Monday, December 3rd, 2007
This article appeared in the Blue Ridge Business Journal on December 3, 2007. A formatted PDF is available under the Additional Reading section.
Economic Incentives for Sustainable Real Estate and Development Practices
Federal, state, and local governments are responding at an ever-increasing rate to our country’s growing concern for our impact on the environment. Many incentives and programs provide businesses and individual landowners the ability to make environmentally conscious land use and development decisions without sacrificing profitability.
Conservation easements allow landowners to realize significant tax benefits while preserving and protecting the agricultural, scenic, or natural resources of their land from future subdivision or commercial development. Qualified conservation easements may entitle the easement donor to a federal tax deduction for 2007 of 50% of the donor’s adjusted gross income. Additionally, any unused portions of the donations made in 2007 may be carried forward for deductions for an additional fifteen years. Conservation easement donors may receive reductions in estate taxes and in local real estate taxes. Finally, Virginia, unlike most states, offers a tax credit of 40% of the easement value that can be applied against state income taxes for the next ten years. Unused tax credits may be sold or given to other Virginia taxpayers.
State and federal brownfield programs promote the redevelopment of abandoned or impacted commercial or industrial properties where real or perceived environmental contamination limits continued use. Revitalizing brownfields enables the community to both remediate contamination and reuse existing properties, thereby decreasing sprawl into suburban and rural areas. The Virginia Department of Environmental Quality’s site-screening services and Voluntary Remediation Program allow for rehabilitation of brownfields without threat of future state environmental actions. In addition, the federal government provides tax incentives for brownfield revitalization, including deductions for qualified cleanup costs, fully deductible in the year incurred. To promote brownfield redevelopment, the City of Roanoke was awarded a Revolving Loan Fund grant of $1,000,000 in May 2007 to fund low- or no-interest loans for cleanup activities at brownfield sites throughout the region.
Numerous other incentives exist for the use of green building and business practices. The Commonwealth of Virginia allows any county, city, or town to exempt solar energy equipment or recycling equipment from local property taxes for residential, commercial, and industrial properties. The City of Roanoke has taken advantage of this exemption for properties with new and existing solar equipment. Similarly, under the federal Energy Star guidelines, home builders may be eligible for a $2,000 tax credit for a new energy efficient home. Owners and designers of new or existing commercial buildings are also eligible for tax deductions for energy efficient heating and cooling systems.
These are but a few of the many opportunities currently available for individuals and business seeking to lessen their impact on the environment while maintaining profitability and property value. With greater public participation in these programs we are likely to see even more incentives to encourage sustainable real estate and business practices.
Monday, September 10th, 2007
This article appeared in the Blue Ridge Business Journal on September 10, 2007. A formatted PDF is available under the Additional Reading section.
Q: I am considering leasing commercial space. The landlord has given me his standard “form” lease. How do I know whether the terms are reasonable?
A: First of all, there is no such thing as a generic “form” lease. I will touch on a few of the more common provisions commercial tenants should consider negotiating in order to protect their interests.
Right to Cure (Correct) a Default. “Failure to pay rent within 10 days after the due date is a default under the lease.” What happens if, due to vacation or a clerical mix-up in your office, the rent check is received late? If local rental rates are on the rise, the landlord may declare a default and attempt to terminate the lease in order to rent to a new tenant at higher rates. You should insist on written notice and at least a 10-day opportunity to cure any default before the landlord may exercise any remedies.
Alterations. “Tenant shall not make any alterations or improvements without Landlord’s prior written consent.” As with any issue where landlord’s consent must be obtained, you should require that consent not be unreasonably withheld or delayed. Also consider including categories that don’t require consent, such as cosmetic and non-structural alterations.
Repairs. If the landlord is responsible for roof repairs, you should make sure this includes the interior ceiling, if damaged by leakage. If you do not want to be responsible for replacing the HVAC system, resurfacing the parking lot, or repairing a ruptured sewer line, the lease should specify that these are the landlord’s obligations. In addition, if the landlord does not make required repairs within a certain amount of time, you should have the right to make the repairs and be reimbursed by the landlord.
Renewal. “This lease will automatically renew for successive one-year periods unless either party gives the other at least 60 days’ notice of termination.” This provision seems innocent enough, but you should consider negotiating an option to renew at your sole discretion. If the landlord gives you a 60-day notice to quit at the end of the initial term, you will be forced to either move or renegotiate at a higher rental rate if you want to stay. If the landlord insists on this provision, you should consider changing the timeframe to 120 days, since 60 days may not give you enough time to find another location and negotiate a new lease.
These are just some of the many issues to consider when reviewing the lease with your attorney. Other important issues include assignment and subletting, insurance, indemnification, access, surrender, condemnation, casualty and signage, among others. Negotiation will lead to a more balanced and reasonable lease. Good luck!
Tuesday, June 26th, 2007
This article appeared in the Blue Ridge Business Journal on June 26, 2007. A formatted PDF is available under the Additional Reading section.
The most important equipment on your company’s trucks may be the tires. The phrase “where the rubber hits the road” is particularly important when discussing 18-wheelers.
The following seven tips should decrease the likelihood of an accident caused by truck tires:
- Check for correct air pressures. Drivers should have an accurate pressure gauge and be instructed to check the tires on their truck each day.
- Conduct a visual inspection of your vehicle’s tires prior to operation. Look for signs of irregular wear in the tread or shoulder of the tire and examine the tire for bubbles or bumps caused by air infiltration or foreign objects.
- Check the vehicle’s owner’s manual or the vehicle load and tire information placard to determine precise air pressure. It should provide initial data on the weight of the vehicle and standard load.
- Never weld or apply heat to the wheel when the tire is mounted. This can cause serious damage to tires and can cause them to explode, causing personal injury.
- Store tires properly when they are not in use. Place them in a cool, dry place away from direct sunlight to avoid premature aging.
- Avoid mixing tires on your vehicle – for example, avoid pairing a normal tread depth with a deep tread depth or a bias-ply tire with a radial.
- Be sure to wash your tires. This helps prevent premature aging of the tires and deterioration of the rubber.
Rapid tire wear and tire debris on highways is often caused by improperly inflated tires. Let’s leave the “alligators” in Florida.
Monday, May 7th, 2007
This article appeared in the Blue Ridge Business Journal on May 7, 2007. A formatted PDF is available under the Additional Reading section.
Q: Our company has a confidentiality policy that, among other things, prohibits employees from discussing their pay with other employees. Is such a policy lawful?
A: Probably not. Most employers have policies in their employee handbooks or otherwise concerning the business need to keep certain information “confidential.” A recent federal appeals court decision, however, found that one company’s policy was overbroad and unlawful.
Cintas Corporation published the following policy in its employee handbook:
We honor confidentiality. We recognize and protect the confidentiality of any information concerning the company, its business plans, its [employees], new business efforts, customers, accounting and financial matters.
Employees could be disciplined for violating this policy.
The DC Court of Appeals recently affirmed a decision from the National Labor Relations Board that this policy violated the National Labor Relations Act (the “NLRA”). Cintas v. NLRB, 2007 U.S. App. Lexis 6075 (D.C. Cir. Mar. 16, 2007).
Although the NLRA is better known for its regulation of matters involving labor unions, it contains certain provisions that apply to all workplaces. For example, Section 7 of the NLRA provides that employees have the right to “engage in other concerted activities for the purpose of…mutual aid or protection.” 29 USC Section 157. The Courts and Labor Board have consistently held that an employee has a right under Section 7 to discuss his wages and other terms and conditions of employment with other employees.
In the Cintas case, the Appeals Court concluded that the Cintas confidentiality policy violated the NLRA because “employees would reasonably construe the language to prohibit Section 7 activity.” Specifically, the Court focused on the language that prohibited the discussion of “any information concerning…employees” and found that such language was overbroad. Moreover, the Court concluded that the fact that no employee had been disciplined under the policy was irrelevant.
Practical Recommendations for Employers: As a result of this decision, all employers should review the language in their confidentiality policies. Employers should avoid sweeping definitions of confidential information that could preclude employees from discussing “any information regarding employees” or “all information concerning the Company.” Policies should be narrowly tailored so that they will not prohibit employees from discussing their wages or other terms and conditions of employment.
Monday, April 23rd, 2007
This article was published in the Blue Ridge Business Journal on April 23, 2007.
Many contractors, suppliers, and owners hear and use the phrase “put a lien on property” and wrongly think that filing a mechanic’s lien provides instant relief to the party seeking to be paid. That is hardly the case, as there are few areas of the law so fraught with rules and issues that make recovery on a mechanic’s lien quite difficult.
Mechanic’s liens provide a means by which contractors and suppliers may obtain a security interest in real property they improved, and ultimately compel the sale of the property to pay for the improvements they provided. Portions of Virginia Code Title 43 govern mechanic’s liens on private projects (liens are not effective on public projects) located in Virginia. Courts strictly construe the statutes dealing with the existence and perfection of a mechanic’s lien.
Generally, a lien can be filed for the construction, removal, repair or improvement of any permanent building or structure and for rental value of equipment used. However, in a situation where a tenant orders work, a lien will not be good unless the lessor ordered or authorized the work.
The mere filing of a mechanic’s lien alone does not automatically entitle the lienor to payment, or the sale of the property. These are a number of issues that make recovering on a mechanic’s lien difficult:
- Timing: The memorandum of mechanic’s lien must be filed not later than 90 days from the last day of the month in which the claimant last performs labor or furnishes material, and in no event later than 90 days from the time the building, structure, or railroad is completed, or the work thereon otherwise terminated.
- What amounts to include: Including within the mechanic’s lien amounts not permitted by Virginia law will invalidate the entire lien. The lien cannot include sums due for labor or materials furnished more than 150 days prior to the last day on which labor was performed or material furnished to the job preceding
the filing of such memorandum (unless those amounts are for retainage).
- Notice: Failure to provide the requisite notice to the correct persons will also invalidate the lien. Here, whether the claimant provided proper notice will depend on whether the claimant is a general contractor or subcontractor/supplier.
- Property: A lien claim may fail where the claimant liens the wrong property, or includes within the mechanic’s lien property that the claimant did not improve.
Friday, February 16th, 2007
Amendments to the Federal Rules of Civil Procedure governing the discovery of electronically stored information (“ESI”) went into effect on December 1, 2006. Barely a month later, on January 12, 2006, United States District Judge Glen E. Conrad entered the first significant opinion in the Western District of Virginia interpreting the new amendments.
Judge Conrad’s decision in DE Technologies, Inc. v. Dell Inc., Civil Action No. 7:04CV00628, involved patent infringement claims against Dell. The primary issue before the court was whether Dell had produced certain electronic documents “as they are kept in the usual course of business” or in a “reasonably usable” format, as required by Federal Rule of Civil Procedure 34. Judge Conrad overturned key parts of any earlier ruling by the Magistrate Judge who sanctioned Dell for failing to produce the records as they were kept in the ordinary course.
BACKGROUND
DE Technologies, Inc. (“DE”) filed suit against Dell in October 2004, claiming that Dell had infringed two of its patents. On October 5, 2006, DE filed a motion seeking sanctions against Dell for what it alleged were discovery abuses. DE objected to Dell’s use at trial of certain documents that it produced in a format which, according to DE, failed to meet the requirements of the Federal Rules of Civil Procedure.
A. Dell’s Electronic Production Format.
The fifty-seven pages of documents at issue (the “Documents”) were responsive to various of DE’s discovery requests. They had been available for DE’s review on Dell’s CaseData System (“CaseData”) for more than 12 months when the sanction motion was filed. CaseData was an electronic database that Dell had used to produce approximately 543,000 documents to DE by exporting them from its internal document management systems.
Documents on CaseData were word searchable. However, while Dell’s internal document management systems included an electronic directory, CaseData did not have a live electronic directory. The Magistrate Judge found that Dell produced no evidence to show that it had identified the information it placed on CaseData as being responsive to any particular discovery request.
B. Federal Rule of Civil Procedure 34.
DE argued for a sanction that would prohibit Dell from being allowed to rely on the Documents at trial because, among other things, it did not properly identify and produce them pursuant to Fed. R. Civ. P. 34(b) prior to the discovery deadline.
Prior to December, 1, 2006, Fed. R. Civ. P. 34 (b) provided:
A party who produces documents for inspection shall produce them as they are kept in the usual course of business or shall organize and label them to correspond with the categories in the request.
Effective December 1, 2006, Fed. R. Civ. P. 34 (b) provides:
(i) a party who produces documents for inspection shall produce them as they are kept in the usual course of business or shall organize and label them to correspond with the categories in the request;
(ii) if a request does not specify the form or forms for producing electronically stored information, a responding party must produce the information in a form or forms in which it is ordinarily maintained or in a form or forms that are reasonably usable; and
(iii) a party need not produce the same electronically stored information in more than one form.
As both Judge Conrad and the Magistrate Judge acknowledged, Rule 34 does not explain what “in a form or forms in which it is ordinarily maintained” is intended to mean. The Documents had been posted to CaseData in September 2005, nearly 15 months before the Federal Rules changed.
THE MAGISTRATE JUDGE’S ANALYSIS
This sanction motion asserted that Dell had not met the requirements of Rule 34 by making the Documents available on CaseData. The Magistrate Judge agreed and granted DE’s motion. The Magistrate Judge entered an order dated October 17, 2006 barring Dell from using certain documents at trial to support any claim or defense for which it bore the burden absent further order of the court. Three days later, Dell filed a Expedited Petition and Motion for Reconsideration of this decision to the extent that it prevented Dell from using the Documents in its case in chief.
In ruling on Dell’s motion to reconsider, the Magistrate Judge found that Dell arguably had complied with Rule 26. She also found, however, that while Dell kept and produced the Documents in electronic form, it did not produce them as “kept in the usual course of business” or as “ordinarily maintained.” The Magistrate Judge found Dell did not make the Documents available as it kept them internally, but rather downloaded them onto CaseData, a specially created electronic database. Although CaseData documents were word searchable, they were not organized or indexed in a manner responsive to DE’s discovery requests. As such, the Magistrate Judge found DE was given no notice that Dell would rely on the Documents to support a particular claim.
Based on this analysis, the Magistrate Judge denied Dell’s motion to reconsider in a Memorandum Opinion dated December 4, 2006. This denial was the subject of Judge Conrad’s decision.
THE COURT’S ANALYSIS
Judge Conrad, by contrast, concluded that “Dell provided the documents in a way that fulfilled all of its discovery obligations” to DE, finding Dell had disclosed the documents to DE in accordance with Rule.
The court held that Rule 34 does not require that documents be produced in a format identical to that in which they are kept, and concluded that “Dell’s production was appropriate.” It cited authority from other jurisdictions for the proposition that electronic documents could be produced in hard copy format. The court found that the primary difference between CaseData and the format in which Dell maintained the Documents internally was that the CaseData lacked a “live electronic directory.” Given that the Documents, as produced via CaseData, were word searchable, the court determined that Dell had satisfied its obligation to produce information as it was kept in the usual course of business. The court also noted that electronic information produced in a word searchable format was more useful to DE than a hard copy production would have been.
The court further held that Dell produced the documents in a manner that was reasonably useable, again focusing on the fact that the documents were word searchable. “This was sufficient to allow DE to use the material and determine which documents were responsive to its requests.”
Finally, the court observed that, if DE were dissatisfied with the CaseData production format, it could have filed a motion to compel. The court noted that DE’s Reply in Opposition cited several instances in which the company had complained about the CaseData format. Nonetheless, because DE had failed to take the intermediate step of filing a motion to compel, and absent violation of a court order, the court was unwilling to sustain discovery sanctions
Vinson & Elkins serves as patent counsel to Dell in this case, and associated William R. Rakes, a partner with the Roanoke, Virginia law firm of Gentry Locke Rakes & Moore, as trial counsel. If you have questions regarding this case or the E-Discovery rules, please contact William R. Rakes, W. David Paxton or James J. O’Keeffe, IV.
Monday, January 29th, 2007
This article appeared in the Blue Ridge Business Journal on January 29, 2007.
On a construction site, who can potentially be cited for the violation of an OSHA standard? Can a general contractor, architect, or even the owner of the project be cited if another entity’s employee is injured or exposed to a dangerous condition? Is the Virginia Department of Labor & Industry presently issuing such citations?
Under regulations adopted by the Virginia Department of Labor & Industry relating to “multi-employer worksites,” any number of entities working on a construction site can be cited for an OSHA violation, even if that entity does not have an employee injured or placed at risk of harm. Under this regulation, a citation will be usually first be “issued to an employer whose employee is exposed to an occupational hazard.” That entity is referred to as the “Exposing Employer.”
In addition, though, other entities with a presence or involvement at the site may be cited under certain circumstances. If an employer is the one “who actually creates the hazard,” it can be cited as the “Creating Employer.” That could be, for example, a subcontractor that incorrectly erects scaffolding on a project for others to use.
If an entity is the one “responsible…for safety and health conditions on the entire worksite, and has the authority for ensuring that the hazardous condition is corrected,” that employer can be cited as the “Controlling Employer.” A typical example is a general contractor who fails to correct a violation by a subcontractor. In some cases, even design professionals with a presence on a construction site have been cited under this approach. Owners of a construction site have also been cited where, for example, they control dangerous apparatus located nearby to on-going renovation work.
Note, however, that under the federal OSHA guidance that should apply to any such Controlling Employer citation in Virginia, it has been clarified that “the measures that a controlling employer must take to satisfy its duty to exercise reasonable care to prevent and detect violations is less than what is required of an employer with respect to protecting its own employees.” This evaluation takes into account a number factors, including whether the controlling employer, usually a general contractor, has exerted sufficient oversight of the exposing employer, usually a subcontractor, based upon the subcontractor’s safety sophistication and safety history.
A third category of “other” entities who can be cited is referred to as the “Correcting Employer.” That would be the entity “who has the responsibility for actually correcting the hazard,” but failed to do so, thus subjecting someone else’s employee to injury or risk of harm.
For a period of time from mid-2005 through September of 2006, the Virginia Department of Labor & Industry stopped issuing “multi-employer citations,” as the result of a court ruling that held that such an approach did not have a statutory or regulatory basis in Virginia. With the September, 2006 adoption of a “multi-employer citation” regulation, Controlling, Creating, and Correcting Employers are once again at risk for being cited for OSHA violations where they do not have employees injured or subjected to a risk of harm.
Understanding the regulation (which does not just apply to construction projects), educating project and field personnel, good recordkeeping, and communication with other entities working on the job site with you are all crucial to avoiding multi-employer worksite OSHA liability.
Tuesday, January 2nd, 2007
The full article is available in pre-formatted PDF format under the Additional Reading section.
INTRODUCTION
Changes to the Federal Rules of Civil Procedure, which became effective December 1, 2006, now require the parties and their attorneys to come to grips quickly with the discovery of “electronically stored information” (“ESI”). These new Federal Rules put a fine point on the need for law firms (and their business clients) to become familiar with and conversant about their clients’ use of computers and other electronic devices where ESI is stored. Planning for and educating businesses before litigation arises, particularly the IT staffs and managers in large corporations, about the impact of these new litigation rules is no longer just a “good idea,” but has become a necessity. Clients must understand that all data that is created and stored becomes possible evidence, and a plan should be in place to deal with such data before litigation arises.
In its report on new Rule changes, the Judicial Conference noted three specific characteristics unique to ESI:
- The volume of ESI vastly overshadows hard copy documents. Many computer systems store information in “terabytes,” each of which represents the equivalent of 500 million typewritten pages of plain text.
- Unlike paper, computer information is dynamic. Merely turning a computer on and off can change the information, sometimes without the operator even knowing it.
- Some ESI can be incomprehensible when separated from the system that created it.
These characteristics of ESI mean that well established, standard practices followed by many companies for the past 40 years in responding to a federal lawsuit (including engaging in discovery) are no longer adequate. A failure to appreciate the scope of the obligation will greatly increase the cost of litigation, and in some situations result in problems that directly impact the outcome of litigation. Attorneys and companies ignore these new Federal Rules at their peril.
Tuesday, November 21st, 2006
The EEOC’s revised EEO-1 report has been approved by the Office of Management and Budget, and becomes effective September 30, 2007. The EEO-1 is an anonymous report the EEOC uses to track the number of women and minorities in certain broad occupational categories. All private employers with 100 or more employees, as well as some federal contractors with 50 or more employees, are required to file an EEO-1 report annually. Employers will be expected to use the new form for the report due September 30, 2007. Until that time, employers are to use the previous EEO-1 form.
The new EEO-1 report includes changes to its race and ethnic categories, as well as changes to the job categories for employees. The changes to the race and ethnic categories include: (1) the addition of a new category for “Two or more races;” (2) splitting the “Asian or Pacific Islander” category into an “Asian” category and a “Native Hawaiian or other Pacific Islander” category; (3) renaming the “Black” category to “Black or African American;” and (4) renaming the “Hispanic” category as “Hispanic or Latino.”Employers are also strongly encouraged to allow employees to self-identify their races or ethnic groups.
As for the occupational categories, the “Officials and Managers” category has been split into two levels: (1) “Executive/Senior Level Officials and Managers,” which are defined as those who “plan, direct and formulate policy, set strategy and provide overall direction,” and who, in larger organizations, are within two levels of the CEO; and (2) “First/Mid-Level Officials and Managers,” which are defined as those who “oversee day-to-day operations” and “direct implementation or operations within specific parameters set by Executive/Senior Level Officials and Managers.”Also, business and financial occupations have jumped from the “Officials and Managers” category to the Professionals” category.
Tuesday, November 21st, 2006
The debates over immigration and border security have renewed focus on “English-only” policies. Across the country, efforts to formally make English the “national language” of the United States are gaining momentum. Earlier this year, the Senate overwhelmingly voted in favor of designating English the “national language” (63-34) to “promote national unity.” More recently, a town just outside of Dallas, Texas made national headlines for unanimously approving tough, local anti-immigration measures, including a provision naming English the town’s official language. Now, some companies are jumping on this bandwagon. Geno’s Steaks, a landmark cheese steak restaurant in Philadelphia, recently made national news for adopting an English-only ordering policy, posting a sign telling its customers, “This Is AMERICA: WHEN ORDERING ‘SPEAK ENGLISH.'”
Companies, however, must be mindful not to get caught up in this debate. Just because Congress is contemplating making English the national language of the country does not mean that private companies can do the same thing for their businesses. An “English-only” rule can be unlawful national origin discrimination prohibited by Title VII of the Civil Rights Act of 1964. Under Title VII, an employer may only adopt an English-only rule for its employees in very limited circumstances justified by “business necessity,” such as in the interest of employee safety. Also, for an English-only rule to be non-discriminatory, it must be narrowly tailored to meet the business necessity identified by the company. For example, if a company adopts an English-only rule to promote safety on an assembly line, it cannot require employees who do not work on that line to speak only English. Federal law also prohibits national origin discrimination against customers in “places of public accommodation,” such as restaurants and hotels. (Obviously, Geno’s did not get that memo).
Companies considering adopting English-only rules must take care. The Equal Employment Opportunity Commission carefully scrutinizes complaints of discriminatory English-only rules. Companies must be prepared to provide a legitimate justification for an English-only rule, as well as evidence to support the necessity of such a rule. Companies would also be well advised to consult an experienced attorney before adopting any such policies to avoid costly litigation down the road. In the case of Geno’s, local Hispanic groups are already planning a lawsuit. I’m sure Geno’s lawyers will appreciate the business.
If you have any questions about English-only rules, contact the Employment team at Gentry Locke at 540.983.9300.
