Articles Posted in Business Litigation

Department of Justice Seal
The Justice Department Criminal Division recently released guidance on what it considers when deciding how a corporation’s compliance program factors into its investigation and the ultimate decision as to whether to bring charges, negotiate pleas or enter into other agreements with corporations under investigation.    The Evaluation of Corporate Compliance Programs, released on April 30, 2019,  is an expansion of the 2017 guidance document issued by the Criminal Division Fraud Section.

Prosecutors Must Ask Three Fundamental Questions

Prosecutors will ask three fundamental questions to determine if a corporation’s compliance program was effective at the time of the offense and at the time of charging:

Digital Code

Computer Code

Voice recordings violate the General Data Protection Regulation (GDPR) when companies fail to provide callers the ability to opt out according to a ruling earlier this month by the Denmark Data Protection Authority.  Under the GDPR, voice recordings are considered personal data.  Therefore, companies that communicate with EU residents need to understand what the GDPR requires from a compliance perspective to avoid unwanted violations.

This Call May Be Monitored …. Requires Affirmative Consent

Picture of Doug Leavitt

Photo: Doug Leavitt

Last month the Department of Labor’s Wage and Hour Division officially rejected the 6-part test it had been using to determine if an employer who had an unpaid intern was violating the Fair Labor Standards Act (FLSA).    Going forward the DOL will employ a “primary beneficiary” test which is designed to focus on the specific economic realities between the employer and intern.  The new test affords the DOL more flexibility in its analysis with one factor not being any more or less important than another factor.

Primary Beneficiary Test

Non-Disclosure Agreements

Non-Disclosure Agreements – Protect Your Employees

This week I reviewed three Non-Disclosure Agreements and was surprised when two of the NDAs were silent regarding employee solicitation. Working with clients over the years I have found that in virtually every successful company, it is almost always the employees, along with the technology, that are among the most valuable assets that need protection. Yet in the deals my clients were exploring, these valuable assets were not protected, or at least would not have been protected had my clients not shared the NDA with me before signing.  First however, I want to take a step back and discuss why the NDA (also called a Confidentiality Agreement) is used, and identify common NDA scenarios.

Protect Confidential Information

Online-Legal-Forms
Potential clients frequently ask me why they should not buy contract forms online or from an office supply store. Why pay for an attorney when I can buy a legal form for a nominal fee?  I understand the inclination to go online because its entirely at your convenience and it is undoubtedly cheaper.  However, this comes at a potentially high cost.   Legals forms do not always comply with all legal requirements for a given industry and location (federal, state and local).  The danger you expose yourself to by avoiding working with a lawyer is the unknown.  It is the risks you don’t realize you are taking that frequently come back to bite you the hardest.  I am writing this blog today as a cautionary tale why such forms should be avoided because of a recent conversation I had with a potential client.

The Form Office Lease

Last week a potential client came into my office with a complaint that a former tenant had recently filed against him.  The tenant claimed damages against the landlord because the lease did not comply with the Philadelphia Lead Disclosure & Certification Law.  This law applies to any dust, dirt/soil, paint, and as of March 1 pipes that drinking water may pass through. If the allegations set forth in the complaint are true, the landlord will have to refund all rents received during the rental period, pay for his tenant’s attorneys’ fees and other fines up to $2,000.   The landlord in this case thought he followed all of the rules.  He even showed me the lead based paint disclosure form that came with his form lease.  Unfortunately, Philadelphia has very specific requirements concerning lead disclosures for buildings that were built prior to 1978.  Moreover, not only are there requirements for what has to be disclosed; but the manner in which disclosures must be made are also regulated by code.  In fact, this is such a prevalent problem in Philadelphia because it is such and old city that it has an excellent publication on this topic.  Click here for Philadelphia Landlord’s Guide to Lead Disclosure.  While, the form lease that was purchased at the chain office supply store might have complied with Pennsylvania state law, it did not satisfy the Philadelphia Code and this will be an unfortunate and expensive lesson for this landlord.

Justice

The American Rule

In the United States, each party is responsible for its own legal fees.  This is known as the “American Rule.”  In other countries, the U.K. for example, the loosing party is responsible for the winner’s legal fees.  This critical difference in approach to the general legal framework explains why litigation in the United States runs amuck as compared to our British counterparts.  New Jersey however has an oft forgotten procedural rule that when used properly turns the “American Rule” on its head and effectively makes the losing party pay for the winner’s attorney fees if certain conditions are met.

Attorney Fees in NJ

Tax Amnesty Programs Available in Pennsylvania in 2017 to Individuals and Businesses

What is the Pennsylvania tax amnesty program?

Tax amnesty  is a program where taxpayers (businesses and individuals) who owe outstanding taxes can settle with the Pennsylvania Department of Revenue (“Department”) by paying less than what is owed.  Under the  program, if the taxpayer pays the entire amount of the outstanding tax due, the Department will waive all penalties and one-half of the interest associated with the underlying tax.  This is an incredible opportunity for taxpayers to settle with the Department and take advantage of the savings being offered.

When does the tax amnesty program take place?

How to Hire the Right Lawyer
If you are reading this then one of two things have probably happened.  You have a business relationship with another person or entity that is taking advantage of you and you need to change it immediately.   You were just served with a complaint that provides a response deadline.  In either scenario, you should hire a lawyer to protect your interests.  But when do you this? How do you do this?  Do you even know any lawyers?  What if I choose the wrong lawyer? How do I hire the right lawyer? Lawyers are intimidating and jerks (so I have been told).  These questions and statements are very common when I meet clients for the first time.  Knowing this, I have always wanted to prepare a cheat sheet that clients can refer to help them navigate the very unfamiliar process of how to hire a lawyer.

Step 1.  Be proactive – Start Your Search and Do Not Wait to Hire Your Lawyer

If you were served with a complaint and do not respond before the indicated deadline, the plaintiff (the person who filed the complaint) can ask the Court to enter a default judgment against you. Do not wait until the last day to reach out to hire an attorney.  It is always a better strategy to meet with an attorney (or with several attorneys) as soon as possible so you can see if you can work together.  The quicker you start your attorney search, the quicker you will hire an attorney.   Do not wait.  This only leaves you with less time to choose the best lawyer for you.  So, where do you begin?

Confession of Judgment
A recent court decision from the Philadelphia Courts should cause anyone with a commercial lease to review their contracts.  The issue in this case required the court to determine if a confession of judgment clause in a commercial lease was enforceable.  The Court ruled the confession of judgment clause was not enforceable against the tenant because the landlord did not strictly follow the statute.  As a result, the Court struck down the confessed judgment.  While not ground breaking in and of itself, the opinion serves as a reminder that a court will closely scrutinize all confessions of judgment.  You can read the court’s decision by clicking here.  Before we look closer at the court’s decision, a basic understanding of what a confession of judgement is and why it is so powerful is required.

What is a confession of judgment?

A confession of judgment clause is usually found in most commercial lending transactions and commercial leases.  In a nutshell, a confession of judgment clause flips our notion of due process on it head.   A confession of judgment clause authorizes the attorney for the bank or landlord to appear for the borrower or tenant without any notice and enter a judgment for a specific amount of money (or for possession of the premises in a lease situation).   Think about this for a second.  The first pleading your lender serves is the paper that informs you a judgment was entered against you.  Game over. Or is it?

Bankruptcy and Sheriff Sales Blog ImageAs a professional real estate developer or someone with an interest in purchasing real estate at a sheriff sale, you need to understand how the bankruptcy and foreclosure laws work together.  Foreclosure is a process by which a private party (a bank for example) or a municipality bring a lawsuit to collect monies that are past due. This can be taxes or other fees owed. Once a judgment is entered, the sheriff will schedule a sale to satisfy the money owed at a public auction.  This is known as a foreclosure or sheriff’s sale. Can a bankruptcy filing stop a foreclosure?  The simple answer is yes. However, the investor that fails to perform simple due diligence can make a foreclosure sale purchase a very costly and time consuming proposition.  Before turning to this, a little background on the bankruptcy laws.

Bankruptcy: The Automatic Stay.

The day a debtor files bankruptcy (Chapter 13, for example), is the petition date.  On the petition date, a legal wall comes down known as the automatic stay.  All creditors are now required by federal law to stop collection efforts for debts owed prior to the petition date.  This includes all demand letters, lawsuits and sheriff sales.  So long as the petition date is prior to the “gavel falling” at the sheriff sale, the real estate remains with its original owner.  However, if bankruptcy is filed after foreclosure, even one day after, the real property passes to the successful bidder. The real property is then not part of the debtor’s bankruptcy estate.

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