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Nov 17 – CMM Bridgehampton Exec Breakfast – POSTPONED

Posted: November 1st, 2014

POSTPONED, New DATE TBD

November 17, 2015

Tax Update
Presented by Thomas Terry, CPA

Join us as Thomas Terry, of Markowitz, Fenelon & Bank discussing the latest developments on federal and New York taxation, including techniques and tax planning ideas – perfect for business owners getting ready to wrap up the year.

Topics include:

Net Investment Income Tax
Affordable Care Act – what it means to the employer and employee
Proposed legislation, including new equipment regulations
Same sex couple developments

EVENT DETAILS:

8:30am – 9:00am
Arrival and Breakfast

9:00am – 9:45am
Presenting Speaker

9:45am – 10:00am
Q&A and Discussion

REGISTRATION: All events are FREE but registration is required. Complimentary breakfast will be served.

LOCATION: CMM’s Bridgehampton office, 2495 Montauk Highway, Bridgehampton

October 2014 Legal Brief – Firm Newsletter

Posted: October 29th, 2014

CMM Opens Office in Bridgehampton

Posted: October 29th, 2014

CMM is proud to announce the opening of a new office in Bridgehampton, New York. The new location enables the firm to further expand its client base into the East End of Long Island and provide easier access to its already existing clients in the Hamptons, and surrounding areas.

The office is located at 2495 Montauk Highway in Bridgehampton. The full range of Campolo, Middleton & McCormick’s services are available to its clients in the Bridgehampton office.

About CMM
Located in both the heart of Long Island and on the East End, Campolo, Middleton & McCormick, LLP is a full-service law firm with the expertise and experience to represent clients with every legal need they may face. We have an established record of results for our clients, who range from individuals to global companies, and approach each matter with a unique understanding of the issues and the highest level of integrity. Learn more at www.cmmllp.com.

Copyright Protection in Selfies Can Help to Prevent Unauthorized Reproduction and Distribution

Posted: October 27th, 2014

Tags: intellectual property, technology

Selfies have become a global phenomenon, but what type of protection does one have to prevent the spread of photos that have been hacked?

We have all heard the story that broke last month about the hundreds of intimate photographs of numerous celebrities, including Kate Upton and Jennifer Lawrence. Although questions are still being raised about the security of cloud storage, copyright law may provide the strongest mechanism to stop the unauthorized dissemination of photos.

A selfie is a self-portrait photograph typically taken using a camera phone or hand-held digital camera. These selfies are typically shared on social networking services such as Facebook, Instagram, and Twitter. As soon as the selfie is taken, it enjoys copyright protection. Copyright protects works of expression fixed in a tangible medium – which is a photograph. There are no copyright formalities needed (i.e. you do not need to display the © emblem) and you do not need to register the photo with the U.S. Copyright Office.

Under Copyright Law, the owner of the selfie would have the right to control and prohibit the reproduction or distribution of the selfie. Anyone making a copy has infringed the copyright.

Although there is a fair use defense to copyright infringement for criticism, comment, news reporting, teaching, scholarship, and research, the selfie owner will have a strong claim for copyright infringement given that the unauthorized use is not likely to fall within the fair use standard. Courts will consider four factors in determining whether or not a particular use is fair: (i) the purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes; (ii) the nature of the copyrighted work; (iii) the amount and sustainability of the portion used in relation to the copyrighted work as a whole; and (iv) the effect of the use upon the potential market for, or value of, the copyrighted work.

Further, although many states, such as New York, have right of publicity laws, they require that the image be used for commercial and business purposes, which is harder to demonstrate when the infringer utilizes the image for artistic purposes.

Accordingly, the strongest potential lies in copyright law. Selfie owners would be wise to avail themselves of the automatic protection provided to them. If the owner obtains an injunction, the selfie can be immediately removed from the public domain, which is likely the primary goal in these circumstances.

How to Limit Fiduciary Duties in Delaware LLC Agreements

Posted: October 10th, 2014

Tags: corporate

On August 1, 2013, the Delaware Assembly passed an amendment to Section 18-1104 of the Delaware LLC Act, expressly providing that corporate director-type fiduciary duties apply by default to LLC managers (and members active in the LLC operations).

The amended statutory language is shown below, with the change underlined.

“§ 18-1104 Cases not provided for in this chapter.
In any case not provided for in this chapter, the rules of law and equity, including the rules of law and equity relating to fiduciary duties and the law merchant, shall govern.”

The amended statue was a response to the Delaware Supreme Court decision, Gatz Properties LLC v. Auriga Capital Corp., C.A. No. 148 (Del. 2012), in which the court stated that the Delaware LLC statute is ambiguous about whether fiduciary duties apply to LLCs by default and urged the Delaware General Assembly to resolve the ambiguity (See bottom of p. 26 in the Decision).
Below is sample language that can be used to limit fiduciary duties for owners and officers of Delaware LLCs and LPs. I’ve modified it slightly because the original language was based on a Delaware Limited Partnership Agreement updated in February 2014, available here.

Duty of Loyalty
(a) The Manager and its principals, partners, directors, officers, members, employees, (the “Manager Agents”) will not be required to devote their full time efforts to the affairs of the Company. The Manager will devote so much of its time and effort in connection with the operations of the Company as in its sole discretion it deems necessary for the management of the affairs of the Company, except as may be required under the Investment Company Act of 1940 and the rules, regulations and orders under the 1940 Act, as amended from time to time, or any successor law.
(b) The Manager and any Member, and any Affiliate of any Member may engage in or possess an interest in other business ventures or commercial dealings of every kind and description, independently or with others, including, but not limited to, acquisition and disposition of Securities, provision of investment advisory or brokerage services, serving as directors, officers, employees, advisors or agents of other companies, Partners of any Partnership, members of any limited liability company, or trustees of any trust, or entering into any other commercial arrangements. No Member will have any rights in or to such activities of any other Member or any Affiliate of any Member or any profits derived from these activities.
(c) The Manager and and the Manager Agents, from time to time may acquire, possess, manage, hypothecate and dispose of Securities or other investment assets, and engage in any other investment transaction for any account over which they exercise discretionary authority, including their own accounts, the accounts of their families, the account of any entity in which they have a beneficial interest or the accounts of others for whom or which they may provide investment advisory or other services.
(d) To the extent that at law or in equity the Manager has duties (including fiduciary duties) and liabilities relating to those duties to the Company or to any other Partner or other Person bound by this Agreement, any such Person acting under this Agreement will not be liable to the Company or to any other Partner or other Person bound by this Agreement for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of the Manager otherwise existing at law or in equity, are agreed by the Members to replace the other duties and liabilities of the Manager.

DUTY OF CARE
(a) The Manager, the Manager Agents and the Members will not be liable to the Company or to any of its Members for any loss or damage occasioned by any act or omission in the performance of the Person’s services under this Agreement, in the absence of a final judicial or arbitral decision on the merits from which no further right to appeal may be taken that the loss is due to an act or omission of the Person constituting bad faith, gross negligence or reckless disregard of the Person’s duties under this Agreement.
(b) Managers and Members not in breach of any obligation under this Agreement or under any agreement pursuant to which such Manager or Member subscribed for Membership Interests will be liable to the Company, any Member or third parties only as required by this Agreement or applicable law.

Market Terms in M&A Transactions

Posted: October 9th, 2014

Tags: M&A

The following checklist is based on a report from the American Bar Association Mergers and Acquisitions Committee, Market Trends Subcommittee, which published a study of 136 private target M&A transactions ranging in size from $17.5 M to $4.7 B, each completed in 2012.

1. Deals with an Earnout: % of deals with an earnout: 25%
2. Length of Earnout: 56% of earnouts last 24 months or less
3. “Material Adverse Effect” defined to include past events that could reasonably be expected to materially adversely affect the target: 93% included.
4. “Material Adverse Effect” excludes “force majeure”-type events (acts of war, general changes in industry, etc): 91% include these types of carveouts
5. “Knowledge” is defined as constructive knowledge as opposed to actual knowledge: 80% constructive knowledge
6. Target’s financials are a “Fair Representation” of Target’s condition:99% include a Fair Representation rep. 22% of those are qualified by GAAP (this qualification is usually beneficial to Seller, if Seller uses GAAP in its financials).
7. Target represents target is in compliance with all laws: 99% include this representation
8. Target represents it has made no untrue statement of material fact or omitted any material fact: 36%
9. When must Representations be Accurate: If signing occurs prior to closing, 57% of deals say representations must be accurate at signing and closing; 42% say at closing only, 1% had no condition.
10. How Accurate must the Representations be:
60% said target’s representations must be accurate “in all material respects”
1% said target’s representations must be accurate “in all respects” without any qualification
39% said target’s must be accurate except for inaccuracies which would not reasonably be expected to give have a material adverse effect on the target
11. “Sandbagging” means Buyer’s right to sue the Seller for breach of a representation or warranty even if Buyer knew of the breach beforehand.
41% of deals permitted this (contained a “Pro-Sandbagging” clause)
10% of deals prohibited this (contained an “Anti-Sandbagging” clause)
49% of deals were silent on this
12. Indemnification Deductible (“Basket”): 59% of deals provided that Seller was not required to indemnify Buyer for aggregate losses less than a certain amount. Of that 59%, 56% of those deals contained a “basket” of .5% or less of the total deal value.

Women Need an Estate Plan

Posted: October 9th, 2014

By: Martin Glass, Esq. email

Tags: elder law, estate planning

I hate to break the news to the guys reading this, but we’re probably going to die before our wives. First off, older women (65+) have a life expectancy of 20.3 years whereas older men only have an expectancy of 17.7 years, according to the CDC.

Add that to the fact that most women marry guys that are two to five years older than themselves, and you’ve got the makings of a wife becoming a widow before the husband has a chance to become a widower.

What that really means is that part of the planning should be to make sure female spouses will be able to live out the remainder of their lives in the standard they have grown accustomed.

I understand gender equality has come a long way in the past few decades, but still, when most people think of estate planning, they think of wealthy older men such as Michael Bloomberg or John Rockefeller. But, when you take into account what was said above, estate planning is a subject which has a significant impact on women.

And to add insult to injury, on average, it is the woman of the family who will end up putting her career on hold for caregiving duties (either to care for young children or aging parents.) This means they will have, less or, no income or assets of their own. Their lower lifetime earnings also means they are far more likely to see their living standards compromised in retirement if proper estate planning isn’t done.

How can women ensure that this doesn’t happen to them? The best answer is for every woman to take an active part in planning her estate. If you are married, talk to your spouse about what will happen to your income and assets if your partner passes away first, leaving you a widow. A loss of income will mean having to spend more of your assets to maintain your lifestyle.

Most married couples that I do planning for have what is typically called “Love me do Wills.” I love you, you love me, whatever I have is yours, whatever you have is mine. When we both die, then the kids get it. And that’s fine. Taking everything we’ve discussed into account, it’s then most likely going to be the wife’s Will that will be controlling where and how the assets go to the kids.

More and more women have some assets in their name only (and if you don’t have assets in your own name, you will if your spouse is the first to pass away). It’s important not only to create a Will for these assets, but also to talk to your family about how these assets should be distributed upon your death. Because estate planning is all about the details, be sure to bring your estate planner into the conversation so you can discuss the issue in specifics, not just generalities.

There are many reasons for being reluctant to start planning your estate: you don’t have time, your partner or spouse generally takes care of the finances, you’re just not a “numbers person” and the most famous, “if I do a Will, I’m tempting fate.” But there’s one overwhelming reason to start: to protect your assets and your future. This isn’t a job anyone should leave to anyone else. Taking charge of your estate means taking charge of your life.

Suggested Handling of the Ebola Outbreak for Employers

Posted: October 9th, 2014

By Christine Malafi

With all of the recent news coverage regarding the Ebola outbreak and its entry into the United States, employers need to be prepared to answer related questions and handle related issues. The CDC has stated that the 2014 Ebola epidemic is the largest in history, affecting multiple countries in West Africa, and advises of the specific symptoms and dangers of Ebola.1

Employers should be aware of the OSHA and CDC guidance available, and should communicate with employees and customers to reaffirm that health and safety concerns are taken very seriously and that all legal actions will be taken to protect them. OSHA has specific guidelines, based on the CDC recommendations, for healthcare workers, airline and travel industry personnel, mortuary workers, lab workers, border and custom workers, emergency responders, and critical sector employees (transportation, pharmacists, etc.) which should be reviewed by employers of those workers.
The following are some steps which may and may not be taken to protect employees, customer, and the public, depending upon the circumstances: 1. Consider work-related travel destinations and require only absolutely necessary business travel to affected geographical areas. 2. Ask employees about travel plans. If an employee intends to travel to a place where they may potentially be exposed to Ebola, then an employer may ask whether the employee had contact with any infected persons, and whether the employee is experiencing any symptoms.
The questions should be limited to avoid inquiry which would require revelation of a disability and violate the Americans with Disabilities Act (ADA).
If an employee has been exposed to Ebola, an employer cannot impose quarantine.
Remind all employees of basic practices which are important during the winter flu season (i.e., washing hands often, getting a flu shot, etc.).
Notify employees of potential hazards of Ebola.
Provide employees with reasonable means to abate the hazards of Ebola. If there is a real fear of contracting Ebola in the workplace, fearful employees may be protected if they refuse to work, and legal counsel should be obtained to help to deal with such a refusal.

If you have any further questions or concerns about the information contained in this Advisory you should not hesitate to contact us.

1 United States Centers for Disease Control and Prevention, www.cdc.gov/vhf/ebola. 2 United States Department of Labor, Occupational Safety & Health Administration, Ebola Control and Prevention, www.osha.gov/SLTC/ebola/control_prevention.html.

Negotiation Skills: Confront Your Anxiety, Improve Your Results

Posted: September 14th, 2014

By: Joe Campolo, Esq. email

Tags: negotiation

A new research study confirms what many of us have suspected: anxiety about a negotiation is likely to work against you.

Published previously in the Harvard Law School Program on Negotiation Daily Blog on November 10, 2014, is an article entitled “Negotiation Skills Confront Your Anxiety Improve Your Results.” The full article can be read here.

Researchers Alison Wood Brooks and Maurice E. Schweitzer of the Wharton School at the University of Pennsylvania have taken a first look at whether anxiety affects negotiators’ outcomes.

In three experiments, the researchers induced anxiety in some of their college student participants by having them listen to frenetic music (the theme from the movie Psycho ) or watch an anxiety-producing film clip about rock climbers. Participants in a neutral condition listened to a piece of classical music or watched a video clip of ocean fish.

Next, the participants engaged in a two-party computerized negotiation simulation involving a buyer and a seller.

In one of the experiments, anxious negotiators didn’t set lower goals than those in the neutral condition, but they did have lower expectations of success, which appeared to become a self-fulfilling prophecy: they made lower first offers, responded more quickly to offers, and achieved less overall.

In another experiment, when negotiators were repeatedly given the option to end the negotiation, anxious negotiators bowed out sooner than those in the neutral condition.

In a fourth experiment, the researchers found that when anxious negotiators were led to believe that their negotiating abilities were strong (whether or not this was actually true), they were not hampered by their anxiety.

The results suggest that negotiators can reduce potentially detrimental anxiety through confidence-boosting training, practice, and thorough preparation.

Simply acknowledging your fears about negotiation is an important first step in turning anxiety into excitement.

http://www.pon.harvard.edu/daily/negotiation-skills-daily/negotiation-skills-confront-your-anxiety-improve-your-results/