Wednesday, December 30, 2015

Hiring and Compliance: Evaluating Candidates and Setting Expectations

Originally published by tfoxlaw.

Today I want to talk about two different techniques that your HR function can use to help the compliance function by honoring two very different yet equally famous baseball players who died on Sunday. The first was Jim O’Toole, who pitched for the Cincinnati Reds in the 1960s and who led their pitching staff when […]

The post Hiring and Compliance: Evaluating Candidates and Setting Expectations appeared first on Compliance Report.

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Contaminated Medical Device Allegedly Causes Fatal Infection

Originally published by By Imrana Manzanares.

Carla Warner, widow of Willie Warner, has sued the makers of a diagnostic instrument and the machine designed to clean it after her husband contracted a fatal infection. Olympus America Inc. and Custom Ultrasonics Inc. have been sued over the safety and reliability of their medical scopes and machines. The suit filed in federal court in Pennsylvania alleges fraud, negligence, and breach of warranty and asks for compensatory and punitive damages.

Approximately two years ago, Mr. Warner contracted a “superbug” infection after having a diagnostic procedure at Carolinas Medical Center in Charlotte. The procedure involved having a device, manufactured by Olympus, known as a duodenoscope inserted into his throat. The device checks the stomach and other organs and drains internal fluids if necessary. Another machine, manufactured by Custom Ultrasonics, was supposed to decontaminate the duodenoscope. The suit alleges that Olympus’ duodenoscope had a design flaw and allowed biological material to be retained by the device.

The Federal Drug Administration has already criticized Custom Ultrasonics’ cleaning machine, claiming it “had not demonstrated that (it) can adequately wash and disinfect…to mitigate the risk of patient infections.” The FDA has issued a nationwide recall of almost 3,000 of the machines from more than 1,000 hospitals across the nation. After 179 patients at UCLA medical center were exposed to a potentially drug-resistant bacteria, a similar warning was issued by the FDA regarding Olympus’ duodenoscope.

When someone is injured or dies as a result of a product defect, financial recovery may be available. Such recovery is particularly important when permanent, life changing injuries are incurred. It is important to contact someone who understands the intricacies of the injured party’s right to recover.

Abraham Watkins offers a free consultation to anyone wishing to pursue a claim for injuries that occurred as a result of a product defect.

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What is a Postmarital Agreement?

Originally published by aleshia anderson.

What is a postmarital agreement you ask? It is an agreement that is made after a couple marries, unlike a premarital agreement that occurs before marriage.

At any time during marriage, spouses may partition or exchange between themselves all or part of their community property, then existing or to be acquired, as they desire. A partition and exchange agreement that occurs after marriage is also known as a “postmarital agreement.”

Like a premarital agreement, a postmarital agreement must be in writing and signed by both parties.

The post What is a Postmarital Agreement? appeared first on .

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Texans QB Brian Hoyer gaining final clearance, to practice Wednesday, start Sunday

Originally published by Aaron Wilson.

Texans starting quarterback Brian Hoyer is gaining final clearance under the NFL medical protocol, practicing Wednesday and starting Sunday against the Jacksonville Jaguars, barring any unforeseen circumstances.

Hoyer has made major strides since suffering his second concussion of the season against the New England Patriots with all symptoms subsiding shortly after a game where he was sacked five times.

This concussion wasn’t as severe as the one Hoyer sustained against the Cincinnati Bengals earlier this season where he experienced memory loss. Because of the frequency of the concussions and the climate surrounding concussions, a cautious approach was taken.

Now,  Hoyer is set to return to play after Brandon Weeden led the Texans to two consecutive wins. Texans coach Bill O’Brien declared Monday that Hoyer would start if he’s cleared medically.

Under NFL rules governing concussions, players have to be passed by an independent neurologist where they pass a baseline neurological exam to be cleared to play. Hoyer has been practicing and feeling fine.

“He’s in the last phase of the evaluation, ” O’Brien said. “So, if he clears this phase, then he’ll start the game on Sunday.”

Hoyer has exhausted every treatment avenue, including acupuncture, purchasing a $20,000 hyperbaric chamber and doing brain exercises through an app on his cell phone.

Now, Hoyer is on the verge of returning as the Texans make a push for the playoffs.

“Brandon has done a really good job, he did,” O’Brien said. “He did a good job in the Indy game and did a good job [Sunday], but if Brian’s healthy and cleared, he’s our starter.”

aaron.wilson@chron.com

http://twitter.com/AaronWilson_NFL

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My New Six-Monitor Display and the Evolution of My Workstations

Originally published by Josh Blackman.

Since April 2014, my workstation at home has used five monitors. While working on Unprecedented, I have actually found myself one screen short. Often I have to have open at the same time three chapters, plus several reference materials. So, in the next evolution of my workstation, I added a sixth monitor via USB Display Link. I was able to put it on a rolling file cabinet, so it fits low enough to below the monitor furthest to the left, but high enough to be at eye level.

monitors

Here is my setup from April 2014. I had four 24″ HD LED flat-panels, mounted on two Dual-Monitor Desk Mounts. I rotated the one on the right, as it makes reading cases and document easier. And no, the palm trees are not native to Houston, but they make for a nice backdrop.

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From December 2012, during a brief period I kept two MacBook Pros rocking, and I added (yet another) monitor.

In case you are wondering, each screen has a dedicated function. My MacBook Pro screen is always trained on my gmail. The screen furthest to the left holds my Tweetdeck and Instant Messaging. The next screen to the right holds whatever document, or documents I am reading. The main screen in the middle contains whatever I am typing. The screen furthest to the right contains my Google Reader. My old Macbook Pro is used for ancillary stuff or testing things, and sometimes I will play a video or something on my Nexus 7 Tablet.

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From August 2012, when I moved to Houston, still with three monitors:

 

Here is my three-monitor display, which I had from June 2010, back in Johnstown, PA until 2012. Note that I still had paper. I’ve gone completely paperless, and it is amazing. Also, since then I’ve gotten rid of my Blackberry, and Google Reader is no longer with us.

On my laptop screen, I keep my e-mail window open. On the far left monitor, I have Pandora open (playing some catchy Lady GaGa song), Tweetdeck (featuring 2 twitter accounts and facebook), and Adium Chat. In the middle monitor I have Microsoft Word open (working on an Op-Ed for McDonald v. Chicago). On the monitor on the right, I have Google Chrome open (tuned to Google Reader). And, my blackberry keeps me posted with text messages and BBM (blackberry messenger for those uninitiated).

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Legislative Approaches to Trust Arbitration in the United States

Originally published by Beth Graham.

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Professor Lee-Ford Tritt, Director of the Center for Estate Planning, Director of the Estates & Trusts Practice Certificate Program, and Associate Director of the Center on Children and Families at the University of Florida Levin College of Law, has written “Legislative Approaches to Trust Arbitration in the United States,” Arbitration of Internal Trust Disputes: Issues in National and International Law, Oxford University Press, S.I. Strong, ed., Forthcoming 2016. In his book chapter, Professor Tritt examines how mandatory arbitral provisions are treated in the context of trust agreements across the nation.

Here is the abstract:

In the United States, the treatment of mandatory arbitration provisions in trust agreements remains murky. This uncertainty may discourage estate planners from suggesting arbitration, even in cases where it would effectuate the settlor’s goals. A number of US state legislatures have already reformed their trust codes to make this area of law more predictable. Although it is impossible to predict the future, it seems likely that other US states will adopt similar provisions in the coming years and may thereby improve the way in which arbitration is used to resolve internal trust disputes. Therefore, this chapter explores the variety, validity, and viability of various legislative attempts to resolve the uncertainty surrounding mandatory arbitration of internal trust disputes. In so doing, the chapter provides a descriptive and normative analysis of various state legislative approaches regarding arbitration of trust disputes and critiques these efforts so as to help legislators going forward.

This and other scholarly publications authored by Professor Tritt may be downloaded free of charge from the Social Science Research Network.

Photo credit: Ken_Mayer via Foter.com / CC BY

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Tuesday, December 29, 2015

The “Double Recovery Rule”

Originally published by Jason Cieri.

Prior to attending law school, I obtained my life insurance license. One of the main principles they teach you during your class is that purchasing property insurance is not a way to make money (at least from the policyholder’s perspective). Insurance is purchased to make you whole again if you experience a loss. No matter how many insurance policies you have for your property, you cannot recover more than the market value of your property. Such was the situation in the recent appellate decision in Pye v. Fidelity National Property and Casualty Insurance Company.1
Jeffrey and Theresa Pye owned a two-unit residential building in Galveston, Texas. In 2007, an appraiser estimated the market value to be $195,000. The building was insured against floods by Fidelity under the National Flood Insurance Program for $205,400 and an additional %50,000 for contents coverage. They also had a policy with Texas Windstorm Insurance Association that covered damages related to wind.

Hurricane…

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The NCAA Committee on Infractions Has Spoken: Florida A&M University

Originally published by Christian Dennie.

The NCAA Committee on Infractions (“Committee” or “Panel”) recently issued its findings and found that Florida A&M University (“FAMU” or “Institution”) committed violations of NCAA legislation. The Committee considered this case through the cooperative summary disposition process in which all parties agreed to the primary facts and violations, as fully set forth in the summary disposition report (“SDR”).

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Opinions: Adult Disabled Child Support & Forever Alimony

Originally published by maknox.

On December 17, 2015, the First District Court of Appeals released two published opinions in Hallsted v. McGinnis, No. 01-14-00967-CV and Thompson v. Smith, No. 01-15-00010-CV.

In Thompson v. Smith, the father of J.L., his intellectually-disabled  28-year-old daughter, unsuccessfully challenged the trial court’s order awarding the mother Smith indefinite child support.

Thompson and Smith were divorced in 1992. Smith received primary custody of their daughter J.L. In 2013, when J.L. was 28 years old, Smith petitioned the trial court for adult disabled child support.  The evidence showed that J.L. needed near-constant supervision, that she had an IQ of 77 at the age of 17 (near borderline intellectual disability), could not dress herself or prepare her own meals (Once, she had destroyed a microwave oven because she left a metal spoon in it and on another occasion started a grease fire on the stove). When she is depressed, she becomes angry and physically aggressive. She was diagnosed as bipolar.

In response to Smith’s evidence, Thompson testified that he did not believe that J.L. was incapable of self-support or that she required substantial care or supervision. But he did admit that J.L. required some supervision, that she had to be told “to do things,” and that he had not spent any significant amount of time with her since the divorce in 1992 and as a result did not have much personal knowledge of or experience with J.L.’s needs. It is at this point in reading the COA’s opinion one feels pretty sure he is not going to win.

Thompson contended the evidence was legally or factually sufficient to support the trial court’s finding J.L. is disabled. In support, Thompson pointed to the evidence that J.L. testified on her behalf in trial court; was eligible to vote; executed a power of attorney; dresses herself; can read, write, perform basic math; and has a high school diploma. But the COA affirmed the trial court’s finding, stating Thompson’s argument did not account for the preponderance of the evidence.

Thompson also challenged the legal and factual sufficiency of the trial court’s finding that J.L. requires substantial care and personal supervision because of her disability. The COA noted that Thompson failed to point to any affirmative evidence that J.L. was able to live independently. On the contrary, the evidence in the record showed that all three of J.L.’s family caretakers testified that J.L. is unable to do so.

Thompson contended the trial court erred in awarding support under Tex. Fam. Code sec. 154.306. Thompson argued J.L.’s general living expenses did not satisfy the statutory requirement that they meet a need stemming directly from her alleged disability. The COA disagreed, pointing to the evidence that J.L.’s disabilities rendered her unable to work, that she could not independently meet her own daily living and health care expenses, that she requires substantial care and personal supervision, that Smith provides substantial care and personal supervision in her own home, that Thompson was not asked to pay for J.L. to receive care from a third party, such as a supervised living community or adult day care. The evidence supported a reasonable inference that Smith would continue to care for J.L. into the indefinite future. Additionally, any evidence that Smith’s current husband supported J.L. was inapposite as he had no obligation to support J.L.

In short, the COA affirmed the trial court.

In Hallsted v. McGinnis, Shawn Hallsted sued her former husband, Kevin McGinnis, claiming that he failed to comply with the parties’ agreement incident to divorce (AID) requiring him to make periodic alimony payments. As damages, she sought compensation calculated pursuant to the AID’s default and acceleration clause. After a bench trial, the trial court denied Hallsted’s request for relief and her motion for new trial. On appeal, Hallsted argued the trial court erred in rendering judgment denying her claim for breach of the AID and denying her MNT, and the judge who presided over the bench trial who is no longer on the bench engaged in judicial misconduct that prejudiced Hallsted. The court of appeals reversed and remanded on the first issue alone and so did not reach the second issue.

Hallsted and McGinnis entered into the AID in 2001, which was approved by the trial court and incorporated into the parties’ divorce decree. The AID required McGinnis to pay Hallsted $2,500/mo but the parties did not agree on what the correct interpretation of the term of that payment was under the AID. McGinnis alleged the contract required him to make payments for the rest of his life and as such it was an unenforceable agreement under Texas law and against public policy. Hallsted alleged it required payments only through January 2014.

The dispute was based on the indentation of the term paragraph. Analyzing the language of the provision and the evidence, the Court of Appeals concluded the term provision was unambiguous and obligated McGinnis to make payments until 2014. But the court also noted that McGinnis’ contention that the provision was unenforceable because it obligated him to make payments for the rest of his life was without merit. While a court may not be able to order lifelong alimony, there is no reason the parties cannot independently agree to it in an otherwise enforceable agreement.

 

 

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How to not clothe an auctioneer.

Originally published by David Coale.

auctioneerWhile the Wilburns submitted the highest price at a real estate auction, it was below the reserve price set by the bank who was auctioning the property. They nevertheless sought to enforce a right to the property.  The Dallas Court affirmed a take-nothing verdict for the defendants.  As to the auctioneer’s actual authority, the Court noted the instructions about reserve price in the “Agreement to Conduct Auction Sale.”  As to his apparent authority, the Court noted the auctioneer’s statements at the start of the auction and the Wilburns’ signatures on two cards that said what a reserve price was and referenced the auctioneer’s contract: “None of the bank’s actions or inactions clothed the auctioneer with the indicia of authority to sell the Property at a price below the reserve without Valliance’s consent.”  Wilburn v. Valliance Bank, No. 05-14-00965-CV (Dec. 21, 2015) (mem. op.)

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American Academy Of Neurology Pushes For Uniform Brain Death Standards

Originally published by Gerry W. Beyer.

The issue of what it means to be brain dead has been in the news recently and has lead many to wonder what standards must be met in order to declare someone dead. As it turns out, there is no…

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Career Development: Make 2016 your best year ever

Originally published by Cordell Parvin.

Screenshot 2015-12-12 10.38.51 copyOver the years, at this time of year I have given presentations and written blog posts on making the next year your best ever. Here’s a list of my ideas for 2016.

1. Write down what you want to accomplish in 2016 and estimate the number of non-billable hours you plan to spend.
2. Prepare a plan so you use your non-billable time wisely.

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Class certification ping-pong

Originally published by David Coale.

ping-pongA failed class action alleging sex discrimination by Wal-Mart concluded as follows:

  1. The named plaintiffs settled with Wal-Mart, and the district court entered final judgment on May 15, 2015;
  2. Appellants intervened on June 2; and then
  3. Appellants filed a notice of appeal (as to the dismissed class claims) on June 12.

While the notice of appeal divested the district court of jurisdiction over the pending motion to intervene, the Fifth Circuit may dismiss such an appeal and remand for purposes of considering the motion, which it did here with the agreement of the parties.  Odle v. Wal-Mart Stores, Inc., No. 15-10571 (Dec. 16, 2015, unpublished).

 

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Privacy Risks in Recycling eWaste

Originally published by Peter S. Vogel.

Once upon a time I bought a used hard drive at a computer resale shop which contained all of the client files for a well-known law firm in my home town which I needed for a patent infringement suit I was defending about software developed for a 1987 Apple Mac computer. Apparently neither the lawyers nor their IT folks bothered to properly wipe the contents.  It’s not hard to eliminate sensitive data from computers, phones, and tablets, but everyone must think about it given the size of eWaste.  According to the according to a report by the United Nations University, the academic and research arm of the United Nations by some estimates:

…consumers threw away 92 billion pounds of used electronics last year, up from 87.7 billion pounds the previous year.

Of course many online services offer trade-in programs including the Amazon has a Trade-In program which:

…allows customers to receive an Amazon Gift Card in exchange for hundreds of thousands of eligible items including phones, electronics, video games, books, DVDs, and CDs.

Given the size of electronic eWaste it is all the more essential that sellers remove sensitive data to protect their privacy.

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Grumpy Cat Gets Grumpier Over Alleged Infringement

Originally published by James Creedon.

Grumpy Cat, famous for her dour looks and internet popularity, has a new complaint. As stated in a December 11, 2015 Central District of California […]

The post Grumpy Cat Gets Grumpier Over Alleged Infringement appeared first on Klemchuk LLP.

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Free veterans legal clinic January 9 in Pasadena

Originally published by Lowell Brown.

Veterans seeking legal assistance are invited to a free legal advice clinic from 9 a.m. to noon January 9 in Pasadena. No appointment is needed.

The Pasadena Bar Association and the Houston Veterans Legal Initiative are providing the clinic at San Jacinto College, 8060 Spencer Highway. Attendees are asked to use the Spencer Highway entrance to the campus.

Veterans—or spouses of deceased veterans—who attend the clinic can speak with a volunteer attorney in any area of law, including family, wills and probate, consumer, real estate and tax law, as well as disability and veterans benefits.

If a veteran needs ongoing legal representation and qualifies for legal aid, the Houston Volunteer Lawyers program will assign him or her a pro bono attorney.

For more information, call the Houston Bar Association at (713) 759-1133 or visit hba.org.

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Monday, December 28, 2015

Insurance Agent Liability in Texas: When the Exclusion Eliminates the Coverage

Originally published by Patrick McGinnis.

Most of my clients are entrepreneurs. They are folks who started out with no money. However, they were rich in work ethic, dreams, hope, perseverance, and intelligence. They are true rags-to-riches people. It is so much fun having these clients because I get to hear their stories and over and over again. I am constantly reminded that the American Dream is still alive. My clients pay tens of thousands of dollars a year in insurance premiums to protect their investments. Like all of us, they pay premiums so that when a storm or fire or other covered loss causes damage to their property, they have insurance money to cover the damage. Nothing is more heartbreaking for my clients than to file a claim and find out that the policy either does not cover the loss or else contains exclusions, which exclude the exact loss they were trying to insure in the first place. This despite the fact that their agent told them they were covered and they paid premiums every year to protect themselves from…

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Cannot escape the pollution exclusion

Originally published by David Coale.

mold_cartoonPlaintiffs sued about insulation installed in their home by the defendants, alleging that they “failed to seal off completely areas in which vapors could be transported from the areas under renovation and construction to the existing area[] of the house[,] in which the Commarotos, their three minor children, and their houseguest, Schlegel, were living and sleeping during the construction process.” The district court found that these allegations unambigously fell within the pollution exclusion of the relevant insurance policy and the Fifth Circuit affirmed.  The Court declined to consider “deposition testimony by two of the plaintiffs stating that they physically touched and examined the spray foam insulation.”  While an exception to the “eight corners rule” could allow consideration of such evidence if “it is initially impossible to discern whether coverage is potentially implicated” (among other matters), the clarity of this pleading precluded its application here.  Evanston Ins. Co. v. Lapolla Indus, Inc., No. 15-20213 (Dec. 23, 2015, unpublished) (applying Star-Tex Resources, LLC v. Granite State Ins. Co., 553 F. App’x 366 (5th Cir. 2014)).

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Is the Nursing Home Always Responsible?

Originally published by Jordan VanderVorste.

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The employees of a nursing home have a very big responsibility and because the responsibility is so great, there are many staff members who help run the day to day operations. When a facility has so many employees handling medication, cooking food for residents, assisting with personal hygiene and medical needs, it isn’t too uncommon for a resident to become a victim of elder abuse.

Should a resident be given the wrong medication and then fall ill, an experienced nursing home attorney would be able to investigate the claim. But let us give you an example that may not be so clear if the nursing home is responsible. What if a resident who has been diagnosed with dementia leaves the facility and wanders away? Is the nursing home responsible? The resident acted on their own and the staff can’t be held liable since they can’t watch everyone, right?

A resident wandering away from a facility is far too common. And a nursing home abuse lawyer would investigate the claim and perhaps they discovered that they are lax in their security. Maybe the attorney finds that the facility has a high turnover rate and never explained the security protocol to new staff members? The point is that even if you feel that the nursing home may not be responsible for an injury, illness or incident, you should still contact a elder abuse lawyer.

When a nursing home is not responsible    

The focus of this article speaks to the responsibility of the nursing home when an injury has occurred. We have given you an example as to how a facility may be responsible, but you may not know whether it is the fault of the nursing home or not.  The following will explain how an injury may occur, but the facility and staff are not at fault. How can this be?

Beds that residents use are often motorized and have been known to malfunction and cause injuries.  In this case it would be the manufacturer of the bed that would be responsible, not the facility. Recently, many residents of three nursing homes contracted salmonella due to unsanitary conditions. While at first glance, it may seem that the nursing home would be at fault, but in this case, as with many facilities, the food service is contracted by a local vendor.

In the examples given above, only an experienced nursing home abuse attorney would be able to uncover who was harmed and what did they lose? What pain did they experience and how much suffering did they endure. The investigation would pinpoint who was at fault and was it both a 3rd party vendor and the facility?

Once you sign up with us, you owe us nothing up front. In fact, if we don’t win your case, you won’t owe us a dime. If you suspect that your loved one is either being neglected, abused or both, call us right now. We are ready to take your call at anytime day or night. We want to be your lawyer.

The post Is the Nursing Home Always Responsible? appeared first on Roberts & Roberts.

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Are Changes Coming to Texas’ Workers’ Comp Opt-Out Law?

Originally published by Misha.

Workers-Compensation-Wormington-and-Bollinger-Texas-McKinneyTexas’ workers’ compensation laws are notoriously confusing and have posed serious problems for employers and workers alike over the years. However, this may be coming to an end. At a recent conference, a national association of state lawmakers announced they will be investigating whether or not companies will continue to be able to opt out of workers’ compensation insurance, instead writing their own plans as to how they will care for workers who become injured on the job.

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Volkswagen Federal MDL Transferred to California’s Northern District

Originally published by By Benny Agosto.

On December 3rd 2015, the U.S Judicial Panel on Multidistrict Litigation heard various arguments on which district to transfer over 500 potentially related lawsuits which were filed against Volkswagen in 60 federal courts. California’s Northern District has been selected as the appropriate district for the litigation against Volkswagen A.G in regards to its emission scandal, with Judge Charles Breyer presiding over combined pre-trial proceedings.

The MDL panel noted that the Northern District of California was chosen because “nearly a fifth of all cases filed nationwide were in the state California.” Furthermore, the panel stated that “relevant documents and witnesses may be found in both the Northern District and throughout California, given the role played by California Air Resources Board in uncovering VW’s use of defeat devices on its diesel engines.”

“Judge Charles R. Breyer was chosen because he is a jurist who is thoroughly familiar with the nuances of complex, multidistrict litigation by virtue of having presided over nine MDL dockets” says the MDL panel.

Firm partners Benny Agosto, Jr. and Mo Aziz of the Houston law firm of Abraham, Watkins, Nichols, Sorrels, Agosto & Friend have been retained by El Paso County to lead a team of lawyers who have filed a lawsuit against Volkswagen Group of America Inc. and Audi of America, LLC.

Benny Agosto, Jr. is a partner at Abraham, Watkins, Nichols, Sorrels, Agosto & Friend in Houston, Texas. For over 60 years, Abraham Watkins has successfully represented injured people and families who fall victim to catastrophes. Our attorneys have the knowledge, experience and resources necessary to obtain just compensation their clients. For more information, please contact the office of Benny Agosto, Jr. at Abraham, Watkins, Nichols, Sorrels, Agosto & Friend, by letter at 800 Commerce Street, Houston, Texas 77002, or by phone at (713) 222-7211.

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Looking ahead to next week’s game against the Jaguars

Originally published by John McClain.

  1. If Cincinnati loses at Denver tonight, the Texans will have to beat Jacksonville to wrap up the AFC South. The Texans won the first game 31-20 at Jacksonville. The Texans are trying to sweep the Jaguars for a second consecutive season.
  2. After the Jaguars bombarded Indianapolis 51-16 at home, they were 5-8 and one game out of first place in the AFC South. Then injuries piled up for the Colts, but the Jaguars failed to take advantage and lost their next two games.
  3. The Jaguars have a good quarterback-receiver combo in Blake Bortles and Allen Robinson. Bortles throws a lot of touchdown passes but suffers a lot of interceptions, too. The Texans can’t afford to let Bortles and Robinson connect too often.

john.mcclain@chron.com

http://twitter.com/mcclain_on_nfl

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Wednesday, December 23, 2015

Diagnostic Errors

Originally published by By Randy Sorrels.

A new study from September has shown that errors in diagnostics are even more rampant than previously estimated. One in 20, or 5%, are effected annually, with 10% of patient deaths attributing to these types of errors. And while there are numerous recommendations by experts to improve this rate, the problem is that most recommendations would take years to put into place.

During the study the errors were placed into three categories: inaccurate diagnosis, untimely diagnosis, and failure to communicate a diagnosis to the patient. Inaccurate diagnosis is usually what people think of. An example would be someone being diagnosed with appendicitis when in fact they have kidney stones. An example of untimely diagnosis would be a delay in diagnosis, which is an error reportedly harder to catch as time is subjective based on what is being identified as a problem. Failure to communicate a diagnosis is self-explanatory; an ill-informed patient can hardly be expected to make the best decisions for himself/herself.

These errors are the lead type of paid medical malpractice claims and represent the highest amount of overall payments. This is a direct result of the claims being almost twice as likely to have resulted in the patient’s death compared to other claims, with the study suggesting that most people will deal with at least one misdiagnosis in their lifetime.

If you or someone you know has been a victim of medical malpractice, contact an attorney at Abraham, Watkins, Nichols, Sorrels, Agosto & Friend by calling 713-222-7211 or toll free at 1-800-870-9584.

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Tuesday, December 22, 2015

Pandora, Others Will Pay More to Stream Music in 2016, Per Copyright Royalty Board

Originally published by Ryan Jones.

Digital streaming services like Pandora will have to pay a little more to bring customers music next year after a highly anticipated ruling from the […]

The post Pandora, Others Will Pay More to Stream Music in 2016, Per Copyright Royalty Board appeared first on Klemchuk LLP.

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TBLS executive director set to retire

Originally published by Hannah Kiddoo.

After more than 30 years with the Texas Board of Legal Specialization, Gary McNeil is retiring from his position as executive director. In his tenure, McNeil has witnessed significant changes in the legal profession and has helped TBLS adapt accordingly. Here, he discusses his role in the organization, the significance of being board certified, and the future of the process.

Since becoming involved with TBLS, what changes have you seen in the legal profession?
The single biggest change can be expressed in one word: “technology.” It has had a huge impact on the way lawyers conduct their business—and on the operation of TBLS. It is probably most noticeable in the trial areas, with fewer cases being tried and more matters resolved by ADR, but it is always a challenge to make certain the standards in each area reflect the current practice in each area.

What were some of your goals as executive director?
I honestly think my first two goals coming in were to listen and to learn. I felt TBLS needed to revise its system for maintaining files and, with the advent of the Texas Bar College and MCLE, realized we needed a centralized manner of reporting CLE attendance so attorneys only had to report one time. I also was interested in saving staff time by administering all exams at once rather than staggering them over several days.

What is your proudest accomplishment from your time with TBLS?
It is hardly my accomplishment alone, but I am proud that TBLS has improved the preparation and grading of exams. It took great commitment from the board and a lot of work by the staff and exam volunteers, but the result was a process based on science, which provides more consistency across all specialty areas.

Why do you think that TBLS has grown in the way that it has?
I think the program has been successful because it is open to anyone—in a big firm or small, in a city or small town—who can meet objective criteria (as intended by the Supreme Court and State Bar) and because the program has been operated with integrity.

What do you see as the future for TBLS?
I think certification is perhaps even more relevant than ever. In the age of information overload, certification is one way a potential client can find an experienced attorney whose competence has been objectively verified by a third party—namely, TBLS. That being said, TBLS has to continue to work hard to get the attention of potential members who are being bombarded with information from all sorts of businesses and professional organizations.

What are your plans now?
My wife and I plan on doing some traveling, including some short spur-of-the-moment trips. I would like to learn a second language and take advantage of a host of other learning opportunities. And I hope to do some work for the legal profession, perhaps in the certification area.

Is there anything else you would like to share?
Just that this is really a time for thankfulness—for my staff and the many good folks at the State Bar I have been able to work with, and for all the folks who have volunteered their time to TBLS. I give a special thanks to the TBLS board members. Even though membership on the board changed periodically, every configuration of members always worked hard to make a sound decision on the issues they faced.

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US Supreme Court: Class Arbitration Waivers Valid

Originally published by Gene Roberts.

On December 14, 2015, the United States Supreme Court issued its opinion in DirectTV, Inc. v. Imburgia. The US Supreme Court held that the Federal Arbitration Act requires the enforcement of an arbitration agreement despite language that the agreement was unenforceable if the “law of your state” made class arbitration waivers unenforceable.
DirectTV and its customers entered into service agreements that contained an arbitration provision that also waived class arbitrations. The contract stated that it would be unenforceable if the “law of your state” made class arbitration waivers unenforceable. Any arbitration was governed by the Federal Arbitration Act.
At the time that Imburgia entered into the contract with DirectTV, California law made class arbitration waivers unenforceable because they were unconscionable. The trial court denied DirectTV’s request to arbitrate and that decision was affirmed by the California Court of Appeal.
While California law did invalidate class action arbitration waivers, the …

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No mandamus in dispute about “dominant” jurisdiction

Originally published by David Coale.

fort apache posterIn the mandamus case of In re Fort Apache Energy Inc., the relators sought relief from a trial setting in Dallas County, alleging that it interfered with the dominant jurisdiction (and slightly later trial setting) of the Kendall County Court.  No. 05-15-00159-CV (Dec. 16, 2015).  The Dallas Court of Appeals denied the petition, finding that the setting did not “amount[] to the kind of direct interference . . . that warrants mandamus relief under currently governing law.”  (citing, inter aliaAbor v. Black, 695 S.W.2d 564, 566 (Tex. 1985) (orig. proceeding).  In a classic disagreement about the scope and role of mandamus proceedings, a dissent would grant relief, arguing that “refusal to correct the trial court’s clear abuse of discretion by mandamus presents a strong likelihood of wasted public and private resources alike.”

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Understanding Social Security Disability and What Makes You Eligible

Originally published by Bob Kraft.

Down and Out What to do when you don't Qualify for Social Security Disability

Have you recently been injured, or do you suffer from a physical disability, illness or disease? It is important to understand all of your options, and whether you qualify to receive Social Security benefits.

Have you been denied benefits?

Social Security laws are complicated, and it is difficult to obtain benefits on your own. Or maybe you have applied for benefits and been denied. Law firms like Snow, Carpio and Weekly are familiar with Social Security law and can effectively get you the benefits you deserve. The majority of first time claims for Social Security are denied. Do not be discouraged. Contact a professional who specializes in Social Security law.

What is a qualifying disability?

A person applying for benefits does not have to meet the specific requirements for a certain condition or illness in order to obtain benefits. You can obtain benefits if your illness or condition matches the criteria on the list of qualifying disabilities. Also, if your condition affects your ability to work and perform your regular daily activities, then it is important to apply for Social Security benefits so you can start getting the benefits you deserve. Your attorney will review the entire list of qualifying disabilities with you.

Can I receive disability payments for a mental illness?

Yes, you can receive disability for a mental illness. The stigma associated with mental illness often prevents those affected from seeking benefits. Don’t let that stop you. There are many people suffering from mental illness who successfully obtain Social Security disability and now have the peace of mind that financial security offers.

What will SSA consider?

When you apply, the Social Security Administration will look at your condition, and assess your ability to perform your daily tasks and if there is a job you can do safely and effectively. Your work history and current skills are also taken into consideration.

Can an attorney really help?

Yes, being represented by a lawyer can greatly increase your odds of being approved for benefits, especially if you have been turned down before.

How much does an attorney cost?

Most attorneys who specialize in disability law offer the first consultation free of charge, and will provide advice on your odds of getting benefits. Fees charged are only collected upon winning of your case, and all fees charged are approved by the Social Security Administration.

Your health and financial well-being is being jeopardized every day without the benefits you deserve. Contact an attorney today.

This article is from Lizzie Weakley, a freelance writer from Columbus, Ohio. She went to college at The Ohio State University where she studied communications. She enjoys the outdoors and long walks in the park with her four-year-old husky Snowball.

The post Understanding Social Security Disability and What Makes You Eligible appeared first on P.I.S.S.D. — Personal Injury, Social Security Disability. Dallas Texas Lawyers.

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Twas the Night Before No Refusal Weekend in Tarrant County

Originally published by Brandon Barnett.

Tarrant County No Refusal Period to Begin on Christmas Eve Yesterday, Tarrant County announced that No Refusal period would begin on December 24th at 9 pm and run through January…

The post Twas the Night Before No Refusal Weekend in Tarrant County appeared first on Criminal Defense Attorney Fort Worth.

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Educating Employees about Phishing is #1 on IBM’s List to Mitigate Damage

Originally published by Peter S. Vogel.

IBM emphasizes that ““this could happen to us” so employers should  provide training on “how to avoid becoming a victim, use a variety of approaches—video, webinars, in-person instruction—and require training at intervals to make the risk clear.”  IBM issued “The perils of phishing” report in December 2015 which included these main points about education:

Most companies, banks and agencies never request personal information via email. Don’t fall prey to this most common type of phishing.

If you suspect an email might be a spear phishing campaign within your company, report it.

Immediately suspect emails with generic greetings like “Dear Customer” or spelling and grammatical errors.

Don’t trust email attachments, even if they come from a trusted source. Unless you’re expecting an email with a document attached, call the sender and confirm they sent it. Their computer might have been compromised and is sending emails without their knowledge, or their email address could have been spoofed.

Never reveal personal or financial information in response to an email request, no matter who appears to have sent it.

Of course detecting phishing not so easy and IBM also points out these 5 phishing methods:

  1. Link manipulation
  2. Filter evasion
  3. Website forgery
  4. Covert redirect
  5. Evil Twins

Companies cannot do enough educating since phishing continues to get more sophisticated every day.

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Attorney is Sanctioned (Sort of) For Errors in Affidavit

Originally published by Thomas J. Crane.

One of the essential tools in any lawsuit or EEOC charge is the affidavit. The employee typically will sign a couple of different affidavits at various stages of a lawsuit. The affidavit is supposed to represent the witnesses’ testimony. An affidavit should mirror the employee’s actual testimony.  But, the rough draft of an affidavit is often prepared by legal personnel, whether it is the Equal Employment Opportunity Commission or the employee’s own law firm. So, some affidavits, if not closely vetted, sound wrong or they are just flat inaccurate. It is up to the witness to ensure any statement is accurate before signing.

In Green v. MOBIS Alabama, LLC, No. 12-CV-277 (M.D. Ala. 3/25/2014), we see what can go wrong with the process of preparing an affidavit. Noria Green applied for unemployment benefits after she was fired. She was denied benefits. Assisted by an associate attorney with Haynes & Haynes, Ms. Green appealed the denial. There was a telephone hearing on Dec. 16, 2011. Ms. Green had been accused of forging a doctor’s notes. At the Dec. 16 telephone hearing, the employer still had not provided the employee or the agency a copy of those allegedly forged notes. The hearing officer postponed the hearing to an unspecified date. Later, the agency sent notices that the hearing would re-convene via telephone on Jan. 4, 2012. The notice was sent in late December when MOBIS’ plant was shut down. So, MOBIS did not receive the notice in time to appear for the telephone hearing.

During the hearing on Jan 4, the hearing officer tried three times to contact MOBIS , but could reach no one. Even though MOBIS was not present for the hearing and they still did not have the alleged notes, the hearing officer found in favor of the employee, Noria Green. The notice sent later about the hearing indicated that MOBIS had attended – even though MOBIS did not attend. The state unemployment agency erred.

Later, in the resulting lawsuit, the employee’s firm argued that the employer was judicially estopped from arguing the doctor’s notes had been forged. The employee via Haynes & Haynes argued that the issue had been previously addressed in the unemployment hearing. Attached to the plaintiff’s response to the motion for summary judgment was an affidavit signed by Ms. Green. The statement claimed that MOBIS had attended the Jan. 4 unemployment hearing. At the time of her response, there was no transcript of the unemployment hearing.

The defendant submitted an affidavit from the MOBIS representative saying he had not been present at the Jan. 4 hearing. He also referred to the newly acquired audio recording of the Jan. 4 hearing as proof. MOBIS provided a transcript of the hearing showing that MOBIS had not attended the Jan. 4 hearing. The plaintiff via the firm of Haynes & Haynes moved to strike this new evidence as untimely. The court refused to strike the evidence and granted summary judgment. It pointed out that Haynes and Haynes law firm was present for the Jan. 4 hearing and should know the affidavit of Mr. Green was false. The court found that Plaintiff’s lawyer misrepresented facts to the court.

MOBIS then asked for attorney’s fees as a sanction, arguing the plaintiff’s law firm had attempted to perpetuate fraud on the court. I did not see the attorney’s fees request, but typically that would involve tens of thousands of dollars.

Ms. Haynes responded that she relied on the notice sent after the hearing. That notice indicated that MOBIS had been present for the Jan. 4 hearing. In the court’s view, however, Ms. Haynes, the lawyer, changed her story about the false affidavit. She tried to argue that MOBIS had an opportunity to litigate the issue at the initial Dec. 16 hearing. She argued other factual issues. But, said the court, in the end, Ms. Haynes’ principal argument was that under agency rules, there is actually only one unemployment hearing date. Any other hearings are considered as part of the one hearing. The court was not persuaded by this specious argument.

At the oral hearing on the motion for sanctions, Ms. Haynes indicated the real problem, said the court. She first became aware that MOBIS had not been present at the Jan. 4 hearing when she read the court’s decision on summary judgment. In effect, the lawyer admitted she had submitted an affidavit without making sure the affidavit was accurate. Ms. Haynes had the audio recordings of the two unemployment hearings. But, said the court, she did not listen to them until after summary judgment had been granted. The court found this incredible.

I don’t know. If the witness agrees to an affidavit, is the lawyer responsible? Perhaps, the court reasoned that whether MOBIS actually attended the Jan. 4 hearing was less a factual issue than a legal issue.

In any event, the employer admitted it did not comply with Fed.R.Civ.Pro. Rule 11. It did not provide the motion for sanctions to the Plaintiff before filing it. That is, it did not offer the plaintiff the “safe harbor” option by which sanctions could be avoided. Therefore, it is barred form seeking attorney’s fees. The court could still award sanctions for unethical behavior. The court noted that eleven attorneys attended the Rule 11 oral hearing. Much effort was invested in the motion for sanctions when the two parties simply refused to talk to each other.

So, the court ordered the parties’ respective lawyers to share two meals together. They would each pay their own expenses. The court imposed a 30 day deadline in which to file a certification with the judge indicating they had done so.

Or as my judge in rural Louisiana would say, “Let’s agree everyone in this room is a sunavabitch and go on from there . . .” See decision here.

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Planning For An Estate That Contains Collectible And Sentimental Assets

Originally published by Gerry W. Beyer.

People usually buy an asset because they need it for a purpose such as to operate their business or because there is an expectation that it will grow in value. However, some people acquire property for reasons in addition to,…

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What if a Partition Deed Doesn’t Consider the Minerals?

Originally published by Charles Sartain.

Posted by Charles Sartain

mosesDid Moses worry about the mineral rights when he parted the Red Sea?  Maybe Charlton Heston knows. What we know is that 3,500 years later if you plan to partition surface rights, the time to pay attention to the minerals is now.

In Hosek v. Scott, the parties had a deed partitioning the surface estate of 338.54 acres in Atascosa County, Texas. The partition deed said:

“This partition does not include any of the oil, gas and other, minerals in, on or under the [land], and same are to remain undivided for a period of [25] years from date hereof and as long thereafter as oil, gas or other minerals are produced in paying quantities from the [land].”

The question

Did the minerals revert to the owners of the surface estates after the period lapsed during which partition of the minerals was prohibited?

After the partition Hosek owned 207.77 acres (except 38.5 owned by Scott) and Scott owned 130.77. Scott conveyed the 38.5 acres to Hosek subject to the reservation of all minerals reserved in the partition deed.

Scott argues: Since the minerals were never partitioned he continues to own an undivided half interest in minerals under the Hosek tract.

Hosek responds:  The meaning of the deed is ambiguous and thus a fact issue exists.  The language intended that the undivided mineral interests revert to the surface owners after the expiration of 25 years and cessation of production.

Are there two reasonable interpretations of the partition deed?  If so, we need a trial. If not, judgment for Scott.

(I’ll skip the rules of contract construction that you’ve seen in this space before).

The answer

The minerals did not “revert” to the surface owner at the end of the 25 years. The deed expressly excluded minerals from the partition and the deed does not have language stating that the minerals would be partitioned at the end of the 25 years. Accordingly, Hosek’s interpretation would require the court to add language to the partition deed.  That, the court is not permitted to do.

The court ruled that the partition deed can be given a definite and certain meaning as a matter of law and is therefore unambiguous. The parties’ intent is expressed in the four corners and restricted partition of the minerals for the 25 years. At the end of that period, the restriction was lifted and the parties had the unrestricted right to partition the minerals, or not. They did not partition the minerals after the end of the 25 year restricted period. Scott wins.

I’m breaking my promise …

… never to write on climate change because the subject is too politicized. But this, from the announcement following the Paris climate change conference is too good to ignore:

Also request the Subsidiary Body for Scientific and Technological Advice to undertake a work programme under the framework for non-market approaches to sustainable development referred to in Article 6, paragraph 8, of the Agreement, with the objective of considering how to enhance linkages and create synergy between inter alia, mitigation, adaptation, finance, technology transfer and capacity-building, and how to facilitate the implementation and coordination of non-market approaches.”

This 66-word morass of abstractions is what we’ve come to expect from bureaucrats, and it dismisses free markets for … what?  Here is Forbes‘ take on it. Michael Lynch says only a lawyer would love it. I object; that monstrosity is an insult to lawyers.

In honor of our special guest Moses we wish you Happy Holidays.

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Law Firms: 2016 How You Might Help Your Lawyers

Originally published by Cordell Parvin.

I am working with a Dallas firm today. I’ll meet with small groups and individuals. At lunch I will make a presentation for the entire office titled: Client Development for 2016 and Beyond.

Whenever I spend a day with a firm, I tell the lawyers that what happens after I am gone is more important than what happens the day I am there.

I learned this many years ago when I gave presentations on preparing a business plan and client development in each of our law firm offices. I left each office being told that I had inspired the lawyers. Three months later, when I checked back in, I discovered nothing had changed.

So, with that background let me ask: Do you have any plans to help your lawyers in 2016? I have an idea I urge you to consider.

If you have someone in your firm like me who gets great joy out of helping young lawyers, you can do take advantage of my idea in-house. If not, I recommend you find someone outside to help.

How do you avoid the one shot presentation problem? I suggest you spend at least a day each quarter helping your junior lawyers.

Screen Shot 2014-01-01 at 6.59.48 AM

What would the day look like?

I recommend that you have a 60-90 minute program for the entire office over lunch. The four quarter topics might include:

  1. Creating a Business Plan and Holding Yourself Accountable
  2. Writing and Speaking to Get Hired
  3. Relationship Building and Closing the Sale
  4. Client service and Expanding Relationships with Clients

What would you do the rest of the day? I recommend 45 minutes one-one-one or small group coaching. If you start at 9:00 AM, you could have eight coaching sessions.

In each one-on-one or small group coaching session, the lawyers with whom the senior lawyer meets will create a 90 Days Action Plan. Just creating a plan every 90 days and then having a way to be held accountable will generate more revenue for your firm because your lawyers will be more focused and strategic about how they use their time.

I get energized each time I meet in person with the junior lawyers I am coaching. I see the progress they are making and their increased enthusiasm. If you are the senior lawyer chosen to coach lawyers in your firm, I’m confident you will find the same enjoyment.

The post Law Firms: 2016 How You Might Help Your Lawyers appeared first on Cordell Parvin Blog.

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Courthouse preservation grant applications due Jan. 8

Originally published by Lindsay Stafford Mader.

More of our state’s beloved courthouses will be restored and modernized with the next round of grants from the Texas Historic Courthouse Preservation Program. The 84th Legislature appropriated $20 million to the program put on by the Texas Historical Commission, which is accepting grant applications until 5 p.m. January 8, 2016.

The funds are partial matching grants, where the program matches a percentage of local funding. All grants aim to restore original architectural integrity as well as modernize the courthouses’ accessibility, security, infrastructure, etc. Three types of grants are being offered: planning grants for producing architectural specifications (33 percent local match minimum); construction grants for restoring and rehabilitating (15 percent local match minimum); and emergency grants fixing dangerous or critical issues (50 percent local match minimum). For more information and application instructions, go to the THCPP’s website.

The Texas Historic Courthouse Preservation Program has funded the restoration of 63 Texas courthouses. According to the program’s website: “Not only is each courthouse lovingly restored to its historic appearance but each has been fully updated to the 21st century.” Nine additional courthouses received smaller grants for partial restorations/emergencies. Current grant recipients—many obtaining up to $450,000—are working on major and important projects, including Callahan County replacing its courthouse’s electrical system and old wooden windows as well as Karnes County replacing its courthouse’s old, mold- and bat-infested tile roof with a new slate roof.

More information available at thc.state.tx.us.

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Monday, December 21, 2015

Don’t be a stickler?

Originally published by Wayne.

“The idea that there are exactly two approaches to usage—all the traditional rules must be followed or else anything goes—is the sticklers’ founding myth. The first step in mastering usage is to understand why this myth is wrong.”

Steven Pinker, The Sense of Style 188 (2014).

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Santander – the taxpayer wins a STARS case (for now)

Originally published by robertprobasco.

On November 13th, the District Court in Massachusetts issued its opinion in Santander Holdings USA, Inc. v. Commissioner.  The case involved a “Structured Trust Advantaged Repackaged Securities” (“STARS”) transaction by Sovereign Bancorp, Inc. (predecessor of Santander).  The government earlier won cases involving this transaction against Bank of N.Y. Mellon and American International Group, in the Second Circuit, and Salem Financial (a subsidiary of BB&T) in the Federal Circuit.  There is also a pending case by Wells Fargo in the District Court of Minnesota, which is heading to trial and looks favorable for the government.

The Massachusetts District Court, however, found for the taxpayer in Santander.  It also pushed back a bit against the economic substance doctrine that the government increasingly relies on in tax cases.  We will be watching the case to see what happens on appeal and for possible impact in future cases.

The facts of the typical STARS transaction are complex.  A brief summary is available in an article I wrote (with Lee Meyercord) on the Tax Court’s decision in the Bank of N.Y. Mellon.  But the essentials are fairly straightforward.  As summarized in the recent Wells Fargo decision:

The plan had four key elements: (1) the American bank would voluntarily subject some of its income-producing assets to U.K. taxation; (2) the American bank would offset those U.K. taxes by claiming foreign-tax credits on its U.S. returns; (3) Barclays would enjoy significant U.K. tax benefits as a result of the American bank’s actions; and (4) Barclays would compensate the American bank for engaging in the STARS transaction.

The compensation paid by Barclays to the American bank is referred to in the cases as the “Barclays payment” or the “Bx payment.”  It plays a key role in the analysis of the transaction under the economic substance doctrine.

In a previous ruling, the Santander court held that the Bx payment should be counted as revenue to Sovereign when determining whether the transaction has a reasonable possibility of earning a profit.  In the most recent opinion, the court reaffirmed that conclusion and also ruled that the foreign taxes paid to the U.K. on income earned by the trust should not be treated as an economic cost for the profit analysis.  This last point follows the earlier cases of Compaq Computer Corp. v. Commissioner and IES Industries, Inc. v. United States, in the Fifth Circuit and the Eighth Circuit respectively.  Decisions in other STARS cases had come to a different conclusion.  The Santander court concluded that the transaction satisfied the economic substance test and should be respected.  Thus, the bank was entitled to foreign tax credits to offset the foreign taxes it had paid to the U.K.

It’s still too early to determine what effect the case will have.  This was a district court decision and the government will almost certainly appeal.  And, of course, the Supreme Court may eventually weigh in.  Cert petitions were filed in the Salem Financial, American International Group and Bank of N.Y. Mellon cases.  (The government opposed cert in the Salem and AIG cases; its response in the BNY case is due January 4th.)  If the Santander ruling is upheld on appeal, or if the taxpayer unexpectedly wins in the Wells Fargo case, that will increase the likelihood that the Supreme Court will decide to hear the issue.  For now, this is just another step in the journey, in this case in the taxpayer’s favor.

——————

What I found most interesting about the Santander opinion, though, was the court’s general observations about the economic substance doctrine.  This judicial doctrine, dating back to Gregory v. Helvering, is an important tool for the government in combating tax shelters.  But the Santander court issued an implicit call for carefully constraining that powerful tool; using it, but remaining aware of its problems and potential for abuse.

The Salem FinancialBank of New York Mellon, and Wells Fargo cases illustrate, I think, that the judicial anti-abuse doctrines – whether substance over form or economic substance – can themselves be susceptible to abuse. . . . [Whether the transaction should be respected] can turn in large part on whether a court subjectively  thinks the transaction being examined is “the sort that Congress intended to be the beneficiary of the foreign tax credit provision.”

[emphasis added]  And later:

Throughout the government’s arguments in this case there has been an undertone of indignation, suggesting that the issues in the case are as much a matter of moral judgment as legal. . . What seems to bother the government is not so much that Sovereign does not qualify for foreign tax credits as that it does not deserve them.  It is almost as if the government thinks that, under a sort of aiding and abetting theory, Sovereign should be punished by taking away its credit for helping Barclays manipulate its benefits under the U.K. tax laws.

The judicial anti-abuse doctrines are important, but their employment should be analytical and not visceral.  Among other things, too-ready resort to the government’s “trump card” . . . may lead to the ad hoc development of novel principles of judgment solely on the basis of their utility for the particular case at hand.  One serious risk is that the ultimate standard of decision becomes a kind of smell test, with the judge’s nose ending up the crucial determinant of the outcome.  The more that is the case, the less predictability there is in the law, and predictability is a high value in tax law.

The court essentially concluded that if there were any abuse involved in STARS, it was Barclays’ manipulation of U.K. tax law to allow it to get an inappropriate benefit.  Barclays was able to treat the U.K. taxes on the trust income as though it had paid the taxes, although the trust/Sovereign had in fact actually paid the taxes.  But the U.K. tax authorities were aware of the transaction and did not challenge Barclays’ treatment of it.

—————————

A couple of weeks earlier, I had read Confidence Games: Lawyers, Accountants, and the Tax Shelter Industry.  The authors criticize how lawyers and accountants analyze economic substance:

Economic substance became a formal requirement like any other and was therefore treated technically.  As a consequence, satisfying the requirement became one of technique . . . rather than ascertaining the economic reality . . . .

and

Whether BLIPS had economic substance became a narrow technical question. . . . Treated as a technical question, the economic substance problem became decoupled from the broader question of whether the strategy would perpetrate tax fraud by allowing clients to claim losses for transactions that did not reflect economic reality.

The description of result-oriented technical manipulation of the rules aptly describes what some tax practitioners did during the late 1990’s and early 2000’s.  But it struck me at the time because it describes not only how tax practitioners have approached economic substance analysis but also how the IRS and courts approach it.  And that can contribute to the potential for abuse that the Santander court was concerned about.  The judge is not the first to make those observations, and he won’t be the last, but his analysis does point out some concerns.

—————-

Economic substance analysis is familiar to tax practitioners and Tax Court judges.  But there are several things about the analysis of economic substance in the other STARS cases that likely would seem a bit strange to those who are not tax specialists.  In fact, some of these aspects may seem a bit strange even to tax specialists.

When analyzing potential probability, the courts bifurcated the STARS transaction into the “Loan” component and the “Trust” component.  (Barclays contributed certain assets to the trust in return for units.  The American bank agreed to repurchase all of Barclays’ units at the end of a certain period of time, for a pre-arranged price.  These portions of the overall transaction are characterized for U.S. tax purposes as a loan rather than Barclays actually owning an equity interest.)  This bifurcation approach to economic substance analysis originally arose because tax shelters, to avoid the doctrine, would “combine” two functionally unrelated activities, one that created profits and one that generated tax benefits, into a single transaction.  The rationale for bifurcation is not as strong, though, when dealing with an integrated transaction.  Here, the parts depended on each other and the parties would not have entered into either part with the other.  But bifurcation of integrated transactions seems to be broadly accepted by the courts now.

When analyzing potential profitability of the “Trust” component, some courts have ignored the income earned by the assets placed within the trust.  The rationale was that the assets would have earned the same income if they had not been placed in the trust.  But putting assets in the trust did not, by itself, result in the American bank paying foreign taxes and claiming foreign tax credits.  It was the income earned by the trust that was taxed by the U.K.  There would have been no foreign taxes paid, and therefore no claim for foreign tax credits, without that income earned by the trust.

Some courts have concluded that the “Bx payment” should not be considered when analyzing the potential profitability of the transaction.  This was justified because, in the words of the Wells Fargo decision, “[t]he focus of the objective inquiry is whether the transaction ‘offers a reasonable opportunity for economic profit, that is, profit exclusive of tax benefits.”   But “tax benefits” in that formulation of the test originally meant the U.S. tax benefits claimed by the taxpayer and disputed by the government – here, the foreign tax credits.  The STARS cases expanded the scope of this formulation by treating payments by a third party (sharing the third party’s U.K. tax benefits) as “tax benefits” rather than subsidies or compensation that are part of the American bank’s economic profit.

And, of course, the BNY decision concluded that the foreign taxes paid by the American bank should be treated as an economic cost for purposes of analyzing potential profitability, disagreeing with the earlier IES and Compaq cases.

Add all of this together, and the analysis includes as part of potential profit only: (a) transaction costs; and (b) the foreign taxes paid by the American bank.  Potential profit does not include: (c) the subsidy from Barclays for participating in the transaction; and (d) the American bank’s income on which those foreign taxes were paid.

Virtually any overseas business activity will be unprofitable for purposes of the economic substance doctrine under those circumstances.

Arguably, these STARS cases have demonstrated “the ad hoc development of novel principles of judgment solely on the basis of their utility for the particular case at hand” mentioned by the Santander court.  And some of the cases have a whiff of results-oriented manipulation of the technical standard that the Santander court referred to as a “smell test.”

The problem, I suspect, is that the economic substance doctrine was originally (Gregory v. Helvering) focused on the question of “whether what was done, apart from the tax motive, was the thing which the statute intended.”  The Court in that case concluded that “the transaction upon its face lies outside the plain intent of the statute. To hold otherwise would be to exalt artifice above reality and to deprive the statutory provision in question of all serious purpose.”

The economic substance test that has developed over the years, though, doesn’t really match all that well with the question of what “the statute intended.”  If a Son-of-BOSS tax shelter was structured in such a way that there was a reasonable possibility of profit, it would still not be what “the statute intended.”  The real abuse is that the taxpayers’ claimed tax losses bore no relation to economic reality, not simply that the transaction as designed would not earn a profit.  But, I suspect, the IRS and courts find it easier to just apply the mechanical test – and manipulate it with “novel principles of judgment” to reach the desired result – rather than grapple with statutory intent.  Particularly when there often is no indication that Congress ever considered the potential abuse that could occur.

That leaves both sides – taxpayer and IRS/court – trying to manipulate the technical standard so that the transaction fits or does not fit within it.  That creates the potential for results-oriented abuse by both sides and allow both sides to avoid the difficulty of arguing about statutory intent.

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The government’s real concern about the STARS transaction is not that the taxpayer seeks to claim foreign tax credits for foreign taxes it did not actually pay.  The real concern is that the taxpayer has deprived the U.S. fisc of tax dollars by shifting business activity overseas, paying taxes on the income to a foreign government and claiming a credit against its U.S. taxes on that income.  If we focused on the statutory intent of the foreign tax credit instead of the technical test for economic substance, the IRS and courts would have to identify under what circumstances, exactly, shifting business activity overseas is not what Congress intended to qualify for the foreign tax credit.

Is it any time that a taxpayer shifts existing business activity to a foreign country?  That seems too broad.  Is it only when certain types of business activity are shifted offshore?  If so, which kinds?  Is it when the taxpayer does not have a “good reason” to shift the business activity offshore, and how do we determine what is a “good reason”?  (And what would Congress have considered a good reason?)  How should third-party subsidies that increase the overall profit factor in?  What types of subsidies can be considered?  How is the “Bx payment,” for example, different from an implicit subsidy in the form of lower wages?

Promulgating regulations can answer these questions in a way that carefully targets what is really abusive and provides an opportunity for public comment.  In fact, the IRS did issue temporary regulations in 2007 and final regulations in 2011 that limit taxpayers’ ability to engage in transactions like STARS.  But an amorphous doctrine like economic substance bypasses the procedural safeguards of the rule-making process and applies retroactively, not giving taxpayers advance warning of what is not acceptable.  It also is not well suited to identifying specifically what is abusive, and why, and setting clear boundaries.  It may only be used properly, against real cases of abuse.  But it can be used more broadly, if the IRS chooses.  In effect, the economic substance doctrine gives the IRS very broad prosecutorial discretion.  Just as with very broadly drawn criminal statutes, even as we recognize the need for such an approach, we should be worried about potential abuse.

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DMCA exemption for 3D Printers (Part 6 of 6)

Originally published by Susan Ross (US).

As we have reported, the sixth triennial rulemaking proceeding by the Librarian of Congress resulted in a wide range of DMCA exemptions. Today, in our final post, we cover a new exemption involving the use of 3D printers.

3D printing 101
3D printing technology allows users to convert digital data into physical objects. The 3D printing process requires the use of material, known as “feedstock,” that ultimately constitutes the final product. Materials used as feedstock for printing include various types of plastics, metals, nylon, epoxy resins, wax, and glass-filled polyamide. The printer applies layers of the material until it forms a three-dimensional object.

3D printer manufacturers use technological protection measures (“TPMs”), such as microchip verification systems, that require users to purchase the manufacturer’s proprietary feedstock or other manufacturer-approved feedstock.

The proponent of the 3D printer exemption wanted users to be able to circumvent TPMs in 3D printers to allow the use of feedstock that is not approved by the printer manufacturer and may therefore cost less. Opponents pointed to potential problems that could result from the use of inferior materials.

The exemption
The Copyright Office adopted the following DMCA exemption:

Computer programs that operate 3D printers that employ microchip-reliant technological measures to limit the use of feedstock, when circumvention is accomplished solely for the purpose of using alternative feedstock and not for the purpose of accessing design software, design files or proprietary data; provided, however, that the exemption shall not extend to any computer program on a 3D printer that produces goods or materials for use in commerce the physical production of which is subject to legal or regulatory oversight or a related certification process, or where the circumvention is otherwise unlawful.

As a preliminary matter, the exemption is narrowly drawn to cover circumvention “solely for the purpose of using alternative feedstock.” However, the exemption does allow the use feedstock brands as well as feedstock materials that are not approved by the printer manufacturer.

Regulated products in commerce are excluded
Many uses of 3D printers – fabrication of vehicle components, firearms, aerospace parts, medical implants, and prosthetics – raise safety and regulatory issues. As a result, the language of the final exemption excludes the circumvention of computer programs on 3D printers that produce goods that are subject to legal or regulatory oversight and that will be used in commerce.

The exemption does not provide any guidance as to the meaning of the phrase “subject to legal or regulatory oversight”. While some product categories easily fit this description – firearms and medical products – the full scope of this exclusion remains unclear. Furthermore, the exclusion requires that regulated products be used “in commerce.” Therefore, if printed products are subject to legal or regulatory oversight, but are not produced for use in commerce, the exemption is still available for the user.  The Register of Copyrights explained it this way: “Users should be free to tinker with their 3D printers, but without putting those further down the stream of commerce at risk.”

Other limitations
The exemption does not prevent printer manufacturers from developing and implementing more sophisticated TPM systems. In fact, the exemption only applies when the TPM utilized by the printer manufacturer is a “microchip-reliant technological measure.” If a manufacturer uses a TPM that is not a microchip-reliant, the exemption does not apply.

Also, as is the case with the other exemptions, this one only immunizes a user from liability under Section 1201(a)(1) of the DMCA. The exemption does not apply to avoid liability under 1201(a)(2) or 1201(b) of the DMCA, which prohibit trafficking in circumvention tools and services. In other words, while a user of a 3D printer might be able to use the exemption to avoid liability under 1201(a)(1) for circumventing a TPM, a seller of software, tools, or instructions that assist others in circumventing a TPM will not be able to assert the exemption. Additionally, the exemption would not prevent a breach of contract claim if the manufacturer and user had entered into an agreement covering permissible feedstock.

Commentary
With respect to 3D printing in general, the current exemption does not affect owners’ rights in either their goods made with 3D printing or in the directions or designs that instruct the 3D printer in how to make the goods. Consequently, brand owners may wish to consider adding – even if they are not legally required – proprietary rights notices on their goods. Although they may not be required, proprietary rights notices can serve as a warning to users that replicas may not be authorized. In addition, brand owners may wish to review the design libraries that the 3D printer manufacturers or others may make available on web sites, and, with respect to goods covered by a registered copyright, consider a DMCA “takedown” notice for those designs that potentially infringe the owner’s copyright.
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