An affiliate of the National Association of Realtors®, IREM is the only professional real estate management association serving both the multi-family and commercial real estate sectors. With 80 U.S. chapters, eight international chapters, and several other partnerships around the globe, IREM is an international organization that also serves as an advocate on issues affecting the real estate management industry.

Earlier this month, Tyson Foods Inc. was sentenced in U.S. District Court in Arkansas to pay the maximum fine for willfully violating worker safety regulations that led to a worker’s death in its River Valley Animal Foods (RVAF) plant in Texarkana, AR, the Justice Department announced. The court ordered Tyson Foods to pay the $500,000, the maximum criminal fine as well as serve one year probation. [See the original FacilityBlog post on this article from 1/7/09.]

According to the court documents filed in the case, Tyson operated several RVAF plants that recycled poultry products into protein and fats for the animal food industry. As part of the rendering process in four of the plants, the company used high-pressure steam processors called hydrolyzers to convert the poultry feather into feather meal.

Decomposition of biological material such as poultry feathers produces hydrogen sulfide gas, an acute-acting toxic substance. Employees at the Tyson facilities often were exposed to the toxic gas when working on or near the hydrolyzers, which required frequent adjustment and replacement.

As of October 2003, corporate safety and regional management were aware that hydrogen sulfide gas was present in the RVAF facilities and three of the four facilities with hydrolyzers had taken measures to protect employees from hydrogen sulfide gas near the hydrolyzers. However, Tyson Foods did not take sufficient steps to implement controls or protective equipment to reduce exposure within prescribed limits or provide effective training to employees on hydrogen sulfide gas at the Texarkana facility despite an identical exposure, resulting in hydrogen sulfide poisoning of an RVAF Texarkana employee in March 2002.

As a result, at approximately 1 a.m. on Oct. 10, 2003, RVAF maintenance employee Jason Kelley was overcome with hydrogen sulfide gas while repairing a leak from a hydrolyzer and later died. Another employee and two emergency responders were hospitalized due to exposure during the rescue attempt. Two employees also were treated at the scene.

“Federal laws require employers to undertake steps that limit exposure to dangerous substances like the gas that killed Jason Kelley. Today, Tyson Foods is paying the maximum fine for failing to abide by these laws,” said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “The Justice Department takes its enforcement responsibility seriously and companies that ignore these laws and risk their employees’ lives will be prosecuted.”

The Occupational Safety and Health Act (OSHA) requires that employers furnish places of employment free from recognized hazards that are likely to cause death or serious physical harm to employees. This includes taking steps to ensure that employee exposure to dangerous substances such as hydrogen sulfide gas remains within prescribed limits.

The investigation was conducted by the Department of Labor and prosecuted by the Justice Department’s Environmental Crimes Section and the U.S. Attorney’s Office for the Western District of Arkansas under the Environmental Crimes Section’s worker endangerment initiative.

Last month (May 2009), a jury in U.S. District Court for the Southern District of Indiana ruled in favor of Duke Energy on four of six projects involved in a lawsuit affecting the company’s Midwest power plants. The jury ruled against the company on two Indiana projects.

The litigation stems from an effort that began in 1999, when the EPA filed a number of environmental enforcement actions across the utility industry. In this case, the EPA alleged that Cinergy, which merged with Duke Energy in 2006, undertook six power plant upgrades in Indiana and Ohio without installing modern pollution controls. The government alleged that the company’s work did not qualify as routine maintenance and that Cinergy should have predicted that the projects would increase emissions at the plants.

The jury found in favor of the company for three projects at its Gibson plant near Princeton, IN, and Beckjord Station in New Richmond, OH, and one project at its Gallagher Station in New Albany, IN. The jury ruled against two other Gallagher projects.

“We are pleased that after nearly 10 years of litigation, the company’s position has been vindicated on the vast majority of the projects about which the government originally complained,” said Marc Manly, Duke Energy’s chief legal officer. “Our employees performed work that was commonly undertaken in our industry to maintain the capability of our facilities to deliver reliable and affordable power to our customers.

“Although this litigation involves a particular technical issue, what’s important is that between 1998 and 2010, Duke Energy will have invested nearly $5 billion across the five states we serve to substantially reduce our emissions of sulfur dioxide, nitrogen oxide and other pollutants from our coal-based power plants,” Manly said. “The net result of these investments will be a reduction of sulfur dioxide and nitrogen oxide emissions by approximately 70 percent across Duke Energy’s five-state service area by 2010.”

Duke Energy is the third largest electric power holding company in the United States, based on kilowatt-hour sales. Its regulated utility operations serve approximately 4 million customers located in five states - North Carolina, South Carolina, Indiana, Ohio and Kentucky - representing a population of approximately 11 million people. Duke Energy’s commercial power and international business segments operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States.

Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: .
Photo: http://www.newscom.com/cgi-bin/prnh/20040414/DUKEENERGYLOGO

Source: Duke Energy

CONTACT: Angeline Protogere, +1-317-838-1338, or Tom Williams,
+1-980-373-4743, or 24-Hour, +1-704-382-8333

Web Site: http://www.duke-energy.com/

Tyson Foods Inc. pleaded guilty in U.S. District Court in Arkansas and agreed to pay the maximum fine for willfully violating worker safety regulations that led to a worker’s death in its River Valley Animal Foods (RVAF) plant in Texarkana, Ark., the Justice Department announced.

According to the information filed along with a plea agreement, Tyson operated several RVAF plants that recycled poultry products into protein and fats for the animal food industry. As part of the rendering process in four of the plants, the company used high-pressure steam processors called hydrolyzers to convert the poultry feather into feather meal.

Decomposition of biological material such as poultry feathers produces hydrogen sulfide gas, an acute-acting toxic substance. Employees at the Tyson facilities often were exposed to the toxic gas when working on or near the hydrolyzers, which required frequent adjustment and replacement.

As of October 2003, corporate safety and regional management were aware that hydrogen sulfide gas was present in the RVAF facilities and three of the four facilities with hydrolyzers had taken measures to protect employees from hydrogen sulfide gas near the hydrolyzers. However, Tyson Foods did not take sufficient steps to implement controls or protective equipment to reduce exposure within prescribed limits or provide effective training to employees on hydrogen sulfide gas at the Texarkana facility despite an identical exposure, resulting in hydrogen sulfide poisoning of an RVAF Texarkana employee in March 2002.

As a result, at approximately 1 a.m. on Oct. 10, 2003, RVAF maintenance employee Jason Kelley was overcome with hydrogen sulfide gas while repairing a leak from a hydrolyzer and later died. Another employee and two emergency responders were hospitalized due to exposure during the rescue attempt. Two employees also were treated at the scene.

“Federal laws require employers to undertake steps that limit exposure to dangerous substances like the gas that killed Jason Kelley. Tyson Foods willfully ignored these regulations and today is being held responsible,” said Ronald J. Tenpas, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “The Justice Department takes its enforcement responsibility seriously and companies that ignore these laws and risk their employees’ lives will be prosecuted.”

The Occupational Safety and Health Act (OSHA) requires that employers furnish places of employment free from recognized hazards that are likely to cause death or serious physical harm to employees. This includes taking steps to ensure that employee exposure to dangerous substances such as hydrogen sulfide gas remains within prescribed limits. Tyson Foods pleaded guilty today to a “willful violation of an OSHA standard resulting in the death of an employee,” the most serious offense available to OSHA.

According to the plea agreement (which was reached on 1/6/09), Tyson Food has agreed to pay $500,000, the maximum criminal fine. The company also will serve one year probation.

The investigation was conducted by the Department of Labor and prosecuted by the Justice Department’s Environmental Crimes Section and the U.S. Attorney’s Office for the Western District of Arkansas under the Environmental Crimes Section’s worker endangerment initiative.

Keeping violence out of the workplace is a top priority for employers everywhere. But as more states pass laws giving employees the right to bring guns onto company parking lots, many facility managers now feel caught in the proverbial crossfire, writes James P. Anelli, a Newark, NJ-based attorney in LeClairRyan’s Labor and Employment Group in a new article.

Anelli feels there is a growing and legally controversial trend among state legislatures to pass laws that actually prevent employers from keeping guns out of workplace parking lots. Indeed, he notes, states that have passed such legislation now include Georgia, Florida, Oklahoma, Alaska, Kentucky, Mississippi, Kansas, and Minnesota, and similar laws are under consideration in the statehouses of Alabama, Louisiana, Montana, Tennessee, Utah, and Virginia.

The aim of these laws, typically introduced by pro-gun lawmakers and supported by the National Rifle Association, is to enable employees to exercise their constitutional right to possess and carry firearms. But the statutes create a difficult dilemma for company executives who are legally charged with maintaining workplace safety, Anelli notes.

Employers, for example, must follow strict workplace safety guidelines issued by the U.S. Occupational Safety and Health Administration (OSHA). Yet, legal opinion is divided on whether these new state laws conflict with OSHA’s general safety requirements. In October 2007, for example, a federal judge issued an injunction against the enforcement of Oklahoma’s aforementioned legislation. The ruling agreed with the employer group arguments that the new laws created an obstacle to meeting OSHA’s requirement to maintain a safe workplace.

Given this legal ambiguity, Anelli says, facility professionals in states that have passed such laws might make a critical mistake — concluding that they have been relieved of their obligation to keep the workplace, including its parking lot, safe. “It is important, despite such laws, to work very closely with security professionals, attorneys, and local law enforcement officials in defusing situations involving potential violence and the possible use of firearms,” explains the veteran attorney.

Anelli spells out concrete steps executives can take to protect their companies from liability — and to protect their employees from workplace violence despite the pro-gun laws. Some types of businesses, for example, may have been legally exempt from the applicable laws, which vary widely from state to state, and can therefore continue enforcing parking lot gun bans. Others might be able to carve out “secured parking areas” that are gun-free but still in compliance with their states’ laws. None of the laws, the attorney emphasizes, protects employees from coming into the actual workplace with a gun. Employers are free to keep firearms out of the company building, and they should continue to watch closely for employee behavior suggestive of possible violence.

Concerned employers, should they choose to do so, might work with other businesses to fight this type of legislation. The first step is to monitor the shifting legal landscape for changes that will affect their own workplace safety responsibilities.

“It is inevitable that OSHA will eventually have to act on this issue, either directly or indirectly, when business groups obtain rulings enforcing OSHA’s general safety requirements and enjoining the enforcement of these laws,” Anelli says. “In the final analysis, while some employers’ groups have said that the days of the Wild West are returning, it seems more likely that these issues will soon be ‘played out’ in the courts.”

Testwell Labs handled steel and concrete testing for projects around NYC, including the new Yankees Stadium (Photo: NY Times)

Yesterday (10/30/08), top executives, including company President, V. Reddy Kancharla and 11 others, from Testwell Laboratories of Ossining, NY were indicted for corruption charges related to falsified or incomplete test results. The company was responsible verifying the integrity for concrete and steel used in major building projects in and around the New York City area. High profile clients include the Freedom Tower at the World Trade Center site and the new Yankees Stadium–both currently under construction.

From The Associated Press:
Manhattan prosecutors have been investigating charges for months that Testwell falsified test results for projects or billed companies for tests it never did, a law enforcement official told The Associated Press, speaking on condition of anonymity because the indictment had not been released publicly. The company’s president, V. Reddy Kancharla, and other company officials are also named in the indictment. Charges will include corruption, fraud, and racketeering over a five year period.

So far, no structural integrity issues have been detected due to the “dummied” results (as many as 1,200 tests at 102 projects, according to a report in today’s New York Daily News), but random checks will be scheduled at affected building sites. Some industry experts think the doctored results may just degrade the long-term integrity of the materials, possibly causing the “structures to deteriorate faster.” (NY Daily News)

The company dominates the testing marketing in the New York metro area, and it holds approximately $12 million in pending contracts around the city. If convicted, the executives could face between 8 1/3 to 25 years in prison.