Wednesday, March 20th, 2019
This article, co-authored by Kirk M. Sosebee and Alicha M. Grubb, appeared in the Spring 2019 issue of the VBA Journal. Click here to read the formatted publication version in PDF.
Attorneys’ Fees in Virginia
Attorneys’ fees are a topic near and dear to lawyers’ hearts. After all, what could be more important than getting paid for the work we do? And what could be better than forcing the other party to pay our fees? In construction cases, as in all litigation, attorneys should keep the prospect of attorneys’ fees in mind, and should pay close attention to recent developments in the law concerning attorneys’ fees in Virginia.
In Virginia, the default rule on attorneys’ fees is the American Rule, where each party pays its own attorneys’ fees and the winner cannot usually recover its fees from the loser.[i] Nevertheless, attorneys’ fees are available to the prevailing party under several statutes in Virginia,[ii] as well as by contractual arrangement between the parties.[iii]
In the construction context in particular, many contracts contain provisions that provide for an award of attorneys’ fees to the prevailing party. Virginia courts will generally uphold these provisions as written.[iv]
Whenever one of these statutes or contractual provisions is in play, the parties should keep the possibility of attorneys’ fees in mind from the outset of the case, and should pay attention to new developments in the law.
Recent Developments in Virginia Case Law
Lambert v. Sea Oats Condo. Ass’n, 293 Va. 245 (2017)
In Lambert, the Supreme Court of Virginia held that the Circuit Court of Virginia Beach abused its discretion by artificially limiting the amount of attorneys’ fees awarded to less than the amount of damages recovered by the plaintiff. In the Circuit Court, Ms. Lambert sought and was awarded $500 in her suit against a condo association. She sought over $9,500 in attorneys’ fees, but the judge stated that he felt obliged to limit the award of attorneys’ fees because the amount in controversy was so low, and so awarded only $375 in attorneys’ fees.
Lambert appealed to the Supreme Court, which noted that courts are allowed to consider the results obtained in a case, and may compare this amount to the amount of damages sought, in order to measure the effectiveness of the attorney’s representation.[v] But the Court ruled that courts may not use the amount of damages sought or recovered as a limit on the amount of attorneys’ fees awarded.[vi] The Supreme Court remanded for an award of reasonable attorneys’ fees.
Takeaway: The amount of damages recovered is not an automatic limit on the amount of attorneys’ fees that may be awarded, even when the attorneys’ fees sought are over 19x the amount of damages recovered.
Winding Brook Owner’s Ass’n v. Thomlyn, LLC, 96 Va. Cir. 173 (Cir. Ct. 2017)
At closing argument, the plaintiff asked the jury for damages of $11,610.88, which the jury awarded in full. The plaintiff then asked the court for an award of around $120,000 in attorneys’ fees and costs. The Hanover Circuit Court held that the amount sought was reasonable, given the complexity of the case and the steps required because of the defendant’s actions. The Court ultimately awarded $117,155.81 in attorneys’ fees and $514.55 in costs.
Takeaway: Based on the complexity and length of a case, courts may award attorneys’ fees of over 10x the amount of damages recovered.
Graham v. Cmty. Mgmt. Corp., 294 Va. 222, 805 S.E.2d 240 (2017)
Ms. Graham was sued by the Community Management Corporation in the Circuit Court of Fairfax County, under a contract containing a provision that provided for an award of attorneys’ fees to the prevailing party. The Community Management Corporation asked for attorneys’ fees in its complaint, but Graham never asked for attorneys’ fees in any of her pleadings despite having filed two demurrers, several pleas in bar, and an answer. Graham ultimately obtained a defense verdict, and then filed a subsequent suit against the Community Management Corporation seeking to recover her attorneys’ fees incurred in defending the first suit.
The Supreme Court held that the plain language of Rule 3:25 prevents Ms. Graham from obtaining attorneys’ fees because she did not make a demand for them in a counterclaim, cross-claim, or responsive pleading in the first suit.[vii] The Court held that Ms. Graham’s failure to raise her entitlement to attorneys’ fees in one of these pleadings constitutes a waiver of her attorneys’ fees claim.
The Court noted that it is important for both parties to know early on in the case whether attorneys’ fees are on the table, because it can affect the parties’ decisions on whether to pursue a claim, dismiss it, or settle it.[viii] This notice also keeps parties from having to speculate throughout the case about what claims ultimately might be brought against them.[ix]
Takeaway: Prevailing parties will not be able to recover attorneys’ fees if they do not follow the requirements of Rule 3:25 and fail to ask for attorneys’ fees in their pleadings.
McIntosh v. Flint Hill Sch., No. CL-2018-1929, 2018 Va. Cir. LEXIS 321 (Cir. Ct. Sep. 17, 2018)
Ms. McIntosh filed a complaint for declaratory relief in the Circuit Court for Fairfax County, seeking to invalidate the one-sided attorneys’ fee provision in the Enrollment Contract between her and child’s school. This provision read “We (I) agree to pay all attorneys’ fees and costs incurred by Flint Hill School in any action arising out of or relating to this Enrollment Contract.”[x] The Court held that this attorneys’ fee provision was substantively unconscionable, because the provision subjects the parents to attorneys’ fees, whether they prevailed in litigation against the school or not, and whether the fees sought are reasonable or not.[xi] The Court also found that the attorneys’ fee provision was void as against public policy because the award of attorneys’ fees contemplated by the provision was not limited to reasonable fees or to a prevailing party, and because the provision significantly barred “potentially meritorious resort to the courts by Plaintiff” and flouted “the corollary principle expressed in the Rules of Professional Conduct not to punish the prevailing party in litigation with payment of the loser’s expenses.”[xii]
Takeaway: A draconian, one-sided “challenger pays” attorneys’ fee provision will likely not be enforced by Virginia courts.
Meuse v. Henry, No. 170604, 2018 Va. LEXIS 132 (Oct. 4, 2018)
This case involved an arbitration where the defendants prevailed on all counts.[xiii] The arbitrators found that the plaintiff’s claims lacked reasonable cause and were brought for an improper purpose, and awarded attorneys’ fees of $900,900.00 and costs of $8,300.00 to the defendants. The Circuit Court for the City of Alexandria confirmed the arbitration award. The Supreme Court upheld the Circuit Court’s confirmation of the arbitration award, and summarily upheld the arbitrators’ award of attorneys’ fees and costs.
Takeaway: Even very large awards of attorneys’ fees in arbitration will likely be upheld by courts in Virginia, absent extraordinary circumstances.
Practical Tips to Recover as Much Of Your Fees as Possible
To the extent a party intends to seek attorneys’ fees, that party should be attentive to the hours spent and billed, and to how those hours are billed. Claiming attorneys’ fees in Virginia starts with the pleading. Rule 3:25 of the Virginia Supreme Court Rules requires that a party seeking to recover attorneys’ fees “include a demand therefore in the” complaint, counterclaim, cross-claim, third party pleading, or in a responsive pleading.[xiv] The party must also “identify the basis upon which [it] relies in requesting attorney’s fees.”[xv] Failure to demand attorneys’ fees constitutes a waiver and is an absolute bar to recovery.[xvi] Virginia law further requires pre-judgment notice to the other party on the face of a pleading.[xvii] Good practices could include emphasizing the demand for attorneys’ fees in all caps or bold lettering stating “Rule 3:25 Notice” and then listing the legal basis for the demand.
Claimants should also be mindful that courts in Virginia adhere to the general rule that attorneys’ fees must be reasonable and necessary.[xviii] Virginia courts will first consider the lodestar figure, which is determined by multiplying the number of reasonable hours expended times a reasonable hourly rate, and then subtracting fees spent on unnecessary claims, while considering the overall success of the parties.[xix]
The reasonable hourly rate is determined by the prevailing market rate where the court sits.[xx] The most important evidence for proving the reasonable hourly rate is expert testimony, usually by affidavit, as to the prevailing market rate in the area. The court will also consider the difficulty of the case and the experience of the attorneys.[xxi]
After determining the reasonableness of an attorneys’ fees claim, Virginia courts then consider whether all the fees were necessary. Courts have discretion to deduct unnecessary fees, if a claim, defense, motion, or attorney action was “frivolous, spurious, or unnecessary.”[xxii] Although attorneys should advocate zealously for their clients, attorneys should be careful not to bill for services that are unnecessary to the client’s litigation.
Virginia courts will discount block billing, travel, vague or redacted billing, double billing, and clerical work.[xxiii] Attorneys should be careful to keep detailed and segregated billing entries that do not contain confidential or privileged information that would later need to be redacted. Attorneys should bill separately for separate causes of action even within the same case. When it comes time to submit the fee petition, attorneys would do well to self-audit their bill for problematic entries.
When preparing the fee petition, attorneys should keep track of their time and costs related to the fee petition, because those fees are also recoverable.[xxiv] Attorneys should also submit affidavits from themselves and from experts as to the reasonableness and necessity of the hours expended and the hourly rate. Once the petition is filed, attorneys should expect courts to fly speck the billing records submitted with the fee petition.
Conclusion
Attorneys should always consider the possibility that attorneys’ fees might be available to one or more of the parties in the case. These fees will not be limited by the amount in controversy, and in fact, might dwarf the amount awarded as damages at trial. Considerations of attorneys’ fees should help guide critical decisions on whether or not to bring a claim, defend it, or settle it.
NOTES
[i] Reineck v. Lemen, 292 Va. 710, 721 (2016).
[ii] Examples of statutes in Virginia that provide for an award of attorneys’ fees to a prevailing party include the Virginia Consumer Protection Act, Va. Code Ann. § 59.1-207.14; Virginia’s Business Conspiracy statute, Va. Code Ann. § 18.2-500; Virginia’s Religious Freedom statute, Va. Code Ann. § 57-2.02(D); Virginia’s Freedom of Information Act, Va. Code Ann. § 2.2-3713(D); and Virginia’s Trade Secrets Act, Va. Code Ann. § 59.1-338.1.
[iii] See Ulloa v. QSP, Inc., 271 Va. 72, 81 (2006) (“parties are free to draft and adopt contractual provisions shifting the responsibility for attorneys’ fees to the losing party in a contract dispute.”). There are a few other areas where courts in Virginia have the ability to award attorneys’ fees, as well. See Carlson v. Wells, 281 Va. 173, 188-89 (2011) (“we have permitted a prevailing party, who prosecuted a cause of action for malicious prosecution or false imprisonment, to recover attorney’s fees. We have held that where a breach of contract has forced the plaintiff to maintain or defend a suit with a third person, he may recover the counsel fees incurred by him in the former suit provided they are reasonable in amount and reasonably incurred. We have permitted a trustee, who defended his trust in good faith, to recover attorney’s fees from the estate, and we have approved an award of attorney’s fees in certain cases involving alimony and support disputes even though such awards of attorneys’ fees were neither authorized by statute nor by contract. We concluded that in a fraud suit, a chancellor, in the exercise of his discretion, may award attorney’s fees to a defrauded party.”) (internal quotations and citations omitted).
[iv] See Ulloa, 271 Va. at 81. Nevertheless, a manifestly one-sided and unconscionable attorneys’ fee provision will be struck down. See McIntosh v. Flint Hill Sch., No. CL-2018-1929, 2018 Va. Cir. LEXIS 321, at *17-25 (Cir. Ct. Sep. 17, 2018).
[v] Lambert, 293 Va. at 254-56.
[vi] Id. at 257.
[vii] See Va. Sup. Ct. R. 3:25(B) (“Demand. –A party seeking to recover attorney’s fees shall include a demand therefor in the complaint filed pursuant to Rule 3:2, in a counterclaim filed pursuant to Rule 3:9, in a cross-claim filed pursuant to Rule 3:10, in a third-party pleading filed pursuant to Rule 3:13, or in a responsive pleading filed pursuant to Rule 3:8. The demand must identify the basis upon which the party relies in requesting attorney’s fees.”), 3:25 (C) (“Waiver. –The failure of a party to file a demand as required by this rule constitutes a waiver by the party of the claim for attorney’s fees, unless leave to file an amended pleading seeking attorney’s fees is granted under Rule 1:8.”).
[viii] Graham v. Cmty. Mgmt. Corp., 294 Va. 222, 231 (2017) (quoting Stockman v. Downs, 573 So. 2d 835, 837 (Fla. 1991).
[ix] Id.
[x] McIntosh, 2018 Va. Cir. LEXIS 321 at *3.
[xi] Id. at *21.
[xii] Id. at *23-24.
[xiii] Meuse v. Henry, No. 170604, 2018 Va. LEXIS 132, at *17-19 (Oct. 4, 2018).
[xiv] Va. Sup. Ct. R. Rule 3:25.
[xv] Id.
[xvi] Id. See also Graham, 294 Va. at 225-26.
[xvii] Fed. R. Civ. P. Rule 54(d)(2).
[xviii] Chawla v. BurgerBusters, Inc., 255 Va. 616 (1998).
[xix] Hernandez v. Trawler Miss Vertie Mae, Inc., 41 Va. Cir. 171, 172-72 (Newport News 1996); see e.g., Dewberry & Davis, Inc. v. C3NS, Inc., 284 Va. 485 (2012); RECP IV WG Land Investors, LLC v. Capital One Bank (USA), N.A., 93 Va. Cir. 282 (Fairfax Cnty. 2016).
[xx] Hernandez, 41 Va. Cir. at 173 (citing Trimper v. City of Norfolk, 58 F.3d 68, 76 (4th Cir. 1995). See also RECP IV WB Land Investors, LLC, 93 Va. Cir. at 321-22. In determining whether the number of hours expended are reasonable, Virginia courts start with the twelve “Johnson” factors adopted by the United States Supreme Court. Hernandez, 41 Va. Cir. at 173. These factors are (1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to properly perform the legal service; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and results obtained; (9) the attorney’s experience, reputation, and ability; (10) the undesirability of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases. Id; see also RECP IV WG Land Investors, LLC, 93 Va. Cir. at 328.
[xxi] See Hernandez, 41 Va. Cir. at 173-74.
[xxii] Dewberry & Davis, Inc., 284 Va. at 496.
[xxiii] See RECP IV WG Land Investors, LLC, 93 Va. Cir. at 329.
[xxiv] Id. at 339.
Tuesday, March 12th, 2019
On February 15, 2019, the Fourth Circuit Court of Appeals held that the City of Roanoke’s Stormwater Management Utility charge was a regulatory fee and not a tax. The Court, therefore, affirmed the dismissal of Norfolk Southern’s Complaint asserting that the City’s Stormwater Management Utility charge was a tax that discriminated against railroads in violation of federal law. The decision forecloses federal court challenges to local government charges for stormwater management services as unlawful discrimination against railroads.
The Court’s decision included three separate opinions; each of the three judges on the panel wrote an opinion. The opinion joined by all three judges, written by Circuit Court Judge Diaz, concluded that the City’s stormwater management charge was a fee rather than a tax, because the charge forms part of a comprehensive regulatory scheme. The opinion states:
In sum, the charge is part of a regulatory scheme, rooted in the Clean Water Act, whose purpose is to remedy the environmental harms associated with stormwater runoff and to hold stormwater dischargers responsible for footing the bill.
The Fourth Circuit’s decision affirmed the decision of District Judge Glen Conrad of the Western District of Virginia granting summary judgment in the City’s favor.
Circuit Judge Wilkinson wrote an eloquent concurring opinion that is destined to be cited as a landmark call to arms in cases involving environmental regulations. Citing sources as varied as John Smith, the Algonquin Indian tribe, and William Byrd, II, Judge Wilkinson analyzed the complexity of addressing modern environmental problems.
Judge Wilkinson noted that, under its stormwater management permit, the City has the burden of reducing stormwater pollution but it can only do so with the cooperation of its residents. The Judge also observed the wide-ranging impact of the Court’s decision, including the effects on stormwater management efforts throughout the Chesapeake Bay Watershed.
Judge Wilkinson wrote:
Our rivers and estuaries are complex, interconnected ecosystems. It follows, therefore, that efforts to restore them are correspondingly complex and interconnected. Without the cooperation of all levels of government, as well as of private companies and citizens, our waters will continue to be compromised by pollution. The restoration effort imposes burdens on many people; happily, the benefits of clean waters, (economic; health; scenic; recreational) accrue to just as many if not more. Everyone, including the owners and employees of Norfolk Southern, are better off when our streams run clear and estuarine flora and fauna are flourishing. It is only fair to ask those who benefit to shoulder some of the burden.
Gentry Locke attorneys Greg Haley, Monica Monday, and Scott Stephenson, together with City Attorney Dan Callaghan, represented the City of Roanoke. The Chesapeake Bay Foundation intervened as a defendant in support of the City’s regulatory program.
Wednesday, February 27th, 2019
Things just got a little easier for employers with tipped employees.
Under previous U.S. Department of Labor rules dating back to the late 1980s, employers who used a tip credit to pay less than the federal minimum wage of $7.25 had to carefully track time employees spent performing side duties.
If that time exceeded 20 percent of the employee’s hours, those duties might be considered a dual job requiring full minimum wage rather than the $2.13 an hour for tipped employees. (Employers always have to ensure that tipped employees earn enough tips to make at least minimum wage, or make up the difference.)
That 80/20 rule sparked a considerable amount of confusion — and litigation. If untipped duties exceeded 20 percent of an employee’s time, the employer could be liable for a considerable amount of unpaid wages. 
But an update to the Labor Department’s Wage and Hour Division Field Operations Handbook eliminates that rule and eases the burden on employers. Under the old rules, the focus was on whether particular duties were tipped, even if they were related to the tipped occupation. For instance, if a server spent enough time folding napkins, setting tables or other duties that aren’t directly tipped, the 80/20 rule could be triggered.
Under the new guidance, the focus is on whether the occupation itself is tipped, not the individual duties. As long as those duties are related to the tipped occupation and performed in the course of that occupation, or for a reasonable time immediately before or after, then the tip credit can be used.
As the opinion letter explaining the new rule states, “We do not intend to place a limitation on the amount of duties related to a tip-producing occupation that may be performed, so long as they are performed contemporaneously with direct customer-service duties and all other requirements of the Act are met.”
The new rule is sensible and clarifies an employer’s responsibilities. The section of the Fair Labor Standards Act the old rule was based on was designed to prevent employers from using the tip credit for employees with two separate jobs — like a server who also does maintenance work.
To be as safe as possible, employers should use the list of core and supplemental duties for tip-producing occupations in the Occupational Information Network (O*NET). Using the tip credit for time spent on other tasks could result in liability, unless the amount of time spent is so insignificant that it could not be precisely recorded for payroll purposes — what courts have considered de minimis.
If you have questions or concerns about the FLSA, the DOL, or these kinds of changes, contact the members of Gentry Locke’s Employment Law team.
Wednesday, February 20th, 2019
For more than 130 years, the American Institute of Architects (AIA) has offered a set of standardized contracts for architects, contractors, building construction owners and developers that have become the most widely used agreements for commercial construction projects. Every ten years, AIA updates the contracts and, after about 18 months, phases out the previous versions. The latest updates to the most highly used sets of contracts were released in 2017, with the 2007 contracts no longer available online after Oct. 31, 2018.
Properly drawn construction contracts are vital to ensure that major projects can overcome issues or conflicts that arise during the life of the project. Contracts should provide the framework and details for the rights and responsibilities of all parties. Comprehensive and well-designed contracts can minimize the chances of any dispute requiring litigation or arbitration to be resolved.
Here is a list of the core documents updated and a brief summary of the major changes for each:
- A101: The standard agreement between an owner and contractor for a project with a fixed-amount or lump-sum payment.
- A102: An agreement for projects contracted for the cost of work plus a fee.
- A201: The general terms and conditions for the A101 and A102/A103.
- B101: The agreement between the owner and the architect.
Many of the revisions to the A101 and A102 were the same:
- Contract time provisions were added to both to determine the official commencement of work and when the work will be substantially completed.
- Both include a new provision for payment of a termination fee if the contract is canceled for the owner’s convenience, but removed the right of the contractor to recover payment for anticipated overhead and profit of uncompleted work.
- Retainage provisions have been consolidated in their own section.
- The contracts specify standards for transmission of digital information, including building models.
Some reversions were unique either to the A101 or A102:
- The A101 changed requirements for progress payments that require the owner to pay a portion of the contract sum allocable to completed work and materials and equipment stored at the site, while the A202 retains language referring to percentages of completion and a schedule of values.
- The A102 has added provisions related to cost controls and owner approval of additional costs.
- The A102 defines what costs of the contractor are reimbursable as cost of the work, and removes some types of employee compensation — bonuses and incentives — from the list of reimbursable costs.
Some of the most important changes were to the A201:
- Insurance requirements have been moved from Article 11 of the A201 and incorporated into Exhibit A of the construction contracts. This is meant to increase flexibility and make it easier for parties to customize insurance requirements.
- Requirements for the owner to provide evidence of financial arrangements to satisfy obligations under the contract have been strengthened and clarified.
- The contractor is now obligated to propose alternate means and methods if there are safety objections to owner-required means and methods rather than wait on instructions from the architect.
- There are additional requirements for scheduling, including additional milestone dates and more details about the completion of each portion of work.
- Language has been added requiring that the architect, in serving as role as the Initial Decision Maker, “shall not show partiality to the owner or the contractor.”
- The A201 adds a new severability clause that allows the bulk of the contract to remain in force even if a court determines that one or more provisions are unenforceable.
Some of the substantial revisions to the B101 include the following:
- The B101 adopts many provisions that were previously part of the B103, a contract for more complex projects, including more detailed definitions of the project’s physical characteristics, the owner’s budget and proposed scheduling details.
- The use of the AIA contract E204 is now required if the owner identifies a sustainable objective.
- As with the A101 and A102 revisions, standards for transmission of digital data are specified.
- More detail on insurance coverage is included.
You can learn more about the details of the 2017 changes in this PDF of a PowerPoint webinar. There are also comparison texts available on the AIA website that show additions underlined and deletions in strikethrough text.
The most important thing to know, though, whether you are a contractor, business owner or architect, is this: Standard documents can be a useful starting place in the proper development of a construction contract, but they will certainly need work and the eye of a professional attorney to ensure that the finished contract actually fits the project, meets the needs and protects the rights of all involved, and complies with the legal requirements of the state and locality where the construction is taking place.
Friday, December 21st, 2018
Travis Graham represents both plaintiffs and defendants in the state and federal courts of Virginia and Tennessee, and focuses on trust and estate litigation, product liability, medical malpractice, and complex commercial litigation. He is a frequent writer, lecturer, and consultant on issues of federal and state civil procedure.
In Virginia State Courts, there are three basic deadline rules.
First, when you calculate a deadline from the occurrence of some event, you never count the day that the event occurred. So, ten days from January 1 is January 11. Ten days before January 20 is January 10.
Second, per Rule 1:7, the deadline to respond to some things can be extended depending on how you got whatever it is you are responding to. If you are responding to something that you received by mail, you add three days to the time period. If you received it by fax, email, or by FedEx or other carrier, you add one day.
The third and final rule is that if the day for compliance falls on a weekend, a legal holiday, or, in the case of something you are filing with the clerk, on a day when the courthouse is closed, your deadline is the “next” day. “Next” is in quotes because, as discussed below, “next” might mean before or after the non-business day.
Here is an example of how this works:
You are served with Requests for Admission on December 1, 2018 by U.S. Mail. You know you were served that day because the certificate of service says that the papers were put in the mail on December 1. Under the “mailbox rule,” papers are deemed served when they are put in the mail, not when they are received. Except for one odd situation discussed below with regard to motions, you never need to worry about postmarks or documenting when something actually got to your office. Service happens at the mailbox.
The rules give you 21 days to respond. You start counting on December 2 and you see that your 21st day is December 22, 2018, a Saturday.
You now have to figure out the interplay between the “extra three days by mail” rule and the “go to the next business day” rule. It works like this: You first add the three days, and see where that falls. You DO NOT go to the next business day, then add three days. So, if your 21st day is December 22, 2018, a Saturday, you count three more days (December 23, 24 and 25) and there you have your due date. Except that December 25 is Christmas, a holiday. So, you go to the next day, December 26. You DO NOT start with December 22, then go to the next business day, which would be December 24, then add three days, which would take you to December 27.
How does this work if you are calculating deadlines in reverse, such as when a scheduling order says that you must do something X days before trial? Everything works the same, except it goes in reverse. If your trial is on December 19, 2018, and you are instructed to serve your witness list ten days before trial, you start counting on December 18, and find that your tenth day is Sunday, December 9, 2018. You then go to the “next” business day, but in this case this means to continue counting backward to Friday, December 7.
Things can get complicated when you try to apply the “extra time for mailing” rule to reverse deadlines. Using our example above of December 7, 2018 as the deadline for serving the witness list, what if you plan to serve it by mail? Should you back up three more days to December 4, or should you rely on the “mailbox rule,” and serve the list by putting it in the mail on December 7? It is absolutely true that you are deemed to have served a paper when you put it in the mailbox. But it is also absolutely true that if you put it in the mailbox at 8:00 p.m. on December 7, and it gets lost among all the Christmas cards and does not get to your opponent until December 12 or 13, he or she is going to pitch a fit and move to strike your witnesses. The best practice, therefore, is to avoid the situation, either by backing up the three days to December 4, or serving it by email, fax, or FedEx so that it gets in your opponent’s hands as quickly as possible. If you sandbag in order to vex your opponent, you will probably get away with it nine out of ten times. But you will not make any friends, and one day the judge might come down on you.
A few other frequently asked questions:
- How about compliance with orders? When you are complying with orders, you do not add time to account for the fact that you got the order in the mail or electronically. If the judge says do something ten days after the date of an order, that is when you do it. This is why it is better to draft orders that say “do X on December 13” rather than “do X ten days after entry of this Order.”
- When are orders considered “entered”? In Virginia state courts, orders are entered when signed by the judge.
- What if something is served on you by mail and email? Do you get three extra days, or one extra day? You get one extra day; you use the quickest method of service.
- What if the certificate of service on something says one date, but the postmark on the envelope shows another? Either disregard and go by the certificate of service or, if you think your opponent is engaging in shenanigans, bring it to the attention of the court. In the meantime, use the date on the certificate of service.
- What are the legal holidays in Virginia? The statute says:
January 1 — New Year’s Day
The Friday preceding the third Monday in January — Lee-Jackson
The third Monday in January — Martin Luther King, Jr., Day
The third Monday in February — Presidents Day
The last Monday in May — Memorial Day
July 4 — Independence Day
The first Monday in September — Labor Day
The second Monday in October — Columbus Day
November 11 — Veterans’ Day
The fourth Thursday in November and the Friday next following — Thanksgiving Day
December 25 — Christmas Day
Whenever any of such days falls on Saturday, the Friday next preceding such day, or whenever any of such days falls on Sunday, the Monday next following such day, and any day so appointed by the Governor of the Commonwealth or the President of the United States, shall be a legal holiday as to the transaction of all business.
- Is it filing or serving that is important? It depends. When we are talking about things that are between you and the clerk, like filing a lawsuit, it is filing that matters. Almost everything else depends on service. In fact, Rule 1:17 tells us that filing a pleading is really sort of an afterthought; you must serve the pleading at or before the time of filing. We all tend to think of filing as being the big deal, because it involves the courthouse, but it is actually not. For instance, if your Answer is due on December 20, and you hand‑deliver it to the courthouse that day but do not mail it to your opponent until the next day, you have missed the deadline. By the same token, if you mail the Answer to your opponent on December 20, but then get caught up in the Christmas spirit and do not send it to the courthouse until December 26, you are not in default.
- Are there any situations where the rules do not work? Two examples come to mind: first, Rule 4:15 tells us that the mailbox rule does not work in the case of motions. In order to serve a motion or response to a motion, you actually have to get it into the hands of your opponent on the day it is due. This rule is almost never enforced, and Rule 4:15 is such a shambles anyway that this is unlikely to come up. Second, if you agree to accept a subpoena or a complaint by mail, you do not add three days to the response time.
- When does the day end? When you are serving things by fax, it has to occur before 5:00 p.m. or it is considered to have happened the next day. Otherwise, the day ends at midnight. We all know that the mail stops running at some point every day, but at least according to the rules, you could mail something at 11:59 p.m. and still be deemed to have served it that day.
Federal Court
In federal court, just as in state court, you do not count the day of an event in calculating deadlines. You add three days to respond to things served by mail, but you do not add any time to account for service by electronic means. As in state court, you can serve items by putting them in the mail, and service is effective at the time of mailing. If you and your opponent agree to serve things by other methods, such as FedEx, service is effective at the time you give the items to the carrier. If you do not agree, service is effective when the FedEx driver delivers the item. Interestingly, there is specific mention of service by facsimile or email in the federal rules. These are “other methods,” and you are supposed to get written consent before using them. You get three extra days to respond to things served by an agreed-upon “other method.” Just as in state court, if your date to respond falls on a weekend day, a holiday, or in the case of something to be filed, a day when the courthouse is closed, you go to the “next” day.
Some frequently asked questions about federal practice:
- How long does the day last? In federal court, the day lasts until midnight in the court’s time zone for purposes of electronic filing and service on your opponent. For filing by other means, it lasts until the clerk’s office closes. Thus, you can mail off your responses to Requests for Admissions on the 30th day two seconds before the ball drops and we sing Auld Lang Syne, and you have met your deadline.
- Are there different rules for motions and such? There are no odd rules on motions in federal court, although there are some specific deadlines set out in Rule 6(c) . The Federal Rules of Civil Procedure do not have many traps, but local rules are a different matter. Almost every federal district court has local rules, ranging from simple (the Western District of Virginia) to complex (the Eastern District of Virginia). It also seems that the courts with the more complicated local rules are the ones more likely to harshly enforce them. Practitioners should not neglect local rules.
- How do dates in scheduling orders work? Federal courts generally issue scheduling orders containing a mixture of deadlines established by date and by time periods counted backward from the trial date. You must remember that the Federal Rules of Civil Procedure also contain a host of specific pretrial deadlines. Many an attorney has experienced the unpleasant sensation of receiving items like opposing deposition designations at six o’clock on a Friday evening, and only then realizing that the deadline is upon him or her. Some scheduling orders are so devious as to set deadlines for some types of pre-trial disclosures, but not others. So, you may find that your witness list, exhibit list, and deposition designations are all due on different dates. It is worth your while to read Rule 26 (a)(2) and (3) in detail and calendar the deadlines.
- When are orders considered “entered”? Orders in federal court are considered entered when the clerk files them, not when the judge signs them.
- What are the federal holidays? According to Rule 6(a)(6), they are New Years’ Eve Day, Martin Luther King, Jr.’s Birthday, Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans’ Day, Thanksgiving Day, Christmas Day, and, for any time period measured after an event, any state holiday.
Thursday, December 6th, 2018
The Fourth Circuit recently explored the contours of what constitutes “protected activity” under Title VII (and by implication other similar civil rights laws). The employee argued that her unauthorized review, copying and disclosure of confidential personnel files in order to gain support for her race and religious discrimination claims constituted a protected activity under Title VII. The Fourth Circuit disagreed.[1]
The employee, a black Muslim woman, worked for the local Sheriff for a number of years with an unblemished disciplinary record until she received a disciplinary sanction which barred her from testing for a promotion. She filed an EEOC Charge alleging that similarly situated officers who were neither black nor Muslim had not been disciplined for the same conduct. To support her claim, she reviewed, copied, and supplied the local HR investigator with two confidential personnel files she retrieved from the file cabinet in the office where she worked. She also obtained the personnel files of three other employees who worked at an adjacent facility which she obtained through a request to a co-worker. She did not, however, seek permission from any of the five employees or her own supervisor to copy and disclose the records. Copies of these materials were later given to the EEOC and her lawyer.
Once discovery began in her Title VII case, the Sheriff’s attorney inquired during her deposition as to how she obtained the records. Based on her deposition testimony, the Sheriff concluded that she violated not only department policy restricting the unauthorized review, duplication and dissemination of personnel records but also violated a state law that protected the personnel files of local and state government employees. In a bold move, the Sheriff then discharged the employee while the case was still pending. Soon after, she filed a new EEOC charge alleging retaliation, which was added to the pending case. After all discovery concluded, the district court granted summary judgment on all claims.
Noting the Supreme Court’s directive to give a broad scope to what constitutes protected activity under Title VII, the Fourth Circuit noted this case required an analysis under both the participation and opposition provision. The participation clause provides absolute protection to a limited range of conduct. In contrast, the opposition clause covers a much broader range of conduct, but it only provides a qualified level of protection, which requires a showing of reasonableness.
The employee argued that her entire course of conduct constituted protected participation activity, and in the alternative, she suggested that her review, copying, and disclosure of the personnel files constituted protected opposition activity. The court quickly disposed of the alternative argument, noting that the unauthorized disclosure of confidential information to third parties is generally unreasonable.[2] The employee attempted to argue that it was reasonable for her to believe that the County’s HR investigator had the right to access the employee personnel files. However, the court noted “we are loathe to provide employees an incentive to rifle through confidential files looking for evidence,” and even if the investigator had a right to files, she had no right to review their contents.
In reviewing the participation clause argument, the court observed the protection seeks to account for the evidentiary difficulties plaintiffs often face when pursuing workplace discrimination claims. It is often true that salaries, disciplinary infractions and other similar evidence remains confidential, which may cause difficulty for an employee to realize – let alone prove – that such evidence exists.[3] In light of these realities, the Fourth Circuit declined to read the participation clause so narrowly as to eliminate an employee’s ability to gather evidence for a bona fide Title VII claim. However, it drew the line in this case because this employee’s unauthorized inspection and copying of the personnel files of a local government agency constituted a violation of a valid, generally applicable state law.[4] There is nothing about the North Carolina statute that contradicts Title VII’s provisions or meaningfully impairs anyone’s ability to pursue a Title VII claim.
The Court, however, declined to go further and hold, as urged by the Sheriff, that any disclosure of information in violation of an employer’s internal confidentiality policies falls beyond the scope of protection provided by the participation clause. The Sheriff argued that while disclosure of records to the EEOC can constitute protected participation activity if doing so results in a violation of the employee’s confidentiality policy, the employer should have a legitimate, nondiscriminatory basis for termination. The Court disagreed. It noted that the underlying act of disclosing evidence to the EEOC and a violation of an employer’s policy, are “so inextricably related” that separating the two for retaliation purposes is too difficult. Accordingly, the Fourth Circuit declined to embrace the proposed rule suggested by the Sheriff.
In summary, this case clarifies, but does not change the law as to what constitutes “protected activity” when an employee takes company records and gives them to the EEOC. If those actions violate a neutral state law (e.g. unauthorized computer trespass) then it is now likely that the Court will not consider such unlawful behavior to be “protected activity.” On the other hand, if the copying and dissemination violates a private company’s confidentiality policies (but not a state law), it is likely that this “improper” activity will continue to be considered “protected activity.” With the number of retaliation and whistleblower claims on the rise, employers need to stay abreast of changes in the law in this area. For assistance with access disciplinary action or representation in defense of whistleblower and/or retaliation claims, contact the members of the Gentry Locke Employment Law team.
[1] Netter v. Barnes, No. 18-1039, 2018 U.S. App. LEXIS 32358 (4th Cir. Nov. 15, 2018).
[2] Laughlin v. Metro Wash. Airports Auth., 149 F.3d 253, 260 n. 4 (4th Cir. 1998) (Under the opposition clause, the employer’s interest in maintaining security and confidentiality of sensitive personnel documents outweighs the employee’s interest in providing them to former co-workers.)
[3] The Court notes that employees have no subpoena power and also have no right to access or obtain copies of documents the EEOC subpoenas from employers as part of its investigation, until after the Charge is dismissed.
[4] The North Carolina law in question made it a Class III misdemeanor to knowingly and willfully examine, remove or copy any portion of a confidential personnel file held by a local or state government agency without authorized access.
Wednesday, December 5th, 2018
On November 16, 2018, the Department of Education published its proposed new Title IX regulations, as well as a one-page fact sheet and six-page background and summary document. You can find the DOE’s Press Release here. The proposed regulations (also referred to as a “Notice of Proposed Rulemaking” or “NPRM”) were formally published in the Federal Register on November 29, 2018. The DOE requests comments through January 28, 2019.
As you may recall, in September 2017 the DOE advised the public that these proposed new regulations were coming. On September 22, 2017, the DOE rescinded previous guidance issued by the Obama Administration, and issued the 2017 Title IX Q&A as an interim and temporary measure to provide information on the DOE’s views of the law.
As you have likely heard, the proposed new regulations offer sweeping and significant changes regarding how colleges will likely be required to handle complaints of sexual harassment and assault to comply with Title IX. It is anticipated that the DOE will not issue final regulations until the summer or fall of 2019. Moreover, there may be court challenges along the way. Nevertheless, these proposed regulations and the “preamble” tell us precisely what the DOE believes the law to be. Further, we should expect that the final regulations will generally track the proposed regulations.
We encourage you to read the November 6 fact sheet, background document, and the Federal Register publication on November 29. The 33-page preamble accompanying the proposed regulations are especially important as it provides great detail on the DOE’s rationale and interpretation of the law. You can read the actual proposed regulations here.
As one example, as part of its proposed regulations for grievance procedures, the DOE emphasizes the training required for coordinators, investigators and decision makers to ensure that they do not have a conflict of interests or bias. In its preamble, the DOE explains, in part, as follows:
[Colleges] will also be required to use training materials that promote impartial investigations and adjudications and that do not rely on sex stereotypes, so as to avoid training that would cause the grievance process to favor one side or the other or bias outcomes in favor of complainants or respondents. — 83 Fed. Reg. No. 230 at 61473 (November 29, 2018)
Gentry Locke is well equipped to assist Colleges and Universities as you consider changes or updates to your policies and practices or if you have situations for which you need guidance or advice. Please contact Todd Leeson, David Paxton or any member of our College & University or Employment Law Practice Group if we can further assist you.
Wednesday, November 7th, 2018
The Supreme Court of the United States has ruled that state and local government entities must comply with the Age Discrimination and Employment Act (“ADEA”) even if the entity employs fewer than twenty (20) employees.
For the past forty (40) years, lower courts have disagreed on whether the ADEA’s requirement for an employer to have at least twenty (20) employees applied to small local government agencies. Many courts have held that government agencies with less than twenty (20) employees were not covered by the ADEA.
This decision issued on November 6, 2018 involves a case brought after a local fire department in Arizona laid off its two oldest, full-time fire fighters due to budget cuts. The fire department argued that the ADEA did not apply because it had only twelve (12) employees, and it pointed out that Title VII (which prohibits race, sex and religious discrimination) only applies to state and local government entities if they have at least fifteen (15) employees. The Court noted the disparity but ruled the language of the ADEA gives it a broader reach than Title VII and it was clear Congress chose to treat the two types of protections differently. It then noted that the better comparator is the Fair Labor Standards Act, which applies to all state and political subdivision employers regardless of the number of employees that they have. The court allowed the claim to go forward against the local fire department. Mount Lemmon Fire District v. Guido, No. 17587 (Nov. 6, 2018).
Following Mount Lemmon, all state and other local political entities must now be mindful of the protections provided to workers who are 40 and older in all aspects of employment. These entities must remember that an age discrimination claim can be brought, even in situations where a younger worker is not hired as a replacement, if there is other evidence of a discriminatory intent against older workers. Moreover, in a situation where a governmental agency decides to terminate an employee who is 40 or older, it must comply with the Older Worker Benefit Protection Act, which requires certain disclosures and a revocation period if the agents want a release of claims for age discrimination. This ruling does not apply to small business or non-profit employers with less than twenty (20) employees.
For more information, contact members of Gentry Locke’s Employment Law team.
Tuesday, November 6th, 2018
Pursuant to new regulations, employers must disclose additional information to applicants and employees before conducting background checks.
In May 2018, Congress enacted the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Act”). The Act requires consumer reporting agencies to provide “national security freezes” to consumers free of charge. The Act also extended the 90-day period to one year for which national consumer reporting agencies must include an initial fraud alert in a consumer’s file.
The Act also provides that whenever the Fair Credit Report Act (“FCRA”) requires an entity to provide a consumer with a “Summary of Consumer Rights,” the new requirements must be included in the notice to the consumer. Because the FCRA classifies applicants and employees as “consumers,” employers are now required to provide applicants and employees notice of their right to obtain a security freeze and the change in duration for initial fraud alerts before conducting a background check.
In response to the new requirements, the Consumer Financial Protection Bureau (CFPB) updated its model “Summary of Consumer Rights.” The model form became effective September 21, 2018. Employers are temporarily permitted to continue using the 2012 form if a separate page containing the new information is attached. Employers must ensure that they update their forms to avoid potential legal liability for non-compliance.
The revised Summary of Consumer Rights is offered as a Word document that can be viewed or downloaded at this link (link opens in new window): https://files.consumerfinance.gov/f/documents/bcfp_consumer-rights-summary_2018-09.docx
Please contact David Paxton or any member of Gentry Locke’s Employment Law Team if we can help your business understand its obligations under the FCRA or other employment laws that govern your business.
Thursday, September 13th, 2018
Commercial landlords and tenants should be aware of a Virginia law that could invalidate long-term leases in Virginia. The Supreme Court of Virginia recently ruled that a 15-year commercial lease was unenforceable because it did not include a seal or seal substitute. See, Game Place, L.L.C. v. Fredericksburg 35, LLC, 295 Va. 396 (2018).
The Court reviewed the applicability of a Virginia law that requires leases with a term longer than five years to be in the form of a deed and include either a seal or a seal substitute. Seal substitutes include, among other things, an imprint or stamp of a corporate or official seal, the use in the body of such writing of the words “this deed,” or “this indenture,” other words importing a sealed instrument or recognizing a seal, or a proper acknowledgement of a document demonstrating an intent to convey real property “before an officer authorized to take acknowledgments of deeds.” Because the lease agreement in Game Place did not include a seal or seal substitute, the Court ruled that the lease was unenforceable and that the parties had a month-to-month tenancy terminable by either party with one month notice.
Responding to the “form over substance” argument, the Court stated “courts can never fully escape the line-drawing exercise that the ‘form’ of the law requires…” and “before asking where to draw the substance-form line, we must first ask who has the power to draw it.” The Court stated the General Assembly had that power, and ultimately declined to excuse the defects.
In short, form still matters in Virginia. The difference between an enforceable and unenforceable long-term commercial lease can depend solely on whether the word “Deed” or “Seal” appears in the document. Property owners and purchasers of leased property should carefully review existing and future long-term lease agreements to ensure these requirements are satisfied.
