The International Society of Primerus Law Firms

Ayres Carr & Sullivan Attorney Included in Super Lawyers Corporate Counsel Edition

Posted by primerus on March 12, 2010 —

Ayres Carr & Sullivan, P.C. is pleased to announce that John R. Carr, III has been named in the 2010 edition of Super Lawyers Corporate Counsel Edition.

John Carr, who focuses his practice on Bankruptcy Reorganization, Creditor’s Rights, Commercial Law, Corporation Law, Insurance Law, and Employee Benefit Law, will be included for his work in the practice area of Bankruptcy and Creditor/Debtor Rights.

Super Lawyers Corporate Counsel Edition lists attorneys who have been recognized in state and regional editions of Super Lawyers 2009. Super Lawyers, which has been published by Law & Politics since 1991, is a supplement that appears in leading magazines and newspapers distributed across the country. Attorneys who are selected for inclusion in Super Lawyers for a particular state have obtained a “high degree of peer recognition and professional achievement”. The listing includes only the finest lawyers in the nation and serves as a good reference for people seeking legal counsel.

Ayres Carr & Sullivan, P.C., which is located in Indianapolis, IN, is a member of the International Society of Primerus Law Firms. Primerus is the leading alliance of small and medium sized, top-rated, independent firms. With over 140 law firms located in the U.S., Canada, Mexico and the U.K., Primerus firms provide clients with responsive, high quality, partner-level service for much less than what large law firms charge. All Primerus law firms are: AV- rated using the Martindale-Hubbell peer review service; screened for excellence; and audited annually for continued quality.

For more information on Ayres Carr & Sullivan, visit the International Society of Primerus Law Firms.

Posted in Member News

Hertz v. Friend: A Corporation’s Principal Place of Business is Its Nerve Center

Posted by primerus on March 11, 2010 —

By: Jordan Wood

Christian & Small, LLP

Birmingham, AL

On February 23, the Supreme Court reached a unanimous decision regarding how to determine a corporation’s principal place of business for purposes of diversity jurisdiction. The opinion of Hertz v. Friend, authored by Justice Stephen G. Breyer, stated a corporation is a citizen of a state where its “nerve center” is located.[1] Justice Breyer noted that, typically, this “nerve center” will be a corporation’s headquarters. The Hertz decision should provide a more streamline and predictable approach in determining corporate citizenship while at the same time restricting tort lawyers’ ability to keep lawsuits in plaintiff-friendly states courts.

The Hertz ruling came in light of the differences among the Circuits in their application the federal diversity statute 28 U.S.C. § 1332, specifically section (c)(1)’s “principal place of business” language. Prior to Hertz, the Federal Circuits had been applying a range of overlapping standards with some courts failing to find a unified approach even within the same Circuit.[2] Aware of this problem, the Supreme Court acknowledge the phrase “principal place of business” “ha[d] proved more difficult to apply than its originators likely expected.”

Indeed, the application of one method over another could significantly alter the disposition of a lawsuit. In the instant case, Hertz, who was involved in a wage-and-hour claim brought by two of its employees, sought to remove the suit from California state court based on diversity jurisdiction. However, the lower courts agreed that Hertz’s principal place of business (and thus corporate citizenship) was California. Specifically, the courts, applying Ninth Circuit precedent, focused on the fact that a majority of Hertz’s business activities took place in California rather than the fact that Hertz’s headquarters was located New Jersey.

Seeking a more uniform approach, the Supreme Court vacated and remanded the lower courts’ decision and held a “nerve center” approach should be applied in determining a corporation’s principal place of business:

We conclude that “principal place of business” is best read as referring to the place where a corporation’s officers direct, control, and coordinate the corporation’s activities. It is the place that Courts of Appeals have called the corporation’s “nerve center.” And in practice it should normally be the place where the corporation maintains its headquarters-provided that the headquarters is the actual center of direction, control, and coordination.

In support of this decision, Justice Breyer pointed to three considerations which the Court believed made the “nerve center” the most superior approach: 1) the text of 28 U.S.C. § 1332(c)(1); 2) the need for administrative simplicity; and 3) the legislative history’s desire for the least complicated approach.

On the business end of the decision, Justice Breyer applied a detail laden form of statutory interpretation to 28 U.S.C. § 1332(c)(1)’s phrase “State where it has its principal place of business.”[3] Under Justice Breyer’s analysis, the “principal place of business” should be a specific location within a state (i.e. a headquarters located within New Jersey) and not the state itself (i.e. California holds a majority of Hertz’s business).

The more common sense argument comes in the need for administrative simplicity. The idea of complex jurisdictional tests not only consumes significant resources of the parties and judicial system, but as Justice Breyer stated, it also “diminish[ed] the likelihood that results and settlements will reflect a claim’s legal and factual merits.” In accordance with its simplicity, the “nerve center” approach should also provide greater predictability to litigants attempting to remove a case to federal court under diversity jurisdiction. Essentially, the Court’s association of a “nerve center” to a headquarters triggers a single location in the minds of both judges and litigants and could potentially reduce the gray area associated with establishing where a majority of a corporation’s “business activity” is being conducted. The added benefit of predictability should also extend to counsel as they assess both the possibility and probability of removal to federal court.

Looking ahead, the Supreme Court seemed well aware of the challenges that await courts in their application of the “nerve center” approach. One such problem area may arise when a corporation does a vast majority of its business in one State but its headquarters is located in another State. For example, even if a corporation conducts nearly all of their business in State A, under the “nerve center” approach the corporation may remove to federal court provided they have established their headquarters in State B. Conversely, this same corporation may be helpless to seek removal when a lawsuit is filed in State B even though they conduct little to no “business activity” there. Justice Breyer acknowledged that such results seemed to fly in the face of the 28 U.S.C. 1332 and the idea of a “principal place of business”.

Another area of concern is the possible decline of the physical headquarters. As business continues to move into telecommunications and corporations increasingly utilize the Internet, the traditional notion of a centralized headquarters may begin to fade into obscurity. As Justice Breyer noted, “some corporations may divide their command and coordinating functions among officers who work at several different locations, perhaps communicating over the Internet.” Justice Breyer, however, considered these gray areas “anomalies” rather than emerging trends, stating “[a]ccepting occasionally counterintuitive results is the price the legal system must pay to avoid overly complex jurisdiction administration while procuring the benefits that accompany a more uniform legal system.”

In the end, the idea of a straightforward approach with easy application appeared to be greatest driving factor behind the Supreme Court’s 9-0 decision. The Hertz decision calls for an end to examinations of corporate “functions, assets, or revenues,” and instead opts for an approach which finds a corporation’s “principal place of business” to be the locus of its overall “direction, control, and coordination.” Theoretically, this “never center” approach should provide greater transparency to all parties examining corporate citizenship for purposes of diversity removal under 28 U.S.C. 1332. However, theory will soon give way to reality as different Circuits begin to apply the “nerve center” approach, testing not only the consistency of its application but also revealing the extent and limits of such an approach.

For more information on Christian Small, visit the International Society of Primerus Law Firms or csattorneys.com.

[1] The full citation for this case is Hertz Corp. v. Friend, No. 08-1107, 2010 WL 605601, at *1 (U.S. Feb. 23, 2010).

[2] See Kelly v. United States Steel Corporation, 284 F.2d 850 (3d Cir. 1960) (holding a corporation’s principal place of activities or “place of operations” determined corporate citizenship); Scot Typewriter Co. v. Underwood Corp., 170 F. Supp. 862 (S.D. N.Y. 1959) (applying a “never center” approach when determining citizenship of a corporation with “far-flung” activities); See also Bel-Bel Intern. Corp v. Community Bank of Homestead, 162 F.3d 1101 (11th Cir. 1998) (applying a “total activites” test which applies both a “principal place of activities” test along with a “nerve center” test in that order).

[3] Justice Breyer noted that the word “place” was singular, not plural, and when coupled with the word “principal” required one to pick a “‘main, prominent’, or ‘leading’ place.” Likewise, he found the fact that the position of the word “place” came after “State where” required the focus to be on a place within a state.

Posted in Business Resources

Iqbal Energizes Motion to Dismiss Practice

Posted by primerus on March 10, 2010 —

By: Barry Miller and Casey Stansbury*[1]

Fowler Measle & Bell PLLC

Lexington, KY

The question before the Supreme Court seemed narrow: Had an alleged terrorist stated a claim in his complaint over the conditions of his confinement after arrest? The short answer was “no.” Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009). But how the court phrased that answer, has created a mini-revolution in motion-to-dismiss practice in federal courts. Iqbal may be starting to affect state practice as well.

To understand Iqbal’s impact, a reader must first confront Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2006). Twombly was a complex class-action antitrust suit, which the trial court dismissed for failure to state a claim. The Second Circuit reversed, applying the long standing rule of Conley v. Gibson, 355 U.S. 41 (1957): A motion to dismiss must be denied unless it appears “beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley, 355 U.S. at 46-47. Twombly stated a new standard: Plausibility. To survive dismissal, a complaint must allege “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570.

But Twombly left open whether the plausibility standard applied only in anti-trust cases, only in complex litigation, or in all cases. According to a recent seminar, a current Supreme Court Justice, in a speech delivered before Iqbal, assured federal practitioners that Twombly’s holding was limited to complex litigation.

In Iqbal, that justice’s colleagues disagreed.

According to Iqbal, Twombly decided whether a complaint met the requirements of Federal Rule of Civil Procedure 8. “That Rule in turn governs the pleading standard ‘in all civil actions and proceedings in the United States district courts.’” Iqbal, 129 S.Ct. 1953, quoting Fed.R.Civ. Proc. 1. Twombly thus “expounded the pleading standard for ‘all civil actions. . . .’” Id.

Practitioners have taken those words literally. Though Iqbal is not yet a year old, it has been cited in more than 6,000 cases. The case has enraged the plaintiff’s bar. John Vail, vice president of the Center for Constitutional Litigation, P.C., told that National Law Journal last fall that Iqbal “heralds a return to the kind of legal practice Dickens condemned in Bleak House.”

Congressional response has included the introduction of proposed legislation to overturn Iqbal and Twombly. Senator Arlen Specter (D-Pa) sponsored the “Notice Pleading Restoration Act of 2009,” which would require federal courts to apply the Conley v. Gibson standard to all motions to dismiss. Representatives John Conyers (D-Mich) and Henry Johnson (D-Ga) have introduced the “Open Access to Courts Act of 2009” in the House. That bill would also adopt the Conley v. Gibson standard, and would expressly prohibit a federal court from applying Twombly or Iqbal.

Certainly, Iqbal has caused some practical problems. Justice Souter, who wrote Twombly, dissented in Iqbal, and raised the question of whether practitioners can now trust the form pleadings appended to the Federal Rules of Procedure, and incorporated by Fed.R.Civ. Proc. 84. As written, those forms embody the Conley standard, and may not be sufficient to meet Iqbal scrutiny. And it may not be just complaints that are subjected to that scrutiny. Boilerplate answers that plead—without supporting facts—each affirmative defense listed in Fed.R.Civ.Proc. 8(c)(1) are difficult to distinguish from “conclusory allegations.”

But for now, Iqbal is generally helpful to the defense, particularly because of how that standard is stated. Iqbal is a trove of powerful language that can support of a motion to dismiss. Just a few examples:

Rule 8 does not require extreme detail, “but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 129 S.Ct. at 1949.
“Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Id., 1949.
Plausibility “asks for more than a sheer possibility that the defendant has acted unlawfully.” Id., 1949.
“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id., 1949.
Rule 8, while departing from hyper-technical code pleading, still “does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Id., 1950.

Motions to dismiss should follow Iqbal two-step analysis. Iqbal instructs trial courts considering a motion to dismiss to first disregard all conclusory allegations. The second step is to determine whether those allegations that remain—which all must be accepted as true—state a plausible claim to relief. A motion to dismiss should identify the complaint’s conclusory allegations then explain why the remaining allegations do not state a plausible claim.

Defense counsel and their clients can also use this two-step analysis to decide whether a motion to dismiss is appropriate in a particular case. Despite Iqbal’s refusal to limit Twombly’s holding to complex litigation, the two-step analysis will be easier to apply in some cases than in others. For example, it is difficult to imagine Iqbal having much impact on areas such as the defense of automobile negligence cases. There, a simple statement that the defendant operated a car negligently at a certain date, place, and time, and that the defendant’s negligent operation harmed the plaintiff should still state a claim.

But it seems clear that motions to dismiss will be warranted more often than under the Conley standard, particularly in cases filed in federal court, or that can be removed there.

How will Iqbal affect state practice?

To date, eight state courts have cited the case, but not all of them cite Iqbal for its procedural holdings.

As for those state courts who have discussed Iqbal on procedural matters:

One panel of the Tennessee Court of Appeals applied the Iqbal standard to a case involving federal constitutional issues (Deja Vu of Nashville, Inc. v. Metro Gov’t, 2009 Tenn. App. LEXIS 683). But a second declined to adopt the standard in a case involving state tort law. Morris v. Grusin, 2009 Tenn. App. LEXIS 874. Morris noted that United States Supreme Court decisions are binding on Tennessee courts only on issues arising under the federal constitution, and that it would be up to the Tennessee Supreme Court to adopt the Iqbal standard in all civil cases.

The Superior Court of Rhode Island found the Iqbal standard was consistent with the state’s Supreme Court approach to motions to dismiss. But the court also noted that it had previously held that Twombly required a heightened level of pleading in complex cases. It found that the case before it (involving questions of default on a lease, and counterclaims of fraud) did not rise to that level of complexity. It thus decided to apply the general standards accepted by Rhode Island courts, and not require a heightened level of pleading. It denied a motion to dismiss. Siemens Financial Services, Inc. v. Stonebridge Equipment Leasing, LLC, 2009 R.I. Super. LEXIS 147.

A New York trial court cited Iqbal, but in the context of a ruling on a bench trial rather than on a motion to dismiss. Creative Interiors, Inc. v. Grinberg, 2009 N.Y. Misc. LEXIS 2027. The citation, however, shows that Iqbal’s holdings can be useful at any state of a proceeding, when it appears that a plaintiff’s theory relies on improbable facts. The New York court used it to state that it need not accept assertions that are “implausible and not worthy of belief because they are ‘manifestly untrue, . . . contrary to experience, or self-contradictory.” Id, *5.

Dissenting judges in Montana (McKinnon v. Wester Sugar Coop. Corp., 201 Mont. LEXIS 21) and Michigan (Duncan v. State, 2009 Mich.App. LEXIS 1380) have relied on Iqbal to argue that generalized assertions should not avoid a motion to dismiss.

And an Indiana court cited Justice Souter’s Iqbal dissent, saying a plaintiff’s complaint was not baseless on its face because it did not “include claims about little green men, his recent trip to Pluto, or his experiences in time travel.” Smith v. Wrigley, 908 N.E.3d 354, 359 (Ind. App. 2009).

Somewhere between “little green men” and “detailed factual allegations” lies the territory of Plausibility. As courts continue to discuss the finer points of Iqbal—like they have already done in more than 6,000 cases—we should get a clearer idea of exactly where that realm can be found.

4846-6655-4885, v. 1

For more information on Fowler Measle & Bell, visit the International Society of Primerus Law Firms or fowlerlaw.com.

* Barry Miller is a senior member at Fowler Measle & Bell, PLLC, and is also a member of the Iqbal Task Force of the American Bar Association’s Pretrial Practice and Discovery Committee. He and associate Casey Stansbury are in the firm’s litigation department.

Posted in Business Resources

Carte Blanche vs. Strict Construction: A Battle of Interpretations to Section 1430(b), California Health & Safety Code

Posted by primerus on March 10, 2010 —

By: Sezen Z. Oygar

Neil, Dymott, Frank, McFall & Trexler APLC

San Diego, CA

If you haven’t experienced it yet, the chances are, you will. Whether you represent a skilled nursing facility or other health care provider, defending a case premised upon the violation of the Patients Bill of Rights just became a little more complicated; and even sweeter for plaintiffs. Section 1430(b), California Health & Safety Code, permits current or former residents of skilled nursing facilities, or intermediate care facilities, to bring civil actions against the licensee of a facility who violates any right of a resident. The most common suit involves a violation of the Patients Bill of Rights, but can also include a violation of any other right provided by federal or state law or regulation. The rights of California patients are typically found in Title 22 of the California Code of Regulations, the California Health and Safety Code, or the California Welfare Institutions Code. Patient’s Federal rights are typically found in Title 42 United States Code or Title 42 Code of Federal Regulations. Further, with no contrary statutory law, the right to an action pursuant to section 1430(b) survives the death of the patient or resident.[1] With a countless number of rights held in the palm of a patient’s hand, nursing home residents now have a new and successful weapon in California courts: Carte blanche statutory interpretation of Section 1430(b) Health & Safety Code.

Section 1430(b) carries multiple weapons. Not only does section 1430(b) provide civil action for a violation of rights, but it also carries a very big carrot at the end of a daunting stick: injunctive relief, fines, attorney fees and costs. From a licensee’s perspective there is no carrot; it’s just a very expensive stick. First, liability is strict in that plaintiffs do not have to prove injury or actual damages. Second, the plain language of the statute expressly designates vicarious liability. Third, injunctive relief is expressly provided. Fourth, waivers of residents’ rights to sue are contrary to public policy and will be deemed void. Finally, if a resident can prove a violation of rights, fines and attorneys fees are expressly provided for. Here is the kink: Section 1430(b), which imposes liability on a licensee for the acts of its employees, states in pertinent part “[t]he licensee shall be liable for up to five hundred dollars ($500), and for costs and attorney fees, and may be enjoined from permitting the violation to continue.” From the plain language of the statute, one would logically conclude the licensee, if liable, would be subject to a flat fee of $500, plus attorney fees and costs. Unfortunately, this is where the interpretations vary and there is little to no case law to serve as guidance. Rather plaintiffs are supporting their position in a carte blanche manner. In various cases, plaintiffs have argued the “$500” fee is not merely a single fee. Rather, plaintiffs have argued they are entitled to $500 per day, per violation. Plaintiffs argue the clear intent behind the statute (and senate bill 1930 which inevitably became section 1430(b)) was to protect and ensure the rights of nursing home residents, raise the quality of care and increase residents’ safety by protecting their personal and private rights. While no one would argue patients’ rights are not inherently important, a carte blanche approach to section 1430(b) seems unduly harsh, particularly from a strict constructionist point of view.

To further complicate matters, 1430(b) actions are typically one of multiple causes of action. Other causes of action typically joined are Elder and Dependent Abuse, Unfair Business Practices, Battery, Negligence, Intentional Infliction of Emotional Distress, Negligent Infliction of Emotional Distress, Fraud, Fiduciary Abuse, and Constructive Fraud. Further, in an attempt to increase their per violation pay out, plaintiffs are encouraged to list as many rights violations as possible to support their 1430(b) cause of action. With an onslaught of causes of actions, one can assume attorney fees, should they be awarded, will be high.

What can Defendants do?

In light of recent successes by plaintiffs who were awarded as much as $305,000 pursuant to 1430(b), what are defendants’ options? First if the facts of the case allow, counsel should consider serving Code of Civil Procedure, section 998 offer for $500.01 for each violation. Should the plaintiff reject the offer and receive a defense verdict, plaintiff is prohibited from recovery of all fees and must pay the prevailing defendant’s costs from the time of the offer.

To counter the view that section 1430(b) allows for a $500 fine per violation, per day, it seems that a defendant’s best argument is statutory interpretation. The question of a $500 fee per violation, per day is best addressed by the plain meaning of the statute. In dealing with the question of statutory interpretation, courts attempt to discern the Legislature’s intent with caution as to give the statute’s words their “plain common sense meaning.”[2] Plaintiffs argue the $500 fee is per violation and per day, yet no where on the face of the statute can one find the words “per violation” or “per day.” Further, in 2004 the California Legislature proposed an amendment to section 1430(b) to increase the $500 fee. The Legislature proposed an increase from $500 to $5,000. Ultimately the increase was not enacted into law, representing the Legislature’s intent to maintain a reasonable limit on the fee. The Legislature did amend the statute to allow former residents to bring a 1430(b) action and amended the statute to include violations for any state or federal right. Thus, while the Legislature broadened who could assert a 1430(b) action and what rights would fall under a 1430(b) action, the monetary cap remained the same. Accordingly, based on the plain meaning and a strict constructionist interpretation of the statute, there is no wiggle room to allow residents to recover $500 per violation, per day.

As these matters work their way into our court system, only time will tell how the California courts will weigh the varying interpretations.

Sezen Z. Oygar is an associate in the San Diego office of Neil, Dymott, Frank, McFall & Trexler. Her practice areas include healthcare and professional liability litigation.

For more information on Neil Dymott, visit the International Society of Primerus Law Firms or neildymott.com.

[1] Fitzhugh v. Granada Healthcare & Rehab. Ctr. (2007) 150 Cal.App.4^th 469, 474.

[2] Ste. Marie v. Riverside County Regional Park & Open-Space Dist. (2009) 46 Cal.4^th 282, 288.

Posted in Business Resources

Seventh Circuit Court of Appeals Rules that Federal Jurisdiction Under the Class Action Fairness Act is Not Dependent on Class Certification

Posted by primerus on March 9, 2010 —

By:Bradley C. Nahrstadt

Williams Montgomery & John Ltd.

Chicago, IL

In Cunningham Charter Corp. v. Learjet, Inc., __ F.3d __, 2010 WL 199627 (7^th Cir. Jan. 22, 2010), in a case of first impression, the Seventh Circuit Court of Appeals ruled that federal jurisdiction under the Class Action Fairness Act (CAFA) does not depend on whether a class is certified. In so holding, the Seventh Circuit explicitly followed an intepretation of CAFA previously adopted by the First Circuit (In re TJX Companies Retail Security Breach Litigation, 564 F.3d 489 (1^st Cir. 2009) and the Eleventh Circuit Court of Appeals (Vega v. T-Mobile USA, Inc., 564 F.3d 1256 (11^th Cir. 2009) and tacitly rejected the Second Circuit Court of Appeal’s position in County of Nassau v. Hotels.com, 577 F.3d 89 (2^nd Cir. 2009).

In Cunningham, the plaintiff filed suit against Learjet, Inc. in an Illinois state court asserting claims for breach of warranty and products liability on behalf of itself and all other buyers of Learjets who had received the same warranty from the manufacturer that Cunningham had received. Learjet removed the case to federal court under the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d), and the plaintiff moved to certify two classes. The district judge denied the motion to certify on the ground that neither proposed class satisfied the criteria for certification set forth in F.R.C.P. 23. The judge then ruled that the denial of class certification eliminated subject-matter jurisdiction under the Act, and so he remanded the case to state court. Learjet then petitioned for leave to appeal the order of remand, a petition that the Seventh Circuit Court of Appeals granted.

According to the Seventh Circuit, CAFA creates federal diversity jurisdiction over certain class actions in which at least one member of the class is a citizen of a different state from any defendant. CAFA defines class action as “any civil action filed under Rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons as a class action.” 28 U.S.C. § 1332(d)(1)(B). A later section of the Act says that it applies “to any class action [within the Act’s scope] before or after the entry of a class certification order.” 28 U.S.C. § 1332(d)(8).

In reversing the judgment of the district court and remanding the case for further proceedings, the Seventh Circuit Court of Appeals said the following:

…[R]emember that jurisdiction attaches when a suit is filed as a class action, and that invariably precedes certification. All that Section 1332(d)(1)(C) means is that a suit filed as a class action cannot be maintained as one without an order certifying the class. That needn’t imply that unless the class is certified the court loses jurisdiction of the case.

* * *

Our conclusion [that federal jurisdiction under CAFA does not depend on whether the class is certified] vindicates the general principle that jurisdiction once properly invoked is not lost by developments after a suit is filed, such as a change in the state of which a party is a citizen that destroys diversity…The general principle is applicable to this case because no one suggests that a class action must be certified before it can be removed to federal court under the Act; section 1332(d)(8) scotches any such inference.

* * *

Behind the principle that jurisdiction once obtained normally is secure is a desire to minimize expense and delay. If at all possible, therefore, a case should stay in the system that first acquired jurisdiction. It should not be shunted between court systems; litigation is not ping-pong.

Cunningham, slip op. at pp. 3-5.

It should be noted that the Seventh Circuit’s decision in Cunningham does not mean that a class action case can never be remanded to state court. According to the court, if the plaintiff amends away jurisdiction is a subsequent pleading, the case can be dismissed. Likewise, if the plaintiff’s class allegations are completely frivolous, the district court can remand the case on that ground.

For more info on Willaims Montgomery & John, visit the International Society of Primerus Law Firms or willmont.com.

Posted in Business Resources

Roe Cassidy Coates & Price Attorneys Successfully Defend Medical Malpractice Action

Posted by primerus on March 9, 2010 —

Roe Cassidy Coates & Price, P.A. (Greenville, SC) is pleased to report that attorneys V. Clark Price and Fred W. “Trey” Suggs III successfully defended a local hospital in a medical malpractice case arising out of an alleged fall at the hospital.

The Plaintiff asserted that the hospital’s nursing staff negligently weighed a severely weakened dialysis patient on a bedside scale, leaving him unattended and allowing him to fall and suffer a femur fracture, requiring surgical repair and incurring over $110,000 in medical bills. The Plaintiff further alleged that the hospital’s staff attempted to cover up the incident and deny that it occurred. The Plaintiff’s family members testified that the hospital staff member who allegedly caused the fall admitted that it occurred and apologized for the incident.

Defense counsel was able to establish through forensic analysis of the medical records that the accident more than likely occurred the following morning when the patient got out of bed without assistance and fell, although their were no witnesses to a fall and the patient was not found out of bed at any time.

The jury deliberated for just 53 minutes before returning a unanimous verdict for the defense.

For more info on Roe Cassidy Coates & Price, visit the International Society of Primerus Law Firms or roecassidy.com.

Posted in Member News

Ohio Supreme Court Declines to Disturb Summary Judgment Obtained by Norchi Forbes Attorney in University Campus Shooting Case

Posted by primerus on March 9, 2010 —

Norchi Forbes, LLC (Cleveland, OH) is pleased to announce that Kevin Norchi preserves on appeal a summary judgment in favor of his client, Case Western Reserve University, in a college campus shooting case, which occurred on the campus in May, 2003.

The shooter, a 63 year old former business graduate student, killed one MBA student, injured two faculty members, and kept many other students and faculty hostage for seven hours. The shooter was later convicted of murder but spared the death penalty.

The university was sued by the Estate of the slain student for failure to protect the student and negligent security. However, ten days before trial was scheduled to begin, the motion for summary judgment filed by counsel for the University was granted by the Cuyahoga County Court of Common Pleas on grounds that the violent acts of the shooter were unforeseeable and therefore there was no duty to protect. The trial court also determined that the Plaintiffs’ did not provide any evidence of negligent security.

On appeal, the Eighth District Court of Appeals affirmed the lower court’s decision applying the “totality of the circumstances” standard and found that the actions of the shooter were not reasonably foreseeable as a matter of law.

On December 30, 2009, the Ohio Supreme Court declined to accept the appeal thereby confirming the state of law in Ohio as it relates to premises liability actions against colleges and universities.

Case Western Reserve University is a preeminent research institution located in Cleveland, OH. The University currently has nearly 10,000 students enrolled and 2,600 faculty on staff.

For more information on Norchi Forbes, visit the International Society of Primerus Law Firms or norchilaw.com.

Posted in Member News

Dukes, Dukes, Keating & Faneca Open New Office

Posted by primerus on March 9, 2010 —

Dukes, Dukes, Keating & Faneca, P.A. (Gulfport, MS) is pleased to announce that it has recently opened another office in Hattiesburg, Mississippi. With this new location in the heart of the Pine Belt Region, in addition to its main office located on the Mississippi Gulf Coast in Gulfport, Mississippi, DDKF is uniquely positioned and well equipped to handle the legal needs of the businesses, corporations and insurance carriers doing business throughout South Mississippi.

For more information on DDKF, visit the International Society of Primerus Law Firms or ddkf.com.

Posted in Member News

Joel W. Collins Receives Inaugural ABOTA Chapter Service Award

Posted by primerus on March 9, 2010 —

Collins & Lacy, P.C. (Columbia, SC) is pleased to announce that Joel W. Collins was awarded the 2010 Chapter Service Award by the South Carolina Chapter of the American Board of Trial Advocates (ABOTA). The award was created this year by the Executive Committee of the South Carolina Chapter of ABOTA and will be named after Mr. Collins and called the Joel W. Collins South Carolina ABOTA Chapter Service Award in future years.

The award was created and awarded to Joel for his exemplary service to the South Carolina Chapter. Mr. Collins was recognized for his efforts for ABOTA on a national level, having served as President of the ABOTA Foundation in 2008, as well as his tireless work on developing the first James Otis Lecture Program for South Carolina which was host to 135 selected high school students at the South Carolina State House on September 18, 2009.

The ABOTA Foundation was established in 1991 to provide education to the American public about the right to trial by jury and to promote the professional education of trial attorneys. Mr. Collins served as the 2008 President of the Board of Trustees of the ABOTA Foundation, and was a featured speaker at the 2008 ABOTA-sponsored conference, Judges and Attorneys in Interaction: The Commonalities and the Differences in Portuguese and American Legal Systems in Lisbon, Portugal. He has also played a key role in numerous “Masters in Trial” presentations throughout the U.S.

Mr. Collins was the recipient of the 2002 Jeter E. Rhodes, Jr., Trial Lawyer of the Year Award, presented by the South Carolina Chapter of ABOTA. He is a member of the International Society of Barristers, Litigation Counsel of America, and serves as a board member of the South Carolina Chapter of the National Safety Council. In 2005, he received the James Petigru Compleat Lawyer Award from the University of South Carolina School of Law. Mr. Collins has been listed in the Best Lawyers in America® for his work in white collar criminal defense, and has also been selected as a South Carolina Super Lawyer. He is also listed as one of South Carolina’s preeminent attorneys according to Martindale-Hubbell.

For more information on Collins & Lacy, visit the International Society of Primerus Law Firms or collinsandlacy.com.

Posted in Member News

Top Honors for Christian & Small partner, Clark A. Cooper

Posted by primerus on March 9, 2010 —

Christian & Small, LLP (Birmingham, AL) that Clark A. Cooper has been invited to become a Fellow of the American Bar Foundation and was reelected to serve a second term with the American Bar Association’s House of Delegates.

Cooper is one of ten Alabama lawyers inducted to the Fellowship for 2009. Cooper joins partners Thomas W. Christian, Clarence M. Small, Duncan Y. Manley, Richard E. Smith and Richard F. Ogle. The Fellows of the American Bar Foundation is an honorary organization of lawyers, judges and legal scholars whose public and private careers have demonstrated outstanding dedication to the welfare of their communities and to the highest principles of the legal profession. Members are nominated by Fellows in their jurisdiction and elected by the Board of the American Bar Foundation.

Cooper will serve as the Alabama State Delegate to the House of Delegates from August 2010 to August 2013. Each state has one state delegate who serves a three-year term. This will be Cooper’s second term.

Cooper is a graduate of Wake Forest University and the University of Alabama School of Law. Cooper’s professional honors include: Listed in The Best Lawyers in America, Listed as a “Future Star” by Benchmark Litigation, and “Best of the Birmingham Bar” by Birmingham Business Journal. In addition, Cooper holds numerous leadership positions in the American Bar Association.

For more information on Christian & Small, visit the International Society of Primerus Law Firms or csattorneys.com.

Posted in Member News

The Michigan Supreme Court Confirms that an Owner of a Construction Site May Not Be Sued Under a Premises Liability Theory for an Injury to the Employee of a Contractor on the Construction Site

Posted by primerus on March 9, 2010 —

By: Anthony Caffrey, III

Cardelli, Lanfear & Buikema, P.C.

Royal Oak, MI

In a recent order, the Michigan Supreme Court reversed the Michigan Court of Appeals on the issue of whether a premises liability claim may be asserted against the owner of a construction site for an injury to an employee of subcontractor. For several decades, Michigan law has recognized that the owner of a construction site will only be liable for an injury to the employee of a subcontractor if the owner “retained control” of the construction site and the injured employee can satisfy the four elements of the “common work area” test. The “common work area” test is satisfied with proof that (1) the property owner failed to take reasonable steps within its supervisory and coordinating authority (2) to guard against readily observable and avoidable dangers (3) that created a high degree of risk to a significant number of workmen (4) in a common work area. These construction law principles are particularly beneficial to the many property owners that lack the expertise to appropriately monitor safety measures on a construction work site.

Because of the significant hurdle imposed by the common work area test elements, it has become all too common for a plaintiff to simply plead the matter as one for premises liability. Other plaintiffs plead both theories, hoping that at least one will survive summary judgment. Unfortunately, this creative pleading has caused some Michigan trial courts, and even the intermediate appellate court, to erratically appreciate these nuances. Over time, the construction law principles have weakened.

In Banaszak v Northwest Airlines, unpublished per curiam opinion of the Michigan Court of Appeals (Docket No. 263305, issued July 21, 2009), a Michigan Court of Appeals panel erroneously opined that an worker injured on a construction site could sue a property owner under both a construction law theory and a premises liability theory. Cardelli, Lanfear & Buikema, P.C. filed an application for leave to appeal to the Michigan Supreme Court. In lieu of granting leave, the Michigan Supreme Court unanimously reversed, opining that Northwest Airline’s status as a property owner of a construction site required the plaintiff to satisfy the common work area test in order to recover. Banaszak v Northwest Airlines, 776 N.W.2d 910 (2010). In so ruling, the Court confirmed that an owner of a construction site can only be sued if the injured employee satisfies the “retained control” and “common work area” tests. It is hoped that this decision will embolden lower courts to summarily dispose of lawsuits alleging a premises liability theory for a construction site injury.

Cardelli, Lanfear & Buikema, P.C. is an A/V rated firm that specializes in litigation matters with emphasis on personal injury and commercial defense litigation. It is dedicated to providing clients with the highest quality, cost effective legal services. The firm’s areas of concentration include product liability, general negligence, insurance defense, and toxic torts. Cardelli, Lanfear & Buikema, P.C. also handles wrongful discharge and employment discrimination matters and environmental hazard claims. In addition to this focus on litigation matters, the firm is involved in a substantial amount of appellate work.

For more information on Cardelli, Lanfear & Buikema, visit the International Society of Primerus Law Firms or cardellilaw.com.

Posted in Business Resources

Boylan Brown Participating in Habitat for Humanity’s “Women Build”

Posted by primerus on March 9, 2010 —

Boylan, Brown, Code, Vigdor & Wilson, LLP (Rochester, NY) is helping to build a house with Flower City Habitat for Humanity as part of the “Women’s Build” program this spring. The fundraising for and construction of the house will be done predominantly by women. Boylan Brown has formed a team – the “Boylan Brown Community Builders” – to assist in fundraising for the project and in the actual construction of the house.

Funds are being raised through a unique virtual tool. You can go to www.RocHabitat.org to build your own virtual house and to help us in our fundraising efforts. If you wish to donate, please select “Boylan Brown Community Builders” from the drop-down list of teams. To find a Habitat for Humanity affiliate in your area, please visit www.habitat.org.

Please contact Sharon Stiller at sstiller@boylanbrown.com or Cassandra Rich at crich@boylanbrown.com if you would like more information about the build or to participate with our team.

For more information on Boylan Brown, visit the International Society of Primerus Law Firms or boylanbrown.com.

Posted in Member News

Boylan Brown Adds New Partner to Its ESOP Practice

Posted by primerus on March 9, 2010 —

Boylan, Brown, Code, Vigdor & Wilson, LLP (Rochester, NY) is pleased to announce the addition of Mark Kossow as a partner in its ESOP department.

Since 1998, Mr. Kossow has practiced law in ERISA and tax related transactions. In the past few years he has represented corporations, selling shareholders and trustees in more than 50 ESOP transactions ranging in size from $500,000 to more than $100,000,000. He has a great deal of experience in tax matters, including tax planning and tax controversies, as well as in mergers and acquisitions, stock purchase transactions and not-for-profit corporations.

Immediately prior to joining Boylan Brown, Mr. Kossow was a partner at Steiker, Fischer, Edwards & Greenapple, P.C. Prior to that, he was an associate at the firms of Gibbons, Del Deo, Dolan, Griffinger & Vecchione (2001-’04) and Fox Rothschild (1998-2001).

Mr. Kossow is an honors graduate of the University of Michigan. He received his law degree from Albany Law School, cum laude, and he holds an LL.M. in taxation from New York University Law School.

Mr. Kossow is admitted to the bar in New York, New Jersey and Pennsylvania.

For more information on Boylan Brown, visit the International Society of Primerus Law Firms or boylanbrown.com.

Posted in Member News

Indianapolis Firm Price Waicukauski & Riley, LLC Files National Yasmin/Yaz Suits

Posted by primerus on March 1, 2010 —

Price Waicukauski & Riley, LLC (Indianapolis, IN) has filed suit against Bayer Healthcare Corporation for the birth control medications, Yasmin and Yaz. Women have claimed that they suffered strokes, heart attack, gall bladder removals or other serious health problems while taking the birth control pills Yasmin or Yaz.

Lawyer William Riley (explained, “Yasmin, which has been marketed since 2001, and Yaz, since 2006, are oral contraceptives that contain ‘fourth generation’ progestin. The use of this birth control may cause arterial blood clots, gallbladder disease, pancreatitis, liver and kidney failure, rapid heartbeat, arrhythmias and other conditions, including death.”

The firm is currently representing 47 women from across the United States and would be happy to talk to any individuals who have suffered an injury due to the use of Yaz, Yasmin and/or the generic equivalent, Ocella.

Price Waicukauski & Riley, LLC represents plaintiffs in complex litigation. Collectively, their attorneys have more than 100 years of experience in trials and in the litigation of lawsuits. In many instances, these lawsuits have been class actions on behalf of landowners, consumers, employees, or other groups. Practice Areas include Class Actions, Personal Injury, Medical Malpractice, Legal Malpractice, Products liability, Actions Against Banks, Environmental Litigation, Civil Trials and Civil Appeals.

Price Waicukauski & Riley, LLC is a member of the International Society of Primerus Law Firms (Primerus). Primerus (http://www.primerus.com/about.htm) is the leading alliance of small and medium sized, top-rated, independent law firms. With approximately 140 law firms located in the U.S., Canada, Mexico and the U.K., Primerus firms (http://www.primerus.com/membership_benefits.htm) provide clients with responsive, high quality, partner-level service for much less than what large law firms charge. All Primerus law firms are: AV- rated using the Martindale-Hubbell peer review service; screened for excellence; audited annually for continued quality; and committed to excellence in six key areas; integrity, reasonable fees, continuing education, civility, community service and excellent work product.

For more info on Price Waicukauski & Riley, visit the International Society of Primerus Law Firms or price-law.com.

Posted in Member News

The New Bankruptcy Act & Its Impact on Family Law

Posted by primerus on March 1, 2010 —

By: Madeline Marzano-Lesnevich

Lesnevich & Marzano-Lesnevich, LLC

Hackensack, NJ

I’m going to speak with you about the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, and its impact on us, as family lawyers.

In light of the current economy and real estate market, you need to be familiar with the main concepts and buzz words, and how they could affect your practice.

The Bankruptcy Abuse Prevention and Consumer Protection Act went into effect on October 17, 2005. The 2005 Act significantly impacted Orders of support, property distributions, payment of our counsel fees, payment of 3^rd party obligations, and other relief which we include in our property settlement agreements in the ordinary course of our practice of family law.

According to the Administrative Office of the United State Courts, there were 2 million 78 thousand 415 (2,078,415) bankruptcy petitions filed in 2005 the United States. However, since the 2005 Act was enacted there has been a significant decrease in the total number of filings for bankruptcy in the United States. In 2006 there were only 617 thousand 660 (617,660) bankruptcy petitions filed and in 2007 there were only 850 thousand 912 (850,912) bankruptcy petitions filed. This is a clear indication of the impact that the 2005 Act has had on debtors.

It is now more difficult for a debtor to discharge debt in bankruptcy, and it is more likely that debtors will be compelled to comply with their divorce-related obligations.
The definition of a domestic support obligation has been expanded, the list of discharge exceptions has been extended, and support obligations have been elevated in the list of priorities – - all to a non-debtor spouse or former spouse’s advantage.

Generally, Chapter 7 is a liquidation chapter. Bankruptcy petitions filed under Chapter 7 begin with the identification of the debtor’s non-exempt assets; and the sale of the assets is overseen by the Trustee in an effort to establish a pool of money from which outstanding creditors are paid. These creditors are paid in an order of priority established by the Bankruptcy Code. One of the most significant changes brought about by the 2005 Act is the designation of domestic support obligations as a first priority, thereby assuring that such obligations are paid before all other obligations. A straightforward Chapter 7 bankruptcy action can be over rather quickly, in some cases lasting no more than four months.

Whereas Chapter 7 is devoted to liquidation, with the Trustee serving the primary roles of identifying and selling the debtor’s assets, Chapter 13 is devoted to reorganization, with the Trustee’s primary role shifting to the establishment of a repayment plan, funded by all of the debtor’s disposable income.

The purpose of this plan under Chapter 13 is to allow for creditors to be repaid over a period of three to five years.

Ordinarily, creditors receive more money in Chapter 13 than in Chapter 7.

Chapter 11 is usually reserved for businesses. However, it can be used by individuals who want to reorganize, but who do not otherwise qualify for reorganization under Chapter 13 because their debt is too significant, or their income is insufficient to fund an appropriate plan. Finally, Chapter 12 is a reorganization chapter reserved for farming entities, and, under the 2005 Act, now includes fishing entities. Bankruptcy petitions filed under Chapter 12 are the least common petitions filed by debtors. We’ll focus on Chapter 7 liquidation, Chapter 11 (usually reserved for business), and Chapter 13 reorganization.

But no matter which Chapter is utilized, it is imperative that we, as family lawyers take some action to protect the economic rights or property interests of our clients. We should:

● Obtain complete copies of all schedules and statements of financial affairs, filed by the debtor. Compare those with the financial disclosures made in the family court proceedings. Has the debtor failed to list assets? In the bankruptcy petition? In the family court action?

● Attend a §341 (a) meeting; that is, a creditors’ meeting. The debtor will be compelled to submit, under oath, to the questions of the Bankruptcy Trustee and the creditors. Again, are there any discrepancies with disclosures made in the family court proceedings? Request that the Trustee inquire into a specific asset if you are aware of discrepancies.

● The Notice of the §341 (a) meeting will set forth the deadlines for filing proofs of claims and for asserting the non-dischargeability of claims. Note the deadlines. Decide whether your client needs the services of a bankruptcy attorney. If not, file a Notice of Appearance. If yes, refer the client to a bankruptcy attorney. Either way, a Proof of Claim should be filed on behalf of your client.

One of the most significant changes to the Bankruptcy Code are the prerequisites that a debtor must meet before filing, including credit counseling and a Chapter 7 means test.

In other words, a debtor seeking to file a Chapter 7 bankruptcy proceeding must first qualify for Chapter 7 protection. To qualify, the debtor must fail the means test – which means the debtor does not have sufficient income with which to complete a Chapter 13 plan – which, remember – is a reorganization plan under which debts are repaid.

Pursuant to the means test, if the Debtor with primarily consumer debt is found to have the “means” to pay his or her debt, that debtor will not be permitted to proceed with a Chapter 7 action, but will rather be required to proceed under Chapter 13, and submit to the repayment plan established by the Trustee.

The results of the means test have ramifications that extend beyond the determination of which Chapter the debtor must proceed by– the ramifications can have a direct impact upon the attorney filing the Chapter 7 petition on the debtor’s behalf. Specifically, if the Chapter 7 petition is filed, and it is ultimately determined that the debtor has the means to pay his debts pursuant to a Chapter 13 action, the attorney filing on the debtor’s behalf may be sanctioned, including provision for disgorgement of fees and for payment of the Chapter 7 Trustee’s fees related to the dismissal.

With regard to the test itself, the debtor’s means to pay will be subject to two separate criteria. The first criterion of the means test mandates a calculation of the debtor’s “current monthly income,” which is comprised of the debtor’s average monthly income over the last six months, multiplied by twelve months. The product [“you remember that term…”] is then compared with the median annual income in the state where the debtor resides. If the debtor’s income is below the median annual income for his or her state, he or she may file for Chapter 7. Our materials give you the website for the median annual income figures for each state. But, if the debtor’s median income is greater than the applicable median annual income for his or her state, a debtor will be subjected to the second criterion, which itself is a two-part test; If the debtor satisfies either part, he or she will be required to file under Chapter 13 reorganization, and not Chapter 7. The two-part test [“I don’t expect you to remember this but follow along…”]: First, the debtor’s current monthly income, less the debtor’s current monthly expenses, is multiplied by 60; If the product equals or exceeds $10,000, the debtor must file under Chapter 13 and not Chapter 7. Second, if that product is less than $10,000.00, but falls between $6,000 and $10,000, and if the product is more than 25% of the debtor’s unsecured debt, the debtor has to file under Chapter 13, and not Chapter 7.

Of the prerequisites impacting family law, actually the most important one, is that

a debtor seeking Chapter 13 protection must be – and must remain– current with his or her support obligation. In Chapter 13 bankruptcies, the debtor is to arrive at a plan that is acceptable to the trustee and by which his or her debts shall be repaid. The 2005 Act permits the debtor to have discharged certain debts (including non-support debts – arising out of a marital settlement agreement) as soon as the debtor has made all payments pursuant to the plan.

One tremendous benefit to the debtor filing a Chapter 13 bankruptcy proceeding is that if the proposed plan is accepted and followed, the debtor filing a Chapter 13 bankruptcy proceeding is afforded the opportunity to retain his or her residence. However, the 2005 Act incorporated an additional requirement for discharge. The Act states that

…[I]n the case of a debtor who is required by a

judicial or administrative order, or by statute, to pay

a domestic support obligation…such debtor must certify

that all amounts payable under such order or such

statute due on or before the date of the certification

(including amounts due before the petition was filed, have

been paid…

In other words, only a debtor who is current on his or her domestic support obligation will find relief under a Chapter 13 proceeding. The 2005 Act has also provided that, “failure of the debtor to pay any domestic support obligation that first becomes payable after the date of the filing of the petition” is grounds for dismissal, of the bankruptcy proceeding. The debtor must be current with his support up to the date of the filing of his certification, and the debtor must remain current with his support obligation. If not current – and this is the remedy you need to be aware of – the trustee may sell the debtor’s residence to satisfy the domestic support obligation.

Prior to the 2005 Act, the filing of any bankruptcy proceeding had automatically stayed determinations or adjudications of the property interests of a debtor, the exercise of control over the property, and the assertions of many claims against the debtor or his property. Pursuant to the 2005 Act, the only divorce-related activities that are stayed by the filing of bankruptcy proceedings are the division of marital property and the collection of certain non-support payments from what is determined to be property of the bankrupt estate.

Therefore, no automatic stay issues on

● paternity actions;

● actions for the establishment or the modification of support;

● actions concerning custody or parenting time;

● the dissolution of marriage (remember, however, there still cannot be a division of property). On this, one should look to individual state’s criteria for a bifurcated proceeding;

● any domestic violence proceedings;

● the collection of domestic support obligation from property that is not property of the estate – there is also no automatic stay;

● income withholding from property of the estate or of the debtor when used for the payment of a domestic support obligation under a judicial or administrative order, or by statute; or

● the interception of tax refunds

Once a bankruptcy petition has been filed, there will be a look-back by the trustee to determine fraudulent and preferential transfers. Transfers to a non-debtor spouse, not constituting support, may be fraudulent; specifically the transfer of a residence to the non-debtor spouse may be considered fraudulent. Payment of alimony or child support will be deemed a preferential transfer if the debt was assigned to a third-party.

We need to protect certain transfers from being voided, or deemed a fraudulent or preferential transfer, if the debt was assigned to a third-party.

For example, in cases where a Marital Settlement Agreement or Property Settlement Agreement provides that a Husband is assuming certain debts from which the wife is being held harmless, we need to include detailed, explanatory, protective language, such as

“It is further understood by and between the parties that the Husband has assumed the aforementioned debts and agreed to indemnify and hold the Wife harmless for same because of the relative financial resources of the parties. It is specifically understood that the Wife’s alimony, support and maintenance has been calculated with this assumption of debt considered, and it is hereby made subject to same. It is further understood that the Wife does not have the financial resources to pay such obligations and compelling her to do so would cause irreparable harm and financial detriment which substantially exceeds the financial benefit to the Husband, if the Wife were to assume such obligations. It is further understood that this obligation to the Wife will not be dischargeable in any bankruptcy filed by the Husband.”

It’s very important for us, as family law practitioners, to craft language in our agreements which will not only protect our clients in the event of a spouse or former spouse’s bankruptcy, but also protect our clients when the Bankruptcy Trustee does the look-back.

What constitutes property of the bankruptcy estate?

A marital estate is created and fixed upon the filing of a divorce complaint. Section 541 of the 2005 Act governs the determination of whether marital property constitutes property of the bankruptcy estate.

In Chapter 7 cases, earned income of the debtor is not property of the estate, but in Chapters 11, 12 and 13 cases, earned income of the debtor is property of the estate.

Discharging debt has become harder under the 2005 Act.

The exceptions to discharge listed in §523 are applicable to Chapter 7, 11, and 12 proceedings, as well as hardship debts discharged under chapters 12 and 13 proceedings. It is important to note the distinctions for each chapter. When faced with bankruptcy the first thing to look at is the chapter being used.

Prior to the enactment of the 2005 Act, §523 contained two exceptions to discharge that related to debts in the context of a dissolution of marriage. The first excepted from discharge any debt:

to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child in connection with a separation agreement, divorce decree or other order of a court of record but not to the extent that such debt was assigned to another entity or such debt included a liability designated as alimony or support but is not actually alimony or support.

Be careful of payments to 3^rd parties.

The exception to discharge under the former Bankruptcy Act contained substantial limitations. The old exception only applied to a creditor who was “a spouse, former spouse, or child of the debtor.”

Now, with the expanding nature of family law, and of our definition of family, many significant potential creditors with debts arising from a family-like context have been deprived of their debts being protected by the discharge exception. For example, legal guardians and relatives, such as grandparents or siblings who have undertaken custodial responsibility for a debtor’s children, could not rely upon the language of the old bankruptcy provisions; even a creditor who is the non-biological, or even the biological parent of the debtor’s child, would not fall within the language of the prior statute unless he or she was the “spouse, or former spouse…of the debtor.” So, if parents were unmarried, the non debtor spouse’s support was not protected.

The 2005 Act replaced the limiting language with the phrase “Domestic Support Obligation.” Any debt or obligation that falls within the definition of domestic support obligations is now excepted from discharge in bankruptcy.

A “Domestic Support Obligation” (“DSO”) is defined as any obligation, including interest that: is established or may be established prior to, at or after the bankruptcy filing (this is substantially broader than before); is owed to or recoverable by any adult who may be responsible for a child (e.g. spouse, ex-spouse, child, child’s parent, legal guardian or other responsible relative) or a governmental unit; is in the “nature of alimony, maintenance or support”; and which has been established by a separation agreement, divorce court, property settlement agreement, order of any court or determination made by any governmental unit.

It may not be assigned to a non-governmental entity unless it was assigned voluntarily solely for purposes of collection. This term “DSO” (Domestic Support Obligation) is utilized in many amended provisions of the Bankruptcy Code. For example §523a5 now reads that any DSO is non-dischargeable, automatically, from any bankruptcy case. Any non-DSO domestic obligation is now, automatically, non-dischargeable in Chapters 7, 11 and 12 cases, but may be discharged in a Chapter 13 case. No adversary proceedings need to be initiated in Chapter 7 cases to determine the non-dischargeability of domestic obligations – they automatically survive the discharge.

A subject of interest to us, a counsel fee award stemming from a divorce action, is just as subject to discharge as any debt for which no exception is otherwise provided. Prior to the 2005 Act, the issue as to whether or not a debtor’s obligation to pay counsel fees could be dischargeable in bankruptcy hinged upon the determination of whether or not the award was deemed alimony, maintenance, or support.” To a large extent it still is. Again, with the new, more inclusive definition of “domestic support obligation,” and with further exceptions for all other debts arising from a divorce settlement agreement, the distinction is not as important for Chapter 7 proceedings as it is for Chapter 13 proceedings. However, for Chapter 13 proceedings, the issue of whether a counsel fee obligation stemming from a divorce proceeding may be excepted from discharge will depend upon whether the obligation is deemed part of a domestic support obligation. You need to be protective in your MSA language.

The Bankruptcy Code establishes an order by which claims are paid from the bankruptcy estate, after such estate has been accumulated. All creditors with claims of a higher priority designation must be paid, and their debts satisfied in full, before credits with claims of lower priority designations receive payment.

But, prior to the 2005 Act, domestic support obligations were considered the seventh priority. Therefore, under the prior act, a creditor seeking to collect monies owed from a domestic support obligation was often unlikely to do so, because by the time his or her debt was considered, the debtor’s estate had been expended to creditors of higher priority. There was simply no money left for support obligations.

The 2005 Act, however, elevated domestic support obligations to the number one priority, with debts recoverable by a spouse, former spouse, child of the debtor, a child’s parent, legal guardian or responsible relative being paid first, and governmental units to which support obligations have been assigned being paid second.

The 2005 Act’s biggest beneficiaries are Creditor ex-spouses. A debtor may no longer discharge any divorce related obligation in Chapter 7 and may only discharge property settlements upon the completion of a Chapter 13 plan and the issuance of his or her discharge. Significant provisions are now in place requiring that the debtor be, and remain current, with post-petition support payments. Bankruptcy under the 2005 Act is no longer a good way for a payor spouse to “renegotiate” divorce-related provisions.

The 2005 Act has had substantial implications, both positive and negative, for family law and family law practitioners. The upside is increased security for the non-debtor spouse in preserving and collecting upon their debts in an equitable and expeditious fashion. The downside is the increased transactional costs associated with the current, and more complicated, requirements. Over the past few years, as domestic practitioners have acclimated to the changed rules and new requirements, it has become clear that a working knowledge of the 2005 Act is really essential. You need to be aware of the issues, you need to contemplate whether bankruptcy is in the pipeline for your client’s spouse or ex-spouse or co-parent, you need to know if you need to refer someone to a bankruptcy attorney.

For more info on Lesnevich & Marzano-Lesnevich, visit the International Society of Primerus Law Firms or lmllawyers.com.

Posted in Consumer Resources

Second Bayer ‘Bellwether’ Trial Results in Another Verdict for Plaintiffs: $1.5 Million Award to Rice Farmers Represented by Don Downing

Posted by primerus on March 1, 2010 —

Gray, Ritter & Graham, P.C. (St. Louise, MO) is pleased to announce that a St. Louis jury found Germany-based Bayer Cropscience AG and several of its affiliates negligent in the second of several “bellwether trials” scheduled for the U.S. District Court for the Eastern District of Missouri, and awarded a total of $1.5 million to two Arkansas long-grain rice farmers and one in Mississippi whose crops and their livelihood, the jury determined, were harmed by Bayer’s genetically modified rice.

This trial, which began January 11, is the second of five scheduled “bellwether” – or test – trials scheduled by U.S. District Court Judge Catherine Perry that involves rice farmers in Missouri, Arkansas, Louisiana, Mississippi, and Texas. These trials represent the first step Perry ordered in hearing the multi-district litigation involving some 6,000 rice producers in those five states.

St. Louis attorney Don Downing, of the firm Gray, Ritter & Graham, was the plaintiffs’ lead attorney in the first two cases and is co-lead counsel of the multi-district litigation. In the first trial, concluded last December, a jury awarded two Missouri rice farmers $2 million in compensatory damages.

“We’re pleased that another jury returned verdicts in favor of our clients and their family farming operations. A second consecutive verdict against Bayer should send a clear and strong message to the company about its negligent conduct and the damages that conduct actually caused to American rice farmers, not only in this case but in the other matters that are scheduled for trial,” Downing said.

Joe and Jim Penn, of Portia, Ark., were awarded $480,692 in compensatory damages and fellow Arkansas rice farmer Jerry Catt, of Corning, Ark., was awarded $96,996 in compensatory damages. Black Dog Planting Co., of Lyon, Miss., represented by partner Gary Goode, was awarded $923,154 in compensatory damages.

The suit was brought on behalf of the rice farmers based on economic damages they suffered from contamination of their crops by an unapproved genetically modified strain of rice seed produced by Bayer. Discovery of the contamination led to a dramatic drop in U.S. rice prices, as the European Union stopped purchasing the U.S. rice. The farmers suffered economic loss due to the much lower demand for their rice since 2006, when the contaminated rice was discovered.

More test trials involving Bayer and rice farmers are scheduled for this summer in the same federal courtroom and will include farmers from Louisiana and Texas.

For more info on Gray Ritter & Graham, visit the International Society of Primerus Law Firms or grgpc.com.

Posted in Member News

Court Dismissed Plaintiff’s Complaint With Prejudice for Failure to Provide Expert Report

Posted by primerus on February 23, 2010 —

By: Thomas Paschos

Thomas Paschos & Associates, P.C.

Haddonfield, NJ

In Choi v. River Terrace Gardens Associate, 2010 WL 26495 (N.J.Super. January 6, 2010), Plaintiffs appealed from an order dismissing their complaint with prejudice pursuant to Rule 4:23-5(a)(2) and denying their motion to reinstate the complaint. Among the discovery deficiencies alleged was plaintiffs’ failure to provide any expert reports, a failure that was not cured prior to the date the motion to dismiss with prejudice was argued.Plaintiffs’ claims arose from their contention that the negligence of defendant, their landlord, resulted in a mold condition that caused them to suffer severe and permanent injury. Their complaint, filed on November 26, 2007, alleged negligence; an unconscionable commercial practice in violation of the Consumer Fraud Act; a breach of the warranty of habitability; and that the landlord failed to return the security deposit. The case was assigned to Track 2, with an original discovery end date of December 2, 2008.

Defendant promptly served its first discovery demands: a demand for answers to Uniform Interrogatories Form A served with its answer on February 6, 2008; a similar demand with its amended answer on February 15, 2008; and a first demand for production of documents on February 14, 2008.

Plaintiffs did not provide answers to interrogatories by their March 7, 2008 due date. Defendant sent letters on March 11 and April 7, 2008, advising plaintiffs’ counsel of their failure and asking that answers be provided. Receiving no response, defendant sent a third letter on April 23, 2008, advising that unless answers were received by May 1, 2008, a motion would be filed without further effort to resolve the discovery issue.

By letter dated July 10, 2008, defense counsel advised plaintiffs’ counsel of deficiencies in the answers including the request for expert discovery. Plaintiffs did not provide the requested expert discovery and were repeatedly informed of this deficiency throughout the litigation and failed to cure it. During the period from May 2008 through February 2009, defendant filed two motions to compel discovery, one motion to dismiss without prejudice and, finally, a motion to dismiss with prejudice, all of which were based in part on the failure to provide expert reports. Yet, this failure persisted despite a court order directing production of outstanding discovery that included expert reports by November 15, 2008, the expiration of the discovery period on January 31, 2009, and even on March 20, 2009, the date that the motions were argued. On March 20, 2009, the trial court granted the motion to dismiss the complaint with prejudice and denied the motion to reinstate the complaint.

On appeal, plaintiffs argue that the trial court was precluded from dismissing the complaint with prejudice pursuant to Rule 4:23-5(a)(2) because they provided fully responsive answers to interrogatories before the return date for the motion. To support this argument, plaintiffs cited St. James AME Dev. Corp. v. City of Jersey City, 403 N.J.Super. 480, 485 (App.Div.2008) which held that “the production of fully responsive answers by the time of the return date, even without exceptional circumstances, precludes dismissing the complaint with prejudice.” The court found plaintiffs’ reliance on St. James misplaced. The court provided:

Although plaintiffs have attempted to characterize the issue here as a bona fide dispute over the sufficiency of the answers provided, the fact remains that plaintiffs never provided any expert reports to defendant. As a result, their contention that they provided fully responsive answers by the return date is simply false and we need not consider the sufficiency of plaintiffs’ other answers to interrogatories.

The court found that plaintiffs failure to provide an expert report could not be minimized as a mere dispute over the sufficiency of interrogatory responses because even if there had been no order compelling plaintiffs to provide this information by November 15, 2008, they were required to provide expert reports before the expiration of the discovery period. Plaintiffs’ failure to provide expert reports thwarted defendant’s ability to complete discovery by deposing plaintiffs’ experts and obtaining defense experts to counter their claims.

Because a motion to vacate the dismissal requires that outstanding discovery “has been fully and responsively provided,” R. 4:23-5(a)(1), plaintiffs’ failure to provide expert reports precluded the granting of their motion to restore the complaint. Therefore, the court held that the motion to dismiss the complaint with prejudice was properly granted.

For more information on Thomas Paschos, visit the International Society of Primerus Law Firms or paschoslaw.com.

Posted in Business Resources

New Jersey’s Law Against Discrimination Prohibits Sexual Harassment and Discrimination in Business Owners and Client Relationships

Posted by primerus on February 23, 2010 —

By: Thomas Paschos

Thomas Paschos & Associates, P.C.

Haddonfield, NJ

In J.T.’s Tire Service, Inc. v. United Rentals North America, Inc., — A.2d —, 2010 WL 26495 (January 6, 2010), Plaintiffs, J.T.’s Tire Service, Inc. (J.T.) and its sole owner Eileen Totorello, filed a complaint alleging discriminatory refusal to do business, under the Law Against Discrimination (LAD), against Defendant, United Rentals North America, Inc. (United). Specifically, plaintiffs alleged that a branch manager at United tried to extort sexual favors from Totorello as a condition of allowing her company to continue doing business with United. Plaintiffs allege that because she refused the manager’s advances, United ceased contracting with J.T.

Plaintiffs’ complaint accused United of unlawful sex discrimination and retaliation in violation of the LAD. Before filing an answer or engaging in any discovery, United filed a motion to dismiss the complaint for failure to state a claim on which relief could be granted. The trial court held that there was no evidence to suggest that Defendant United discriminated against Plaintiff based on her sex and that United had not unlawfully retaliated against plaintiffs as contemplated by the statute. The court dismissed count one of Plaintiff’s Complaint as to Defendant United. Plaintiffs appealed.

The appeals court acknowledged that the LAD prohibits discriminatory refusals to do business on the basis of sex. Specifically, subsection (l) prohibits:

For any person to refuse to buy from, sell to, lease from or to, license, contract with, or trade with, provide goods, services or information to, or otherwise do business with any other person on the basis of the race, creed, color, national origin, ancestry, age, sex,. . . .

N.J.S.A. 10:5-12(l) (emphasis added). From the plain wording of the statute, it prohibits sex discrimination in the form of refusals to buy from or otherwise do business with a person because of her gender. However, defendant contends that for purposes of subsection (l), sexual harassment is not prohibited sex discrimination. Defendant argued that sexual harassment is prohibited only in employment, under subsection 12(a), and is not sex discrimination within the meaning of 12(l); that subsection 12(l) does not apply to “discriminatory conduct which arises after companies begin engaging in business transactions;” and that women business owners do not need protection against sexual harassment by those with whom they do business. The appeals court rejected these arguments.

The court noted that although the LAD does not specifically mention sexual harassment as a prohibited form of discrimination, it is well-established that sexual harassment is a form of sex discrimination that violates both Title VII and the LAD. The court provided that “[w]here, as here, the harassment consists of sexual overtures and unwelcome touching or groping, it is presumed that the conduct was committed because of the victim’s sex.” The court considered this case to involve “quid pro quo sexual harassment” which occurs when an employer attempts to make an employee’s submission to sexual demands a condition of his or her employment. The court held:

The quid pro quo sexual harassment alleged in the complaint, if legally permitted, would stand as a barrier to women’s ability to do business on an equal footing with men. Construing N.J.S.A. 10:5-12(l) to prohibit such opprobrious conduct is consistent with the Legislature’s intent to eliminate sex discrimination in contracting.

As such, the court reversed the trials court’s dismissal of plaintiff’s action against defendant.

For more information on Tom Paschos, visit the International Society of Primerus Law Firms or paschoslaw.com.

Posted in Business Resources

Smith Debnam’s Bettie Kelley Sousa President-Elect of National Board

Posted by primerus on February 16, 2010 —

Smith Debnam Narron Drake Saintsing & Myers, L.L.P. (Raleigh, NC) is proud to announce that Bettie Kelley Sousa was elected President-Elect of the American Board of Certification (ABC) at its recent meeting in La Quinta, California.

Accredited by the American Bar Association, ABC administers the only nationwide certification of specialists in the legal fields of creditors’ rights and bankruptcy.

Mrs. Sousa, primarily a business litigator, has been a creditors’ rights specialist since the certification was first available in 1993. She has served on ABC’s Board of Directors since 2002, on its Executive Committee since 2004, and has held the offices of Secretary and Treasurer. Jerry T. Myers, the managing partner of Smith Debnam, also serves on ABC’s Board of Directors.

For more information on Smith Debnam, visit the International Society of Primerus Law Firms or smithdebnamlaw.com.

Posted in Member News

Schneider, Smeltz, Ranney & LaFond P.L.L.

Posted by primerus on February 16, 2010 —

Schneider, Smeltz, Ranney & LaFond P.L.L. (Cleveland, OH) is proud to announce the addition of Thomas I. Hausman as Of Counsel.

Thomas I. Hausman has been a practicing attorney for over 30 years. He focuses on partnerships, estate planning, corporate tax, tax controversies, and general tax matters. He has represented many clients in connection with the formation, management, operation and liquidation of partnerships and limited liability companies, the sale of partnership interests, the reorganization of partnerships and limited liability companies, and the allocation of profits and losses among partners. He also practices in the areas of estate planning, and tax controversy work before the Appeals Office of the Internal Revenue Service, and the U.S. Tax Court. From 1994 to 2005, Mr. Hausman was the administrative director of the graduate tax (LL.M.) program and a faculty member of Case Western Reserve University Law School, where he taught courses in partnership tax, estate planning, and corporate tax. He is currently an adjunct professor at Case Western Reserve University Law School, where he teaches estate planning. Mr. Hausman is a member of the Tax Specialty Board of the Ohio State Bar Association, which is responsible for making recommendations to the Ohio Supreme Court for the certification of a lawyer as a tax specialist. Mr. Hausman is a member of the Tax Section of the American Bar Association, where he has for many years been a member of the Partnership tax committee, and was the former chair person of the Individual Investments and Workouts Subcommittee. He regularly speaks at various tax meetings, including the Cleveland Tax Institute, where he was the general chairman in 1996.

For more information on Schneider, Smeltz, Ranney & LaFond, visit the International Society of Primerus Law Firms or ssrl.com.

Posted in Member News

Recent Changes in Federal Transfer Taxes: How the Current Uncertainty May Affect Your Clients

Posted by primerus on February 16, 2010 —

By: David M. Lenz and J. Paul Fidler

Schneider, Smeltz, Ranney & LaFond P.L.L.

Cleveland, OH

The new calendar year brought with it dramatic changes in the federal transfer tax laws. These changes could significantly affect your clients’ planning strategies or even alter the way in which their property is distributed under their existing estate plan documents. Below is a brief summary of the current state of the law and some of the issues that may arise for your clients.

What is Happening?

The entire federal transfer tax system shifted dramatically as of January 1, 2010. Below is a summary of the major changes in the tax rates and exemptions for the federal estate tax, the federal generation-skipping transfer (“GST”) tax, and the federal gift tax:

	2009	2010	2011 (and thereafter)
Federal Estate Tax Rate	45%	N/A	55%
Federal Estate Tax Exemption	$3,500,000	N/A	$1,000,000
GST Tax Rate	45%	N/A	55%
GST Tax Exemption	$3,500,000	N/A	$1,000,000
Gift Tax Rate	45%	35%	55%
Gift Tax Exemption	$1,000,000	$1,000,000	$1,000,000

Another change that is only in effect for 2010 involves income tax basis of inherited assets. Under prior law, the income tax basis of an inherited asset was generally “stepped up” to its value at the owner’s death. In 2010, however, the deceased owner’s income tax basis will generally “carry over” to the heirs. This means an heir would likely pay capital gains tax when he or she eventually sells the asset.

These changes in the law were created in 2001 by legislation that included a 10-year sunset provision but was intended to lead toward permanent estate tax repeal. Once the political and economic environment shifted away from permanent repeal we, like most estate planning advisors, expected that Congress would pass legislation to extend the 2009 law and avoid the temporary “repeal” of the estate tax. Unfortunately, Congress was unable to approve such legislation. This inaction by Congress has caused great anxiety among planners and clients. Congress may address transfer taxes this year with a law that applies for the rest of 2010, or even one that applies retroactively back to January 1, 2010. It is unclear whether Congress will be able to pass such a law and, if so, what the substance of the law would be.

It is important to note that notwithstanding these federal changes, your state’s estate tax system may continue to apply in 2010 as in previous years.

Why Does This Matter?

The current suspension of the federal estate and GST taxes may cause confusion in your clients’ estate plan documents. Key provisions in many estate plan documents refer to federal transfer tax concepts, such as the “estate tax exemption amount,” “GST tax exemption,” or “marital deduction.” Because those tax concepts are not in the law this year, there may be questions as to what the documents mean and how property is disposed of, particularly if the client were to die in 2010.

For example, consider a husband’s Declaration of Trust that leaves “an amount equal to the maximum amount that will be exempt from federal estate tax” in trust for his children and leaves the balance of his estate to his wife. Under prior (and future) law, the children’s trust would preserve his full estate tax exemption, and the portion for his wife uses the marital deduction for the rest of his estate. As a result, no federal estate tax would be due at his death. This is a very traditional form of estate planning for married couples and continues to be generally appropriate. However, in 2010, when there is no federal estate tax, all of the husband’s estate would be exempt from the federal estate tax. Therefore, all of his property may pass to his children, effectively disinheriting his wife!

Similar problems can arise pertaining to the marital deduction, GST tax exemption, or charitable deduction, depending on how a client’s documents are worded. Formulas that were designed to produce an optimal transfer tax result could cause confusion or mis-allocation of assets if there is no federal estate or GST tax in effect at the client’s death.

What Should You Do?

If your clients are concerned about these issues, you should encourage them to contact their attorney to review their estate plan. The kinds of issues described above are very case-specific and require consultation between the attorney and client concerning the client’s current documents, goals, and wishes.

Further, the elimination of the GST tax, coupled with a reduced gift tax rate, may provide a unique opportunity for gifts in trust during 2010. Your clients may be interested in discussing these options. However, as was mentioned above, there is a possibility that Congress will reinstate the estate and GST taxes this year and make the law retroactive to January 1, 2010. These variables must be carefully considered before a client makes a substantial gift in 2010.

If you are interested in more detailed information concerning these changes in the law, please visit our website, www.ssrl.com, click on the “Library,” and click on the article entitled “2010 Estate Tax Repeal: How Did We Get Here and What Does It Mean?”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

For more information on Schneider, Smeltz, Ranney & LaFond P.L.L., visit the International Society of Primerus Law Firms or ssrl.com.

Posted in Business Resources

Robinson Waters & O’Dorisio Adds Matthews and Staab as Shareholders

Posted by primerus on February 16, 2010 —

Robinson Waters & O’Dorisio, P.C. (Denver, CO) has added Kelly N. Matthews and Louise Betcher Staab as shareholders.

Matthews will continue to focus her practice in the areas of general corporate and commercial law with an emphasis on banking and credit finance transactions, venture capital and angel financing transactions and representation of privately held companies (for-profit and non-profit). Matthews’ banking and credit financing practice includes representation of banks and other lender clients in commercial lending transactions, acquisition financing and debt restructuring as well as representation of borrower clients in various financing transactions. Matthews’ general corporate and emerging technology practice includes serving as a strategic counsel to privately held companies, with a focus on capital raising, business operations, corporate governance matters and strategic planning.

Matthews earned her bachelor’s degree in economics from Stanford University. She earned her juris doctorate from the University of Colorado School of Law.

Staab will continue to focus her practice on commercial leasing for both landlords and tenants including the preparation and negotiation of complex long term ground leases as well as office, retail and industrial leases including multi-tenant and single tenant triple net projects. Further, Staab will continue to represent commercial landlords in matters related to owning, managing and operating their properties such as the preparation and negotiation of management agreements, broker listing agreements, service contracts, construction contracts and telecommunications licenses. Additionally, she’ll carry on her work with developers and building owners on the financing of their properties and the acquisition and disposition of real estate holdings including office buildings, apartment complexes, hotels and vacant land.

Staab earned her bachelor’s degree from Capital University and juris doctorate from the University of Colorado School of Law.

For more information on Robinson, Waters & O’Dorisio, visit the International Society of Primerus Law Firms or rwolaw.com.

Posted in Member News

Welcome to California: Watch Out For Those Speed Bumps!

Posted by primerus on February 16, 2010 —

By: June Lin

Niesar & Vestal LLP

San Francisco, CA

California has some quirky laws that often surprise lawyers from other states who are involved in California-based transactions. It is not always clear where some of our laws are going, or which direction a business person is meant to take.

To help you maneuver your way around these speed bumps, this series of articles explores some of the more unusual California laws that trip up or otherwise cause consternation to out-of-state attorneys involved in California transactions.

In previous months we looked at California usury laws, country club memberships that could be treated as a securities offering, and broker-dealer requirements for officers and directors who help their companies sell securities.

Real Estate Licensing for Merger and Acquisition Practitioners?

Introduction

Imagine an investment banking firm agrees to assist a company in finding a buyer to purchase the company’s stock and is successful in finding a buyer. After the sale of the company’s stock, the company refuses to pay the investment banking firm’s commission, claiming that the firm, although a licensed securities broker, is not entitled to compensation because it does not possess a real estate broker’s license. Surely the company would fail in such a claim? Not necessarily – if the deal is taking place in California.

Or imagine an individual involved in negotiating an asset purchase transaction on behalf of a company that purchases a small portion of another company’s assets, consisting of certain customer contracts, supporting equipment, and a pledge of nonsolicitation from the seller. The individual is contractually entitled to commissions of $20 million from the buyer for his role in arranging the acquisition of the business assets. The buyer refuses to pay, claiming the individual is not licensed as a real estate broker. The buyer wins his argument in court and the individual loses $20 million of commissions. True story? In California it is.

Regulation of Securities Brokers by the California Department of Real Estate

Some business brokers believe that selling stock falls solely under the securities regulations. Not so in California. Turf wars between securities and real estate brokers were brought to a head in All Points Traders, Inc. v. Barrington Associates.[1] In this 1989 case, an investment banking firm (Barrington) agreed to assist a company (All Points) in finding a buyer to purchase its stock. After the sale of All Points’ stock, Barrington initiated binding arbitration pursuant to the parties’ written agreement, seeking payment of a commission. All Points argued in the arbitration that, because Barrington did not possess a real estate broker’s license, it was not entitled to any compensation. The arbitrator found in favor of Barrington and awarded it a commission. The superior court confirmed the award. The Court of Appeal reversed, concluding that Barrington needed a real estate broker’s license to assist All Points in the sale of its stock. Absent the license, the parties’ commission agreement was illegal and unenforceable under the California Real Estate Law, and the arbitration award could not be based on such an agreement.

In this case, the California Court of Appeal held that an investment banking firm which specializes in mergers and acquisitions must possess a real estate broker’s license when negotiating the sale of a business opportunity offered by a corporation seeking to transfer all of its stock or assets to a prospective buyer. The court noted that the fact the transaction might also fall within the scope of California’s securities regulations was irrelevant because regulation under one statute or scheme does not preclude regulation pursuant to other statutory provisions…the statutory scheme provides no indication that business opportunity regulation and securities regulation in general are mutually exclusive or dismembered from one another.

Almost immediately after, and in reaction to, the All Points Traders case, the California legislature amended the Business and Professions Code by adding Section 10008.5 which went into effect as an emergency measure September 30, 1989. That Section says that the Real Estate licensing requirement does not apply to the sale, lease or exchange of a business opportunity transaction that is brokered by a licensed securities broker, unless “the substance of the transaction is to transfer, sell, lease, or exchange an interest in real property for the purpose of evading this part.” So, unless the real estate component of a business opportunity sale transaction represents the “substance of the transaction” (which one commentator has described as the “overwhelming majority of the consideration involved”), the securities broker license would be sufficient, and the commission arrangement would be entirely enforceable. For example, if the sale of business opportunity transaction only involved a piece of real estate held by a limited liability company or corporation, and was structured as a sale of membership interests or stock, the securities broker license would likely not be sufficient, as this would seem to fit the exception. No cases have been decided under Section 10008.5 since its adoption in 1989, so the question of how dominant the real estate component of the transaction must be remains an open issue. For instance, if a business consists of a machine shop plus the building in which the business is conducted, and the real estate value is therefore 75 to 80% of the total business value, we cannot predict whether a court would rule that this transaction is one that can be completed by a securities broker who does not also have a real estate license.

Regulation of Asset Deals by the California Department of Real Estate

The 2007 case Vincent Salazar v. Interland, Inc.[2] makes clear the dangers of arranging asset acquisitions without being aware of the California licensing requirements. In this case, Salazar, who held neither a securities broker’s license nor a real estate broker’s license, learned that AT&T Corporation wanted to sell its small business web hosting division. He contacted Interland and arranged for a meeting between AT&T and Interland. Interland ended up buying AT&T’s small business web hosting division. Interland had previously agreed to pay Salazar a commission, based upon the assets transferred and the number of customers acquired. Salazar sued Interland when he did not receive his commission for $20 million. The court ruled that Salazar was required to hold a real estate broker’s license under the Business and Professions Code for any sale of a “business opportunity”. The court rejected Salazar’s argument that he was entitled to receive the commission because he did not sell the entire business but sold just portions of business assets, customer contracts and good will. Salazar was therefore denied the $20 million commission, even though he was instrumental in procuring the transaction. The court even refused to grant Salazar compensation for his time and efforts in rendering valuable services to Interland on a quantum meruit theory.

Conclusion

In California, arranging the sale of a “business opportunity” requires a real estate broker’s license, unless the transaction falls within the exception for licensed securities brokers. A licensed securities broker or dealer in California is not required to have a real estate license to effect business sale transactions, whether for stock or assets, unless the transaction is really a disguised sale of real estate. A licensed securities broker may therefore escape regulation under the Real Estate Law by showing that its activities are not those of a real estate broker because the interest bought and sold is not predominantly an interest in real estate. An individual that is not licensed as either a securities broker or a real estate broker and arranges a sale of a business opportunity is, unfortunately, out of luck.

This article is intended to provide a general summary and should not be construed as a legal opinion nor a complete legal analysis of the subject matter. June Lin is an attorney at Niesar & Vestal LLP in San Francisco, a law firm specializing in business law and corporate finance.

For more information on Niesar & Vestal, please visit the International Society of Primerus Law Firms or www.nvlawllp.com.

[1] 211 Cal.App.3d 723, 259 Cal.Rptr. 780 (1989).

[2] 152 Cal. App. 4^th 1031, 62 Cal. Rptr. 3d 24 (2007).

Posted in Business Resources

Business Brokers and M&A Advisors Should Be Wary

Posted by primerus on February 16, 2010 —

By: K. Andrew Hall

Krass Monroe P.A.

Minneapolis, MN

Many of us who work in corporate finance represent companies who engage a business broker or M&A advisor when our client desires to sell the business. We also may represent business brokers and M&A advisors who help companies sell the business. For convenience, this article refers to both as simply business brokers.

The value a business broker can bring to the table cannot be overstated. The business broker understands the process of selling a business has knowledge of the marketplace and can bring a greater number of potential buyers to the table. From a regulatory standpoint, there is nothing wrong with engaging a business broker in the context of an asset sale for all cash.

However, many transactions raise the specter of federal and state securities laws, which regulate the offer and sale of a security. After Landreth Timber (1985), there is no exception for the sale of an entire business if securities are involved. A business sale is always a securities transaction if it involves the purchase, sale, issuance or exchange of stock, membership or partnership interests, options, warrants or other securities. This includes a sale of stock to an ESOP or any sale of a fractional interest in the business. Securities laws also are implicated if there is an earn-out of seller note involved, which is quite common in today’s market.

The activities of business brokers are attracting more regulatory scrutiny, both at federal and state levels. In 2007, the SEC said in a denial of a no-action request that a company undertaking activities in which many business brokers typically engage should be registered as a broker/dealer (Hallmark Capital). The new Form D requires the disclosure of finders. Recently, the SEC has stepped up enforcement actions against unregistered broker/dealers. At the state level, several courts have invalidated business broker engagement agreements, causing the business brokers to lose the right to claim fees for their efforts. The State of Utah sent a letter in May 2009 to a host of business brokers stating that their activities likely require registration as a broker/dealer.

The consequences for both the business broker and the seller for violation of the securities laws can be severe. As noted above, an unregistered business broker can lose the right to fees in an adversary proceeding with their client, the seller. In addition, an unregistered business broker can be subject to administrative enforcement actions, which can result in fines, penalties and disgorgement of fees and can result in preventing the business broker from registering in the future. In some cases, an unregistered business broker can face criminal liabilities. Most importantly, both the business broker and the seller can face civil actions by the buyer of the business whose remedies include rescission of the transaction.

There is hope on the horizon. The SEC issued a no-action letter to Country Business, Inc., a business broker (November 8, 2006). The SEC indicated it would not recommend enforcement where the engagement is to sell the entire business and:

(1) if a decision is made to effect the transaction by a sale of securities, the business broker has a limited role in negotiations and will not have the power to bind either party in the transaction;

(2) the business is a going concern and not a “shell” organization;

(3) the seller satisfies the size standards for a “small business” pursuant to regulations issued by the SBA;

(4) only assets will be advertised or otherwise offered for sale by the business broker;

(5) if the transaction is effected by means of securities, it will be a conveyance of all of the business’s equity securities to a single purchaser or group of purchasers formed without the assistance of the business broker;

(6) the business broker will not advise the parties whether to issue securities, or otherwise to effect the transfer of the business by means of securities, or assess the value of any securities sold (other than by valuing the assets of the business as a going concern);

(7) the business broker’s compensation will be determined prior to the decision on how to effect the sale of the business, will be a fixed fee, hourly fee, a commission, or a combination thereof, that is based upon the consideration received by the seller, regardless of the means used to effect the transaction and will not vary according to the form of conveyance (i.e., securities rather than assets), will be in cash and paid in connection with the payments to the seller; and

(8) the business broker will not assist purchasers with obtaining financing, other than providing uncompensated introductions to third-party lenders or help with completing the paperwork associated with loan applications.

The SEC is considering an M&A Broker Rule proposed by various trade groups that would create an exception from broker/dealer registration for business brokers. It is unclear when or if the SEC will issue a proposed rule.

Until the SEC acts, business brokers should adhere closely, if not exactly, to the Country Business guidelines. While Country Business is not binding on states or on courts, the Country Business request for no-action and its grant by the SEC outline a structure and process that likely would be persuasive in an argument that such activities are not “effecting transactions in securities”, the lodestone for broker/dealer activities. In the alternative, business brokers should consider taking the required FINRA tests and affiliating with a registered broker/dealer.

For our selling clients, we should carefully review any engagement of an M&A advisor or business broker by the client to reduce the risk of a rescission claim by an unsatisfied buyer.

KM: 4840-7069-5685, v. 1

For more information on Krass Monroe, visit the International Society of Primerus Law Firms or krassmonroe.com.

Posted in Business Resources

Krass Monroe Announces New Partner James A. Wahl

Posted by primerus on February 16, 2010 —

Krass Monroe, P.A. (Minneapolis, MN) is pleased to announce that James A. Wahl has become a partner in the firm. According to firm President, Mark Moxness, “Jim has proven his ability to help clients solve critical business challenges. We are pleased to have Jim join the partner ranks at Krass Monroe.”

Wahl is the Co-Chair of the Franchise, Distribution and Intellectual Property Practice Group of Krass Monroe. His practice concentrates on structuring, documenting, registering and implementing franchise and distribution programs, and on registering and protecting clients’ trademark and copyright interests. He is admitted to the Bar in Minnesota and the United States District Court, District of Minnesota and is a member of the Minnesota State, Hennepin County and American Bar Associations. He has been named a “Super Lawyer” by Minnesota Law & Politics and honored as a “Legal Eagle” by Franchise Times magazine. Jim received his Juris Doctor degree from the University of Minnesota Law School.

Krass Monroe has approximately 25 legal professionals many of whom have been locally and nationally recognized as industry leaders. As “More Than a Law Firm,” Krass Monroe offers a comprehensive array of services at the local, regional, national and international levels in areas including business law, corporate finance, mergers and acquisitions, franchise, distribution and intellectual property law, litigation, public finance, real estate, taxation, and wealth preservation. To learn more about the firm and its unique menu of services, visit the International Society of Primerus Law Firms or krassmonroe.com.

Posted in Member News

Kohner, Mann & Kailas, S.C. Attorney to Again Judge Wisconsin Governor’s Business Plan Contest

Posted by primerus on February 16, 2010 —

Kohner, Mann & Kailas, S.C. (Milwaukee, WI) is pleased to announce that, for the third year in a row, Stephen D. R. Taylor has accepted an invitation to serve as a judge for the Wisconsin Governor’s Business Plan Contest.

Conducted under the auspices of the Wisconsin Technology Council, the contest encourages the creation, start-up and early-development stages of businesses in Wisconsin. Since its launch in 2004, more than 1,500 business propositions have been submitted and over $1 million in cash and in-kind prizes have been awarded. Moreover, past finalists are reported to have raised in excess of $11 million in private equity. In addition to providing exposure to potential investors, the contest is designed around the proposal review process utilized by third-party investors, in order to provide competitors with experience of the process and the opportunity to hone their presentations.

Before becoming an attorney, Stephen was a venture capitalist. In that capacity, he appraised potential investment opportunities, determined exit strategies, identified and exploited intellectual property assets, planned international market penetration and resolved operational problems restraining development. He also worked with a number of entrepreneurs to structure proposals capable of securing external investment and guided them through the process of securing such capital. Stephen served on the board of a UK venture capital fund specializing in leading-edge technology investments and has served as an external associate for similar funds.

As an attorney with KMKSC, Stephen focuses on business-related aspects and international implications of complex business disputes and on areas where the law and information technology are colliding, such as planning for and conducting electronic discovery.

For more information, visit the International Society of Primerus Law Firms or kmksc.com.

Posted in Member News

Brody Wilkinson Attorneys Named to 2010 Connecticut Super Lawyers and Rising Stars Lists

Posted by primerus on February 16, 2010 —

Brody Wilkinson PC (Southport, CT) is pleased to announce that Peter T. Mott, Ronald B. Noren, Thomas J. Walsh, Jr. and Douglas R. Brown were selected by their peers in 2010 as “Connecticut Super Lawyers.” In addition, Heather J. Lange was selected as a “Connecticut Rising Star.” All five attorneys are listed in the special supplement of the February 2010 issue of Connecticut Magazine along with their designated practice areas:

Peter T. Mott, Estate Planning and Probate; Tax

Ronald B. Noren, Estate Planning and Probate

Thomas J. Walsh, Jr., Business/Corporate; Real Estate; Banking

Douglas R. Brown, Estate Planning and Probate; Estate and Trust Litigation

Heather J. Lange, Estate Planning and Probate; Tax; Non-Profit

Based on a rigorous, multiphase peer-review process, Super Lawyers is a credible, comprehensive and diverse listing of attorneys in more than 70 practice areas. Super Lawyers listings are used as a resource guide to assist businesses and individuals in hiring legal counsel. Super Lawyers is published by Law & Politics as a special supplement in top newspapers and city and regional magazines across the country. The published list represents no more than 5% of the lawyers in the state. For more information on the Super Lawyers selection process, visit www.superlawyers.com.

For more information on Brody Wilkinson, visit the International Society of Primerus Law Firms or brodywilk.com.

Posted in Member News

In Re Bilski: Will it Be a Blockbuster?

Posted by primerus on February 16, 2010 —

By: Henry Sneath

Picadio Sneath Miller & Norton, P.C.

Pittsburgh, PA

Argument was heard before the United States Supreme Court on Monday, November 9, 2009, in the potential landmark patent case, In re Bilski. (appeal from 545 F.3d 943, 88 U.S.P.Q. 2d 1385, Fed. Cir. 2008). Disappointed patent applicant Bernard Bilski appealed the USPTO’s denial of patent protection to his claimed method of managing the consumption risk in commodity trading. Bilski’s method, involved no software, no hardware, and no algorithms. The USPTO Examiner rejected the patent claims stating that “the invention is not implemented on a specific apparatus and merely manipulates an abstract idea and solves a purely mathematical problem without any limitation to a practical application, and therefore, the invention is not directed to the technological arts.” In other words, it is not a thing!

“The Federal Circuit’s rigid and narrow machine – or – transformation test for all patent – eligible methods should be reversed.” Such began the argument on behalf of the Petitioner, Bilski. “The reason that Alexander Graham Bell’s method was patentable, was that it operated in the realm of the physical.” Such began the argument on behalf of the Respondent (the USPTO).

Much has been written about In re Bilski which, on the one hand, seems like a fairly simple and straightforward legal issue, but on the other seems a complex, nuanced and multi-faceted legal conundrum. The Federal Circuit appeared poised to frame and resolve a few straightforward issues, but instead went further to review, rewrite, revamp, re-up or redo (depending on your perspective) a fairly long history of Supreme Court and Federal Circuit review of “process” claims. One such seemingly straightforward issue was framed as follows: “Thus, the issue before us involves what the term ‘process’ in §101 means, and how to determine whether a given claim – – and Applicants’ claim 1 in particular – – is a ‘new and useful process.’ Drilling down, the Federal Circuit framed another issue as follows: “The true issue before us then is whether Applicants are seeking to claim a fundamental principle (such as an abstract idea) or a mental process.”

The Supreme Court oral argument was fascinating. No sooner did J. Michael Jakes, Esquire begin his argument on behalf of Petitioners, by declaring the Federal Circuit’s ruling “rigid and narrow”, did Justice Ginsberg chime in, with some incredulity:

Justice Ginsberg: “but you would say tax avoidance methods are covered, just as the process here is covered. So an estate plan, tax avoidance, how to resist a corporate takeover, how to choose a jury, all of these are patentable?”

Mr. Jakes: “They are eligible for patenting as processes, assuming they meet the other statutory requirements.”

Justice Bryer: “And your view would be – – and it’s new too and it’s useful, made him a fortune – – anything that helps any businessman succeed is patentable because we reduce it to a number of steps, explain it in general terms, file our application, granted?”

Mr. Jakes: “It is potentially patentable, yes.”

Justice Bryer: “Do you think that the framers would have wanted to require anyone successful in this great, vast, new continent because he thinks of something new, to have had to run to Washington and to force any possible competitor to do a search and then stop the wheels of progress unless they get permission?”

The questioning of Petitioner was highly suggestive of a skeptical court. Justice Bryer, invoking humor on a couple of occasions, said at one point, “you know, I have a great, wonderful, really original method of teaching anti-trust law, and it kept 80% of the students awake. They learned things… (laughter from the courtroom). It was fabulous, and I could probably have reduced it to a set of steps and other teachers could have followed it. That you are going to say is patentable, too?”

Mr. Jakes: “Potentially.”

Even the great inventions by Bell and Morse were brought into the discussion. Take this colloquy between Justice Scalia and Mr. Jakes.

Justice Scalia: “Sound – – sound is not physical, and electric current is not physical?”

Mr. Jakes: “I think electric current is physical.”

Justice Scalia: “Yes, I think so.”

Mr. Jakes: “Yes.”

Justice Scalia: “Sound is, too.”

Mr. Jakes: “It can be, but when it’s transmitted over a wire, it’s not. It’s something else. It’s an electric current then.”

Justice Scalia: “Sound is not transmitted over the wires. Sound has been transformed into current, and current is transmitted over the wire and then transformed back at the other end into sound.”

It was on that note that Malcolm Stewart, on behalf of the Government argued in response.

Mr. Stewart: “The reason that Bell’s method was patentable was that it operated in the realm of the physical.”
And then, just when it seemed that a skeptical court was ready to eliminate from patentability, any business method, process, idea or anything short of a mechanical device itself, the reins were pulled back, surprisingly, in the Government’s argument. The Government tried to convince the court that their argument was meant to be narrow, and that the Government was not seeking a sweeping ruling which would effectively eliminate business method and similar process patents. Mr. Stewart argued:

Mr. Stewart: “all that the Federal Circuit has really said is that to have a patent-eligible process you have to identify some link to a machine or a transformation of matter.”

In distinguishing the famous State Street Bank case from the instant case, Stewart further argued that:

Mr. Stewart: “the innovation that was held to be patent-eligible in State Street Bank was not a process. The Federal Circuit was not construing the statutory term ‘process.’ It was construing the statutory term ‘machine.’ And it said, in essence, a computer that has been programmed to perform various calculations in connection with the operation of this business is a machine.”

He summed up one of his early narratives by arguing:

Mr. Stewart: “So to say that business methods are categorically ineligible for patent protection would eliminate new machines, including programmed computers, that are useful because of their contributions to the operation of businesses. And similarly, the court – – the Federal Circuit in other cases has held that a claim to new and innovative computer software may be held patentable as a process, as a method of accomplishing particular tasks through the use of a computer and those might be business-related tasks. So to say that business methods were ruled out would itself be a fairly sweeping holding.”

At this point the argument shifted, and the Supreme Court appeared to begin searching for a middle ground, perhaps in an effort not to overrule State Street Bank.

Mr. Stewart: “Well, I guess there – – there were two different places, I believe, at which we (the Government) identified ways in which this sort of hedging scheme (the claimed Bilski innovation) might be patent-eligible. The first is we described a hypothetical interactive website in which people – – parties and counterparties could essentially find each other by the computer and could agree to terms on that basis. And in that situation, the – – the computer would be at the heart of the innovation.”

Chief Justice “No, no. That’s just saying instead of looking at the

Roberts: – – in the yellow pages, you look on the computer; and that makes all the difference to you?”

Justice Sotomayor: “So help us with a test that doesn’t go to the extreme the Federal Circuit did, which is to preclude any other items, something we held open explicitly in two other cases, so we would have to backtrack and say now we are ruling that we were wrong, and still get at something like this?”

Mr. Stewart: “Well I think the court could say – – could do essentially what was done in Benson and Flook, namely acknowledge that there had never been a case up to this point in which a process had been held patent-eligible that didn’t involve a machine or a transformation. It could leave open the possibility that some new and as yet unforeseen technology could necessitate the creation of an exception.”

That theme of searching for a “non-sweeping” ruling carried through much of the remainder of Mr. Stewart’s argument time. He urged the court to adopt the Federal Circuit ruling (preserve the machine or transformation test), but to leave open the door to the possibility of some day affirming a Patent as a pure idea that meets the “Wow” factor test, without meeting the machine or transformation test. Stewart later seemed to sum up his argument in that regard when he argued:

Mr. Stewart: “we would say that the claimed hedging method here is not the sort of Space Age innovation that might cause Justices to say, ‘this is just different in kind from anything the drafters of the patent statute could have imagined.”

Hedging bets in the commodity market just does not meet the “Wow” factor test, according to Mr. Stewart. In the end, it appeared that the Government’s position, in seeking to uphold the Federal Circuit ruling, was that the machine or transformation test is the appropriate test, and that under the nuances of that test, the Petitioner’s “method for managing the consumption risk cost of a commodity sold by a commodity provider at a fixed price…” cannot be patent-eligible because it does not “transform any article to a different state or thing.” In the end, Stewart relied essentially on what sounded like a “public policy” argument when he spoke his final argument words:

Mr. Stewart: “and the third thing I would say is that in a sense, there is a strong dog that didn’t bark in the night quality to our argument. That is, even though the court has never said in so many words that a method of allocating risk by contract is a patent-eligible process, the economic history of this country really would have been fundamentally different if it had been believed from the outset that innovations of this character could be patented and potential competitors could be foreclosed from engaging in the same method.”

There is potential here for a landmark decision, but apparently equal potential for a “hedging” of the bet, and the rendering of a middle ground opinion by the Supreme Court. It will be fascinating reading when it arrives.

For more information on Picadio Sneath, visit the International Society of Primreus Law Firms or psmn.com.

Posted in Business Resources

Norchi Forbes Attorney Speaks at the Great Lakes Higher Education Law Symposium

Posted by primerus on February 16, 2010 —

Norchi Forbes, LLC (Cleveland, OH) is pleased to announce that Kevin Norchi, Founder and President of the firm, recently spoke at the Great Lakes Higher Education Law Symposium which was held at Case Western Reserve University.

The purpose of the Higher Education Law Symposium was to address issues confronted by colleges and universities in the Great Lakes region including New York, Pennsylvania, Ohio, Michigan and West Virginia. The program was designed for higher education personnel including university presidents, general counsel and outside counsel.

Kevin Norchi, one of 31 presenters at the Symposium, spoke on the Liability of Educational Institutions for Criminal Acts of Third Persons. During his presentation, Norchi discussed the challenges general counsel face when a campus crisis occurs. He also explained the role outside counsel plays in assisting general counsel with crisis management, which includes working with the public relations department and responding to the internal decision-making structure, as early as possible, to identify the message that will be disseminated to the public and used in court.

Kevin Norchi explains, “The issues encountered by Colleges and Universities and their counsel are varied in complexity. The stakes are often quite significant and can involve the loss of life and fear for personal safety on the one hand, to loss of federal funding and significant employment and tenure issues.” Norchi further explained, “As federal regulations constantly change and evolve, correct advice from outside counsel is important.”

The 2010 Higher Education Symposium, which featured the former President of Cleveland State University Michael Schwartz, attracted over 75 attendees. Other topics included:

- Dealing with Troubled Students: Legal Frameworks and Policy Proposals,

- FERPA: Communication of Concerns Regarding Students Before a Crisis,

- Are Tenured Faculty Invulnerable to Termination,

- The Interaction of FMLA and ADA in Tracking Leave for Faculty,

- Legal Issues and Tips Regarding Mediation of Employment Disputes.

For more info on Norchi Forbes, visit the Internation Society of Primerus Law Firms or norchilaw.com.

Posted in Member News

Zizik Powers Attorneys Successfully Defend Petroleum Company and Secures Motion for Summary Judgment in a Gasoline Price-Fixing and Price-Gouging Case

Posted by primerus on February 12, 2010 —

Zizik, Powers, O’Connell, Spaulding & Lamontagne, P.C. (Westwood, MA) attorneys Brian O’Connell and Bill Fidurko successfully defended Drake Petroleum Company in a putative class action before the United States District Court of Massachusetts, and secured a summary judgment ruling in favor of their client, Drake Petroleum.

Drake Petroleum, which is one of the largest independent petroleum distributors in the New England area, is located in North Grosvenordale, CT.

The plaintiffs, a group of residents and a corporation from the island of Martha’s Vineyard, alleged a decade long conspiracy to fix gasoline prices. The plaintiffs also accused the defendants of price-gouging following Hurricanes Katrina and Rita in 2005. Plaintiffs sued four gas stations from Martha’s Vineyard alleging violation of the Sherman Act and the Massachusetts Consumer Protection Act. The defendants moved for summary judgment on both counts.

O’Connell and Fidurko successfully argued to a federal district judge that the plaintiffs’ evidence of price-fixing was insufficient for a reasonable jury to conclude that the defendants had an actual agreement to fix prices and were not acting independently. They convinced the Court that the plaintiffs’ evidence of similar prices and other conduct was as consistent with permissible competition as with illegal conspiracy and therefore did not support an inference of anti-trust conspiracy.

In addition, O’Connell and Fidurko, in a case of first impression, won a victory for their client on the issue of price-gouging by arguing persuasively that the price fluctuations at the defendants’ gas stations after Hurricanes Katrina and Rita were consistent with the normal operation of the market and therefore not unconscionable under the Massachusetts Consumer Protection Act. The decision resulted in the dismissal of the plaintiffs’ complaint against the defendants in its entirety.

For more information on Zizik Powers, visit the International Society of Primerus Law Firms or zizikpowers.com.

Posted in Member News

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