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In a Victory for the Election Process, CMM Secures Certification of Election Results as Special Counsel to Village of Poquott

Posted: July 20th, 2017

In its role as Special Counsel to the Village of Poquott and Of Counsel to the Village Attorney for the Village of Poquott, Campolo, Middleton & McCormick, LLP, a premier law firm with offices in Ronkonkoma and Bridgehampton, successfully secured the certification of the results of the recent village trustee election.  The outcome is a victory for the Village of Poquott and the election process.

Although Poquott officials maintained that the Suffolk County Board of Elections certified the final vote tallies in the June 20 election, Deborah Stevens, a candidate who lost her bid for one of the two open trustee seats by two votes, challenged those results in a lawsuit in Supreme Court, Suffolk County, seeking a re-canvass and/or correction of alleged errors concerning certain contested ballots.  On behalf of the Village, CMM moved by order to show cause to dismiss the lawsuit by Stevens and certify the findings of the Suffolk County Board of Elections, declaring John Richardson and Jeffrey Koppelson the winners of the election.  CMM persuasively argued that the numerous deficiencies in Stevens’s petition required its dismissal.

After a conference with the Court, the parties reached an agreement that CMM’s motion on behalf of the Village of Poquott to certify the election results would be granted, certifying that Richardson and Koppelson won the open seats.  Further, Stevens agreed to withdraw her petition.

CMM partner Scott Middleton, who handled this matter on behalf of the Village, said of the outcome, “I don’t know what motivated this lawsuit, but the Village took it very seriously.  This is the right result for the voters of the Village of Poquott under the Election Law of New York State.”

About CMM
Campolo, Middleton & McCormick, LLP is a premier law firm with offices in Ronkonkoma and Bridgehampton, New York. Over the past generation, CMM attorneys have played a central role in the most critical legal issues and transactions affecting Long Island. The firm has earned the prestigious HIA-LI Business Achievement Award and LIBN Corporate Citizenship Award, a spot on the U.S. News & World Report list of Best Law Firms, and the coveted title of Best Law Firm on Long Island. Learn more at www.cmmllp.com.

Photo by Arnaud Jaegers on Unsplash

Middleton quoted in Newsday article “Poquott Candidate Drops Suit Challenging Election Results”

Posted: July 20th, 2017

 

A Poquott trustee candidate who fell two votes short in her bid for a seat on the village board has withdrawn her lawsuit challenging the outcome of the June 20 vote.

Debbie Stevens dropped her lawsuit against the village earlier this week after lawyers determined that legal papers filed by her attorney lacked details needed for the case to go forward. A hearing was to have been held Thursday before state Supreme Court Judge John J. Leo in Central Islip.

Incumbent trustee Jeff Koppelson and candidate John Richardson had defeated Stevens and two other candidates in voting last month.

Stevens said in an interview Wednesday she dropped the lawsuit because “I think this is what’s best for the village.”

“I didn’t want the village to be quote-unquote shut down and blamed on me,” she said. “I’m not through fighting. I’m just doing what I think is best.”

Stevens, a spa owner, said she had not decided whether she would run again for a seat on the village board.

In an email, Mayor Dolores Parrish said she was “happy it is over. I am looking forward to moving forward in the village.”

Richardson, a New York City firefighter, took the oath of office last week from Village Clerk Joseph Newfield after he insisted on being sworn in to begin his two-year term.

Newfield said Koppelson was sworn into his second two-year term Tuesday after Stevens discontinued her lawsuit. Newfield said the village board will meet at 5 p.m. Thursday. The village board has not held meetings while officials awaited the outcome of Stevens’ lawsuit.

Stevens and her attorney, George Vlachos of Central Islip, had asked in the lawsuit for a recanvass of the 379 ballots cast in the election — alleging that Poquott officials had allowed some people to vote though they had not registered at least 10 days before the election, as required by law.

Poquott officials denied wrongdoing and said the vote was certified by the Suffolk Board of Elections.

Scott Middleton, a Ronkonkoma lawyer and partner at Campolo, Middleton & McCormick who represented the village in Stevens’ lawsuit, said her legal papers contained “deficiencies,” such as failing to name the four other trustee candidates among parties potentially affected by the lawsuit.

“I don’t know what motivated this lawsuit,” Middleton said. “The village took it very seriously.”

Middleton said the omissions in Stevens’ lawsuit were discussed last week during a conference with the judge. After the meeting, Middleton said, Vlachos notified him that Stevens would drop her suit. Vlachos could not be reached for comment Wednesday.

Read it on Newsday.

CMM Represents Applied DNA Sciences, Inc. in Agreement with Himatsingka America, Inc. to Bring Molecular Traceability to Home Fashions Worldwide

Posted: July 13th, 2017

Campolo, Middleton & McCormick, LLP represented Applied DNA Sciences, Inc. (NASDAQ: APDN) in the negotiation of an agreement with textile manufacturer Himatsingka America, Inc. to incorporate the company’s molecular tag technology, SigNature® T, in products sold to retailers such as Bed Bath & Beyond and Costco where source-traceable product is now available nationwide and online.

Applied DNA Sciences provides DNA-based supply chain, anti-counterfeiting and anti-theft technology, product genotyping, and product authentication solutions.  SigNature T is a molecular tag that attaches to cotton fiber at the gin, ensuring reliable traceability and verification throughout an entire supply chain. SigNature T enables verification that Pimacott®-branded products sold to consumers, including comforters, pillow cases, and shams, are made from pure Pima cotton, grown in the San Joaquin Valley, California. It also powers the Himatsingka-branded “HomeGrown™ – Cotton Proudly Grown in the USA” cotton products verifying traceability to gins in Arkansas, Texas, and California.

“Today, consumers care deeply about where their products originate.  With our technology, retailers and brands can be confident that the products on their shelves are true to the label,” said Dr. James Hayward, President and CEO of Applied DNA Sciences.

“One of the thrills of working on Long Island is when you can represent one of its gems,” said Joe Campolo, Managing Partner of Campolo, Middleton & McCormick.  “Applied DNA Sciences, under Jim Hayward’s leadership, is a truly innovative company and this deal will help bring product transparency to millions of consumers.”

Learn more about the important work of Applied DNA Sciences at adnas.com.

September 12 – CMM Business Breakfast: Labor & Employment Update featuring Irv Miljoner of U.S. Department of Labor

Posted: July 10th, 2017

Event Date: September 12th, 2017

Labor & Employment Update: What Businesses Need to Know

Wage and hour updates, paid family leave, social media in the workplace, and enforceability of non-compete agreements, to name a few: evolving practices and policies pose a challenge to employers trying to stay ahead of the changes.  Join us for our annual Labor & Employment Update to hear from a panel of experts about new laws and regulations affecting the workplace, and learn the specific steps your business should take to prepare for compliance.  Don’t miss the opportunity to hear directly from the Department of Labor as well as representatives from the legal, accounting, and human resources fields about the critical labor and employment updates that affect your business.

Moderator: Joe Campolo, Esq., Managing Partner, Campolo, Middleton & McCormick, LLP

Panelists:

Date: Tuesday, September 12, 2017

Location: Hotel Indigo Long Island – East End, 1830 W Main St, Riverhead, NY 11901

Agenda:
8:00 – 8:30 a.m. – Registration, continental breakfast & networking
8:30 – 10:00 a.m. – Panel discussion and Q&A

Register here.

Co-hosted and Sponsored by Markowitz, Fenelon & Bank

MFB, Markowitz, Fenelon & Bank, LLC

 

Eisenbud quoted in Newsday article “Wheatley Heights Residents Again Object to Colonial Springs Plan”

Posted: June 30th, 2017

By Denise M. Bonilla
denise.bonilla@newsday.com


Photo credit: Barry Sloan

Wheatley Heights residents expressed anger and disbelief this week that they are still fighting the development of an apartment complex more than a decade after the project was first proposed.

The residents spoke out Wednesday at a Babylon Town Board public hearing on the rezoning of 16.09 acres of Colonial Springs Farm from single-family home zoning to multiple-residence. Property owner Gustave Wade wants to build 264 one- and two-bedroom rental units on the southern portion of his 32-acre site, the town’s last working farm.

“I feel a little like Yogi Berra, it’s déjà vu all over again,” said attorney Fred Eisenbud, who spoke on behalf of the Concerned Taxpayers of Wheatley Heights/Dix Hills, a civic association.

In 2001, Wade proposed rezoning to build 494 senior units and 100 assisted-living spaces on the 32-acre parcel. In 2004, he sought to build 264 senior apartments and 149 co-op units. In 2006, the town board approved Wade’s application to build 56 single-family homes on the site.

“I don’t understand why we’re back here,” said resident Lystra Gaddy. “This was done. As far as I’m concerned this is disrespectful to our community.”

As with past rezoning attempts, residents have protested the current proposal, saying the development is too dense and will negatively impact their community.

“I’m appalled that this is being entertained,” said Darlette McFarlane. With the latest proposal “we still have the traffic problems, the environmental problems, just the quality-of-life issues that have not been resolved, and we’re still coming back to this.”

Wade, who lives in East Northport, cited a recent Long Island Association report stating that more than 515,000 millennials live on Long Island. Those residents, who are between the ages of 20 and 34, are spurring the need for more rentals, Wade said.

“Long Island’s future is in the hands of the millennials who are getting out of college and looking for a place to live,” he told the town board. “This board has the ability to keep the millennials here.”

David Fliegel, of New Hyde Park, is one of those millennials, and he told the board he favors the project because a lack of affordable rentals has forced him to live 25 miles from his job.

“I would like to remain on the Island and continue my future here, but at this moment I frequently debate jumping ship,” he said. The rentals proposed would cut down his commute, which he said “would help improve my quality of life.”

But residents said that unlike other apartment projects being built around Long Island, Wade’s is not near a train station or downtown.

“Young people want restaurants and night life and easy access to the railroad station,” said Patty Marshall. “That doesn’t exist here.”

The town will continue to accept comments on the proposed project until June 26.

Read it on Newsday.

Supreme Court Settles Important Taking Question

Posted: June 29th, 2017

On June 23, 2017, in Murr v. Wisconsin, the U.S. Supreme Court addressed whether adjacent properties owned by the same owner may be combined for purposes of determining if there has been a regulatory taking without compensation.

The Court ruled that a Wisconsin regulation preventing the owners of two adjacent parcels from selling or developing one of the two parcels did not effect a regulatory taking without compensation of the parcel which could not be sold or developed because takings analysis permitted the adjacent parcels be combined under the facts presented to determine if the regulation went too far.  Justice Kennedy wrote the decision for the 5-3 majority decision, and Justice Roberts filed a dissenting opinion arguing there was a taking requiring compensation in which Justices Alito and Thomas joined.

The Constitution does not bar the government from taking private property; it merely requires that it be done for a “public purpose” and that it pay “just compensation” to the owner.[i]  For many years, it was thought that the taking clause applied only to direct appropriation of property, or the functional equiva­lent of a practical ouster of the owner’s possession, like the permanent flooding of property.[ii]  In 1922, in Pennsylvania Coal Co. v. Mahon,[iii] however, the Supreme Court recognized that “while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.” Thus, the Mahon Court recognized that a regulation may be so burdensome as to become a taking, but it did not formulate more detailed guidance for determining when this limit is reached.

While subsequent cases dealing with alleged regulatory takings were based on the facts of each case, two guidelines evolved to guide case-by-case analysis:

First, “with certain qualifications . . . a regulation which ‘denies all economically beneficial or productive use of land’ will require compensation under the Takings Clause.” Palazzolo v. Rhode Island, 533 U. S. 606, 617 (2001) (quoting Lucas, supra, at 1015). Second, when a regulation impedes the use of property without depriving the owner of all economically beneficial use, a taking still may be found based on “a complex of factors,” including (1) the economic impact of the regulation on the claimant; (2) the extent to which the regulation has interfered with distinct investment-backed expectations; and (3) the character of the governmental action.[iv]

Even though the complete deprivation of economic use generally is deemed a “categorical” taking requiring compensation, the relevance of state law and land-use customs can lead to a contrary conclusion.  The complete deprivation of use will not re­quire compensation if the challenged limitations “inhere . . . in the restrictions that background principles of the State’s law of property and nuisance already placed upon land ownership.”[v]

The Court in Murr stated that regulatory taking analysis “must reconcile two competing objectives central to regulatory taking analysis.”  One is “the individual’s right to retain the interests and exercise the freedoms at the core of private property ownership,” and the other “is the government’s well-established power to “adjus[t] rights for the public good.”[vi]  In all instances, the analysis must be driven “by the purpose of the Takings Clause, which is to prevent the government from ‘forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.’” [vii]

This brings us to the issue before the Supreme Court in Muir, stated by the Court to be as follows:[viii]

This case presents a question that is linked to the ulti­mate determination whether a regulatory taking has occurred: What is the proper unit of property against which to assess the effect of the challenged governmental action? Put another way, “[b]ecause our test for regulatory taking requires us to compare the value that has been taken from the property with the value that remains in the property, one of the critical questions is determining how to define the unit of property ‘whose value is to fur­nish the denominator of the fraction.’” Keystone Bitumi­nous Coal Assn. v. DeBenedictis, 480 U. S. 470, 497 (1987) (quoting Michelman, Property, Utility, and Fairness, 80 Harv. L. Rev. 1165, 1992 (1967)).

Here are the basic facts presented to the Supreme Court.  The petitioners are four siblings who own two parcels along the St. Croix River.  This River originates in northwest Wisconsin, and travels 170 miles until it intersects with the Mississippi River, forming a boundary between Wisconsin and Minnesota.  The St. Croix expands in southern Wisconsin and forms Lake St. Croix, recognized for its “picturesque grandeur.”  In 1960, petitioners’ parents purchased a parcel along the River referenced as “Lot F,” and built a recreational cabin on it.  In 1961, petitioners’ parents transferred title to Lot F to the family plumbing business.  In 1963, petitioners’ parents purchased adjacent parcel “Lot E” which they took title to in their own names.  Lot E has approximately 60 feet of river frontage, and Lot F has approximately 100 feet. Though each lot is approximately 1.25 acres in size, because of the waterline and the steep bank they each have less than one acre of land suitable for development. Even when combined, the lots’ buildable land area is only 0.98 acres due to the steep terrain.

Under the Wild and Scenic Rivers Act, the St. Croix River was designated, by 1972, for federal protection.[ix]  The law required the States of Wisconsin and Minnesota to develop “a management and development program” for the river area.[x] In compliance, Wisconsin authorized the State Department of Natural Resources to promulgate rules limiting development to “guarantee the protection of the wild, scenic and recreational qualities of the river for present and future generations.”[xi]

For the area where petitioners’ property is located, the Wisconsin rules prevent the use of lots as separate build­ing sites unless they have at least one acre of land suitable for development.[xii] A grand­father clause relaxes this restriction for substandard lots which were “in separate ownership from abutting lands” on January 1, 1976, the effective date of the regula­tion.[xiii] The clause permits the use of qualifying lots as separate building sites. The rules also include a merger provision, however, which provides that adjacent lots under common ownership may not be “sold or developed as separate lots” if they do not meet the size requirement.[xiv] The Wisconsin rules require localities to adopt parallel provisions, so the St. Croix County zoning ordinance contains identical restrictions.   The Wisconsin rules also authorize the local zoning authority to grant variances from the regulations where enforcement would create “unnecessary hardship.”

The lots remained under separate ownership, with Lot F owned by the plumbing company and Lot E owned by petitioners’ parents, until transfers to petitioners. Lot F was conveyed to them in 1994, and Lot E was conveyed to them in 1995.

A decade later, petitioners wanted to move the recreational cabin to a different location on Lot F, and wanted to sell Lot E to finance the work.  Because the lots were then under common ownership, and the lots separately did not meet the minimum size requirements, petitioners sought a variance, but were denied.

Petitioners then sought compensation in State Court, claiming the regulations deprived them of “all, or practically all, of the use of Lot E because the lot cannot be sold or developed as a separate lot.”  Appraisals established the following values of the parcels, separately and combined:  $698,300 for the lots together as regulated; $771,000 for the lots as two distinct buildable properties; and $373,000 for Lot F as a single lot with improvements and approximately $40,000 for Lot E as an undevelopable lot, based on the counterfactual assumption that it could be sold as a separate property.

Summary judgment was granted the State, and the Court of Appeals affirmed.  It found that petitioners could not reasonably have expected to use the lots separately because they were “‘charged with knowledge of the existing zoning laws’” when they acquired the property. Thus, “even if [petitioners] did intend to develop or sell Lot E separately, that expectation of separate treatment became unreasonable when they chose to acquire Lot E in 1995, after their having acquired Lot F in 1994.” The court also discounted the severity of the economic impact on petitioners’ property, recognizing the Circuit Court’s conclusion that the regulations diminished the property’s combined value by less than 10 percent. The Supreme Court of Wisconsin denied discretionary review, and the U.S. Supreme court granted review.

The Supreme Court affirmed the Wisconsin’ court’s finding that there was no taking.  It was careful to state, however, that there is no categorical rule that “property rights under the Takings Clause should be coextensive with those under state law.”  This view, the majority found, would improperly grant to “States the unfettered authority to ‘shape and define property rights and reasonable investment-backed expectations,’ leaving landowners without recourse against unreasonable regulations.” [xv] In addition, such deference could remove improper State regulations from taking review, the Court said, giving as an example a state law inconsistent with reasonable investment backed expectations by consolidating for purposes of takings analysis all properties owned by the same person, regardless of where they are located.[xvi]

Three factors should be considered by a court:  the treatment of the land under state and local law; the physical characteristics of the land; and the prospective value of the regulated land.

First, courts should give substantial weight to the treatment of the land, in particular how it is bounded or divided, under state and local law. The reasonable expectations of an acquirer of land must acknowledge legitimate restrictions affecting his or her subsequent use and dispensation of the property, the Court said.[xvii]  While a valid takings claim will not evaporate just because a purchaser took title after the law was enacted, a reasonable restriction that predates a landowner’s acquisition, can be one of the objective factors that most landowners would reasonably consider in forming fair expectations about their property. In a similar manner, a use restriction which is triggered only after, or because of, a change in ownership should also guide a court’s assessment of reasonable private expectations.[xviii]

Second, the Court found, “courts must look to the physical characteristics of the landowner’s property. These include the physical relationship of any distinguishable tracts, the parcel’s topography, and the surrounding human and ecological environment. In particular, it may be relevant that the property is located in an area that is subject to, or likely to become subject to, environmental or other regulation.”[xix]

Third, and perhaps most important with regard to the facts before the Court, the Court said:

[C]ourts should assess the value of the property under the challenged regulation, with special attention to the effect of burdened land on the value of other holdings. Though a use restriction may decrease the market value of the property, the effect may be tempered if the regulated land adds value to the remaining property, such as by increasing privacy, expanding recreational space, or preserving surrounding natural beauty. A law that limits use of a landowner’s small lot in one part of the city by reason of the landowner’s nonadjacent holdings elsewhere may decrease the market value of the small lot in an unmitigated fashion. The absence of a special relationship between the holdings may counsel against consideration of all the holdings as a single parcel, making the restrictive law susceptible to a takings challenge. On the other hand, if the landowner’s other property is adjacent to the small lot, the market value of the properties may well increase if their combination enables the expansion of a structure, or if development restraints for one part of the parcel protect the unobstructed skyline views of another part. That, in turn, may counsel in favor of treatment as a single parcel and may reveal the weakness of a regulatory takings challenge to the law.

The Supreme Court rejected petitioners’ position that the Court adopt a presumption that lot lines define the relevant parcel in every instance, making Lot E the necessary denominator for determining the percent reduction in value caused by a regulation.   This position, the Court responded, “ignores the fact that lot lines are themselves creatures of state law, which can be overridden by the State in the reasonable exercise of its power. In effect, petitioners ask this Court to credit the aspect of state law that favors their preferred result (lot lines) and ignore that which does not (merger provision).” Further, “This approach contravenes the Court’s case law, which recognizes that reasonable land-use regulations do not work a taking.” [xx]

The Court concluded that “The merger provision here is likewise a legitimate exercise of government power, as reflected by its consistency with a long history of state and local merger regulations that originated nearly a century ago. *** Merger provisions often form part of a regulatory scheme that establishes a minimum lot size in order to preserve open space while still allowing orderly development.”[xxi]

The Court explained the importance of finding that merger provisions do not per se create a taking for which compensation must be paid:[xxii]

When States or localities first set a minimum lot size, there often are existing lots that do not meet the new requirements, and so local governments will strive to reduce substandard lots in a gradual manner. The regulations here represent a classic way of doing this: by implementing a merger provision, which combines contiguous substandard lots under common ownership, alongside a grandfather clause, which preserves adjacent substandard lots that are in separate ownership. Also, as here, the harshness of a merger provision may be ameliorated by the availability of a variance from the local zoning authority for landowners in special circumstances.

Significantly, although the Supreme Court affirmed the conclusion that the two adjacent parcels owned by the petitioners could be merged for purposes of taking analysis, the Court was careful to state that, “To the extent the state court treated the two lots as one parcel based on a bright-line rule, nothing in this opinion approves that methodology, as distinct from the result.”[xxiii]  It thus concluded that the Wisconsin court’s decision that there was no taking in this case should be affirmed, but only because of the facts of the case presented:

Like the ultimate question whether a regulation has gone too far, the question of the proper parcel in regulatory takings cases cannot be solved by any simple test. *** Courts must instead define the parcel in a manner that reflects reasonable expectations about the property. Courts must strive for consistency with the central purpose of the Takings Clause: to “bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” *** Treating the lot in question as a single parcel is legitimate for purposes of this takings inquiry, and this supports the conclusion that no regulatory taking occurred here.

CONCLUSION

The Supreme Court’s ruling in Murr v. Wisconsin provides support for State, County and local laws that employ merger requirements to help protect sensitive properties, or preserve open space.  The lesson to be learned is that adjacent parcels should not be owned by the same person or entity.  If adjacent properties are owned by different persons or entities, and the laws applicable to those parcels change in a way that renders the parcels substandard, generally, they become legal non-conforming parcels which may be developed.  If the adjacent parcels have the same owner, the new zoning or regulation may be fully applicable to the parcels, limiting their economic use.

[i] U.S. Const. 5th Amendment, made applicable to the States though the Fourteenth Amendment.

[ii] Lucas v. South Caro­lina Coastal Council, 505 U. S. 1003, 1014 (1992).

[iii] Pennsylvania Coal Co. v. Mahon, 260 U. S. 393 (1922).

[iv] Palazzolo v. Rhode Island, 533 U. S. 606, 621 (2001), quoting Lucas v. South Caro­lina Coastal Council, 505 U. S. 1003, 1024 (1992).

[v] Lucas v. South Caro­lina Coastal Council, 505 U. S. 1003, 1029 and 1030–1031 (listing factors for courts to consider in making this determination).

[vi] Palazzolo, supra, at 617– 618 (quoting Armstrong v. United States, 364 U. S. 40, 49 (1960).

[vii] Muir v. Wisconsin, Slip Op. at 9.

[viii] Muir v. Wisconsin, Slip Op. at 9 (citations deleted).

[ix] Muir v. Wisconsin, Slip Op. at 2, citing Wild and Scenic Rivers Act, §3(a)(6), 82 Stat. 908, 16 U. S.

  1. §1274(a)(6) (designating Upper St. Croix River); Lower Saint Croix River Act of 1972, §2, 86 Stat. 1174, 16 U. S. C. §1274(a)(9) (adding Lower St. Croix River).

[x] 41 Fed. Reg. 26237 (1976).

[xi] Wis. Stat. §30.27(l) (1973).

[xii] Wis. Admin. Code §§ NR 118.04(4), 118.03(27), 118.06(1)(a)(2)(a), 118.06(1)(b) (2017).

[xiii] Wis. Admin. Code § NR 118.08(4)(a)(1).

[xiv] Wis. Admin. Code § NR 118.08(4)(a)(2).

[xv] Muir v. Wisconsin, Slip Op. at 11.

[xvi] Muir v. Wisconsin, Slip Op. at 11.

[xvii] Muir v. Wisconsin, Slip Op. at 12.

[xviii] Muir v. Wisconsin, Slip Op. at 12.

[xix] Muir v. Wisconsin, Slip Op. at 12.

[xx] Muir v. Wisconsin, Slip Op. at 14-15.

[xxi] Muir v. Wisconsin, Slip Op. at 15-16.

[xxii] Muir v. Wisconsin, Slip Op. at 16.

[xxiii] Muir v. Wisconsin, Slip Op. at 19.

Dodd-Frank Anti-Retaliation: Headed to the Supreme Court?

Posted: June 26th, 2017

The Dodd-Frank Act, signed into law in 2010, established a program for whistleblowing related to securities and commodities law violations.  It created a private cause of action for whistleblowers to sue their employers for retaliation after reporting company misconduct.  However, federal circuit courts are split as to when employees are eligible for anti-retaliation protection under Dodd-Frank.  The answer hinges on whether the SEC must be notified of the potential misconduct or if an internal company complaint will suffice.

The Fifth Circuit, in Asadi v. G.E. Energy (USA), LLC, 720 F.3d 620 (5th Cir. 2013), held that the employee must report information to the SEC to qualify as a whistleblower, whereas the Second Circuit and the Ninth Circuit have held that Dodd-Frank protects internal whistleblowers as well as those who report to the SEC.  See Berman v. Neo@Ogilvy LLC, 801 F.3d 145 (2d Cir. 2015); Somers v. Digital Realty Trust, Inc., 2017 WL 908245 (9th Cir. Mar. 8, 2017) (finding that Somers was wrongfully fired after he complained to upper management that a supervisor violated Sarbanes-Oxley internal-control requirements, but before Somers was able to report the same to the SEC).  On April 26, 2017, Digital Realty Trust, Inc. petitioned the U.S. Supreme Court in hopes of a definitive resolution to the circuit split.  See Digital Realty Trust, Inc. v. Somers, U.S., No. 16-1276.

If the U.S. Supreme Court hears the case and determines that individuals must report to the SEC to be eligible for protection, expect internal compliance programs to be ignored as would-be whistleblowers head straight to the SEC for protection.  Although Dodd-Frank was designed to promote U.S. financial stability and improve financial transparency, absent a definitive ruling from the nation’s high court, an employee lodging an internal complaint could be fired as he or she is dialing the SEC’s number to report misconduct – just in time to render the employee ineligible for anti-retaliation protection under Dodd-Frank.

In the Second Circuit and the Ninth Circuit, employers are not permitted to terminate the employment of anyone who raises an internal complaint about how the company is conducting its business and must proceed with caution, even if the employee should be terminated on other grounds.  If and until the U.S. Supreme Court opines, employees and employers alike should seek legal counsel to advise as to whether Dodd-Frank’s anti-retaliation protections are applicable with respect to internal reporting of alleged unlawful activity.

Note: we are monitoring proposed changes to Dodd-Frank, most of which focus on tax and regulatory relief, and will report on these issues in a future article.

And the Scams Keep Coming

Posted: June 26th, 2017

By: Martin Glass, Esq. email

Tags:

About a year ago I wrote about scams, mainly those against seniors.  I feel compelled to write again since I’ve found some relatively new phone scams, one of which a senior relative of mine was caught up in.

I thought this scam was brand new, but when I talked to some of the seniors that I know, I learned that it has already been around for a few months and is quite prevalent.  A person calls you up and tells you that if you have Medicare, you can get a back brace for free.  Now what senior doesn’t have Medicare?  And what senior doesn’t have some type of back pain?

Sometimes the caller will use the name of an actual company and sometimes just the name of one that sounds real.  The catch is that the phone number they give you is not the number to any actual company.

Once they’ve got you on the phone, the person will explain all the marvelous benefits of the brace.  And since you have Medicare, you don’t have to pay a thing.  You just have to give him the last four digits of your social security number.  You have to do what!?! If not before, that’s when a humongous red flag should go up.  No company should be asking for any part of your social security number over the phone.

If they called you, that means they have not only your name and phone number, but probably also your address – all the things needed to “check your identification” when calling your bank to move money, etc.

So, what do you do if this happens to you or a loved one?  You need to contact the financial institutions that you deal with.  Let them know what happened.  They can put an alert on your account or add additional security such as a secondary password.  You should also call one of the three credit bureaus (Equifax, Experian, or TransUnion).  They have an automated service that will put an alert on your account and let you know if anyone is trying to access your credit.

The other question is: how could you have prevented this to begin with?  That is a harder question because it deals with the nature of seniors.  One habit that they have to break is the need to always answer the phone.  I’ve found this extremely difficult for many seniors.  They just have to know who’s calling them.

Getting a phone (and the service) with Caller ID will help.  But that doesn’t always work because of 800 numbers and cell phones.  So the other thing the new phone needs is memory.  Enter everyone’s cell phone number into the memory.  That way, when the senior looks at the ID, it will say “Bill’s Cell” and not just the phone number.

The third thing the phone needs is a voicemail system that even the least tech-savvy senior can operate.  Many seniors will never use a system where they have to dial into the service to retrieve their messages.  My philosophy is that if someone really wants to speak to me, they’ll leave a message.  But, as I’ll show in a minute, you do have to be a bit leery with voicemails also.

Another suggestion is to get a phone that actually speaks and says who’s calling.  It’s a neat little feature, but the text to voice conversion is not always the greatest.

The biggest thing is to get your loved one to understand that if they do not know who’s calling, DON’T pick up the phone.  Let it go to voicemail.

This brings me to another scam that isn’t limited to seniors – in fact, many attorneys at our firm have gotten this call, myself included.  I received the call on my home phone from someone claiming to be from the IRS.  He said that I owed back taxes and would be arrested if I did not call back to settle my account.  The caller ID was just some random number so I didn’t answer.  The reason that I know about it is that they left a voicemail.  No, I did not call back.  I simply erased the message and never heard from them again.

The fear of being arrested is pretty strong.  This can be even truer for seniors who grew up in other countries.  You need to assure them that the IRS does not call you on the phone and they certainly don’t arrest people for owing taxes.

I could go on and on as there are many more scams out there.  Most of them prey on the senior’s fears, love of their children or grandchildren, or their innocence in thinking that something is for free.  As hard as it is to say, help your loved ones understand that the world we live in is just not that way.

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.

Supreme Court Limits Venue Shopping in Patent Cases

Posted: June 26th, 2017

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The U.S. Supreme Court recently issued a unanimous decision that will limit the controversial practice of “venue shopping” by plaintiffs who pick court locations they believe will be more favorable to their case, and who unnecessarily drag defendants into patent disputes in a faraway venue in the process.  The decision has important implications for businesses that rely on patents to protect their innovation.

For many years, plaintiffs have relied upon a more general venue law that allowed a lawsuit to be filed where the defendant resides or does any business, which led to a disproportionate number of patent filings in the Eastern District of Texas.

The Eastern District of Texas had long been the venue of choice for many plaintiffs because its local practices favor patentees and the district’s rapid litigation timetable can put pressure on defendants to settle.  In the past two years, about 40 percent of all U.S. patent suits were filed in the Eastern District of Texas, with 90 percent of those cases filed by “patent trolls,” or companies that hold patents but do not manufacture or produce anything.

Now, with the recent U.S. Supreme Court decision, plaintiffs will be able to bring patent suits only “where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business” under the patent venue statue, 28 U.S.C. § 1400(b).  As applied to domestic corporations, the term “resides” refers only to the state of incorporation.

The recent decision will likely limit the ability to “shop” for friendly courts – meaning that no longer will defendants be forced to defend patent suits in distant locales adding to cost, complexity, and unpredictability.

Although this decision may minimize the number of filings in the Eastern District of Texas, it may cause an increase of filings in the District of Delaware since many companies are incorporated there.  Nevertheless, the decision is an important step to bring balance back in patent litigation and funnel cases back to the defendants’ home jurisdiction.

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.