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The Complainants are Tractor Supply Co. of Texas, LP and Tractor Supply Company (“Complainants”), of Tennessee, United States of America (“United States”), represented by Waller Lansden Dortch & Davis, LLP, United States. Complainant Tractor Supply Company, a Delaware corporation, is the sole general partner of Complainant Tractor Supply Co. of Texas, LP, a Texas limited partnership.
The Respondent is Guisheng Fang (“Respondent”), of Hagerstown, Maryland, United States.
The disputed domain names <tractorsupplies.name> and <tractorsupply.name> (the “Disputed Domain Names”) are registered with GoDaddy.com, Inc. (the “Registrar”).
The Complaint was filed with the WIPO Arbitration and Mediation Center (the “Center”) on May 29, 2009. On May 29, 2009, the Center transmitted by email to the Registrar a request for registrar verification in connection with the Disputed Domain Names. On May 29, 2009, the Registrar transmitted by email to the Center its verification response confirming that Respondent is listed as the registrant and providing the contact details. On June 5, 2009, the Center verified that the Complaint satisfied the formal requirements of the Uniform Domain Name Dispute Resolution Policy (the “Policy” or “UDRP”), the Rules for Uniform Domain Name Dispute Resolution Policy (the “Rules”), and the WIPO Supplemental Rules for Uniform Domain Name Dispute Resolution Policy.
In accordance with the Rules, Paragraphs 2(a) and 4(a), the Center formally notified Respondent of the Complaint, and the proceedings commenced on June 5, 2009. In accordance with the Rules, Paragraph 5(a), the due date for Response was June 25, 2009. Respondent did not submit any response. Accordingly, the Center notified Respondent of its default on June 26, 2009.
The Center appointed Steven M. Auvil as the sole panelist (the “Panel”) in this matter on July 2, 2009. The Panel finds that it was properly constituted. The Panel has submitted the Statement of Acceptance and Declaration of Impartiality and Independence, as required by the Center to ensure compliance with the Rules, Paragraph 7.
Complainants, or their predecessors-in-interest, have been doing business in the United States since 1938 under the service mark TRACTOR SUPPLY COMPANY. Over the years, as Complainants' business grew, several variations of the TRACTOR SUPPLY COMPANY service mark, including TRACTOR SUPPLY, TRACTOR SUPPLY CO., and TSC (the “TRACTOR SUPPLY Marks” or “TRACTOR SUPPLY Brand”), have been adopted. Complainant Tractor Supply Co. of Texas LP is the owner of the TRACTOR SUPPLY Marks, which it licenses to Complainant Tractor Supply Company.
Relevant to this matter, in particular, Complainant Tractor Supply Co. of Texas LP is the owner of United States Trademark Registrations Nos. 3,039,473 for TRACTOR SUPPLY CO., registered January 10, 2006 and claiming a first use date of 1938, and 1,846,015 for TSC TRACTOR SUPPLY CO. & Design, registered July 19, 1994. The former registration covers “retail store services in the field of animal care, home improvement, recreation, and apparel; retail store services in the field of automotive accessories, namely batteries, lubricants, tarps, truck toolboxes, trailers, towing parts, and fuel tanks; retail store services in the field of maintenance equipment, namely air compressors, welders, generators, pumps, electrical products, plumbing, and paint; retail store services in the field of lawn and garden products, namely seed and bulbs, fertilizer, windmills, and yard accessories” in International Class 35. The latter registration covers “retail stores featuring hardware; automotive supplies; household supplies; apparel; pet foods and pet supplies; farm supplies; swimming pool supplies and lawn care equipment; and mail order catalog services featuring hardware; automotive supplies; pet foods and pet supplies; farm supplies; namely, fencing, livestock feeds, mineral supplements, livestock feeders and waterers, veterinary supplies, rope and twine; sprayers; pumps; paints and painter's supplies; air compressors; welders and welding supplies; and electrical and gas heaters” in International Class 42. Since 1999, Complainants have also registered and used the domain name <tractorsupply.com> in connection with the aforesaid services.
Complainants' business, Tractor Supply Company, is a well-known publicly traded company with annual net sales of over USD three billion in 2008. Tractor Supply Company operates more than 800 retail stores throughout more than 40 states in the United States. In fact, one of Tractor Supply Company's stores, opened in April 2002, is located in Hagerstown, Maryland, approximately five miles from Respondent's registered address for the Disputed Domain Names.
The TRACTOR SUPPLY Brand is the leading farm and ranch store brand in the United States. In 2008 alone, Complainants spent USD 58 million to promote and advertise the TRACTOR SUPPLY Brand.
Respondent first registered each of the Disputed Domain Names with the Registrar on July 11, 2007, more than 65 years after Complainants' TRACTOR SUPPLY Marks were first used in the United States, and more than 8 years after Complainants began using <tractorsupply.com>. Complainants provided evidence that Respondent is using the Disputed Domain Names for commercial purposes, namely, to provide “click-through” links to various websites, including links to websites of Complainants' competitors that promote and sell farm-related and ranch-related goods and services.
In their Complaint, Complainants contend that their TRACTOR SUPPLY Marks are widely known to consumers to identify specifically Tractor Supply Company's chain of retail stores and that they have acquired widespread consumer goodwill by virtue of nearly 70 years of widespread use. Complainants further contend that they have invested substantial time, expense, and effort in the creation of goodwill and recognition regarding the TRACTOR SUPPLY Marks and allege that they have consequently acquired valid and far-reaching common law trademark rights therein. In support of their Complaint, Complainants point to the previously referenced U.S. trademark registrations, as well as their common law rights in the TRACTOR SUPPLY Marks and the domain name <tractorsupply.com>, and allege that their marks are distinctive in the minds of relevant consumers as identifying Complainants' goods and services.
Complainants contend the Disputed Domain Names are confusingly similar to their TRACTOR SUPPLY Marks and allege that they are identical or confusingly similar to Complainants' primary domain name <tractorsupply.com>. Complainants contend that the substitution of the generic top-level domain “.name” does not negate the confusing similarity to Complainants' TRACTOR SUPPLY Marks. Complainants also contend that these types of domain names are typically registered to generate revenue from consumers' mistakes or to be held for sale to the relevant trademark owner. When combined with the fact that the Disputed Domain Names contain links promoting goods and services that are nearly identical to those offered by Complainants, Complainants assert that it is clear that Respondent registered these particular domains precisely because of their confusing similarity to Complainants' TRACTOR SUPPLY Marks and domain name.
In addition, Complainants contend that Respondent has no rights or legitimate interests in the Disputed Domain Names. Complainants contend that there is no evidence that the Disputed Domain Names are the actual legal names of Respondent or that they are names that are commonly used to identify Respondent. Furthermore, Complainants contend that they have never granted Respondent rights to use the TRACTOR SUPPLY Marks. Complainants also contend that Respondent has never used the Disputed Domain Names in connection with a bona fide offering of goods or services, nor has Respondent even demonstrated preparations to use the Disputed Domain Names in connection with a bona fide offering of goods or services. Complainants further contend that Respondent is using the Disputed Domain Names to attract confused customers of Complainants and to divert those customers to websites that compete with Complainants. Moreover, Complainants contend that because Respondent is using the Disputed Domain Names to redirect consumers to other commercial websites for profit, Respondent is not making a legitimate noncommercial or fair use of the Disputed Domain Names.
Finally, Complainants contend that Respondent registered and is using the Disputed Domain Names in bad faith. In support of this contention, Complainants offer several potential bases. Among these, Complainants assert: (1) that Respondent has registered or has acquired the Disputed Domain Names primarily for the purpose of selling, renting, or otherwise transferring the domain name registrations to Complainants or to a competitor of Complainants; (2) that Respondent is holding the Disputed Domain Names to prevent Complainants from registering them and is benefiting from those customers searching for Complainants' website; and (3) that Respondent, by registering and using the Disputed Domain Names that include Complainants' TRACTOR SUPPLY Marks, intends to divert users attempting to access Complainants' website in order to offer them goods and services similar to those sold by Complainants. In short, Complainants contend that Respondent is exploiting Complainants' federally protected and common law trademark rights in the TRACTOR SUPPLY Marks for Respondent's own benefit and commercial gain. Complainants also contend that, given the close proximity of Complainants' store to Respondent's registered address and the similarity of the Disputed Domain Names to Complainants' own website, it is nearly inconceivable that Respondent was not aware of Complainants in registering the Disputed Domain Names. On the other hand, Complainants contend, based upon a letter Complainant addressed to Respondent, which was returned as “undeliverable,” that the contact information provided by Respondent is incorrect and is additional evidence of Respondent's bad faith. Lastly, Complainants contend that the fact that Respondent has registered at least two slight variations of Complainants' domain name <tractorsupply.com> is further evidence of Respondent's bad faith.
The Panel's jurisdiction is limited to a determination of whether Complainants have proved the necessary elements of a claim for transfer or cancellation of each of the Disputed Domain Names under the Policy and the Rules. Policy, Paragraph 4(a). The discussion and decision will be governed by the terms of the Policy.
(iii) that the domain names registered by Respondent have been registered and are being used in bad faith.
In view of Respondent's failure to submit a Response, the Panel will decide this administrative proceeding based on Complainants' undisputed allegations for which there is support, pursuant to the Rules, Paragraphs 5(e), 14(a), and 15(a), and draw such inferences it considers appropriate, pursuant to the Rules, Paragraph 14(b).
The Panel finds that the Disputed Domain Names are confusingly similar to Complainants' TRACTOR SUPPLY Marks. The Panel first notes that the owner of a descriptive or generic trademark or service mark, whether registered or unregistered, holds a right to exclude others that is far more circumscribed than if the mark is fanciful. See, e.g., Classmates Online, Inc. v. John Zuccarini, individually and dba RaveClub Berlin, WIPO Case No. D2002-0635 (addressing the complainant's mark CLASSMATES). The registrant of a descriptive mark may have more limited rights to exclude others from using such term, under both United States trademark law and the Policy. Ciphergen Biosystems v. David Sabatini, WIPO Case No. D2002-0600. But, in view of Respondent's failure to submit a response, Respondent has neither challenged Complainants' asserted first use dates nor the distinctiveness of the TRACTOR SUPPLY Marks.
It is well-settled that the Policy is applicable to unregistered marks. See Imperial College v. Christophe Dessimoz, WIPO Case No. D2004-0322 (finding that the Policy is applicable to unregistered trademarks and service marks). Common law trademark and service mark rights exist when a party proves that there is enough goodwill and reputation in and to a name and sufficient association of the same with the party itself. Id. Complainants assert that they have continuously used the TRACTOR SUPPLY Marks, which include the mark TRACTOR SUPPLY, for several decades. Complainants have invested substantial time, expense, and effort in the creation of goodwill and recognition regarding the TRACTOR SUPPLY Marks. And customers have come to recognize these marks as identifying Complainants and their goods and services. Accordingly, based on the evidence provided, the Panel finds that Complainants also hold valid common law service mark rights in, among others, the mark TRACTOR SUPPLY. Again, by failing to file a response, Respondent has not contested Complainants' common law service mark rights in, among others, the TRACTOR SUPPLY mark.
The Disputed Domain Name <tractorsupply.name> consists of Complainants' TRACTOR SUPPLY mark in its entirety and the addition of the generic top-level domain “.name”. Furthermore, it is essentially identical to Complainants' registered domain name <tractorsupply.com>, in which Complainants also assert common law service mark rights. Likewise, the Disputed Domain Name <tractorsupplies.name> consists of the Complainants' TRACTOR SUPPLY mark, albeit in its plural form, and the addition of the generic top level domain “.name”.
The Panel finds that the Disputed Domain Name <tractorsupply.name> is confusingly similar to Complainants' TRACTOR SUPPLY mark because it fully incorporates that mark. See PepsiCo, Inc. v. PEPSI, SRL (a/k/a P.E.P.S.I.) and EMS COMPUTER INDUSTRY (a/k/a EMS), WIPO Case No. D2003-0696 (“incorporating a trademark in its entirety can be sufficient to establish that a domain name is identical or confusingly similar to a registered trademark”). The Panel also finds that the Disputed Domain Name <tractorsupplies.name> is confusingly similar to Complainants' TRACTOR SUPPLY mark. The Panel considers that this plural form is virtually identical to the Complainants' mark. As stated by the panel in i2 Technologies Inc v. Richard Alexander Smith, WIPO Case No. D2001-0164, “it is trite law and basic common sense that the mere change from singular to plural or vice versa is not sufficient to avoid confusion for trade mark purposes or passing off purposes.” Moreover, with respect to both of the Disputed Domain Names, the use of the top level domain “.name” does not change the identical or similar nature of the mark. It is well established in many panel decisions that suffixes such as “.com”, “.org”, or “.net” should not be taken into account when considering the issue of identity or confusing similarity. See, e.g., Busy Body, Inc. v. Fitness Outlet Inc., WIPO Case No. D2000-0127 (stating that “the addition of the generic top-level domain (gTLD) name ‘.com' is . . . without legal significance since use of a gTLD is required of domain name registrants”).
For these reasons, the Panel concludes that the Disputed Domain Names are confusingly similar to the TRACTOR SUPPLY mark, a service mark in which Complainants have rights.
Under the Policy, rights or legitimate interests in a domain name may be demonstrated by showing that: (i) before any notice of this dispute, Respondent used, or demonstrably prepared to use, the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services; (ii) Respondent has been commonly known by the domain name, even if no trademark or service mark rights have been acquired; or (iii) Respondent is making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain to misleadingly divert customers or to tarnish the trademark at issue. Policy, Paragraph 4(c).
The burden of proving the absence of a right or legitimate interest in a disputed domain name falls on the complainant, but panels have long recognized that the information needed to prove such a right or interest is normally in the possession of the respondent. In order to avoid requiring complainants to prove a negative, which will often be impossible, panels have typically accepted that once a complainant has established a prima facie case that a respondent lacks rights or legitimate interests, the burden of proof passes to the respondent to show that it does indeed have such a right or interest. See, e.g., Belupo d.d. v. WACHEM d.o.o., WIPO Case No. D2004-0110.
Complainants contend that Respondent has no rights or legitimate interests in the Disputed Domain Name. Respondent has not submitted any arguments or evidence in rebuttal.
Nothing in the record suggests that Respondent is commonly known by either of the Disputed Domain Names or that, before any notice of this dispute, Respondent used, or demonstrably prepared to use, the Disputed Domain Names or a name corresponding to the Disputed Domain Names in connection with a bona fide offering of goods or services. In fact, Complainants have offered evidence that Respondent has used the Disputed Domain Names to re-direct Internet users to other websites offering farm-related and ranch-related goods and services in competition with Complainants' goods and services. Furthermore, Complainants have asserted that Complainants have never granted Respondent rights to use any of the TRACTOR SUPPLY Marks for this or any other purpose. Respondent's use of the Disputed Domain Names to provide links to goods and services that are related to those of Complainants does not constitute a bona fide offering of goods or services. See, e.g., St. Baldrick's Foundation Inc. v. Wan-Fu China, Ltd., WIPO Case No. D2007-0705 (stating that prior panels “have decided that the use of confusingly similar domain names in connection with a ‘click-through' scheme does not serve to establish a bona fide offering of goods or services”).
Furthermore, the undisputed record indicates that Respondent registered the Disputed Domain Names more than 65 years after Complainants' established rights in the TRACTOR SUPPLY Marks through use and more than 8 years after Complainants began using <tractorsupply.com>. Given the record before the Panel, it is a reasonable inference that Respondent was aware of Complainants and their business when Respondent registered the Disputed Domain Names and that Respondent deliberately incorporated Complainants' TRACTOR SUPPLY mark in the Disputed Domain Names in order to suggest an association between the Disputed Domain Names and Complainants.
In short, there is simply no evidence in the record from which the Panel could conclude that Respondent has rights to or legitimate interests in the Disputed Domain Names.
The Panel, especially in the absence of any response from Respondent, considers that the circumstances described in Paragraph 4(c) of the Policy, of proof of legitimate interest by Respondent in the Disputed Domain Names, likely do not exist.
For these reasons, in accordance with the Policy, Paragraph 4(a)(ii), the Panel finds that Respondent has no rights or legitimate interests in the Disputed Domain Names.
Complainants also argue that Respondent registered and is using the Disputed Domain Names in bad faith. Complainants have submitted evidence that the Disputed Domain Names resolve to an advertising portal with links to farm-related and ranch-related goods and services. In other words, Respondent appears to have used the Disputed Domain Names in order to intentionally trade on the goodwill in the TRACTOR SUPPLY mark and to attract traffic to other websites for commercial gain (pay-per-click revenue), which previous panels have concluded may support a finding of bad faith. See St. Baldrick's Foundation Inc. v. Web Advertising, Corp., WIPO Case No. D2007-0707 (“Prior panel decisions have consistently recognized that the registration of domain names which are then used to operate ‘click-through' sites, can be considered to be evidence of bad faith.”); Arla Foods amba v. Jucco Holdings, WIPO Case No. D2006-0409 (“[T]he practice of registering a domain name and using it to redirect a user to a website which is used for the sale of competing services constitutes evidence of registering and using a trademark in bad faith.”).
As already mentioned, the Panel finds that it is likely that Respondent was aware of Complainants and their business when Respondent registered the Disputed Domain Names, which evidences bad faith on Respondent's part. See PepsiCo, Inc. v. “null”, aka Alexander Zhavoronkov, WIPO Case No. D2002-0562 (“blatant appropriation of a universally recognized trademark is of itself sufficient to constitute bad faith”); see also Veuve Clicquot Ponsardin, Maison Fondée en 1772 v. The Polygenix Group Co., WIPO Case No. D2000-0163 (bad faith is found where a domain name “is so obviously connected with such a well-known product that its very use by someone with no connection with the product suggests opportunistic bad faith”).
Moreover, the Panel is further convinced of Respondent's bad faith because, in the absence of any response from Respondent, the Panel finds it doubtful that there is any legitimate reason for Respondent's choice of the Disputed Domain Names incorporating Complainants' TRACTOR SUPPLY mark.
Furthermore, the Panel finds that Respondent's registration of one domain name consisting exclusively of the TRACTOR SUPPLY mark and of another domain name consisting of a slight variation of the TRACTOR SUPPLY mark is further evidence of Respondent's bad faith.
In short, in this case, the Panel finds that the totality of the circumstances supports the conclusion that Respondent registered and is using the Disputed Domain Names in bad faith. Therefore, the Panel concludes that the bad faith element of the Policy is satisfied in this case.
For all the foregoing reasons, in accordance with the Policy, Paragraph 4(i), and the Rules, Paragraph 15, the Panel orders that the Disputed Domain Names <tractorsupplies.name> and <tractorsupply.name> be transferred to Complainants.

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EDWIN S. VAN DYKE & another [Note 1] vs. ST. PAUL FIRE AND MARINE INSURANCE COMPANY.
Present: WILKINS, LIACOS, NOLAN, & O'CONNOR, JJ.
CIVIL ACTION commenced in the Superior Court Department on September 2, 1981.
Jan Richard Schlichtmann (Kevin P. Conway with him) for the plaintiffs.
Jacob J. Locke (Lionel H. Perlo with him) for the defendants.
WILKINS, J. In our opinion issued today in Van Dyke v. Bixby, ante 663 (1983), we upheld judgments awarding damages to the Van Dykes, the plaintiffs in that action and in this one. The Bixby case, which we shall call the underlying action, involved the liability of the defendant physicians for a deceased associate's alleged negligence in the treatment of the plaintiff, Edwin S. Van Dyke. In this action, the Van Dykes seek to recover damages under G. L. c. 93A, Section 9, for alleged unfair claim settlement practices of the defendant insurer (St. Paul). The Van Dykes claim that St. Paul, as the defendants' insurer in the underlying action, did not adequately investigate their claims before rejecting their pretrial demand for settlement and that St. Paul had an obligation to make a reasonable pretrial offer of settlement because liability was reasonably clear.
A judge of the Superior Court granted summary judgment for St. Paul. We affirm the judgment because, although St. Paul did not establish by affidavit or otherwise that there was no material fact in dispute concerning the propriety of its claim settlement practices as to the Van Dykes, the Van Dykes were not adversely affected by any acts or omissions of St. Paul that may have been unlawful methods, acts, or practices under G. L. c. 93A, Section 9.
In January, 1980, the Van Dykes commenced the underlying action. In February, 1981, their attorney made a request through defense counsel for settlement of their claims for approximately $400,000, stating in detail the circumstances on which the Van Dykes then relied in asserting liability and damages. Apparently St. Paul made no written response to this request. On May 27, 1981, the Van Dykes' counsel sent a letter of demand under G. L. c. 93A, Section 9, to St. Paul's claims-loss supervisor in Boston, to which was attached the settlement request and associated material sent earlier to defense counsel.
their earlier request for settlement and asserted that St. Paul's failure to make "a fair, prompt, and reasonable settlement constituted an unfair claims settlement practice under [G. L. c. 93A and G. L. c. 176D, Section 3 (9)]."
On June 15, 1981, St. Paul's claims-loss supervisor answered the Van Dykes' letter of demand. He stated St. Paul's opinion that G. L. c. 93A was "wholly inapplicable to the above matter, at least in its present status." He added that "[i]n our view, based upon the information obtained to date, there is a reasonable likelihood that a jury would return a verdict in favor of the defendants at trial." He declined "at present to extend an offer of settlement."
The complaint in this G. L. c. 93A action was filed on September 2, 1981. In February, 1982, after the jury verdict for the Van Dykes in the underlying action, St. Paul moved for summary judgment. That motion, as amended, relied on the provision in its policy allegedly precluding it from settling claims without the insured doctors' consent. St. Paul further alleged that liability in the underlying action was not "reasonably clear" and thus it did not have to make a settlement offer. St. Paul advanced two other claims: that the plaintiffs lacked standing under G. L. c. 93A and that the action was premature. In support of its motion for summary judgment, St. Paul submitted an affidavit of its claims-loss supervisor and of its trial counsel in the underlying action.
demand because of the position taken by its insureds. The claims-loss supervisor's affidavit further referred to the pretrial advice of the insureds' experienced trial counsel in the underlying action that there was a reasonable likelihood that St. Paul would prevail at trial. The affidavit did not, however, state when St. Paul received that advice.
through St. 1973, c. 939, the plaintiffs claimed that the defendant employed unfair and deceptive settlement practices in handling no-fault insurance claims. We noted that only an insurance company's policyholder could assert a G. L. c. 93A violation against it for improper claim settlement practices. Id. at 81-82. After our Dodd opinion, the Legislature amended G. L. c. 93A, Section 9 (1), by St. 1979, c. 406, Section 1, to provide that "[a]ny person, other than a person entitled to bring action under [G. L. c. 93A, Section 11], who has been injured by another person's use or employment of any method, act or practice declared to be unlawful by section two . . . or any person whose rights are affected by another person violating the provisions of [G. L. c. 176D, Section 3 (9)] may bring an action . . . ." This 1979 amendment substantially broadened the class of persons who could maintain actions under G. L. c. 93A, Section 9. The plaintiffs, therefore, are entitled to relief under G. L. c. 93A, Section 9, if they were injured by any method, act, or practice of St. Paul that was unlawful under G. L. c. 93A, Section 2, or if their rights were affected by St. Paul's violation of G. L. c. 176D, Section 3 (9).
The plaintiffs focus on the claim that St. Paul violated G. L. c. 176D, Section 3 (9). They make no specific argument that St. Paul engaged in an unfair or deceptive act or practice made unlawful under G. L. c. 93A, Section 2. We thus turn to the provisions of G. L. c. 176D. Section 3 defines "unfair methods of competition and unfair or deceptive acts or practices in the business of insurance" to include "[u]nfair claim settlement practices." G. L. c. 176D, Section 3 (9). "[A]n unfair claim settlement practice" may be one of a number of acts or omissions. Id. The plaintiffs rely on three of the acts or omissions enumerated in Section 3 (9): "(d) Refusing to pay claims without conducting a reasonable investigation based upon all available information"; "(f) Failing to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear"; and "(n) Failing to provide promptly a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim . . . ."
St. Paul's affidavits we do not know what investigation it had conducted by June 15, 1981, or what reasonable investigation could have been conducted by that date. One may infer that St. Paul had had sufficient time to conduct a full investigation because the underlying malpractice action had been commenced on January 25, 1980. St. Paul's affidavits failed to show that there was no material fact in dispute concerning the reasonableness of its claims investigation prior to its denial of the claim. Thus, summary judgment for St. Paul cannot be supported on the ground that it was undisputed that it had conducted a reasonable investigation before denying the claim.
Summary judgment was properly entered for St. Paul. Even if St. Paul violated G. L. c. 176D, Section 3 (9) (d) and (f), the plaintiffs had to be adversely affected by that violation in order to be entitled to recover under G. L. c. 93A, Section 9. If St. Paul did not have adequate information to reject the G. L. c. 93A demand when it did, it ran the risk that subsequent events would not support its assertion that its insureds had a reasonable defense. Here, however, the affidavits filed in connection with St. Paul's motion for summary judgment show that the plaintiffs were not adversely affected by the refusal of the G. L. c. 93A demand. If St. Paul had conducted a proper investigation before rejecting that demand (as it may have, but the affidavits do not show it did), liability would not have been reasonably clear and St. Paul would have been warranted in rejecting the demand. Thus, any omission by St. Paul to comply with G. L. c. 176D, Section 3 (9), did not cause any injury to or adversely affect the plaintiffs. The plaintiffs, therefore, have no claim under G. L. c. 93A, Section 9.
[Note 1] Kathleen Van Dyke, his wife.
[Note 2] The Van Dykes filed a countermotion for summary judgment. In an affidavit, their counsel stated that he first learned on October 16, 1981, that St. Paul had retained a medical expert to testify in the underlying action.
[Note 3] The Van Dykes made a second G. L. c. 93A demand after the trial of the underlying action, which St. Paul rejected by a letter dated January 26, 1982. We assume, without deciding, that such a demand could properly be part of this case without an amendment of the complaint. We have considered the affidavits and supporting materials. They do not demonstrate any disputed material fact concerning St. Paul's posttrial violation of any obligation imposed on it by G. L. c. 93A, Section 9. St. Paul was warranted in declining to settle the Van Dykes' claim and in pursuing its appeal.
Even if there was a disputed material fact concerning St. Paul's posttrial conduct, thus requiring reversal of the summary judgment for St. Paul, we know from the record in Van Dyke v. Bixby, supra, that the Van Dykes would ultimately fail in this aspect of their claim. Issues on appeal in Van Dyke v. Bixby were substantial, and liability was not reasonably clear.
[Note 4] Clause (n), however, refers to a single instance of failing to give a reasonable explanation of the basis in the insurance policy for denying a claim. Lack of coverage or limited coverage could be a ground for such a denial. See Higgenbottom v. Aetna Casualty & Sur. Co., 12 Mass. App. Ct. 927 (1981). In the case before us, St. Paul gave a reasonably prompt response stating the basis in the insurance policy for denying the claim -- the absence of any reasonably clear liability of the insured's physicians. The facts show that St. Paul did not violate clause (n).
[Note 5] In Noyes v. Quincy Mut. Fire Ins. Co., 7 Mass. App. Ct. 723 (1979), the Appeals Court discussed a policyholder's claim under G. L. c. 93A, prior to its 1979 amendment, as if a single violation of G. L. c. 176D, Section 3 (9) (f), could be action made unlawful under G. L. c. 93A, Section 2 (a).
[Note 6] We need not reach St. Paul's claim that under the professional liability policy issued to the defendant physicians in the underlying action St. Paul had no right to settle the claim because it agreed that it "shall make no settlement of a claim or suit covered by [the policy] without the written consent of the Insured." In August, 1981, the defendant physicians stated in a letter that they wished to contest the action vigorously. The letter was sent after St. Paul rejected the G. L. c. 93A demand. St. Paul's response to the demand made no reference to this provision in the policy and arguably should have, if St. Paul was relying on it in denying the claim. See G. L. c. 176D, Section 3 (9) (n). The policy was, of course, issued long before the 1979 amendment of G. L. c. 93A, Section 9. It may be that an insurer may not rely conclusively on such policy language in the face of obligations expressed in G. L. c. 93A, Section 2, and G. L. c. 176D, Section 3 (9). See Transit Casualty Co. v. Spink Corp., 94 Cal. App. 3d 124, 135-136 (1979).
[Note 7] St. Paul's further ground for denying the G. L. c. 93A claim -- "G. L. c. 93A is wholly inapplicable to the above matter" -- is wrong as a matter of law, as our earlier discussion of the 1979 amendment of Section 9 of G. L. c. 93A shows.
[Note 8] We are in the peculiar position of having an opportunity to assess the reasonableness of the judgments of the physician and attorney expressed in their affidavits. In Van Dyke v. Bixby, supra, there was a substantial question, both at trial and on appeal, whether the defendant doctors were liable for the consequences of any negligent act committed in 1959 and whether there was any negligence of Dr. Alt in 1969 for which they would be liable. The doctors would not have been liable if Dr. Alt's only negligence occurred in 1970, after the partnership was terminated. The plaintiffs may have had a case for the jury to consider, but St. Paul's medical and legal advisors were well warranted in their advice.

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*217 Atty. Gen. Rufus L. Edmisten by Asst. Atty. Gen. Donald W. Stephens and Asst. Atty. Gen. James C. Gulick, Associate Atty. Gen., Raleigh, for the state.
Bruce W. Huggins, Lumberton, for defendant-appellant.
Although defendant has assigned no error to this phase of his trial, due to the seriousness of the offense and the severity of the punishment, we have carefully reviewed the record of the pretrial, as well as the trial, proceedings.
If defendant resolved in his mind a fixed purpose to kill his wife and thereafter, because of that previously formed intention, and not because of any legal provocation on her part, he deliberately and intentionally shot her, the three essential elements of murder in the first-degreepremeditation, deliberation, and maliceconcurred.
The evidence presented by the state in the case sub judice is more than sufficient to support the jury's verdict of first-degree murder. The statements made by defendant to his wife in January prior to the killing in July are of particular importance. At that time he told her twice that he was going to kill her and that "I mean it". The evidence showed that he carried out that determination some six months later in a most brutal manner.
We conclude that there was no error in the guilt determination phase of defendant's trial.
By his only assignment of error, defendant contends that the trial court erred in instructing the jury that if they found the murder of Mrs. Martin to be especially heinous, atrocious or cruel that this would be an aggravating circumstance which would permit them to recommend the imposition of the death penalty. We find no merit in the assignment.
First, defendant argues that the evidence in this case was insufficient to establish that the murder was especially heinous, atrocious, or cruel within the contemplation of G.S. § 15A-2000(e)(9) as interpreted by previous decisions of this court, and he cites State v. Goodman, 298 N.C. 1, 257 S.E.2d 569 (1979).
G.S. 15A-2000(e)(9) states that the jury may consider as an aggravating circumstance justifying the imposition of the death penalty the fact that the `capital felony was especially heinous, atrocious, or cruel.' While we recognize that every murder is, at least arguably, heinous, atrocious, and cruel, we do not believe that this subsection is intended to apply *218 to every homicide. By using the word `especially' the legislature indicated that there must be evidence that the brutality involved in the murder in question must exceed that normally present in any killing before the jury would be instructed upon this subsection. State v. Stewart [197 Neb. 497, 250 N.W.2d 849 (1977)], supra; State v. Rust [197 Neb. 528, 250 N.W.2d 867], supra; State v. Simants, 197 Neb. 549, 250 N.W.2d 881, cert. denied, 434 U.S. 878, 98 S. Ct. 231, 54 L. Ed. 2d 158 (1977). The Florida provision concerning this aggravating factor is identical to ours. Florida's Supreme Court has said that this provision is directed at `the conscienceless or pitiless crime which is unnecessarily torturous to the victim.' State v. Dixon, 283 So. 2d 1 (Fla.1973), cert. denied, 416 U.S. 943, 94 S. Ct. 1950, 40 L. Ed. 2d 295 (1974); see also, Alford v. State, 307 So. 2d 433 (Fla.1975), cert. denied, 428 U.S. 912, 96 S. Ct. 3227, 49 L. Ed. 2d 1221 (1976). Nebraska has also adopted the Florida construction of this subsection. Both Florida and Nebraska have limited the application of this subsection to acts done to the victim during the commission of the capital felony itself. State v. Rust, supra; Riley v. State, 366 So. 2d 19 (Fla.1979). We too believe that this is an appropriate construction of the language of this provision. Under this construction, subsection (e)(9) will not become a `catch all' provision which can always be employed in cases where there is no evidence of other aggravating circumstances. Harris v. State, 237 Ga. 718, 230 S.E.2d 1 (1976), cert. denied, 431 U.S. 933, 97 S. Ct. 2642, 53 L. Ed. 2d 251 (1977).
298 N.C. at 24-25, 257 S.E.2d at 585.
We now turn to a brief review of the evidence which relates to the details of the killing at hand. An eyewitness, Jackie Hulon, testified that immediately after defendant ran into the Hulon apartment, he fired two shots and Mrs. Martin "slumped down and fell" to her knees; that defendant told her to get up; that she told defendant she could not walk; that she could not move her legs; that defendant then went to her, placed his right hand around her waist and dragged her across the room into a small hallway; that he then held her up with his left hand and hit her four or five times with the pistol; that he thereafter slung her against the wall and hit her several times in her face with the pistol; that he told her he ought to kill her and she begged him not to hit her anymore; that he then slung her against the wall in the hall and hit her on her head five or six times with his fist; that while he was beating her in the hall, two shots were fired but they did not appear to strike Mrs. Martin; that thereafter, while she was down on the floor, defendant fired another shot down toward the floor; that her small son then entered the apartment, calling his "Mama" at which time defendant fired another shot toward the floor; that she told the little boy to leave and he left the apartment crying; that she continued to plead for her life and asking defendant to forgive her; that she asked that someone call an ambulance because she was dying; that defendant then said, "I hope he does, I'll blow his g. d. brains out"; that defendant then fired three more shots at Mrs. Martin and "clicked" the gun five more times at her; and that thereafter he laid the gun on a table and said, "Well, I've done it". Approximately twenty to twenty-five minutes elapsed between the time Mrs. Martin entered the Hulon apartment and defendant laid the gun on the table.
A post-mortem examination revealed that Mrs. Martin received six gunshot wounds, three to her head, two to her body, and one to her elbow. It was the opinion of the pathologist that one of the first bullets that wounded Mrs. Martin severed her spinal cord and caused immediate paralysis and that either of the two bullets which entered her head would have caused instant death.
Clearly, the evidence for the state tends to show that the brutality of the manner in which defendant murdered his wife exceeded that which is normally present in any killing in that it was unnecessarily tortuous to her, not only from a *219 physical standpoint, but also from a psychological one as well. Defendant did not murder his wife in a quick and efficient manner. Instead, he repeatedly shot her over a twenty-five minute period. Not until one of the final two shots were fired was she killed. Until that moment, she was physically abused by him in that she was dragged across the apartment of a neighbor in a state of helpless paralysis only to receive further physical abuse in the form of being beaten by defendant, not only with his fists but also with the murder weapon. Throughout the episode, defendant's wife begged for her life, knowing that she could not escape because of her initial wounds. At one point, the couple's four-year-old child came into the room calling for his mother. Defendant fired another round at his wife in the presence of the child. At that point, Mrs. Martin told the child to leave, and the youngster fled out the front door crying. It cannot be argued that this evidence fails to establish a conscienceless or pitiless crime which was committed in disregard for the life of another. Compare State v. Oliver and Moore, 302 N.C. 28, 274 S.E.2d 183 (1981); State v. McDowell, 301 N.C. 279, 271 S.E.2d 286 (1980).
Second, defendant contends that G.S. § 15A-2000(e)(9) is unconstitutionally vague in that it fails to guide the discretion of the jury at the sentencing phase of the trial. We disagree with this contention.
While it is settled that capital punishment is not invariably cruel and unusual punishment within the meaning of the eighth amendment, Gregg v. Georgia, 428 U.S. 153, 96 S. Ct. 2909, 49 L. Ed. 2d 859 (1976); State v. Barfield, 298 N.C. 306, 259 S.E.2d 510 (1979), cert. denied, 448 U.S. 907, 100 S. Ct. 3050, 65 L. Ed. 2d 1137 (1980), it remains the law that those states which choose to extract the penalty of death for specified offenses must not impose the ultimate sanction under sentencing procedures which create a substantial risk that it will be imposed in an arbitrary and capricious manner. Furman v. Georgia, 408 U.S. 238, 253, 92 S. Ct. 2726, 2734, 33 L. Ed. 2d 346, 357 (1972) (Douglas, J., concurring); compare Godfrey v. Georgia, 446 U.S. 420, 100 S. Ct. 1759, 64 L. Ed. 2d 398 (1980); Gregg v. Georgia, 428 U.S. at 189, 96 S. Ct. at 2932, 49 L. Ed. 2d at 883. In other words, because the nature of a sentence of death is qualitatively different from that of any other punishment option which is available to the state, due process requires that the procedure under which such punishment is pronounced must provide a "meaningful basis for distinguishing the few cases in which it is imposed from the many cases in which it is not." Furman v. Georgia, 408 U.S. at 313, 92 S. Ct. at 2764, 33 L. Ed. 2d at 392 (White, J., concurring).
While a jury is not likely to be skilled as a body in handling the information which is brought before it at the sentencing phase of the procedure which is contemplated by North Carolina's scheme for trial of capital offenses, its lack of expertise can be overcome if the jury is given sufficient guidance concerning the relevant factors about the defendant and the crime which he was found to have committed. State v. Barfield, 298 N.C. at 352-353, 259 S.E.2d at 543. Such guidance allows the jury which is impaneled to consider on the basis of all the relevant evidence not only why the death penalty should be imposed in a given case but also why it should not be imposed. Id.
Sentencing standards are, by necessity, somewhat general in nature. As we noted in Barfield, "while they must be particular enough to afford fair warning to a defendant of the probable penalty which would attach upon a finding of guilt, they must also be general enough to allow the courts to respond to the various mutations of conduct which society has judged to warrant the application of the criminal sanction." Id. It was our conclusion in Barfield that the issues which are posed to a jury at the sentencing phase of North Carolina's bifurcated proceeding have a common sense core of meaning which jurors sitting in a criminal trial ought to be capable of understanding and applying when they are given suitable instructions by the trial judge.
*220 On its face, G.S. § 15A-2000(e)(9) is clearly general in nature. However, it is not impermissibly so when it is applied in light of the construction which this court has applied to it in State v. Goodman, supra. As we noted earlier, in Goodman we held that the aggravating circumstance of "especially heinous, atrocious, or cruel" requires that there be evidence that the murder in question involved brutality in excess of that which is normally present in any killing. In so holding we foreclosed any suggestion that G.S. § 15A-2000(e)(9) could be employed as a "catchall" provision which could be submitted when there is no evidence of other aggravating circumstances. In Goodman, we did not rely upon the canons of statutory construction alone. Instead, we also drew upon the decisions of the Florida Supreme Court in construing a provision of that state's capital punishment statutes whose language is identical to that of G.S. § 15A-2000(e)(9). In State v. Dixon, 283 So. 2d 1 (1973), the Florida Supreme Court interpreted the intent of its legislature in the words "especially heinous, atrocious, or cruel" to authorize the imposition of the death penalty based upon this factor only in those situations where the evidence showed that the murder was committed in such a way as to amount to a conscienceless or pitiless crime which is unnecessarily torturous to the victim. That construction was singled out for consideration by the United States Supreme Court in Proffitt v. Florida, 428 U.S. 242, 96 S. Ct. 2960, 49 L. Ed. 2d 913 (1976), wherein it upheld the constitutionality of the procedure by which the Florida courts imposed the death penalty. In his opinion, Mr. Justice Powell observed that, "[W]e cannot say that the provision, as so construed, provides inadequate guidance to those charged with the duty of recommending or imposing sentences in capital cases." 428 U.S. at 255-256, 96 S. Ct. at 2968, 49 L. Ed. 2d at 925. Because of the identical language which is utilized in the North Carolina and Florida statutes, as well as the similar construction placed upon that language by this court, as well as by the Florida Supreme Court, we hold that the aggravating circumstance embodied in G.S. § 15A-2000(e)(9) is not unconstitutionally vague.
C. As a check against the capricious or random imposition of the death penalty, G.S. § 15A-2000(d) directs this court to review the record in a capital case to determine whether the record supports the jury's finding of any aggravating circumstance, whether the sentence was imposed under the influence of passion, prejudice or any other arbitrary factor, and whether the sentence of death is excessive or disproportionate to the penalty imposed in similar cases, considering both the crime and the defendant. See State v. McDowell, supra; State v. Barfield, supra.
Our review function in this regard should be employed only in those instances where both phases of the trial of a defendant in a capital case have been found to be without error. State v. Goodman, 298 N.C. at 35, 257 S.E.2d at 590-591. In exercising our role in the statutory scheme, we must be sensitive not only to the mandate of the legislature but also to the constitutional dimensions of our review. See Gregg v. Georgia, 428 U.S. at 204-206, 96 S. Ct. at 2939-2940, 49 L.Ed.2d at 892-893; Proffitt v. Florida, 428 U.S. at 258-259, 96 S. Ct. at 2969-2970, 49 L. Ed. 2d at 926-927.
We repeat what we said in Barfield: "We do not take lightly the responsibility imposed on us by G.S. § 15A-2000(d)(2)." 298 N.C. at 354, 259 S.E.2d at 544. Consequently, we have meticulously reviewed the record in this case. We have carefully considered the briefs and arguments which have been presented to us.
After full deliberation, we conclude that there is sufficient evidence in the record to support the jury's finding as to the aggravating circumstance which was submitted to it. We find nothing in the record which would indicate that the sentence of death was imposed under the influence of passion, prejudice, or any other arbitrary factor.
The brutal manner in which death was inflicted, which followed defendant's *221 declaration approximately six months previously that he was going to kill his wife, leads us to conclude that the sentence of death is not excessive or disproportionate, considering both the crime and the defendant. We, therefore, decline to exercise our discretion to set aside the sentence imposed.
 The record reveals that on 12 September 1979 the court ordered that defendant be committed to Dorothea Dix Hospital at Raleigh for a determination with respect to his mental condition. On 2 October 1979, a report (dated 26 September 1979) from Dr. Bob Rollins, forensic psychiatrist, was filed with the court. In his report, based on interviews with defendant, observations of his ward behavior, and contacts with his attorney and the arresting officer, Dr. Rollins concluded that although defendant scored only 73 on the Slossen Intelligence Test, "clinically he appears to function in the average range of intelligence"; that his reading is at the 3.9 grade level; that his relatively low I.Q. score is the result of social and educational deprivation; and that "Mr. Martin is capable of proceeding to trial in that he has an understanding of his legal situation and is able to cooperate with his attorney. At the time of the alleged crime he may have been intoxicated to some degree."


text:
G.R. No. 154689 - UNICORN SAFETY GLASS, INC., ET AL. v. RODRIGO BASARTE, ET AL.
UNICORN SAFETY GLASS, INC., LILY YULO and HILARIO YULO, Petitioners, v. RODRIGO BASARTE, JAIMELITO FLORES, TEODOLFO LOR, RONNIE DECIO, ELMER SULTORA and JOSELITO DECIO, Respondents.
This is a Petition for Review on Certiorari seeking to set aside the Decision1 of the Court of Appeals dated October 18, 2001 and its subsequent Resolution dated August 7, 2002, which reversed the decisions of the Labor Arbiter and the National Labor Relations Commission (NLRC).
Respondents were regular employees of petitioner Unicorn Safety Glass Incorporated, a company engaged in the business of glass manufacturing. Respondents normally worked six (6) times a week, from Monday to Saturday, and were paid on a weekly basis. They were likewise officers of the organized union in petitioner company, owned and managed by the Spouses Lily and Hilario Yulo.
On March 2, 1998, Hilario Yulo, as general manager of Unicorn, issued a Memorandum2 informing respondents that effective April 13, 1998, their workdays shall be reduced due to economic considerations. Yulo cited several factors such as decrease in sales, increase in the cost of production, devaluation of the peso and increase in minimum wage, which contributed to the current economic state of the company. In a letter dated March 12, 1998, respondents registered their protest to the proposed reduction of working days and expressed doubts on the reasons offered by the company.3 Respondents also surmised that the management was merely getting back at them for forming a union especially since only the union officers were affected by the work reduction.
On April 13, 1998, instead of reporting for work, respondents filed a complaint against petitioner company with the National Labor Relations Commission, docketed as NLRC Case No. NCR-00-04-03277-98, for constructive dismissal and unfair labor practice, i.e., union busting, non-payment of five days service incentive leave pay and payment of moral and exemplary damages as well as attorney's fees. Respondents prayed for reinstatement and payment of full backwages.
Meanwhile, since respondents failed to report for work, petitioners sent each of them a telegram directing them to do so. On April 18, 1998, respondents sent Yulo a letter informing him that, in view of the management's apparent indifference to their plight and blatant violation of their rights, a complaint was lodged against petitioner company for constructive dismissal. Moreover, given the working environment they were subjected to, they decided not to report for work at all.7 Petitioner company replied by asking them to explain why they have not been reporting for work. However, respondents neither reported for work nor replied to petitioner company's telegrams.
Complainants claim that they were constructively terminated. However, evidence extant do not support this contention. What we see on records are the telegrams, letters and memoranda sent by respondents to complainants ordering the latter to report for work. Despite due receipt by the complainants of these communications, they simply ignored respondents' plea. Complainants deliberate refusal to report for work is very much evident from the number of letters they received from respondents which were all ignored.
WHEREFORE, the instant case is hereby dismissed for lack of merit. Respondents however, are ordered to pay complainants the total amount of P5,110.00 for unpaid service incentive leave pay as alluded in the above computation.
On the grounds of amicable settlement and subsequent withdrawals of their complaints, the cases of PAQUITO MANONGSONG and ELMER SULTORA are hereby dismissed with prejudice.
The case was appealed to the NLRC. During the pendency of the appeal, however, petitioner company filed a Motion to Dismiss alleging that respondents Basarte, Flores, Decio and Lor entered into amicable settlements and executed a "Waiver, Release & Quitclaim."10 Respondents' representative filed an Opposition thereto alleging that the "Waiver, Release & Quitclaim" executed by respondents were entered into without his knowledge and not in the presence of the Labor Arbiter; and that the amounts received by respondents were unconscionably inadequate.
We are not convinced that the amicable settlement entered into by complainants were involuntary and that the consideration thereof are unconscionable.
It is to be stressed that the complainants were the ones who went to the office of respondent for settlement. They acknowledged having signed the "Waiver, Release and Quitclaim" and brought the same before a Notary Public'. Given these factual circumstances, it is hard to believe that there was involuntariness on the part of the complainant when they settled their claims with respondent. In fact, almost a year have already lapsed since then. It is only now that complainants are claiming that their settlement was involuntary.
PREMISES CONSIDERED, the appeal from the Decision dated January 26, 1999 is hereby DISMISSED for lack of merit and the Decision is AFFIRMED.
Further, the motions to dismiss filed by respondents with respect to complainants Rodrigo Basarte, Jaimelito Flores, Joselito Decio and Teodolfo Lor are hereby GRANTED. Thus, insofar as said complainants are concerned their cases are dismissed with prejudice, as prayed for by respondents.
Unrelenting, the respondents filed a petition for certiorari with the Court of Appeals, which found respondents' case partly meritorious.
UPON THE VIEW WE TAKE OF THIS CASE, THUS, the petition is substantially GRANTED. Private respondents are hereby ordered to reinstate to their former positions Rodrigo Basarte, Jaimelito Flores and Ronnie Decio, without loss of seniority rights and privileges, and to pay these three their full backwages from April 13, 1998 until their reinstatement. Or, to award them separation pay, in case reinstatement is no longer feasible or possible. Private respondents are further sentenced to pay the aforenamed petitioners ten per cent (10%) of the total awards by way of attorney's fees. Costs shall also be taxed against private respondents.
THE HONORABLE COURT OF APPEALS ERRED IN REVERSING THE RULING OF THE LABOR ARBITER A QUO WHICH WAS AFFIRMED BY THE NLRC HOLDING THAT PRIVATE RESPONDENTS WERE NOT ILLEGALLY DISMISSED FROM THEIR EMPLOYMENT.
In the case at bar, we agree with the Court of Appeals that petitioners' bare assertions on the alleged reason for the rotation plan as well as its failure to refute respondents' contention that they were targeted due to their union activities, merit the reversal of the Labor Arbiter's decision. It was incumbent upon petitioners to prove that the rotation scheme was a genuine business necessity and not meant to subdue the organized union. The reasons enumerated by petitioners in their Memoranda dated March 2, 1998 were factors too general to actually substantiate the need for the scheme. Petitioners cite the reduction in their electric consumption as proof of an economic slump. This may be true to an extent. But it does not, by itself, prove that the rotation scheme was the most reasonable alternative to remedy the company's problems.
The petitioners' unbending stance on the implementation of the rotation scheme was an indication that the rotation plan was being implemented for reasons other than business necessity. It appears that respondents attempted on more than one occasion to have a dialogue with petitioner Hilario Yulo to discuss the work reduction. Good faith should have prompted Yulo to hear the side of the respondents, to come up with a scheme amenable to both parties or attempt to convince the employees concerned that there was no other viable option. However, petitioners ignored the letters sent by respondents, which compelled the latter to seek redress with the Labor Arbiter.
In the case at bar, the manner by which petitioners exercised their management prerogative appears to be an underhanded circumvention of the law. Petitioners were keen on summarily implementing the rotation plan, obviously singling out respondents who were all union officers. The management's apparent lack of interest to hear what the respondents had to say, created an uncertain situation where reporting for work was tantamount to an acquiescence in an unjust situation.
However, petitioners' charge of abandonment of work by respondents does not hold water when taken in light of the complaint for constructive dismissal. We have held that a charge of abandonment is totally inconsistent with the filing of a complaint for constructive dismissal' and with reason.22 Respondents cannot be said to have abandoned their jobs when precisely, the root cause of their protest is their demand to maintain their regular work hours. What is more, respondents even prayed for reinstatement and backwages. Clearly, these are incompatible with the proposition that respondents sought to abandon their work.
Anent the issue of the validity of the waivers and quitclaims executed by some of the respondents, petitioners argue that while admittedly, the amounts indicated therein were not substantial, it does not necessarily follow that these were executed under duress. Moreover, the waivers and quitclaims were executed when the complaint for illegal dismissal was already dismissed by the Labor Arbiter. Thus, the waivers and quitclaims were executed under valid circumstances.
If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking.
In the instant case, while it is true that the complaint for illegal dismissal filed by respondents with the Labor Arbiter has been dismissed, their appeal before the NLRC was still pending. In fact, petitioners even filed a Motion to Dismiss with the NLRC on the very ground that the respondents, or at least most of them, have executed said "Waivers, Releases and Quitclaims." Petitioners cannot therefore deny that it was in their interest to have respondents execute the quitclaims.
Furthermore, the considerations received by respondents Basarte and Flores were grossly inadequate considering the length of time that they were employed in petitioner company. As correctly pointed out by the Court of Appeals, Basarte worked for petitioner company for 21 years, that is, from 1976 to 1998, while Flores worked from 1991 to 1998. Basarte and Flores only received P10,000.00 and P3,000.00, respectively. In contrast, Manongsong and Soltura, two workers who opted to settle their respective cases earlier on, both started in 1993 only, but were able to take home P16,434.00 each after executing their waivers.
Article 279 of the Labor Code provides that an employee who is unjustly dismissed from work is entitled to reinstatement without loss of seniority rights and other privileges, and to his full backwages, inclusive of allowances, and to the other benefits or their monetary equivalent computed from the time of his actual reinstatement. However, if reinstatement is no longer possible, the employer has the alternative of paying the employee his separation pay in lieu of reinstatement.
WHEREFORE, the instant petition is DENIED, and the decision of the Court of Appeals of October 18, 2001 in CA-G.R. SP No. 63577 is AFFIRMED in toto. Costs against petitioners.
Quisumbing, Carpio, and Azcuna, JJ., concur.
Davide, Jr., C.J. (Chairman), on official leave.
1 Penned by Associate Justice Renato C. Dacudao of the Thirteenth Division with the concurrence of then Associate Justice of the Court of Appeals, now Associate Justice of the Supreme Court, Romeo J. Callejo, Sr. and Associate Justice Mariano C. Del Castillo.
2 Court of Appeals Decision, Rollo, p. 35.
3 Annex D, Court of Appeals Rollo, p. 132.
4 Annex F, Court of Appeals Rollo, p. 43.
5 Annex A, Court of Appeals Rollo, p. 59.
6 Court of Appeals Rollo, p. 47.
7 Annex B, Court of Appeals Rollo, p. 61.
8 Court of Appeals Rollo, pp. 30-31.
10 NLRC Decision, Court of Appeals Rollo, p. 20.
15 Philippine Industrial Security Agency Corporation v. Virgilio Dapiton, G.R. No. 127421, 8 December 1999, 320 SCRA 124; see also Delfin Garcia v. National Labor Relations Commission, G.R. No. 116568, 3 September 1999, 313 SCRA 597; Mark Roche International v. National Labor Relations Commission, G.R. No. 123825, 31 August 1999, 313 SCRA 356.
16 Soliman Security Services, Inc. v. Court of Appeals, G.R. No. 143215, 11 July 2002, 384 SCRA 514; see also Ala Mode Garments, Inc. v. National Labor Relations Commission, G.R. No. 122165, 17 February 1997, 268 SCRA 497; Philippine Advertising Counselors, Inc. v. National Labor Relations Commission, G.R. No. 120008, 18 October 1996, 263 SCRA 395; Philippine Japan Active Carbon Corporation v. National Labor Relations Commission, G.R. No. 83239, 8 March 1989, 171 SCRA 164.
17 Philippine-Singapore Transport Services, Inc. v. National Labor Relations Commission, G.R. No. 95449, 18 August 1997, 277 SCRA 506; San Miguel Brewery Sales v. Ople, G.R. No. 53615, 8 February 1989, 170 SCRA 25; Caltex Refinery Employees Association v. NLRC, et al., G.R. No. 102993, 14 July 1995, 246 SCRA 271; Businessday Information Systems and Services, Inc. v. NLRC, et al., G.R. No. 103575, 5 April 1993, 221 SCRA 9.
18 Sime Darby Pilipinas, Inc. v. National Labor Relations Commission, G.R. No. 119205, 15 April 1998, 289 SCRA 86.
19 Philippine Airlines, Inc. v. Joselito Pascua, G.R. No. 143258, 15 August 2003, 409 SCRA 195.
21 Premiere Development Bank v. National Labor Relations Commission, G.R. No. 114695, 23 July 1998, 293 SCRA 49.
22 Globe Telecom, Inc. v. Florendo-Flores, G.R. No. 150092, 27 September 2002, 390 SCRA 201; see also Philippine Industrial Security Agency Corporation v. Virgilio Dapiton, supra; Delfin Garcia v. National Labor Relations Commission, supra.
23 G.R. No. 91298, 22 June 1990, 186 SCRA 724, 730-731.

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In the first case of its kind, the SEC has settled charges with Zachary Coburn, the operator of the cryptocurrency exchange EtherDelta, both the New York Times and CoinDesk report. In the settlement order, the SEC takes note of the fact that most of the trades on EtherDelta occurred after the SEC issued The DAO Report in July 2017. That report clarified that many of the crypto-tokens being offered in initial coin offerings (ICOs) met the test for a “security” under SEC v. W.J. Howey Co. and that issuers and or exchanges trading in such tokens needed to either follow the registration requirements of the federal securities laws or qualify for an exemption. While noting Coburn’s cooperation in “facilitating the staff’s investigation involving an emerging technology,” the settlement order still required him to pay disgorgement and interest of $313,000 and a civil fine of $75,000 for operating an unregistered securities exchange.
The Tennessee Court of Appeals (Gibson, J.) recently considered a breach of contract case brought by an aspiring country music artist. In the case, Gregg v. Estate of Cupit, a Washington state insurance salesman pursuing his dream in Nashville signed a record contract with Cupit Records. He paid nearly $350,000 for Cupit Records to record, release and promote multiple singles on his behalf, but ultimately his music career was unsuccessful. After the owner of Cupit Records passed away, the artist sued the owner’s estate for breach of contract, claiming the company had failed to adequately promote his records. The trial court agreed and awarded the artist nearly $225,000.
The Court of Appeals, however, reversed, focusing on the provisions in the contract stating that the artist was paying a “flat fee of one hundred thousand per single” for promotion of three singles and that “[b]oth parties understand the music business is a speculative business and there are no guarantees.” There was no evidence that Cupit Records had breached its implied duty of good faith and fair dealing by underpromoting the artist’s records or failing to keep a detailed accounting of the funds that it spent on the artist. The Court of Appeals was not inclined to use the implied duty of good faith to rescue the artist from the bad bargain he had made.
The Delaware Supreme Court has clarified the standard it set forth in Kahn v. M&F Worldwide Co. (Del. 2014) (“MFW”) regarding when the business judgment rule applies to mergers proposed by a controlling shareholder that have been “cleansed” by a vote of a special committee of disinterested directors and the informed vote of the majority of minority shareholders. In MFW, the Delaware Supreme Court “held that business judgment review applied to a merger proposed by a controlling stockholder conditioned before the start of negotiations on” both sets of votes.
In the recent opinion, Flood v. Synutra International, Inc., Chief Justice Strine wrote for a divided court that in order for the business judgment rule to apply, the conditions of a majority vote of independent directors and minority shareholders must be in place ab initio, or at the beginning of negotiations. This requirement is to ensure “that controllers could not use the conditions as bargaining chips during economic negotiations.” The ab initio requirement should not be taken literally, however, to mean that the conditions of the “cleansing” votes must be in the controlling shareholder’s first offer. Rather, they need only be established before any “substantive economic negotiations” take place.
The opinion also clarified that if the business judgment rule applies, “a plaintiff can plead a duty of care violation only by showing that the Special Committee acted with gross negligence, not by questioning the sufficiency of the price.” A dissenting justice argued that the court should have maintained a bright-line rule and held that the ab initio requirement is only satisfied “when the Dual Protections are contained in the controller’s initial formal written proposal.” Otherwise, the controlling shareholder transaction should be subject to the less-forgiving “entire fairness” standard.
In FDA Properties v. Miller, the Court of Appeals (Gibson, J.) looked at the effect of a member’s bankruptcy on the dissolution of an LLC. The LLC in question was organized in 2005 under the Tennessee LLC Act (the Revised LLC Act was enacted in 2005, but is only effective for LLCs organized after Jan. 1, 2006, and those older LLCs choosing to be governed by the Revised Act). After one of the four members of the LLC declared bankruptcy, the other members expelled him through a written document, though no formal vote was taken. The Court of Appeals determined that Tenn. Code Ann. § 48-245-101(a)(5), which lists ten different events upon which dissolution occurs, applied to the LLC. One such event in the statutory list is the bankruptcy of any member, and the LLC did not include an exception to that rule in its operating agreement. However, because the trial court did not rule on whether the dissolution provisions in the LLC’s operating agreement modified the statutory bases for dissolution, the Court of Appeals remanded for further proceedings.
In other public offering news, SurveyMonkey’s parent corporation, SVMK Inc., began trading as a public company on Sept. 26. Known by many as a go-to resource for simple online surveying, SurveyMonkey raised more than $180 million in its initial public offering, according to The New York Times DealBook. SVMK is trading on the Nasdaq Stock Market under the ticker symbol “SVMK."
The Tennessee Journal of Business Law is hosting two upcoming events at the UT College of Law that are of interest to business lawyers in East Tennessee. On Friday, September 14, from 8:00 a.m. to 3:45 p.m., the law school is hosting “Connecting the Threads II,” a series of presentations from business law professors who teach throughout the United States. On Friday, September 21, from 8:30 a.m. to 4:00 p.m., the law school is hosting “Law and Business Tech: Cybersecurity, Blockchain and Electronic Transactions,” a one-day event bringing together representatives from the business world, the cybersecurity field, and the legal profession. Both events are free and open to the public, with CLE credit available for a fee.
CBS announced on Sunday that its long-time Chairman and CEO, Leslie Moonves, would be departing the company in the wake of sexual harassment allegations. “In the end, it was the evidence that Mr. Moonves had misled his board — even more than the allegations of abuse from multiple women — that doomed him,” reported the New York Times. How to deal with the allegations against Mr. Moonves was the latest challenge for a board that already had been split by the ongoing dispute between Mr. Moonves and CBS’s controlling shareholder, Shari Redstone.


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In my last blog entry, I discussed procedural obligations arising from statute and soft law. What happens when those documents are silent or ambiguous? When a statute is silent or leaves gaps with respect to procedure, the common law steps in to fill those gaps. The other fundamental principle is that to override the rules of natural justice, express language or necessary implication must be found in the statute. The statute cannot be ambiguous. With those two principles in mind, we can begin to answer whether the duty applies.
The general rule from Cardinal is that the duty of fairness obligation is likely to be broad. The duty arises for decisions of every public authority that is making decisions of an administrative nature which affect the rights, privileges or interests of an individual. The duty can be ousted by (i) the nature of the decision, (ii) the relationship between the public official and the citizen or (iii) the effect of the decision.
(i) Nature of the Decision – Whether the decision is final or preliminary and legislative or administrative affects whether the duty applies. The general principles discussed below come from Knight v. Indian Head School Board.
A decision of a preliminary nature does not trigger the duty whereas a decision of a final nature does. There are two exceptions to this general rule. First, a preliminary decision that is de facto a final one is subject to the duty. Second, if the preliminary decision has a significant impact on the person effect, the duty will attach.
A decision of a general, legislative nature does not trigger the duty whereas a decision of a specific, administrative nature does. The question becomes: what is legislative? The important distinction between the two comes from Wells v. Newfoundland. An implementation of a general policy which happens to have a specific effect on someone is not enough to classify the decision as specific and administrative. The case of Homex Realty v. Wyoming tells us it is important to look at the substance of the decision. A decision cannot be taken on its face, we must look at the substance, context and circumstances to determine the true nature of the decision.
(ii) Relationship Between the Body and the Individual – the duty can be excluded by statute or by contract.
If a relationship between the two is set out by statute or the statute expressly excludes the duty (or by necessary implication), no duty will attach. The rule from Kane v. Board of Governors of UBC is that, in order for the duty to not attach, the statute must exhaust the relationship of procedural fairness or expressly oust the duty. The statutory language must be very specific and deal exactly with the procedure in question.
If a relationship between the two is set out in a contract, the duty may not attach. The general rule from Dunsmuir v. New Brunswick is that an employment relationship between the government and individual (i.e. employer-employee) will not be subject to the duty where there is an employment contract. Instead, that relationship is governed by private law. Mavi clarified this rule by saying that interpretation of the Dunsmuir rule should be narrow and only when a relationship is truly contractual will the duty not attach. In Mavi, the undertakings were found not to be a contract because the substance of the undertaking was set by statute and regulations. The court held that the Dunsmuir rule did not apply because the substance of the undertaking was from statute and so the terms of the relationship were set by statute. Note that this is consistent with the general principles from Nicholson and Martineau: procedural fairness should reach as far as possible among public officials as long as it is principled.
(iii) Effect of the Decision on the Individual’s Rights – the threshold for meeting the requirement of effecting the rights, privileges or interests of an individual is very low because we want public officials to be governed by the duty. There is a right to procedural fairness only if the decision is a significant one which has an important impact on the individual. For example, decisions like deportation (Baker) and enforcement of a debt (Mavi) are taken to meet these criteria.
The question becomes whether the decision to deny a benefit which one is eligible for but not entitled to is subject to the duty. The case of Hutfield v. Board of Fort Saskatchewan General Hospital District No 98 stands for the proposition that the duty applies whether the person is a benefit seeker or benefit holder. The traditional view that the duty applied only to benefit holders has been abandoned because the distinction between seekers and holders is not grounded in principle.
It appears that the common law duty is very far reaching and expanding. The court in Homex Realty looked to the substance of a bylaw (i.e. a legislative decision) to conclude that the duty applied. The court in Mavi held that an undertaking (i.e. a form of contract) did not create a contractual relationship between the government and individual, meaning that the duty applied. It also stated that the Dunsmuir exception must be interpreted narrowly. The court in Hutfield abandoned the principle that the duty applied only to benefit holders. It held that the duty applies to both benefit seekers and holders. All instances are keeping in mind the principles from Nicholson and Martineau, discussed above.
The next entry will discuss what the common law duty entails when it applies.

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