CMM is proud to share that Joe Campolo has been chosen as the honoree for the 2015 Suffolk County Girl Scouts Golf Classic & Grand Cocktail Reception on July 27. 2015 at the Nissequogue Golf Club. We invite you to join us for a day on the greens. Proceeds from the Girl Scouts’ Golf Classic will provide scholarships for children for STEM programs.
Yvonne Grant, President/CEO of the organization shared that they are “delighted to honor Joseph, as his impressive tenure of community service and giving back to others aligns with our mission of building the strong, confident leaders of tomorrow.”
Please join us on Thursday, March 31 for a complimentary seminar on Secured Transactions, presented by managing partner Joe Campolo. This survey on the ins and outs of security interests will cover attachment, perfection, default, remedies, and tips for drafting security agreements. Attendees will receive crucial guidance on the role of Article 9 of the Uniform Commercial Code in corporate transactions.
The course has been submitted for credit approval (1.5 Professional Practice, 0.5 Skills) in accordance with the requirements of the New York State Continuing Legal Education Board. Approval is pending. This course is appropriate for both newly admitted and experienced attorneys.
A light dinner will be served.
Thursday, March 31, 2016 5:00 – 7:00 p.m. Campolo, Middleton & McCormick, LLP 4175 Veterans Memorial Highway, Suite 400 Ronkonkoma, NY 11779
This seminar is free but registration is required. Please RSVP to Lauren Kanter-Lawrence, Esq., Director of Communications, at Lkanter@cmmllp.com or (631) 738-9100, extension 322.
SPower, the entity seeking to construct a 9.5 MW solar electrical generating facility on a 60 acre portion of the Delalio sod farm in Shoreham, along Route 25A, recently sent a brochure to the community touting the environmental benefits of the project, its ability to eliminate fluctuating prices for electricity during peak usage, its benefits for the environment, and why a buffer of trees around the facility will “protect the local viewshed and maintain the rural character of the area.” How can anyone be against this project and doesn’t opposing it make you “anti-environment”? Opposition to this project is based on there being a better solar alternative that won’t eliminate altogether 60 acres of open space, the existing viewshed, and the existing agricultural use which the Brookhaven Town Code’s Planned Conservation Overlay District expressly states must be preserved. Putting solar panels on roof tops (“distributed solar power”) can provide the same benefits to the environment, without the adverse impacts caused by huge commercial projects, at a fraction of the cost to LIPA and its ratepayers. Supporting distributed solar power is most assuredly a pro-environment position.
PSEG-LI recently concluded that the reliability of LIPA’s electrical system can be maintained without additional power sources until 2024. Why then are LIPA and PSEG-LI moving full speed ahead with negotiating 11 Power Purchase Agreements (“PPAs”) for 122.1 MW of commercial solar power at significantly inflated cost compared to purchasing power on the open market, and say they will soon release a new Request for Proposals for another 160 MW of commercial solar power? These PPAs will require LIPA to purchase all the power from these commercial facilities for 20 years at a fixed cost of approximately $0.17 per kWh, more than twice the cost of power on the open market. After 20 years, LIPA and its ratepayers will pay approximately $360,000,000 more for the commercial solar power than they would for open market power. The proposed 9.5 MW solar facility proposed by SPower in Shoreham is even worse – LIPA has guaranteed it will pay SPower $0.22 per kWh generated for the next 20 years, almost three times the cost of power on the open market.
The State has set a goal of having 20% of power from renewable sources by 2025. But why rush into commercial solar contracts at high prices now when that goal may be able to be achieved by 2025 with rooftop solar systems at a fraction of the cost to LIPA, and without any of the negative aspects of commercial solar systems such as high energy cost, and loss of large tracts of open space? LIPA expects to eliminate rebate incentives for rooftop solar systems altogether within two years because the cost will be low enough so that incentives no longer will be needed to encourage rooftop systems to be installed. LIPA will then receive all the power from these rooftop solar systems at virtually no cost to LIPA. Nevertheless, LIPA prefers the long term high priced contracts because it wants to avoid the loss of revenues suffered when power from solar systems installed on roofs is credited to the system owner.
Dare I say anything negative about solar? It is crazy to rush into overpriced 20 year contracts for commercial solar power when no more power is needed for at least ten years. If enough people install solar systems on their roofs in the next few years, the length of time until more power is needed by LIPA to maintain reliability will be further extended, and the power from the commercial solar systems may no longer be needed. Regardless, ratepayers will pay the inflated cost for commercial solar for twenty years if these 20-year contracts are signed.
Whether LIPA likes it or not, the ever declining cost of rooftop solar systems and the increasing efficiency of lighting and appliances will cause LIPA to lose more revenue every year. Whatever the solution to this problem may be, the answer cannot be to enter into 20 year fixed contracts at inflated prices for solar power that may never be needed. Indeed, if you examine your monthly LIPA bill, and divide the monthly charge by the number of kWhs you used, you will see that you are paying about $0.22 per kWh to LIPA to cover all of its monthly costs for power, transmission lines, maintenance, taxes, and revenue lost from renewable energy and energy efficiency. Only a fraction of what you pay goes to pay for electricity. By agreeing to pay SPower $0.22 per kWh for all the solar power it generates for the next 20 years, however, LIPA will then have to find the funds to cover all the other costs it has for expenses other than acquisition of electricity. At the end of the day, the ratepayers will have to pay for this shortfall.
In addition, when LIPA agrees to purchase solar power from huge commercial developers like SPower, the money spent goes out of State. When local companies install roof-top systems, the money goes to local companies, and the money saved by the owners of roof-top systems by reason of their monthly LIPA charges being significantly reduced gets spent right here, in our communities.
One of the arguments made in the lawsuit challenging LIPA’s and PSEG-LI’s approval of a PPA for SPower’s 9.5 MW commercial solar system is that the approval occurred without any environmental review at all. If a Draft Environmental Impact Statement had been prepared, alternatives, such as distributed rooftop solar systems, would have had to be considered in depth. No such review took place.
LIPA and PSEG-LI have the luxury of time. The commercial solar projects and their long term inflated costs can wait; proper planning must come first. Slow down – and get it right.
To protect shareholders, in certain circumstances the law places liability upon corporations and their directors and officers for damages caused by conduct harmful to shareholders or conduct that breaches fiduciary duties. Just the way car owners and homeowners have insurance to protect themselves from potential liability claims against them, corporations and their directors and officers can have similar protection. Directors’ and Officers’ (“D&O”) liability insurance protects individual directors and officers, as well as their corporations, defending against claims of wrongful conduct specified in the coverage and losses incurred to a corporation directly in connection with those claims.
In the underwriting process, in addition to setting the premium amount, the potential D&O insurer may also review a corporation’s governance and business practices, and may even suggest changes to be made prior to the issuance of such coverage. As with everything in business, the purchase of such insurance may require a cost-benefit analysis.
Insurers typically offer three different coverages. The first of these coverages compensates individual directors and officers when a corporation does not satisfy certain debts on their behalf. The second protects corporations when they indemnify their directors and officers for such claims. The third coverage protects the corporation from its own liabilities. None of these coverages defend or indemnify against allegations of fraud, acts that took place prior to the date coverage began, or suits between the corporation and its directors or officers. Nevertheless, all three of these coverages provide safeguards and help to manage the risk of liability. The D&O policy usually covers settlement amounts, legal fees, and compensatory damages that would otherwise have to be paid by the corporation or its officers and directors directly.
The one general standard that D&O insurance protects against are mis-steps by the corporation or its officers and directors. Even though the corporation and its employees can rely upon the business judgment rule as a defense to lawsuits, if a suit is based upon a decision or act which is rationally based, there are still risks, litigation may be protracted, and the cost of defending a lawsuit can be high. D&O insurance allows corporations to make rational business decisions without the fear of sustaining costs and expenses that could harm or even shut the business. As a result, it may be an important decision for a corporation as to whether to purchase D&O insurance.
The answer is one of my great attorney answers: “It depends.” In general terms, there is no gift tax in New York. So for the remaining part of the discussion, we will be focusing on federal gift and estate taxes.
It’s actually what’s referred to as a uniform gift and estate tax. That means you have a $5.43 million exemption. Whatever you don’t give away during your lifetime, you can give away (tax-free) upon your death. The IRS just wants to keep tabs on what you give away during your lifetime so they know how much of an exemption you have left when you die.
With respect to gifting, there are really two “trigger points” as far as the IRS is concerned. The first is if you give more than $14,000 in cash, property or gifts to anyone within the tax year, you must report the gift to the IRS. It doesn’t matter whether you made the gift to family members or total strangers. But whether you have to pay a gift tax will depend on the total amount of gifts that you’ve made during your lifetime. That’s trigger number two.
You also need to remember that it’s only the gift giver that may have to file the IRS form and report the gift. The person giving the gift, not the recipient, is responsible for paying the tax. And, as a side note, from the recipient’s point of view, gifts from family and friends are not considered income, so there’s no income tax. That’s true no matter how high the value of gifts you receive in a given year.
That $14,000 worth of assets each year you gift is called the annual exclusion and you don’t have to tell the IRS about it – so no gift tax form. Any gift above this amount will count against your lifetime exemption from gift or estate tax.
If you exceed this exemption amount (sometimes called the “unified credit” or the “basic exclusion”) you could wind up owing gift tax of 40% or more. Even if you don’t, remember that your lifetime gifts reduce how much you can pass tax‑free through your estate plan.
Now a great thing about married couples is that the usual limits on lifetime gifts don’t apply. If your spouse is a U.S. citizen, there’s an unlimited marital deduction for most gifts, even if they exceed the annual exclusion amount and you generally are not required to file a return.
Another important tax break is that married couples can combine both their annual exclusions. This is called gift‑splitting. By using the annual exclusion this way, they can jointly give away up to $28,000 to as many people as they want each year without dipping into the $5.43 million lifetime allotment. Ordinarily couples must then file a gift tax return and consent, on each other’s returns, to gift‑split. And because we’re talking about gifting under the federal laws, all these rules now apply to legally married, same‑sex couples.
If you pay a friend or family member’s tuition, dental or medical expenses (including health insurance premiums), it won’t count against either the annual exclusion or your $5.43 million exemption, and you won’t have to file a gift tax return. The only catch is that you must make those payments directly to the service provider, such as the school, doctor or insurance company. This is a great way for parents or grandparents to lower their estate and tax liabilities.
As far as filing the actual gift tax form, if you didn’t file gift tax returns for past tax years, it’s never too late to file one. As a general rule, you have until the IRS catches the problem. And besides, if you’re not liable for gift tax, there’s no penalty for late filing.
Keep in mind that since the $5.43 million lifetime exemption from gift tax and any gift tax you pay are cumulative, you must keep the returns indefinitely. Your heirs need them to calculate the tax, if any, on your estate. And the most likely time for the IRS to flag unreported gifts or to question the value of the gifts you made is after you die. So, do everyone a favor and make sure you leave all the documentation behind.
Most companies assume that any intellectual property (IP) created by their employees in connection with their job duties automatically become the employer’s property. This assumption, however, is often incorrect, and can lead to lengthy and costly disputes. Generally, an employer’s right to IP created by an employee depends on the circumstances of the employee’s hire and whether the employer and employee entered into an agreement that fully assigns the IP to the employer.
Companies seeking to avoid disputes and secure all IP rights to the inventions created by their employees should ensure that the employees have signed an Inventions Assignment Agreement (sometimes also known as Assignment of Inventions Agreement).
Without an agreement, although specific laws differ from state to state, the following general principles apply: (1) for employees employed to invent (i.e. engineers and scientists), the inventions are generally owned by the employer even if the employee did not sign an agreement; (2) for general employees (i.e. sales and marketing), who have not been hired specifically to invent, the general rule is that the employee owns such inventions if there is no agreement that provides otherwise; and (3) for general employees whose inventions do not relate to the business of the employer, these inventions are generally owned by the employee if no invention assignment agreement is signed.
However, the above common law rights may be superseded there is an express and enforceable Inventions Assignment Agreement. Accordingly, it is in the company’s best interest to require its employees to sign an agreement that clearly sets forth the employer’s rights in and to the inventions.
A carefully drafted Inventions Assignment Agreement would help ensure the employee-inventor’s rights are assigned to the company. Without a clear agreement on the assignment of inventions, the employer is taking a large risk which can result in a dispute over ownership.
Medical providers must plan now to comply with New York’s new “Surprise Medical Bill” law, which takes effect April 1, 2015. In short, for “surprise bills,” the law caps a patient’s financial responsibility for out-of-network medical services to an amount no greater than if the patient saw an in-network provider. Medical providers who do not comply with the mandatory disclosures under the law will find their bills classified as “surprise bills,” which means that they must pursue arbitration directly with the insurance carrier to obtain reimbursement. For surprise out-of-network medical bills, medical providers may not pursue reimbursement directly from the patients.
New York’s law, the toughest in the nation, was included as part of the Governor’s Executive Budget Bill in 2014 (S.6914, A.9205). The law is a response to endless horror stories from individuals who thought they received treatment from in-network providers, but who later received bills from out-of-network providers such as anesthesiologists, radiologists, pathologists, assisting surgeons, etc., who did not participate in a patient’s insurance plan. After receiving meager, if any, reimbursement from insurers, these out-of-network providers then send large bills to patients, who must pay out of pocket. Various consumer advocacy groups claim that surprise medical bills have been one of the largest causes of consumer bankruptcy.
The law places new requirements on insurers to ensure that they provide an adequate network of providers for members to receive medical care, as well as “fairer” out-of-network reimbursement methodologies. Insurers in many cases have moved away from reimbursing out-of-network services as a percentage of the “usual and customary rate” and have instead adopted a percentage over Medicare rate reimbursement, such as paying 140% of the Medicare rate for a particular service. Using the Medicare rate scale, out-of-network services now result in much lower reimbursements from insurers, leaving patients liable for much larger coinsurance or “balance billing” liabilities, since medical providers are required to bill patients for the balance of what insurance does not cover for out-of-network services.
In order to receive greater reimbursement for out-of-network services, medical providers must preserve their ability to seek full reimbursement from patients after insurance has paid its portion. To preserve this ability, providers must comply with the New York State Public Health Law, which added a new Section 24.
This section provides:
Providers shall disclose to patients or prospective patients in writing or through an internet website the health care plans in which the provider participates and the hospitals with which the provider is affiliated. This disclosure must be done prior to providing non-emergency services, and the information must be conveyed verbally at the time an appointment is scheduled;
Providers who do not participate in a patient’s insurance plan shall, prior to providing non-emergency services, inform a patient that the amount or estimated amount that the provider will bill the patient is available upon request; and upon such a request the provider shall provide such an estimate in writing to the patient. The provider must also identify insurance plans in which physicians at a hospital who are reasonably expected to provide services to a patient, such as anesthesiologists, radiologists, and pathologists.
While these disclosure requirements seem onerous, failure to comply will likely lead a provider’s out-of-network bill to be classified as a “surprise bill,” and thus require the provider to seek reimbursement from the insurer only.
A “surprise bill” is defined in the new Article 6 added to the New York State Finance Law. Section 603(H) provides:
“Surprise Bill” means a bill for health care services, other than emergency services, received by:
An insured for services rendered by a non-participating physician at a participating hospital or ambulatory surgical center, where a participating physician is unavailable or a non-participating physician renders services without the insured’s knowledge, or unforeseen medical services arise at the time the health care services are rendered; provided, however, that a surprise bill shall not mean a bill received for health care services when a participating physician is available and the insured has elected to obtain services from a non-participating physician;
An insured for services rendered by a non-participating provider, where the services were referred by a participating physician to a non-participating provider without explicit written consent of the insured acknowledging that the participating physician is referring the insured to a non-participating provider and that the referral may result in costs not covered by the health care plan; or
A patient who is not an insured for services rendered by a physician at a hospital or ambulatory surgical center, where the patient has not timely received all of the disclosures required pursuant to Section 24 of the Public Health Law.
Providers should prepare prior to April 1, 2015 in order to avoid having their bills for out-of-network services falling under the “Surprise Bill” definition in the new law. Proactive steps include:
Update your practice’s website and marketing materials to include all insurance plans in which a practice participates;
Prepare office staff to make required disclosures when booking appointments;
Get familiar with plan affiliations of physicians to whom you regularly refer patients;
Prepare cost estimates for commonly-treated conditions to provide to out-of-network patients.
In prior months, I have discussed cases involving businesses pursuing lawsuits against former employees due to perceived violations of, among other things, non-compete and/or non-disclosure agreements, as well as alleged misappropriation of trade secrets. While the former employer is usually the one to commence the lawsuit, there are times when the former employee may also fight back with claims of his or her own. This is exactly what happened in a recent case out of the New York County Commercial Division. Luckily for the employer, certain of the former employee’s claims were dismissed.
In the case of International Publishing Concepts, LLC v. Locatelli (J. Bransten), International Publishing Concepts, LLC (“IPC”) commenced a lawsuit against one of its former salespeople, Thierry Locatelli (“Locatelli”). IPC is a company that publishes books and magazines for placement in hotels. IPC generates revenue by selling advertising within the publications themselves. Locatelli was a salesperson for IPC for approximately five years, beginning in 2007, and generated significant revenue for IPC during the time he was employed.
In mid-2012, Locatelli left IPC and allegedly began to compete against the company, which led to a significant drop in sales. IPC alleged that Locatelli used similar materials in an effort to mislead IPC’s clients to do business with him instead. IPC commenced the lawsuit against Locatelli alleging claims for breach of fiduciary duty, fraud, unjust enrichment, tortious interference, unfair competition, and theft of corporate opportunity. After IPC commenced the lawsuit against Locatelli, Locatelli served an Answer containing counterclaims against IPC for defamation, among other things. Locatelli alleged that IPC forwarded several disparaging emails and letters to Locatelli’s clients, which caused him to lose business and damaged his reputation. Locatelli also commenced a third party action against the president and CEO of IPC for the same defamation claim as alleged against IPC.
As it turns out, the letters that were forwarded to two of Locatelli’s clients by email were actually letters from IPC’s counsel in this lawsuit. The first letter was originally sent to IPC’s President and addressed the firm’s analysis of the claims against Locatelli and provided the firm’s recommendations as to what claims and relief to pursue. [As an aside, it is unclear if the law firm was okay with its client sending out an attorney-client privileged communication, but it is not something that would be recommended regardless of intent.] The second letter was a “cease and desist” letter from IPC’s counsel to Locatelli which essentially restated the legal claims against Locatelli for engaging in violative conduct. It was these letters and the emails forwarding them that formed the basis for Locatelli’s defamation counterclaim and third party claim.
IPC and IPC’s President sought to dismiss the defamation counterclaim and third party claim respectively, among other relief. In reviewing the defamation claim under New York law, the Court noted that Locatelli would have to establish that there was “(1) a false statement, (2) published without privilege or authorization to a third party, (3) constituting fault as judged by, at a minimum, a negligence standard, and (4) it must either cause special harm or constitute defamation per se.” Frechtman v. Gutterman, 115 A.D.3d 102, 104 (1st Dep’t 2014).
The Court ultimately held that the defamation claim must be dismissed because the statements contained in the letters and forwarding emails were protected by “absolute privilege,” “qualified privilege,” and were also non-actionable statements of opinion rather that actionable assertions of fact.
The Court held that the absolute privilege applied because the statements made in the letters were made by individuals participating in a public function such as a judicial proceeding. Because the statements made were pertinent to the litigation, absolute privilege applied and the defamation claim could not stand.
The Court held that qualified privilege also applied because both parties (the communicating party and the receiving party) had an interest in the communications and Locatelli could not establish that the communications were made with spite or ill will or with knowledge that the statements were false or made in reckless disregard for the truth.
Lastly, the Court held that the statements in the letters were merely non-actionable opinions rather than actual assertions of fact. Considering that the letters merely contained statements of IPC’s lawyers’ beliefs and opinions, rather than statements of fact, the defamation claims were dismissed on that ground as well.
While the defamation claim was ultimately dismissed here, it is important that any business in this type of situation consult with its attorneys before sending out potentially inflammatory communications, especially attorney-client privileged communications. The claims asserted by Locatelli, which include tortious interference claims that were not part of the motion to dismiss, potentially could have been avoided if IPC sought the advice of its counsel before forwarding letters to Locatelli’s clients. It is unclear if IPC consulted with its attorneys here, but it does not appear so based on the facts presented by the Court.
Bridgehampton Teachers Get Hair Buzzed to Benefit Local Family
By Mara Certic
Bridgehampton School seniors Jada Pinckney, Daniel Denton and Hayley Lund were called up to finish history teacher John Reilly’s new ‘do as part of a fundraising event for a family in the district. Photo by Michael Heller.
The last day of school before vacation tends to be an exciting one, as academics take a backseat to fun activities in most classrooms for the last few hours before that week of freedom. That was the case on Friday, February 13, at the Bridgehampton School where students prepared themselves for the chance of a lifetime—the opportunity to shave a teacher’s head.
In an effort to raise money for a family in the school district, Bridgehampton High School History teacher John Reilly decided that it was once again time to give schoolchildren the opportunity to pay money for the chance to shave his flowing locks in front of the entire school.
Mr. Reilly has previously allowed his students to give him a buzz, and this year, when he heard that the father of a first grader was battling cancer and unable to work, he didn’t hesitate to offer up his coiffed ‘do in order to raise some money.
“My hair is less important than their need,” Mr. Reilly said on Friday afternoon, shortly after he had been shorn.
The history teacher, whose mane looked like it belonged on the head of a Romantic poet, mysteriously went “missing” moments before he was scheduled to sit for his hair cut. Eric Bramoff, the school’s athletic director, asked the gathered students call out to Mr. Reilly to try to find him.
“I saw him in the hallway, maybe he’s nervous,” one second-grader shouted over the screams of “Mr. Reilly” punctuated by rhythmic claps that echoed throughout the gymnasium.
A mysterious character with long, flowing blonde locks ran in at one point and sat in the designated barber’s chair, much to the confusion of some of the children. It was not a golden-haired maiden, as some had believed, but in fact music teacher David Elliot, who had donned the shining wig.
After more chanting from the students, a reluctant Mr. Reilly emerged from another room.
“There’s just not enough money in the pot,” he said as he explained he had cold feet and was second-guessing his decision.
Just as disappointed groans started to become audible throughout the gym, Mr. Bramoff made an offer he couldn’t refuse.
Would he change his mind if the new athletic director bought another ticket for every student in the gym? Could that $175 sway his decision?
Apparently so, as Mr. Reilly sat down and lucky students were called up to begin buzzing his hair.
Charles Manning Jr., Janatan Braia, Franky Bonilla, Melissa Villa and Michael Smith were all called up to begin the trimming process.
The school’s three senior classmen were also called upon to participate in the haircut, which raised a total of $760.
Campolo, Middleton & McCormick donated $100 when it heard of Mr. Reilly’s plans.
In a shock last-minute decision, just as students were starting to file out of the room, Mr. Bramoff announced he was going to let his girls JV basketball team shave his head too, in order to get the total up to an even $1000.
The team, which is new this season, gleefully took up the challenge and quickly gave their basketball coach a haircut that might just as well be known as the “Reilly” at Bridgehampton School.
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