Thursday, January 15th, 2015
This article was first published as a guest post on Gentry Locke’s Virginia Construction Law Update blog.
“Except in the middle of the battlefield, nowhere must men coordinate movement of other men and all materials in the midst of such chaos and with such limited certainty of present facts and future occurrences as in a huge construction project . . .”
— Blake Construction Co. v. C.J. Coakley Co., 431 A.2d 569, 575 (D. C. Ct. App. 1981)
How true. Anyone who has stepped foot onto the site of a large construction project understands it is little more than bedlam with a dash of pandemonium thrown in for good measure. Mud, dust, and large equipment pose only a portion of the unpleasantness and risks. Add to this cocktail contractors, picky engineers, overzealous government inspectors, frugal owners, and half-broke subcontractors and you have the makings of a one heck of a mess.
Knowing this, many years ago someone had the bright idea to get all of the parties involved in a construction project to write down their respective responsibilities on pieces of paper. These documents became known as contracts. Hence, we have the word contractor. What a great idea; if everyone writes down his or her responsibilities for the construction project and signs off on them, what can go wrong? Right?
As a construction lawyer, I get a lot of calls from people standing on a construction site. The lucky ones are in a jobsite trailer, maybe with a pot of fresh coffee brewing. Many of the other are calling from the cramped seat of their pick-up truck in the pouring down rain wondering whether the bad weather is going to buy them more time to get their work done. Regardless, when they call, my first question to them is almost every single time is, “What does your contract say?” To this, responses range from a simple “Huh?” to “What contract?” or “I’m pretty sure I saw a contract, but don’t know if I signed it.” Others just cuss and mutter under their breath. You get the point. In spite of being contractors, many contractors just don’t take the time to read their contracts.
Like a magician banished from his trade for revealing the secrets behind his tricks, I am about to risk exile by the members of my profession by telling you a little secret about what we do.
When we get a call from that contractor wanting to know how to address a problem on a construction project, we go get the contract and we read it. Yep. That is it. More times than not, if someone calls with a question about a construction project, the answer is usually right there…in the contract. It is like baking a cake. You leave out the sugar or the eggs and the cake won’t taste good. You have to follow the recipe.
“Do I get extra time to finish due to this rain?” Well, your contract says, “The project scheduled will be extended for the abnormal number of days of inclement weather in a particular month as determined by NOAA.” The NOAA website says there are normally 12 days of inclement weather in January, and this January there have been 15.” So yes, you get three extra days…here is my bill. (This is akin to the doc telling you to take two and call him in the morning.)
The point for contractors is two-fold. One, it is important to read your contracts. Two, reading and understanding your contracts can keep you from spending money on lawyers to read to you what your contract says. Let the exile begin.
Wednesday, January 14th, 2015
This article by Todd Leeson was published in the Winter/Spring 2015 edition of “Virginia Human Resources Today” magazine, a publication of the Virginia Society for Human Resource Management.
In Three D, LLC, 361 NLRB No. 31 (Aug. 22, 2014), the NLRB held that an employer unlawfully terminated two employees who had posted content on Facebook that the employer considered to be disloyal or defamatory. What can Virginia employers learn from this case?
Triple Play is a restaurant owned in part by Ralph DelBuono. In January 2011, employees learned that they owed more in state taxes than expected. In response to their complaints, Triple Play scheduled an employee meeting with its payroll provider.
Before the meeting occurred, Jamie, a former employee, posted to her Facebook page information critical of the owners of Triple Play, noting that they could not even do taxes correctly. Several of Jamie’s Facebook “friends” commented and expressed their outrage. Jamie replied further stating, among other things, that it was “all Ralph’s fault.” At that point, Vincent, a current employee, selected the “like” option in his Facebook response. There were a number of additional Facebook comments. Another current employee, Jillian, then chimed in as follows: “I owe too. Such an a–hole.” [Referring to Ralph.]
When Triple Play learned about the Facebook postings, it terminated Vincent and Jillian because it deemed their actions to be disloyal, defamatory, and/or disparaging. The terminated employees contended that they engaged in protected, concerted activity (PCA) under the National Labor Relations Act and that they were unlawfully terminated. The NLRB agreed.
The Board analyzed this case under the following test: “employee communications to third parties in an effort to obtain their support are protected where the communication indicated it is related to an ongoing dispute between the employees and the employers and a communication is not so disloyal, reckless, or maliciously untrue as to lose the Act’s protection.” The Board found that Jillian’s profanity toward her boss–posted on an individual’s Facebook page–was no big deal. The Board also interpreted Vincent’s “like” as referring only to Jamie’s initial comment. The Board opined that Vincent had the option to individually “like” each of the prior comments but did not so do. The Board, therefore, concluded that the employees’ comments were not so disloyal as to lose the protection of the Act and that they were not defamatory or maliciously untrue.
Unfortunately, this decision is not surprising. This Board has shown time and time again its willingness to protect conduct by employees that most employers would consider unacceptable. As just one example, in Plaza Auto Center, a May 2014 case, an employee raised his voice during a meeting with the owner of a small business and called him, among other things, a “f—ing crook” and an “a–hole” who is stupid and that nobody liked. The employee then stood up and stated that if he was fired, the owner would “regret it.” The owner fired him. Remarkably, the Board concluded that the employee’s conduct was protected because it was “not menacing, physically aggressive or belligerent.”
What does this mean? At a minimum, if an employee is arguably engaged in PCA, it will be more difficult for the employer to terminate the employee even if it reasonably believes that the conduct by the employee was egregious. In other words, the employer may need to be more tolerant of employee dissent. As you probably know, the NLRB is also regularly invalidating various social media and other policies because they are deemed to be ambiguous and/or overbroad (i.e., infringing upon an employee’s right to engage in PCA). Thus, there is heightened legal risk for an employer to rely upon a social media or other handbook policy as a basis for disciplinary action unless you are confident that your policy will withstand NLRB scrutiny. In sum, as employers evaluate employee misconduct on social media, HR professionals must be mindful of the NLRB’s strong interest in the topic.
Wednesday, November 5th, 2014
While we wait for the days of retina scanners to unlock our smartphones — á la movies like Batman (1966 version), Star Trek II: The Wrath of Khan (1982), and GoldenEye (1995) — we must wrestle with whether or not to enable our devices with the now standard thumbprint security identification.
While convenient, personalized, and perhaps even close to secure [1], just because we can does not always mean that we should. And just last week, smartphone owners in Virginia have been given a good reason to be sure that passcodes, and not just fingerprints, should continue to be the norm.
In case you missed it, Virginia Beach Circuit Court Judge Steven C. Frucci ruled that requiring a criminal defendant to provide his passcode to unlock his phone for investigators pursuant to a search warrant violates the Fifth Amendment right to be free from self-incrimination. Judge Frucci explained that giving a fingerprint to police is akin to providing a key to open a door, a DNA sample, or handwriting samples, conduct which is not protected by the Fifth Amendment.
While it may seem like there is little difference between fingerprints, DNA, and passcodes, the distinction does warrant the different treatment. The Fifth Amendment specifically provides that “No person … shall be compelled in any criminal case to be a witness against himself.” Unlike a passcode, which requires the content of a person’s mind to be shared, fingerprints, DNA, and even handwriting is an innate physical characteristic or identifier. While difficult to articulate, there is a stark difference between forcing an individual to share a mental process versus requiring an individual to share a physical attribute.
This distinction, however, makes perfect sense from a historical and practical view, particularly in the context of the Enlightenment and the timing of the Bill of Rights. As Rene Descartes so aptly captured, “except our own thoughts, there is nothing absolutely in our power.”2 Put another way, our thoughts and mental processes are the only things that we maintain absolute control over; therefore, for the state to force an individual to share a thought is anathema to basic notions of individual rights and personhood. And this is precisely what the drafters of the Fifth Amendment had in mind when they preserved the right of all persons to be free from self-incrimination.
While the question of passcodes versus fingerprints is a more mundane discussion, the foundation for the legal distinction between the two cannot be overemphasized. Whether Judge Frucci’s ruling will be upheld if appealed is, of course, a different question, and will likely not be answered for some time. Nevertheless, Judge Frucci’s distinction is correct and worth discussing.
So, next time you bemoan having to type in several digits or letters to unlock your smartphone, think about the principles at work that protect your privacy from the ever-lengthening reach of the government.
[1] See Brandon Giggs, How secure is your iPhone5S fingerprint?, available at www.cnn.com.
[2] Rene Descartes, Meditations, Discourse on the Method of Rightly Conducting the Reason, and Seeking Truth in the Sciences.
Friday, October 10th, 2014
From Stephen Colbert to rap music, the role of amicus curiae briefs has caught the public eye.
On the first day of the 2014-15 Supreme Court term, Stephen Colbert interviewed William & Mary law Professor Alison Larsen about her research into the 800% increase in amici filings over the last fifty years. Colbert described amicus briefs as “informational documents written by third parties who are not involved in the situation, whose opinion was not sought, but still want some say in the decision.” Or, as Colbert spoofed, “the legal equivalents of grandparents.”
Professor Larsen does not dismiss amicus briefs outright, but does raise some red flags. Larsen, whose article “The Trouble with Amicus Facts” will be published in the Virginia Law Review, told Colbert that our Supreme Court justices may have a hard time distinguishing between reliable and unreliable “facts,” now that they must wade through dozens of amicus briefs filed by so-called experts.
Trial courts weed out unreliable experts, Professor Larsen said, but the Supreme Court is a relatively open door: “Today, anyone can be a factual expert, or claim to be,” she said.
“When you want an expert witness at trial, you don’t let anybody come to the courthouse and testify,” Larsen told Colbert. This echoes a point Justice Scalia made in a 2011 dissent criticizing the majority’s reliance on government-funded studies that made no appearance in the case until the appeal. Justice Scalia wrote, “Supreme Court briefs are an inappropriate place to develop the key facts in a case … An adversarial process in the trial courts can identify flaws in the methodology of the studies that the parties put forward; here, we accept the studies’ findings on faith, without examining their methodology at all.” Sykes v. United States, 131 S. Ct. 2267, 2286 (2011) (Scalia, J., dissenting).
The trouble with amicus briefs, Professor Larsen submits, is that they come in at the eleventh hour and are untested. Or they purport to deliver “facts” but actually present an advocacy group’s selective viewpoint. Her research shows that even our esteemed Supreme Court justices may have difficulty separating fact from fiction.
Will the Supreme Court encounter this problem in an upcoming free-speech case? In Elonis v. United States, rap music experts filed an amicus brief on behalf of Anthony Elonis, who was sentenced to four years in prison for making threatening posts on Facebook. At issue is whether a “true threat” (not protected by the First Amendment) depends on the speaker’s intent or the listener’s response.
A jury convicted Elonis for posting on Facebook comments about murdering his former wife, shooting up their child’s kindergarten class, and going after a female FBI agent. The Facebook posts read like rap lyrics, styled with rhyme and rhythm. Elonis argues that rap lyrics aren’t confessional or punishable, but that they are instead artistic expressions about pushing limits.
In their amicus brief, Erik Nielson (University of Richmond) and Charis Kubrin (UC-Irvine) argue that “Rap music resides squarely within a long tradition of African American storytelling and verbal competition, one that privileges exaggeration, metaphor, and above all, wordplay. Underlying this tradition is the practice of signifying, or the obscuring of apparent meaning; in the process of signifying, ambiguity is prized, meaning is destabilized, and gaps between the literal and the figurative are intentionally exploited.” (Marion Brechner of the First Amendment Project contributed to this brief.)
The amicus brief essentially argues that police, politicians, and judges don’t understand rap music. They don’t understand how “an insult can be a compliment, a seeming threat a mere joke.” Instead, they engage in stereotyping and impose unjustifiable punishments.
Writing for Slate.com, Dahlia Lithwik describes the amicus brief as a “master class on Rap Music for Aging Jurists.” As Lithwik points out, the brief concludes with a university professor’s remarks that “in 20 years’ time, Tupac Shakur will be ranked with Walt Whitman as a great American poet.”
So, Professor Larsen tells us that amicus briefs are at an all-time high and that jurists must approach them with caution. While that may be true, rap music may be a topic particularly well suited for some extra analysis. Perhaps the amicus brief shouldn’t exonerate Elonis, but it provides critical context for determining how the First Amendment applies in the modern age.
Gentry Locke’s appellate lawyers have their ears to the ground – and attuned to the work of Tupac, Queen Latifah, and Public Enemy – to see how it all plays out.
Friday, September 19th, 2014
I admit it. I am an appellate argument junkie. This has been a long-standing problem, but when the Supreme Court of Virginia began releasing audio recordings of its oral arguments earlier this year, my habit took on new dimensions. I can now listen to hours of appellate argument without leaving the house, car, or office. This has brought new purpose to my long daily commute (I hope the legislature will not make this illegal), and I’m totally hooked.
But what’s the big deal, concerned friends ask – audio recordings of Fourth Circuit arguments have been available for some time now. It’s true, so what is the big deal? Supreme Court recordings provide a look at the Court as a whole and how the justices interact with each other. Except for the rare occasion when it sits en banc, the Fourth Circuit hears most arguments in panels of three, limiting a study of that Court as a whole.
Whatever the reason for my obsessive interest in these audio recordings, they have reinforced some suspicions I have had about the Supreme Court, and appellate arguments in general. And, they have provided some new insight as well.
First, the justices are talking to each other when they ask their questions. This is something that is hard to follow during the heat of oral argument. However, listening to the argument after the fact, it is clear that many questions are not really for me, but are directed towards another justice, or the entire Court. The justices are really discussing the case with each other and trying to convince their colleagues on the bench of their position.
So does this mean that my answers don’t matter? Am I just a pawn on the Court’s chess board? Not at all. My answers to those questions can influence that private, judicial discussion – and the ultimate outcome of the case – by showing why my position is right.
Second, some questions are not at all what I thought they were at the time. During argument, it can be difficult to really listen to the Court’s questions when you are focused on delivering the argument you have prepared. Things become clearer with the luxury of hearing the argument again without the stress of being in the middle of it. In particular, I have noticed that some questions were not exactly what I thought they were at the time; rather, the Court was asking something slightly different.
Good listening at oral argument is hard. It requires us to focus on the Court first, and our prepared argument second. Because the Court is the decision-maker, though, we must understand its concerns and questions so we can respond meaningfully. If we haven’t answered the Court’s questions, then we have not done our jobs as oral advocates. So, be flexible during oral argument. Weave the important points of the argument into your answers, but make sure you are addressing the issues the Court wants to discuss.
Third, the Court genuinely wants to understand your argument and the ramifications of its decision. This is why the justices ask hypothetical questions – to test the boundaries and effect of its ruling in future cases involving different facts. And this is why it may press the advocate to define the scope of the ruling he seeks and to explain the effect of that ruling. Concisely explaining the scope and limiting principles of your position will greatly assist the Court in understanding the effect of adopting your position, and becoming comfortable with it. Embrace the opportunity to help the Court do its job well.
Finally, audio recordings only tell you half the story. Listening to an audio recording of an argument I heard – or delivered – is a different experience than being there live. The visual, relational, and intangible aspects of the live argument cannot be captured on an audio tape. Thus, many essential ingredients to an effective oral argument, such as genuineness, credibility, eagerness, passion, engagement, and rapport with the Court are not fully experienced on an audio recording.
Therefore, being there in person is the only way to fully appreciate the argument – although that won’t stop me from listening. And, you should not agree to argue your case by phone – that separation prevents full engagement with the Court.
You may access the audio recordings from the Court’s merits arguments since January 7, 2014, at https://courts.state.va.us/courts/scv/oral_arguments/home.html.
Friday, August 22nd, 2014
For three years in law school, finishing in 1993, I think I hardly heard the word “mediation,” much less had any courses or training in it. In clerking in the US District Court in Norfolk for a year after that, I don’t recall much, if any, mediation occurring, certainly not with magistrate judges the way it is today. Within days of arriving at work at Gentry Locke in the fall of 1994, however, I can vividly remember having conversations with a colleague about John McCammon starting a “mediation business.” Not long after that, I began getting involved in representing parties in mediations on a regular basis. Without knowing exactly, I’d say the count of those cases is in the hundreds. Mediation has become an integral part of the overall dispute resolution process for legal disputes. In the construction law arena, it has become standard fare as a part of many of the form contract documents.
Until recently, my experience in mediation had always been in representing one of the parties involved. That has now changed. I had the welcome opportunity to serve as the mediator in a case between a local government and a contractor involving an underground utility construction project. Though it is a small sampling of experience at this point, I gleaned some excellent insight from that one case, which did settle. Here are some, but not nearly all, of the insight I gained from being the neutral, rather than on one side.
- Advance knowledge of the case is not only helpful to the neutral, it is vital. Whether the information arrives from the parties, or is drawn from previous experiences you have had with similar legal issues, construction processes, or otherwise, that head start is a head start.
- It is helpful for the mediator to create some rapport with each side either in advance, or at the mediation. Key players from the parties do have to trust, feel comfortable with, and want to work with the mediator to get the dispute settled. Each party already has skepticism (at a minimum) for the other side — there is no need for them to have that with the mediator as well.
- Some evaluative element to the mediation can be helpful. Part of why I was asked to mediate this case was due to my experience in working with these kinds of cases — for both local governments and contractors — in the past. The parties sought my opinion on some of the key change order issues, and agreed in advance that I could (and should) opine about those. And, I did. It proved helpful in the parties understanding their respective risks.
- Not getting locked into a set process for the mediation is beneficial. At the conclusion of the opening presentations by the parties, we went right into group discussions about some of the key issues, and answering some of the questions that I thought were clogging up the settlement process. We did not automatically break into caucuses. The individuals involved were professional, and the dialogue remained useful and moved the discussions forward.
- On a lighter note, setting the mediation for a morning only, and not ordering lunch, certainly helped keep the parties moving. It was an unintentional aspect of the process (at least as to the food), but it seemed to have a real impact. I don’t suggest depriving anyone of sustenance, but things do seem to move quicker when the parties start thinking they have been there longer than they should have been.
- Honesty, not trickery, is the best means of getting a matter resolved. I have heard about mediators who tell the two (or more) parties two (or more) different accounts of how an issue is likely to be resolved. From my limited experience, it was more effective, and much easier to keep straight when a consistent account of how issues are likely to be addressed in court is maintained. Certainly there are variations on how issues could turn out, and thus it is fine to work in those gray areas. But when asked to provide an evaluation — as I was in this mediation — consistency is very important.
- Be careful in communicating offers back and forth as lack of clarity can derail the entire process. During the mediation, there was some lack of clarity on how the offers were being structured, as liquidated damages and retainage were being placed into and out of the offers and responses. Ultimately, I brought the parties together in front of a white board and made sure there was an understanding of what the amounts were, how much cash would exchange hands, what accounting would need to occur with the retainage, etc.
- The devil is in the details. Despite my best efforts to get the parties to identify up front the key aspects of the settlement, beyond the payments and time extensions being requested, it was difficult to get those items in focus until the end of the process. Even as we were trying to get ink on paper to get the deal done, issues and details (including important ones that had not been brought up at all until that point) were raising their heads.
- Don’t assume that everyone speaks the same dialect of construction language. I find that in handling cases, and now in having mediated one, that parties use different construction jargon. In a case I am handling now, I am finding that “team build” and “design build” carry connotations that may not be true under the actual contract documents in place. Be careful that parties using “lingo” and terminology are using it the same way — and correctly.
- Keep the parties working, even when the mediator is out of the room. You want the parties to be invested in solving the problem. If you leave the room with nothing more to do than wait (and read the newspaper on the iPad) then not much (or nearly enough) is going to get done. Leave the room with an assignment for the group that is waiting on the other side’s next move.
- Often parties think that mediation takes too long and that cutting to the bottom line should occur sooner. Being in the role of neutral, I now see that there is a method to the madness. Parties have to have time to become comfortable with the moves they are making in the negotiations, and moves that are too extreme may not have time to sink in or become comfortable. As the process moves along with measured progress, it allows the parties to more fully accept the progress that is being made and to want (not fear) further progress.
- Another point about not being wedded to a certain process — getting smaller groups of participants together at various points in the process is quite useful. The owner in our mediation had representatives of its design firm present. Though having them there was helpful, separating them at certain points so that design issues could be discussed (and questioned) led to some additional progress. Likewise, having the attorneys meet and come to a concluding recommendation point proved helpful in getting us very close (but not quite all of the way) to the finish line.
- Using examples of mediation successes from the past can help the process. Creating psychological markers with the participants that mediation results in success seemed beneficial. That goes hand in hand with the reminder to the parties that this process works, that it often takes time, and that progress is being made (when asked).
- Keep in mind conflicts of interest for parties/participants who may not be directly involved in the process. In other words, don’t just focus on the main players but the secondary level players when taking on such an engagement (for those of you who serve or want to serve as mediator and are in private practice).
- And, lastly, for now, the nuance of construction law and the contracts do still matter. A few years ago I was mediating with a younger colleague assisting me. Late in the day of a successful mediation, he kept coming back to a discrete point of the construction contract and reminding me and the mediator that the other side was incorrect about this legal point. I explained to him in that case that we were way past the legal points and far into just getting a business deal done. He wasn’t wrong, those points do matter, it is just a matter of timing. At some point in my recent mediation, it turned from a debate/discussion of the legal and contractual issues to getting a business deal done that the parties could live with. It helped, I think, that the process did involve debates over some key legal points, and some evaluation by me, of the relative rights related to those points. It got us to getting the deal done sooner, and having a basis for explaining and understanding the outcome.
I’m sure there are many other lessons and pointers I picked up from serving as mediator. Putting this list together has given me a chance to uncover and discuss quite a few of them. I look forward to revisiting these topics in the future, and applying them to my practice regardless of the role in which I am serving.
Friday, August 15th, 2014
A pillar of Virginia workers’ compensation law is the requirement that the claimed injury “arise out of” the claimant’s employment. The Virginia Workers’ Compensation Commission and Virginia appellate courts generally interpret this to mean that there must be a “causal link” between the claimant’s job and his injury. That is, if the cause of your injury is unrelated to your job, your injury is not compensable — even if you were injured while you were doing your job.
While such a scenario can be difficult for laymen to immediately apprehend, there are many cases that illustrate this principle. For instance, injuries resulting from situations as disparate as being struck by lightning, being bitten by a spider, and tripping and falling while rushing to get to work have all been ruled non-compensable because the claimant’s job did not, in a legal sense, “cause” the injuries.
In addition, the claimant bears the burden of proof to show the causal link between his job and his injury. This is a particular pitfall for claimants unrepresented by counsel; injured employees without attorneys may simply not understand that it is up to them to demonstrate to the Commission how the conditions of their jobs caused their injuries.
Because there are so many different ways to be injured by a fall, many of which are not legally considered to “arise” out of a claimant’s employment, the rulings in cases on injuries by falling constitute a large and sprawling area of workers’ compensation law in Virginia. This accumulation of judicial opinions sometimes makes proving compensability for some types of falls more difficult than other types of falls. For example, an injury caused by a simple trip and fall on a staircase is generally not, by itself, compensable. This is for the simple reason that people walk up and down staircases every day outside their employment, and tripping while doing so does not meet the legal threshold for “arising out of” employment.
Conversely, for a long time in Virginia, ladders were expressly recognized by the appellate courts and the Commission as being dangerous “in and of themselves.” This legal recognition allowed, for instance, a workers’ compensation award to a claimant who had injured himself so badly due to a fall from a ladder that he could not recall the fall itself or how it happened. Typically, the Commission or the appellate court would rely on evidence provided by other sources to rule on compensability in such a case, but it was clear that the fact that a fall that started on a ladder gave the claimant a head start on the way to an award, sometimes appearing to give rise to what amounted to an inference of compensability for a fall from a ladder.
A recent decision by the Virginia Court of Appeals seems to have changed this head start. In Grubbs v. Correctional Administration/Commonwealth of Virginia, decided May 13, 2014, the claimant had fallen from a stepladder, but “could not say for certain what specifically caused him to fall.” The claimant’s supervisor had testified that there were defects in the stepladder. The Court of Appeals overruled the Commission’s award of compensability because the unrepresented claimant had failed to carry his burden to show the causal connection between his employment and his injury. The Court’s majority opinion did not mention, let alone discuss, any “inherent danger” posed by ladders. This new case may thus signal a statewide change in the legal analysis of “ladder cases,” and has already affected the determination of cases at the Commission level.
The lesson here for both employers and employees is that merely falling off a ladder may no longer be sufficient to persuade the Commission of compensability. Accordingly, both sides in a ladder case will want to take care to determine whether the claimant can prove that something about the ladder, or something more broadly associated with the claimant’s job, caused the fall.
Thursday, July 31st, 2014
As an employment lawyer who has represented Virginia businesses for 25 years, I have a different perspective from those persons who advocate that employers stop asking applicants to check a “box” if they had a prior criminal conviction. I recommend that Virginia employers “keep the box.”
To understand this issue better, there are two primary legal concepts to consider. First, the federal Equal Employment Opportunity Commission (EEOC) proclaims that an employer risks a violation of Title VII of the Civil Rights Act if it fails to hire an applicant based solely on the fact that he disclosed a prior conviction (i.e., he “checked” the box). In April 2012, the EEOC published updated enforcement guidance on this topic. An employer’s selection process is also one the EEOC’s top six enforcement priorities.
In other words, the EEOC will initiate litigation against an employer who refuses to hire a person in a protected class (e.g., an African-American) solely because he has checked the box. Accordingly, for decades enlightened employers have included language in their applications immediately after the criminal conviction question along these lines:
If yes, please state the facts including the location, the offense, and the date of the conviction. A conviction does not mean that you will not be hired. Please provide all the facts so that we can evaluate them as to the position for which you have applied.
With this safeguard in place, the employer can then make an “individualized assessment” as to the relevance of the prior conviction(s). Of course, the employer will also be evaluating other facts as to the applicant’s qualifications such as the applicant’s employment history, educational background and any necessary skills.
The second legal concept is known as “negligent hiring.” Depending on the facts, an employer in Virginia can be liable for failing to conduct a reasonable investigation as to an applicant it hires who then harms another person by virtue of the employment. Consider these allegations from a 2012 Virginia case. The employer hired a person to work in a hotel, and allegedly did not perform a background check or ask about the person’s criminal history. The person had previously been convicted of a felony sex crime. The person thereafter raped an 18 year-old hotel maid on her third day on the job. The maid sued the hotel for “negligent hire.” The case settled with the hotel agreeing to pay $675,000 to the former maid.
In sum, I believe it is reasonable and prudent for employers to ask about prior convictions as one factor as to the overall evaluation of the applicant. I know of many Virginia employers who have hired applicants who “checked the box” because of the additional information provided by the applicant (e.g., the conviction was relatively minor and/or occurred a long time ago). Employers should “keep the box.”
Friday, June 27th, 2014
Two partners set out on their own to create a business from scratch, intending to embark on an adventure and fulfill the American dream. Making a little money wouldn’t hurt either.
In the midst of start-up efforts, planning for a split-up or even a management deadlock is rarely at the top of the entrepreneur’s to-do list. However, the longer it takes to address succession issues, the more difficult it may be to reach a mutually acceptable arrangement. It is therefore important for every closely held business owner to devise an “exit strategy” tailored to his or her needs. For ease of reference, the examples here assume a two-owner 50/50 voting structure.
There are several ways to plan for the future in the context of a closely held business, and this article addresses just one option: a Buy-Sell Agreement (or a Cross Purchase Agreement), which is intended to address instances when a closely held business owner is concerned about a possible change in the business’ ownership or wishes to force such a change. This article addresses three significant issues:
(1) The death or disability of an owner;
(2) An owner’s lifetime desire to transfer shares to an unaffiliated third party; and
(3) An owner’s lifetime desire to either buy out another owner or to have another owner buy him out.
Death or Disability of a Shareholder
A succession plan for a closely held business should address the process for the transfer of ownership interests upon the death or disability of an owner.
Upon the death or disability of an owner, the remaining owner would be required to purchase the ownership interest of the deceased or disabled owner at a value to be determined. To help fund each owner’s obligation to purchase the ownership interest of a deceased or disabled owner, each owner could be required to purchase life insurance on the other owner’s life. The purchase price for the ownership interest of the deceased or disabled owner could be determined by any number of methods including an appraisal, a formula, or the proceeds of life insurance on the deceased owner’s life.
Right of First Refusal
A Buy-Sell Agreement may also grant each owner a right of first refusal upon the other owner’s desire to sell his all or part of his ownership interest. If any owner desires to sell any portion of his ownership interest (the Selling Owner), the other owner (the Non-Selling Owner) will have a right to force the Selling Owner to sell his or her ownership interest to the Non-Selling Owner.
The purchase price for an owner exercising his or her right of first refusal will typically be a function of any bona fide offer received or made by a Selling Owner to transfer the Selling Owner’s ownership interest. The Non-Selling Owner would be required to purchase the Selling Owner’s ownership interest at the price and on the terms and conditions of the bona fide offer.
Importantly, the Non-Selling Owners would have the option and not the obligation to purchase the Selling Owner’s ownership interest. If, within a specified timeframe, the Non-Selling Owner choses not to purchase the Selling Owner’s ownership interest, the Selling Owner may sell his or her ownership interest to a third party.
“Russian Roulette” Provision
The Russian Roulette provision (or what my colleague likes to call a “Candy Bar” provision) offers an owner an opportunity to buy out, or to be bought out by, the other owner in the event of a deadlock in management. This provision offers each owner the chance to trigger a mechanism which will result in one owner buying out the other owner, effecting a complete ownership shift.
So, how would this work? Either owner may deliver notice (the “Initiating Owner”) of his or her exercise of the Russian Roulette provision to the other owner (the “Responding Owner”). The notice will contain a purchase price at which the Initiating Owner offers to either buy the Responding Owner’s ownership interest or sell the Initiating Owner’s shares to the Responding Owner. In other words, the Initiating Owner breaks the candy bar in half, and the Responding Owner chooses which half to eat.
The Russian Roulette provision is a last resort provision, but provides owners of closely held businesses a way out of a tricky deadlock situation.
In conclusion, whether you are starting a business or maintaining a successfully run business, a prudent entrepreneur should consider all succession options available before it’s too late.
Saturday, June 21st, 2014
This article, written by Gentry Locke attorneys William R. Rakes, Gregory J. Haley, and Abigail E. Murchison, was a Virginia CLE presentation to attendees of an event sponsored by the Advanced Business Litigation Institute in Charlottesville, Virginia on June 21, 2014.
Due to the length of the article, it is provided in PDF format here.
Introduction
The topic of trying breach of contract cases from the defense perspective is huge. This outline addresses recurring themes and topics in defending these cases. The content reflects the personal experiences of the authors and the “lessons learned.” Many of the comments below may seem obvious, but most of the suggestions are based on observations of obvious things that competent parties fail to do.
Business litigation involves complicated evidence about issues that are not familiar to jurors (or judges) including business practices, technical issues, industry practices, and related tax and accounting issues. The task of defense counsel is to make the evidence and law make sense to the jury. The trial is where the facts, law and the fact-finder’s common sense all come together. There will be competing narratives and claims of victimhood or villainy. The defense counsel must develop a coherent strategy and then execute that strategy while grappling with the opposing party, the court, and his or her own client.
The defense must be relentlessly realistic in evaluating the facts and the evidence. At trial, defense counsel must be the truth-teller in the room and the source of consistently reliable and accurate information. It is a simple reality that many cases with a lopsided plaintiff’s victory were poorly defended. It is often the difficult cases that get tried; i.e., those cases with tough liability issues, large damages, and/or difficult personalities involved. Defense counsel, however, must implement a defense strategy that manages and minimizes risk, not a strategy that maximizes risk by antagonizing the court and creating avoidable “all or nothing” decisions.
For cases which appear (at least in hindsight) to be examples of defense strategies that increased risk, see: Prospect Development Company v. Bershader, 258 Va. 75 (1999) (affirming award of discretionary attorney’s fees of $151,000 on an award of $34,000 with equitable relief; aggressive defense tactics noted); and Condominium Services, Inc. v. First Owner’s Association, 281 Va. 561 (2011) (affirming punitive damages award of $275,000 associated with a $91,000 breach of contract and conversion claims; aggressive business tactics and weak counterclaims noted).
Read the full article here.
