Watching Your Language to Say What You Mean in Contracts

Above the entry to Hutchins Hall (in which my alma mater University of Michigan Law School is ensconced) is carved Oliver Wendall Hollmes’ famous quote to the effect that “the life of the law has been experience, not logic”.  A “Watch Your Language”  ongoing series in the new Ohio Real Estate Blog would add that if you want the experience to lead to law supporting the result you prefer, it’s important to take care in the language you choose to document your business relationships. 

• Here’s a welcome to the new Ohio Real Estate Blog being published by attorneys at the Cleveland based law firm of Kohrman Jackson & Krantz, PLL.  Kohrman Jackson & Krantz is also home to Jon Hyman, author of the Ohio Employers Law Blog which has been providing useful information and knowledgeable commentary about labor and employment law for  more than a year.  (Hopefully, Jon can mention to his colleagues that not including dates on blog posts is really annoying.) 

The first installment in the Watch Your Language series suggests “Say What You Mean, Precicely [sic], or a Judge will Decide What You Meant - #1 (Watch Your Language with ‘Repair Clauses’ in Commercial Leases)”.  The second installment further advises “If the Form Does Not Fit, You Must Alter It - #2 (Watch Your Language [and Intent] with Letters of Intent”.  Together, these posts again make the point that if the life of the law IS experience, one important aspect of framing and influencing that experience is being clear in defining the consensual business relationship.

• I have previously posted on the potential perils of a ”do it yourself” approach to legal documentation, pointing out that every legal document can be written from a variety of perspectives.  If you’re a commercial landlord, you’d probably prefer a lease slanted towards your interests rather than the tenant.  Perhaps even more importantly, an agreement regarding the sale and purchase of a business will typically be drafted much differently from the seller’s perspective than from the prospective buyer’s standpoint. 

Why Saying What You Mean Matters in Commercial Landlord-Tenant Relationships.  In his post regarding the wording of commerical lease repair clauses, Stephen Richman  uses object examples from caselaw to illustrate that even little things can make a difference.  In one instance, the result turned upon the grammatical difference between “i.e” and “e.g” with the language at issue providing “the landlord is responsible for structural repairs only, i.e. air conditioning, bolier, wiring and utlity replacements, provided tenant keeps up maintenance.”  Because ”i.e” means “that is” while “e.g.” means “for example” and the roof was not listed, the court ruled that the tenant was not obligated to make repairs to the roof.

The recent Ohio decision of Atelier District, LLC v. Parking Company of America, Inc., 2007  Ohio 7138, 2007 Ohio App. LEXIS 6258 (10th App. Dist.)  further emphasizes the need to “say what you mean.”  Both parties were sophisticated business entities in this case which ultmately proved to be a half million dollar (i.e. $500,000 plus) mistake for the tenant when the Court of Appeals upheld the trial court’s judgment in favor of the landlord.

At issue was language in an Addendum to a lease which obligated the tenant to “make improvements” to parking lots “which shall include development, paving, demoliton and fencing, such improvements to be more particularly described in Exhibit B”.  Exhibit B set forth ”cost estimates” for the improvements, but did not indicate any cap on the amount the tenant would have to pay to effectuate the required improvements.  Neither the Addeddum nor Exhibit B described the “improvements” to be made in any detail.    

The tenant argued that there was no “meeting of the minds” because it thought “paving” only meant that an “asphalt overlay”.  It also tried to blame the landlord and other outside factora for the tenant’s failure to fulfill its obligations under the Addendum.  However, the Court noted that “[b]ecause [the tenant] assumed the responsibility to obtain any required licenses or permits, it bore the risk that the government would delay in issuing them….  [The tenant] agreed to complete the lot improvements pursuant to the ‘Improvements’ provision and Exhibit B without including any ‘cap’ or ‘maximum’ on the amount it must spend to complete the improvements.”

Choosing the Right Words.  All right >> so you’re convinced that using just the right language is important in any document dealing with a legal relationship.  But does that really mean it has to be long and virtually impossible to understand (even by another lawyer, or for that matter even a few years later by the lawyer who drafted it in the first place)?  Ken Adams, a professor at the University of Pennsylvania Law School who writes the terrific AdamsDrafting blog focusing on contract drafting, doesn’t think so.  He is seeking submissions of a form contract a company uses on a regular basis for his class to redraft.  

• More information about the Penn Law Contract Redrafting Project
• Description of results of 2007 Penn Law Contract Redrafting Project involving a master services agreement used by a financial services company 

In his other Watch Your Language post on letters of intent,  Stephen Richman focuses on whether a letter of intent is binding and offers tips for ensuring that it does not accidentally become binding.  

And, finally Findlaw.com offers a Do’s and Don’ts: Contract Terms checklist offering useful guidance to anyone trying to document a legal transaction, as well as several other useful tips. 

 

Even the Bankruptcy Code Goes Global - Introducing Chapter 15

Although I’ve practiced bankruptcy law for more than twenty years, when I first heard about Chapter 15, I thought it must be shorthand for another serial bankruptcy filing combination.  After all, I’d quickly adapted to Chapter 20 in which a Chapter 13 proceeding is followed by a Chapter 7 and I’m certainly familar with Chapter 22 consisting of successive Chapter 11 reorganization proceedings. 

But Chapter 15?  For the uninitiated, Chapter 15 was added to the Bankruptcy Code as part of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act which is perhaps better known for its credit card industry inspired “means testing” provisions restricting consumer use of Chapter 7.  Chapter 15 addresses cross-border insolvencies and offers a way for debtors involved in foreign insolvency proceedings to administer assets found in the U.S.  In plain English, it deals with situations in which assets, creditors, or affiliates of the debtor exist in more than one country.  According to 11 U.S.C. 1501, Chapter 15 of the Bankruptcy Code is designed to

• promote cooperation between the United States courts and parties in interest and the courts and other competent authorities of foreign countries involved in cross-border insolvency cases; 
• establish greater legal certainty for trade and investment;
• provide for the fair and efficient administration of cross-border insolvencies that protects the interests of all creditors and other interested entities, including the debtor;
• afford protection and maximization of the value of the debtor’s assets; and
• facilitate the rescue of financially troubled businesses, thereby protecting investment and preserving employment.

>>>>>>>>>   Chapter 15 of the Bankruptcy Code is still not well known, but there are some useful resources available to anyone wanting to know more.

There is a good overview of the statutory provisions making up Chapter 15 on the U.S. Courts website.

The Canadian law firm of Cassels offers a Canadian view of the important provisions of Chapter 15 and how it addresses issues of particular concern to domestic creditors.

Bob Eisenbach of the In the (Red) business bankruptcy blog provides a terrific summary of the major substantive aspects of Chapter 15 and how it works on a practical level.  Among other useful information, Bob explains that if a U.S. Bankruptcy Court “recognizes’ a “main” insolvency proceeding pending outside the United States, the foreign debtor receives important protections such as the application of the automatic stay to U.S. creditors and assets without the necessity of a separate U.S. filing.  There are also other provisions giving U.S. bankruptcy courts discretion to grant other appropriate relief. 

For those wanting to follow Chapter 15 cases in detail, Chapter15.com is an invaluable resource.  In addition to various commentary on the pertinent law, Chapter15.com provides summary information about cases and related foreign proceedings, as well links to the dockets and pleadings for Chapter 15 cases filed throughout the U.S.  The website’s database is searchable in a variety of ways, including by court, debtor, filing date, and industry.

While many cases are filed in New York as one might expect, at least one case has been filed in every circuit according to Chapter15.com.  In Ohio, the following cases involving Canadian insolvencies have been filed, including a recent filing here in the Southern District of Ohio:

• In the Northern  District of Ohio >>>  Kirshan K. Sudan, Case No. 07-11166, Judge Harris 
• In the Southern District of Ohio >>>  ROL Manufacturing (Canada) Ltd., Case No. 08-31022, Judge Walter presiding
  • Marwil, Inc., Case No. 08-31029, Judge Walter presiding
  • ROL Holdings USA, Inc., Case No. 08-31025, Judge Walter presiding
  • ROL Holdings (Canada) Inc., Case No. 08-31024, Judge Walter presiding
  • ROL Manufacturing of America, Inc. Case No. 08-31027, Judge Walter presiding

 

Employment Law Potpourri

Lots of interesting posts recently in the world of employment law…..

Chris Moander of the Wisconsin Business Law and Litigation cautions Employee references are like ghosts -they can haunt you forever.  He links to an article in the April 2008 issue of the Wisconsin Lawyer  by Matthew L. Mac Kelly entitled Employer Liability for Employment References.  According to the article, the four areas of potential liability employers face when responding to a reference check are:

• defamation
• invasion of privacy
• retaliation claims
• negligent refertal/failure to warn

The article explains how each of these problems might arise and provides some useful guidance for minimizing an employer’s risk in providing reference information on former employees.

Jon Hyman of the Ohio Employer’s Law Blog reports that EEOC settles landmark “cat’s paw” discrimination  case.  As Jon explains, this case points up that employers can be held liable for adverse employment decisions made in reliance on information provided by a supervisor or other employee motivated by an impermissible bias such as racism.  

Jon also has an interesting post Court vindicates employer who turned a blind eyeto a request for a reasonable acomodation about an Ohio Eighth Appellate District case Buboltz v. Residential Advantages, Inc.  Although the employer successfully survived the charge it failed to provide reasonable accomodation to a blind employee, Jon believes that employers should not underestimate their continuing duty in this area.

Mike Hamblin over at the Michigan Business Lawyer Blog provides advice about What Should a Michigan Business Do If It Suspects One of Its Employees is Committing a Crime?

Dan Schwartz of the Connecticut Employment Law Blog provides a helpful reminder about the importance of notifying your insurance carrier early of employment liability claims if you are unfortunate enough to have events occur that might result in litigation. 

 

Mentoring Matters - To Everyone….

Mentoring matters - and is important and rewarding - to both the person being mentoring and the person doing the mentoring.  It’s not something that can really be successfully institutionalized in any company, but when it happens “for real”, it’s a crucial and life-changing experience for both people.  And we all ought to look for ways to nurture the environment and circumstances which actually DO make it happen spontaneously.   

Last week I had cocktails with a woman with whom I suppose I have a kinda mentoring relationship.  She works for a different firm than me - a larger, perhaps objectively, more prestigious firm than my current firm - but I feel lots of pride and satisfaction that I helped her get the interview with that firm.  I know she had to “win” the interview and that her standing and success at that firm now are all hers, but it makes me feel good that she has done so well and that I can still give her useful advice about how to maximize her success.

My Mentors.  In about a year and a month, I will turn the big 5-0.  So I suppose it makes sense that I’ve been in a “taking stock” mood lately and thinking, among other topics, about the whole mentoring thing.  As I talk with other lawyers, both contemporaries and younger attorneys, I’ve begun to realize EXACTLY how fortunate I’ve been in my career when it comes to having always had people along the way who were both willing and able to show me how to become the “right” sort of lawyer.

As I’ve moved along in my own career, I’ve become especially appreciative of the “non-billable” intangible aspects of being that certain kind of lawyer which today I am truly proud of being every day.  These exceptional individuals taught me every day in both their word and deed what I really wanted to be, and should be, when I finally became a “grown-up” lawyer.

And it’s so many years later that some of these mentors in my professional life perhaps do not, and may not ever, know or really understand how important they have been in how I approach and do so many things today.  Perhaps just importantly, I doubt that either of us realized how significant they would later be in making sure my “mentee(s)” will grow into the sort of ethical, intelligent, pragmatic lawyer we all want to see.

I still remember the lawyer (then a fairly experienced associate on the brink of becoming a partner) who came by my office my very first week as an employed attorney.  He explained the “nuts and bolts” of recording time (the thing that will always MOST matter to any lawyer in private practice), as well as many other practical aspects of being a lawyer they just don’t teach you in law school. 

It was a small, perhaps even selfish, act since he was going to be the one billing much of my time (or at least the one reviewing bills which included time I spent working on matters).  Yet it opened the door for a personal - yet professional - relationship between us which made it O.K. for me to ask the “stupid” questions about how to do things that young lawyers really DO need to know answers to.  It also helped me connect more to the firm because he was also the person I could go to when something about the “goings on” at the firm puzzled or concerned me.

Then there was the other relatively experienced partner who taught me much of what I know today about the substantive aspects of my practice area.  But what he really did - which I might not have gotten from anyone else - was teach me about “being” a “worthwhile”  lawyer.  Sure he taught me about being an ethical attorney, both generally as a concept and more specifically as issues arose in our day-to-day practice.  However, as crucially important as that was and is, what has and will continue to resonate with me is how he helped me understand about what it really takes to be an effective lawyer and what I should strive to be.

And later, there were the name partners in a much smaller firm with whom I spent a decade of my life.  One was sorta like my “big brother” who both challenged me and insisted that I continue to mature as a lawyer.  The other one “got” who I was and what I needed to do to become the best lawyer I could ever be.  In different ways, both of these individuals - as well as my previous mentors - helped me understand my potential and path to becoming a better attorney (and person).

My Mentees.  Back to my mentee.  I became involved with her when, as a first year law student (for whom law jobs are sometime tough to get), she was sufficently  persistent (without being annoying or unreasonable) that I finally gave her a job as a law clerk; she was FANTISTIC!!  When we got together last week (almost four years after we met one another), she told me that she is getting married - and I am thrilled for her.  We spent most of our time together talking about her - and her upcoming nuptials, career path, and current situation.  And while I have to admit, I often spend as much time talking as listening, it felt VERY O.K. to hear all about her this time and where’s she at and what she wants to do, personally and professionally.

There is also another  attorney I know who is a little further along the prescribed career for sucessful lawyers.  She’s just made a change in moving to a new law firm.  Since I’ve actually done this a couple of times, I could give her useful information based on my experiences.  Being able to help her make this transition in the most sucessful way possible mattered to me and made me feel good about myself and what I stand for as an attorney.            

The Fruits of Mentoring. Today, it doesn’t really even enter into my mind NOT to try to help younger folks.  It’s the way I was “brought up” as a lawyer and I can’t even imagine behaving any other way.  My point in sharing this is that it REALLY does matter what you or I do (or, tragically, fail to do) with the younger and/or less experienced folks in our organization (whether it’s a law firm or some other sort of business) - AND that it might be a LOT of years before you ever find out (if you ever do) - how much it matters.  Really matters to that person and to the individuals that person later interacts with…. and the individuals they later interact with…. and, well you get the picture….

Click here and here for some other “testimonials” about the power and importance of mentoring.  I’d link to more, but my Google search turned up disappointing results - search for “billable hour” and you’ll get lots of hits; search for “mentoring” or some variation thereof and there’s just not that much out there.  I’d like to think that’s because of how deeply personal and meaningful these relationships are and that we don’t quite know how to talk about them.  Or maybe it’s because if you’ve been lucky enough to have this valuable experience, you tend to take it for granted and think it’s a normal part of everyone’s career path; and if you haven’t been so fortunate, you’re not really certain what the “big deal” about this is anyway.  So, anyone, other stories???   

Many companies try to “assign” mentors to new hires.  I know they mean well, but I honestly don’t believe that these sort of relationships can happen this way.  Nor can you just go up to someone and say, hey, would you be my mentor or, on the other side of the relationship, can you force yourself on a younger colleague as “the” person who can show him or her the way.  Mentors are just drawn to one another and do the “choosing”, if you can call it that, themselves - mostly without really being aware it’s happening.

The most we can do is create an environment which facilitates and is conducive to making these relationships happen.  It needs to be a fundamental part of a company’s culture that never occurs to anyone to question.  A few years ago it was popular to say that “it takes a village to raise a child” - well, it also takes a village to bring  a lawyer, accountant, banker, or business person to maturity.     

In today’s bustling world of commerce in which everything seems to go faster and faster and profit margins sometimes seem to be getting smaller and smaller, it might be easy to overlook this aspect of professional business life. However, if we want a better world or a better profession, it really is up to us experienced types not to let that happen. 

To me, it’s not that different from growing up as a human.  There really are just some things which parents (or law partners or senior executive members of a company or organization) do need to instill in their offspring (or proteges).  I am willing to take on that responsibilty.  How ’bout YOU????      

 

Contract Essentials

Sharmil McKee of the Small Business Blog out of Philadephia recently made (on April 12) an interesting and concise post on the bare essentials of making a contract entitled “What should be included in a contract?”  (Because this blog doesn’t allow you to bookmark precise calendar posts, you may have to scroll down to get to this post.)  She suggests dividing a piece of paper into four squares:

> What are you promising to do?                      

> What happens if you break your promise?

> What is the other person promising to do?

> What happens if he/she breaks that promise? 

Sharmil also gives a useful example of how this would work.  While there are indeed many parts of making a contract, this does get to the essence of what is being agreed and may be a helpful shorthand way of thinking about contracting.

Contracts are, however complex, in the end nothing more than promises that law will enforce.  They include the things everyone thinks about like an employment agreement, or a contract for the sale of goods or services,  or a confidentiality agreement.  However, contracts also include loan documents, the lease for your store or office, and agreements between owners of the same company such as Operating Agreements for limited liability companies or close corporation agreements for corporations with a limited number of owners.

When courts have to decide whether a particular contract should be enforced one way or another, there are several important considerations.  At the most basic level, both parties to the contract must be adults, have full mental capacity (e.g. not be drunk or have a mental illness), and, if signing for a business entity such as a coporation or LLC, be authorized to execute the contract on behalf of that company.  There is also the “reasonable man” with whom all law school students quickly become acquainted - he is a hypothetical objective person and courts are always asking what he would do or think in the facts and circumstances before them to reach appropriate decisions in contract cases.

Offer and Acceptance.  Key to any valid contract is an “offer and acceptance” or what did each party promise to do.  Often this consists of one party agreeing to pay a certain sum of money either immediately or over some period of time in exchange for the other party delivering certain specific equipment, goods, or services.  At a minimum, for there to be a contract, a court must be able to determine:

• The identity of the parties to the contract (and in complex transactions, there may be multiple parties with different obligations)
• The subject matter of the offer, i.e. what is being sold
• Quantity of what is being sold, both how many and what measurement unit is being used (e.g. hours, currency, feet, meters, pounds, etc) - this is often where things can become ambiguous
• “Meeting of the Minds” which is legal speak for saying that everyone was on the same page about what each was promising to do

I’ve previously posted about the “battle of the forms” which arises when the contract is made through a series of correspondence or the exchange of pre-printed forms with lots of extra “Terms and Conditions” which don’t match.  Suffice it to say that when this happens, things can get a lot more complicated than anyone expected.  There can also be various counteroffers exchanged before final agreement is reached which can also make it more difficult to determine what was in fact agreed or whether there was a “meeting of minds” at all.   

Consideration.  Another critical part to a valid contract is the exchange of “consideration” among the parties.  This simply means that each party must get something of value from the contract, which may or may not be monetary.  Thus either a bargained-for benefit or a bargained-for detriment will work.  This distinguishes contracts from gifts and also from situations in which someone is already obligated to do something.  This is also often an area of dispute, particularly if there have been various modifications of the contractual relationship along the way.

More Information on Contracts.  For more information about contract basics, you can visit Findlaw’s “Contract Law-The Basics” page.   In addition to general information about contracts, it also has several tips for making (and keeping) contracts, including:

• Ten Tips for Making Solid Business Agreements and Contracts
• Do’s and Don’ts: Contract Terms
• Checklist: Contract Terms
• Top 10 Reasons to Avoid Breaching a Contract

I’ve previously posted about not relying too much on form contracts because they are generally slanted towards one side of the other, which may or may not coincide with yours in your particular deal.  In addition, they may be either too simple or too complex for your transaction.  And of course, there really is no such thing as “fine print” which you can just ignore - make sure you understand what every paragraph of the contract is saying. 

 

Straight Talk About State Tax Obligations in Ohio

Over the past few months, I have become much better acquainted with the ins and outs of state taxes in Ohio, as well as the consequences of a failure to pay when due,  than I would have thought likely.  So let me impart a bit of the knowledge I’ve gained mostly from hard work and experience. 

Unemployment Contributions.  I’ve become convinced that the absolute worst state  tax obligation in Ohio to fail to pay has got to be the unemployment contributions required to be paid to the Ohio Department of Job and Family Services (ODJFS) pursuant to Ohio Rev. Code §§4141.23 and 4141.27.  Why?  Well, mostly because the interest and penalties charged on these obligations is by far and away the most substantial of any unpaid state tax obligation in Ohio.  In addition, officers and others charged with responsibility for payment of unemployment contributions can be held personally liable for these amounts. 

Interest alone accrues at the rate of 14% per annum on the unpaid amounts required.  Moreover, unlike even the strictest lender, ODJFS charges interest on accrued interest, thus making it entirely possible that the interest and penalties on unpaid unemployment contributions will dwarf the actual amount originally due. 

On the brighter side, unlike many other state tax obligations, the State of Ohio is required to actually file a lawsuit and obtain judgment before moving on to the particularly intrusive collection activities such as bank account garnishment.  However, the assessment is presumed to be valid which considerably limits the options of the delinquent taxpayer and consequently shortens the litigation process.    

Sales, Withholding, and Use Tax.  In the case of Ohio state sales (Ohio Rev. Code §5739.13), withholding (Ohio Rev. Code §5747.13(C)), and use tax (Ohio Rev. Code §5741.14),  if the taxpayer fails to pay in a timely manner, the State of Ohio has the right to file a lien immediately without first filing a lawsuit.  This lien will then have the same effect as a judgment lien.  This means that the delinquent taxpayer may unexpectedly find bank accounts cleaned out through garnishment.  In addition, other post-judgment collection activities such as judgment debtor examinations and enforcement of the lien through foreclosure are a definite reality. 

To make matters worse, various penalties and interest add up quickly.  First  there is a “late” penalty for failing to file the required return in a timely manner in an amount equal to 10% of the amount assessed by the Ohio Department of Taxation.  In addition,  for failing to pay the required tax when due, there is another penalty  in the amount of the greater of $50 or 50% of the amount due.  There are also a variety of other charges and penalties levied upon the delinquent taxpayer.  And none of these are negotiable.  On top of everything else, interest will be assessed on the amount of the obligation.     

As further inducement to pay sales and withholding tax, the company’s vendor license and/or liquor license may be suspended or revoked if this obligation is ignored.  During the period of suspension or revocation, no sales of items for which the license is required may be made.  There is also a charge to get the applicable license reinstated.   

In addition, sales, withholding, and use tax are all “trust fund” taxes.  This means that officers, employees, or other representatives of the delinquent taxpayer may find themselves subject to personal liability if they are a “responsible party” charged by the company with ensuring these amounts were properly paid in a timely manner. 

For more detailed information about the scope of sales and use tax, the Ohio Department of Taxation has a helpful Sales Tax FAQ on its website. 

Workers Compensation Premium Contributions.  Like state sales, withholding, and use taxes,  the workers compensation premium contributions required to be paid to the Ohio Bureau of Workers Compensation pursuant to Ohio Rev. Code §4123.35 are post-judgment type obligations.  Thus a failure to pay these amounts can result in unfavorable collection activities against the delinquent taxpayer relatively quickly as spelled out in Ohio Rev. Code §4123.37.  In addition, in some cases, liquor licenses can be suspended for failure to pay workers’ compensation premiums when do.   

Income Tax.  If  business or personal state income tax is not paid promptly when required, a lien can be filed immediately against the taxpayer in a similar manner and with similar consequences as when state sales, withholding, or use tax is not paid.  In addition, any subsequent state income tax refunds due to the taxpayer will be rerouted to the State of Ohio. 

Corporate Franchise Tax.  Corporate franchise tax is being phased out and replaced by the corporate activities tax.  Until that transition is complete, corporate franchise tax works much the same way as state sales tax except that there is no personal liability for failure to pay.  However, if the corporation is in existence for even part of the year, it must pay at least the minimum tax of $50.00.   

Going Out of Business.  If you have ceased doing business, it is important to notify the State of Ohio IN WRITING of this fact so you do not continue to be assessed taxes and penalties.  To be certain it takes, you should consult the website for the applicable taxing authorities and follow the instructions concerning any forms or other procedures for providing notification that you are no longer in business.  In many cases, if you fail to make proper notification, you will still be required to pay penalties and other charges even though you weren’t doing any business.   

 

What You Don’t Know About Legal Requirements for E-Mail Marketing CAN(-SPAM) Hurt You

So you’ve decided to “get with it” and enter the 21st century in your marketing and business development efforts?  You’re really going to do it - harnessing the power and magic of the internet and e-mail marketing!  GREAT!  But did you know that there are some legal pitfalls waiting to trip you up if you fail to do it correctly?

And failing to do it right CAN cost you - BIG TIME!  Recently, at the request of the Federal Trade Commission (FTC), a federal judge in Chicago, Illinois ordered Sili Neutraceuticals, LLC and Brian McDaid to pay more than $2.5 MILLION for making false advertising claims and sending illegal e-mail messages in violation of the FTC  Act and the CAN-SPAM Act.  Why?  Well, according to the FTC  Press Release, among other reasons, the commercial e-mail messages being sent

• had misleading subject headings
• failed to provide clear and conspicuous notice of the opportunity to decline receiving any further e-mails from the sender
• failed to provide  a functioning return e-mail address
• failed to include the sender’s valid physical postal address 

Nor is this simply an isolated incident or a problem only for inexperienced or small businesses.  FTC also recently settled with Cyperheat, Inc. regarding the behavior of its downstream affiliates, imposing significant monitoring responsibilities on Cybernet, Inc.  For a summary of the responsibilities being imposed and suggestions on how to avoid trouble, visit “Affiliates: What is a Company’s Responsibility?” post on Laura Adkins‘  Word to the Wise blog.

What CAN-SPAM Is All About.  So what, exactly, is this CAN-SPAM Act and how can you make sure you don’t accidentally run afoul of its requirements, exposing yourself to unwanted possible liability and interference with the operation of your business?

• The CAN-SPAM Act is  the Controlling the Assault of Non-Solicited Pornography  And Marketing Act of 2003.  Its purpose is to authorize the FTC to enforce the first national standards for sending commercial e-mail, and to limit the bulk sending of e-mail.

• On its website, the FTC provides an excellent summary concerning “The CAN-SPAM Act: Requirements for Commercial Emailers” which highlights the major requirements of the CAN-SPAM Act, as well as the penalties for non-compliance and “Remove Me” Responses and Responsibilities: E-mail Marketers Must Honor ‘Unsubsribe’ Claims” which gives specific guidance concerning responsibilities of businesses using e-mail marketing techniques.   

Scope of CAN-SPAM Act.  The CAN-SPAM Act differentiates between “commercial” and “transactional” messages.  Thus, messages that are primarily invoicing or related to account information are not subject to CAN-SPAM.  You can even include some advertising content as long as it occupies a non-prominent postion.  (Some may wonder if it’s even worth the effort to do this, especially since including any advertising arguably exposes you to at least some risk of liability.)  Rule of Thumb - if you’re sending exactly the same message to lots of customers or clients (or potential customers or clients), CAN-SPAM probably applies. 

Religous or political messages are exempt.  Also, at least to some extent, messages to existing customers or others who have affirmatively inquired about your goods or services may also be exempt.

The Bottom Line: What You Really Want to Know.  If you’re like most business owners, all you really want to know is what - exactly - you have to do to be safe.  Obviously, to be sure you have properly complied, you should consult legal counsel to advise you about your particular situation.  However, here is some very GENERAL guidance:

• Unsubscribe Compliance.  Recipients of your e-mail  MUST  have an effective option to unsubscribe and you must comply within 10 days (or if at all possible, sooner).  You should also keep a list of folks whose “unsubscribe” requests you have honored so you can demonstrate compliance if necessary.  In addition, once someone has unsubscribed, you can’t legally sell or transfer that person’s e-mail address or other information. 

• Content.  Be SURE to accurately reflect yourself as sender and don’t get too cute with the subject lines; accurate and proper descriptions are essential.  In addition, you MUST include your physical postal address within the body of the e-mail.  (It’s probably not a bad idea to also include the main phone number for your business.)  While providing a link to your company website might satisfy the address requirements, why take the chance?  Finally, if your company is involved in the distribution, production, or other connection, with or of “adult content”, you MUST so label it. 

• Sending Behavior.  Don’t send messages with false headers, through open relays, or which contain a harvested e-mail addresses.

Other Points to Keep in Mind.  If you promise refunds to dissatisfied curtomers, make certain you deliver.  Identify your e-mail, or otherwise make sure it can be identified, as an advertisement.  Remember that even seemingly innocuous correspondence such as notifications of “seminars”, “open houses”, or “receptions” can still fall within the orbit of CAN-SPAM.   

What Can Happen If You Mess Up.  Each violation (and every single e-mail sent can be considered a separate violation) is subject to fines of up to $11,000.00 (so if you sent the same e-mail to 10 people, that could potentially be a $110,000 fine).  Additional penalties, including criminal prosecution and imprisonment, are also a possibility under certain conditions.  So you kinda want not to mess up on this.

BOTTOM LINE (Practical Legal Counsel): It’s just not that hard to make sure you’re doing it right so why take the risk?  If you pay attention and make the effort, you can virtually eliminate this potential liability.  If you don’t, it really could be the end of your business.  And, of course, good legal counsel can help make sure you’re addressing this concern effectively.   

 

C.V. Perry Receivership Update - Part II: Bankruptcy Law Influence

The ongoing C.V. Perry receivership case reflects an interesting choice of state law insolvency procedures over federal bankruptcy proceedings.  And yet, no doubt in part due to the sparseness of developed case law and statutory authority when it comes to Ohio receivership law, much has been borrowed from federal bankruptcy law. 

As a Columbus bankruptcy attorney who often represents creditors, I find the C.V. Perry case quite interesting because the procedures and law that will be established during the course of this case are likely to have an impact for some years to come.  If nothing else, Franklin County at least will have a roadmap for others contemplating receivership to follow.

A few months ago I wrote about how the C.V. Perry receivership was representative on what I saw as a mini-trend in choosing state court receivership over federal bankruptcy and some reasons that might be happening.  In my last post, I provided more detailed information about the C.V. Perry receivership itself.  In this post, I want to discuss some more of the events in the case and how the influence of federal bankruptcy law can be seen.

Proof of Claim Procedure.  Although Ohio Rev. Code 1701.89(A)  does refer to the “presentation and proof of all claims and demands against the corporation”, the actual process to be followed is left rather vague.  Moreover, there is no analogous provision in Chapter 1705 of the Ohio Revised Code applicable to limited liability companies.   Under federal bankruptcy law, requiring creditors to make a written “proof of claim” is a key component to the administration of any bankruptcy case and Bankruptcy Rule 3002 and Bankruptcy Rule 3003 sets out exactly how and when this should be done.  

Injunctive Relief in Form of a ”Stay”.  Count VII of the  Complaint seeks unspecified injunctive relief.  However, the Amended Order goes further and in language very similar to section 362 of the Bankruptcy Code, provides:

IT IS FURTHER ORDERED that all creditors, claimants, bodies politic, parties in interest, and all sheriffs, marshalls, and other officers, and their respective attorneys, servants, agents, and employees, and all other persons, firms and corporations be, and they hereby are, jointly and severally, enjoined and stayed from commencing or continuing any action at law or suit or proceeding in equity to foreclose any lien or enforce any claim against any of the Movants or their respective property, or against Martin Management, as receiver and liquidating trustee, in any court.  All such entities are further stayed from executing or issuing or causing the execution or issuance out of any Court of any writ, process, summons, attachment, subpoena, replevin, execution, or other process for the purpose of impounding or taking possession of or interfering with, or enforcing any claim or lien upon any property owned by or in possession of Martin Management, as receiver and liquidating trustee, and from doing any act  or thing whatsoever to interfere with Martin Management, as receiver and liquidating trustee, in the discharge of its duties in this proceeding with the exclusive jurisdiction of this Court over Movants’ properties and said receiver and liquidating trustee.  This Order shall be in full force and effect as of the date of its journalization with the Clerk of Court. 

Creditors have also responded in a fashion similar to what they would do in a bankruptcy proceeding.  One even entitled its pleading “Motion for Relief from Stay”. 

My point here is that ordinarily in cases in which injunctive relief is granted outside bankruptcy, the procedure is somewhat different than what seems to be happening in this case.  Typically an interim temporary restraining order is first imposed for a limited period of time followed, generally after some kind of hearing or by agreement of the parties, by a preliminary injunction.  Parties wanting the injunction removed usually ask that it be dissolved, not that the “stay” be lifted.  Here, there is no indication that any hearing was ever held prior to the issuance of this Order. 

What makes the issuance and continuance of that portion of the order appointing the receiver/liquidating trustee particularly interesting is that, as some creditors have pointed out, statutory authority doesn’t really support such a blanket imposition of a stay.  While Ohio Rev. Code 1701.89(A)(2) does allow the imposition of a “stay of the prosecution of any proceeding against the corporation or involving any of its property”, Ohio Rev. Code 1705.45(B)(2) specifically states that  ”dissolution of a limited liability company does not… prevent the commencement of a proceeding by or against the company in its name…”   

“Administrative Priority”.  One especially interesting concept borrowed from bankruptcy practice is the recognition of “administrative priorty” for certain claims.  An intial Borrowing Order entered in late December authorizes the Receiver/Liquidating Trustee to borrow funds or purchase materials up to an aggregate amount of $5 million.  It also provides that those extending credit in this way “shall be entitled to administrative priority distribution” for those amounts. 

More recently in February, the Receiver/Liquidating Trustee  filed a Motion for Authorization to Establish Fund for Administrative Fees, Costs and Operating Expenses which essentially seeks to surcharge creditors with liens on real estate to pay fees for the Receiver/Liquidating Trustee and his counsel, as well as other administrative expenses.  Creditors have opposed this latest motion and some have pointed out that in a Chapter 7 bankruptcy proceeding, attorneys’ fees and other administrative priority  claims are only paid out of the disposition of unencumbered assets.

The concept of “administrative priority” is a bankruptcy one spelled out in section 503 of the Bankruptcy Code.  There is no comparable provision in the Ohio Revised Code.  Here again, the sparseness of statutory authority and relative staleness of caselaw (most cases cited by any party are more than 50 years old and some date back before 1900) has led to importation of bankruptcy concepts into a state law insolvency proceeding.  

The paucity of recent or extensive authority concerning receiverships in Ohio law has been both the advantage and drawback of choosing receivership over the more clearly delineated Chapter 7 bankruptcy proceeding.  At the conclusion of the C.V. Perry case, that will no longer be true.  As the case proceeds, it will be interesting to see the extent to which bankruptcy concepts and procedures are imported. 

 

Skybus Chapter 11 Bankruptcy Petition Filed

Columbus based Skybus Airlines, Inc. (which is a Delaware corporation) has filed for Chapter 11 bankruptcy in Delaware, Case No. 08-10637-CSS.  Judge Christopher S. Sontchi will be presiding.  Click here for the story by Bloomberg.com.  Also read the initial story on the shut down as reported by the Columbus Dispatch.  The Columbus Regional Airport Authority is listed among the Twenty Largest Creditors (having unsecured debt) with a debt in the amount of $200,000.00.

Skybus is the third airline to file for bankruptcy protection in the last three weeks. 

UPDATE: The Docket Sheet for the first week of the Skybus Chapter 11 shows relatively little activity for a case this size. 

On April 8, Ohio Attorney General Marc Dann provided this advice for Skybus customers, including a sample letter to send to your credit card company. 

On April 15, 2008, a Class Action Adversary Proceeding Complaint (Adv. Pro. No. 08-50570) on behalf of Skybus employees was filed seeking damages consisting of 60 days’ pay and ERISA benefits.  The putative (i.e. not yet certified as a class action) class action asserts that approximately 450 individuals are affected and contends that Skybus violated the Worker Adjustment and Retraining Notification Act (aka and better known as the “WARN Act”) in the way it ended operations.  The action also seeks to obtain “administrative priority”  for the claims pursuant to 11 U.S.C. 503(b)(1)(A) which would put them in the same category as the lawyers and other professionals working on the case for Skybus.  This is a smart move because, if successful, it would require Skybus employees to be paid ahead of other unsecured creditors, including Skybus ticketholders unable to obtain a refund from their credit card company. 

 

C.V. Perry Receivership Update - Part I: Case Specifics

In connection with the downfall of the C.V. Perry homebuilder entities, I have previously posted on the increasing use of receivership in place of bankruptcy.  It’s been a few months since then and perhaps time for an update, as well as some commentary. 

This is the first of a two-part series concerning events in the case itself and some reflections on what it all means.  In this post, I want to provide some more detailed information about the case, some of its players, and the context in which it is happening.  In Part II, I will explore the influence of federal bankruptcy law in the case. 

Parties.  First, more info on the basics.  The C.V. Perry receivership actually involves multiple related entities, consisting of limited liability companies in which C.V. Perry & Co. was the sole member.  In addition to C.V. Perry & Co., the receivership case also  includes the judicial administration and winding up of the following entities (collectively, along with C.V. Perry & Co., I’ll refer to as “Perry Entities”):

• C.V. Perry Builders, LLC
• C.V. Builders II, LLC
• Manors at Homestead, LLC
• Pointe at Blacklick, LLC
• Manors at CrossCreeks, LLC
• C.V. Land II, LLC
• Arlington Remodeling, LLC

Martin Management Services, Inc., through its principal Reg Martin is the court appointed “Receiver and Liquidating Trustee” (more on what this means below) and is represented by the law firm of Strip, Hoppers, Leithart, McGrath & Terlecky Co., LPA.  Judge John F. Bender is presiding. 

Following Case Progress.  Anyone wanting to follow this case closely can visit the Franklin County Clerk of Court’s website and enter Case No. 07MS-11-454 (you don’t actually have to enter the “11″ as that is simply a notation indicating the case was filed in November) to see the docket showing the pleadings which have been filed.  To see copies of pleadings, you can make a personal visit to the Franklin County Clerk of Courts and view them on computer terminals provided there.     

Original Complaint.  According to the Perry Entities’ receivership Complaint, filed November 7, 2007, the impetus for seeking appointment of a receiver/liquidating trustee resulted from such problems  as (1) numerous cognovit judgments having been taken against the Perry Entities by The Home Savings and Loan Company of Youngstown; (2) dozens of mechanics’ liens filed against Perry Entities; and (3) numerous other lawsuits filed against the Perry Entities.  The Complaint for Judicial Administration of Winding Up of Affairs of Voluntarily Dissolved Corporation and Limited Liability Companies has eight counts which are:

• Appointment of Receiver for C.V. Perry; R.C. 1701.89(A)(
• Appointment of Liquidating Trustee for the Limited Liability Companies; R.C. 1705.44
• Establishment of Proof of Claims Procedure; R.C. 1701.89(A)(1), 1705.45 and 1705.46
• Settlement or Determination of Claims; R.C. 1701.89(A)(3), 1705.45 and 1705.46
• Determination of Rights of Holders of Shares; 1701.89(A)(4), 1705.45 and 1705.46
• Presentation and Filing of Receiver’s and Liquidations Trustee’s Account; R.C. 1701.89(A)(5) and 1705.44
• Injuctive Relief; R.C. 1701.89(A)(9) and 1705.44 
• Allowance and Payment of Compensation to Receiver, Liquidating Trustee, Attorneys, Accountants, and other Persons; R.C. 1701.89(A)(10) and 1705.44

Order Appointing Receiver and Liquidating Trustee.  An initial Order appointing the receiver/liquidating trustee was entered the same day as the Complaint was filed, but an Amended Order Appointing Receiver and Liquidating Trustee was entered on December 5, 2007.  The Amended Order granted the relief sought in the Complaint  and required the newly appointed Receiver and Liquidating Trustee to post a bond of $100.00 with the Franklin County Clerk of Court. 

So why the appointment as Receiver and Liquidating Trustee? Simply put, what statutory authority Ohio has concerning the liquidation and winding up of the affairs of business entities are slightly different with respect to corporations and limited liability companies.  Ohio Rev. Code 1701.89, applying to corporations, references appointment of a receiver.  Ohio Rev. Code 1705.44, the analogous statute for LLCs, refers to a “liquidating trustee”.   

Local Rule 93.  In addition to these statutes, Franklin County Court of Pleas Common Pleas Court Local Rule 93 (courts elsewhere in Ohio will have their own rules which may differ in important respects from this rule) will govern procedures and events in this case.  Among other provisions, Local Rule 93 requires the filing of an initial inventory and appraisal of the assets of the entity placed in receivership by the court appointed receiver within two months of his or her appointment, together with receipts and disbursements received and made to that point.  It also restricts a receiver’s fees to no more than $75 an hour and caps fees for counsel for a receiver at $150,000 (which may seem like a lot, but in this case may pose a problem for the receiver’s counsel).

Events.  What’s happened so far has mainly been authorization to sell certain properties, establishment of a “proof of claim” procedure, and a fair amount of sparring about “administrative priority”.  I’ll talk about the latter two of these in my next post.  

So that’s the lay of the land.  In Part II, I will focus on the influence of federal bankruptcy law on these receivership proceedings. 

 

10,000 Hits and Counting…

With all due respect to Kevin O’Keefe who posts today that when Measuring law blog success: Web stats are not the answer, I’m still going to celebrate breaking the 10,000 total hits threshold!  It happened yesterday and if nothing else, it’s a nice benchmark from which to look back over the last six months.

When I started this blog, I didn’t even know where to go to make it happen.  Hat tip to Eric Wittenberg - who in addition to being a fine Ohio lawyer, is also a Civil War historian who publishes the Rantings of a Civil War Historian - who helped me get started and explained some of the basic stuff to me.

I’m not sure if I knew anything about Google Reader when I started and I know I had no idea what an RSS feed was and why anyone would care.  Since then I’ve become quite the evangelist for Google Reader and am continually somewhat flabbergasted to find how few of my acquaintances have ever heard of it.  And now I don’t know what I’d do without RSS feeds to save time.  

I’ve also recently become acquainted with Google Notebook and its amazing usefulness both for bloogin purposes and for general practice purposes.

And, yes, I’ve had fun doing the blog to such an extent I find myself sometimes wanting to do it rather than whatever billable work I’m supposed to be doing at the time.

So here’s to continuing the journey… 

 

So You Want to Collect Interest on Unpaid “Accounts”….

You probably have some regular customers who order items from you from time to time.  Maybe there’s a purchase order involved, but for whatever reason, there’s never been any actual written contract between the two of you regarding the relationship as a whole.  Now suppose some of these customers start stretching out payment on you after you invoice them for their purchases.  What can you do?

What about adding a notation to the invoices indicating that interest will be charged on any amounts not paid in 30 days?  That’s exactly what a farm cooperative did (to the tune of 24% per annum) in a case decided last week by the Ohio Supreme Court.  (The creditor said it also sent a letter about the new finance charge, but there was some dispute whether the customer ever received the letter.)  The customers continued to purchase items after the invoices indicated interest would be charged on unpaid amounts, but eventually ran up a balance which they failed to pay.  The farm cooperative then sued. 

Holding.  Result?  In a unanimous decision (which includes one Justice concurring in the judgment only) in Minster Farmers Coop. Exchange Co., Inc. v. Meyer, 2008 Ohio 1259, the Ohio Supreme Court held that those notations were not enough to constitute a “written contract”.  Therefore, according to the Court, the farm cooperative could not collect interest on the unpaid amounts in excess of the statutory amount permitted under Ohio law pursuant to Ohio Rev. Code 5703.47 (in this case 10%).  As usual, the Ohio Supreme Court’s Office of Public Information has prepared a useful and informative summary of the case.   

Ohio Supreme Court’s Reasoning.  As the Ohio Supreme Court saw it, under Ohio Rev. Code 1343.03(A)(3), a creditor is not permitted to charge more than the applicable statutory rate on a book account “unless a written contract provides a different rate of interest”.  Thus the question was whether the notations on the invoice constituted a “written contract.”

To answer this question, the Court had to consider one of my favorite  issues of contract law: the infamous “battle of the forms”.  The creditor asserted that Ohio Rev. Code 1302.10 rather than Ohio Rev. Code 1343.03(A)(3) should control the result.  Ohio Rev. Code 1302.10 provides that a written confirmation of a commercial agreement sent within a reasonable time operates as an acceptance in most cases even though it has “additional” or “different” terms.  According to the creditor, the provisions concerning interest were “additional” terms that, absent any objection by the customer within a reasonable time, became an enforceable part of the contract between the creditor and the customer.

The Supreme Court rejected the argument that there was even a “written contract”, holding that the more specific statutory provisions of Ohio Rev. Code 1343.03 applied.  For “additional” terms to come into a contract, first there has to be a written contract.  According to the Court, the weight of authority in Ohio had concluded that invoices did not constitute “written contracts” for purposes of Ohio Rev. Code 1302.10.  The Court agreed with the determination by these courts that the customer needed to sign indicating his agreement to the new interest rate and opined:

By stating interest terms on invoices or account statements, [creditor] Minster Farmers made no attempt to condition the acceptance of orders on [customers] Meyer’s or Due’s agreement to Minster Farmers’ interest rate terms; instead it tried to unilaterally impose those terms after the fact….  Minster Farmer’s placement of an interest rate on invoices contained no promise by Meyer or Dues and demonstrated no meeting of the minds between the parties.

Prospective Application Only.  Thankfully, the Ohio Supreme Court limited application of this new rule to transactions occurring in the future.  As it explained: ” We do not intend for this decision to create shock waves throughout the many sectors of Ohio’s economy that rely on book accounts to do business, nor do we wish to encourage a propagation of pleadings regarding past practices.”   

What It Means.  If you want to charge interest on unpaid accounts or purchase orders, make sure that it says that on the very first correspondence or documentation you send the customer. 

• Even then, unless you also add language indicating that you are unwilling to do business unless the customer agrees to this, don’t expect to be able to enforce your chosen interest rate if the customer objects. 
• With this sort of language, you have a better chance of having your interest rate enforced, but it would be best to have the customer actually sign off in writing on the interest rate. 
•  If that first time payment of interest is mentioned is on an invoice sent along with the item purchased (or delivered later) which is not signed by the customer, you may have difficulty enforcing the interest provisions in any event.  
• And of course every case is slightly different and will turn on its specific facts.

Maximum Interest Rate.  One other thing you should be aware of is that for trade accounts and other business loans and indebtedness less than $100,000.00 and not secured by real estate, Ohio Rev. Code 1343.01 caps the permissible interest rate at 8% per annum.  (There are some other exceptions in Ohio Rev Code 1343.01(B), but this is the gist of it.) 

Yes I know the banks and credit card companies charge waaay more than that.  So why can’t you?  Well, because you are not a federally chartered financial institution, that’s why.  Federal law “preempts” state law and allows banks and credit card companies to charge more; there’s also some other laws applicable only to banks and credit card companies and not to you.  

So, let’s be careful out there about slapping interest rates of 18% plus on those slow paying accounts….

 

When Golf and the LAW Meet…. Fore!!!

With it being April Fools’ Day and all - and being far enough removed from the historic near blizzard that dumped 20 inches of snow here in Columbus a few weeks ago that one can actually start to believe Spring is here -  it seems appropriate to honor the approaching golf season in Central Ohio by taking a look at where golf (and golfers) seem to meet the Law.  And the consequences thereof (come on, did you really think I’d resist the temptation to use the legalese). 

Suppose you and your foursome are out in the middle of the back nine.  Playing ready golf, one of your golfing companions has gotten further up the fairway and is now waiting for you to hit.  She’s off to the right and certainly nowhere near where you want the ball to go.  Do you ask her to move just to be sure you don’t hit her or do you go ahead and hit?  What happens if you do hit her?  Are you legally responsible then?

Assumption of Risk = Recklessness, Not Just Negligence, Required for Liability

In Ohio, the seminal (i.e. case which sets the standard) case regarding golf accidents is Thompson v. McNeill, 53 Ohio St.3d 102, 559 N.E.2d 705 (1990).  A foursome of women reached the twelfth hole at a private country club.  Lucille  McNeill’s second shot went to the right, landing in a water hazard and JoAnn Thompson went to look for the ball.  McNeill chose, as she could under the rules of golf, to hit another ball from her same position.  When McNeill hit her third shot, Thompson was still near the water hazard, about 15 yards away, but at angle of nearly 90 degrees  from the intended path of the ball.  McNeill shanked the ball and hit Thompson in the right eye, causing severe injury.  It wasn’t clear whether McNeill yelled “Fore” as golf etiquette requires.

The Ohio Supreme Court held that to be liable, McNeill had to have acted recklessly or with the actual intent of hurting Thompson.  Mere negligence was not enough because when golfers enter the course, they have “assumed the risk” that inherent “foreseeable” accidents or injuries might occur.  Because “a golfer accepts the risk of coming into contact with wayward golf shots on the links” and “[s]hanking the ball is a foreseeable and not uncommon occurrence in the game of golf”, the Court ruled in favor of McNeill, the defendant.

Rules to Play By 

So against this backdrop, here are some rules to think about next  time you play a round:

1. Because of the “assumption of risk” perspective, if you do get hit by a ball on the golf course, whether by someone in your own foursome, or another group, it will probably be difficult to convince a court that you should be compensated for your injuries by whoever hit you.
2. If at all possible, you really should yell “Fore” and not just because it’s customary to do so.  In Thompson, the Ohio Supreme Court commented:
   • “If for example, a golfer knows another is within the line of flight of his shot and fails to offer the customary warning of “fore”, liability might accrue.  Such conduct could amount to reckless indiference to the rights of others.”  
3. If you are going to hit someone, it’s way better to do it with a really bad shot - that way it’s clearer that it shouldn’t have been forseeable, i.e. reckless.  Maxwell v. Rowe, 1998 Ohio App. LEXIS 4396 (9th App. Dist.) (”the fact that Jeramie was near the green when he was struck is evidence that Todd’s ball went where Todd intended it to go.”)
4. While most states apply the same sort of recklessness standard as Ohio, a few - Illinois to be specific - only require the injured golfer to prove negligence to impose liability on the golfer responsible for hitting the errant golf ball.  Zurla v. Hydel, 289 Ill. App.3d 215, 681 N.E.2d 148 (1st App. Dist. 1997).  So, if you’re playing golf in Chicago, be especially vigilant about not hitting other golfers. 

And now,

A Little About Me and Golf (and Why It Matters)

I’ve been playing golf for a few years now, mostly just for fun but occasionally to entertain clients and possible referral sources for my business, commercial, and transactional law practice.  I am by no stretch of the imagination REMOTELY  good, but I enjoy it (heck I can admit it, I’m addicted to it) anyway.  How do I know that?  Well, I’ve managed to rationalize my golf habit as an extremely efficient use of time.  The way I see it, when I golf, particularly with clients or prospective clients, I am simultaneously accomplishing:

• Socializing (which is fun and essential to staying a well rounded normal adult)
• Business development (which is essential to my career happiness as a successful lawyer)
• Exercise (which is essential to basic physical health and well  being as a human)
• Productive release of my natural competiveness and enhancement of my ability to know myself (the cliche is that golf is life and that what happens on the golf course really is indicative of behavior in “real life”)  

Socializing.  Through golf, I’ve met some terrific folks and made some really good friends, especially through my involvement in the Columbus Chapter of the Executive Women’s Golf Association.  So I definitely appreciate the socializing aspect of the golf experience.  I’ve also noticed that it can be a real ice breaker when you’re faced with meeting and interacting with folks you haven’t met before in a business/professional situation.  Regardless of ability, ALL golfers feel frustration at times and every golfer has a favorite course.  So if I know (or suspect) my counterpart plays golf, suddenly it becomes easy to establish a productive working relationship within which to do business.  And that HAS to be good for all concerned.

Career and Business Development.  One of the nice things about golf and being a woman in the business world is I don’t actually have to play all that well to have golf work for me (which in my case is DEFINITELY a good thing) in a business context.  As I mentioned, even just talking about it helps me establish common ground with people with whom I might otherwise have difficulty establishing a connection.  And there are an awful lot of men who really aren’t that good who feel very comfortable playing with me.  In addition, as any avid golfer will tell you, golf is really about being competitive with yourself which allows golfers of different abilities to still have a good time playing together. 

Perhaps the greatest utility of golf in the business development department is that you get 2-5 hours of uninterrupted time one-on-one time with the client, referral source, or prospect in a relatively relaxed environment to become acquainted on the personal level that really matters most.  How many lunches would you have to do to get to the same place? 

Finally, did I mention it’s FUN! - which makes everyone feel more postive towards a continued relationship with one another.

Exercise.  Ahhh….. EXERCISE - I know I need to do more of it, but I can never seem to establish a “gym” routine.  When I play nine holes, I frequently walk.  And even when I ride when playing a full eighteen holes, I do get some exercise…… painlessly.

Introspection.  That stuff about Golf = Life -  well, it’s true and I learn a great deal about my personal strengths and weaknesses almost every time I play. 

Now, if only it would get warm, or at least warmer….

 

 

Dos and Don’ts When It Comes to Interviewing Prospective Employees

Earlier this month, Jon Hyman over at Ohio Employer’s Law Blog made several excellent posts about making sure your interview process for prospective employees doesn’t inadvertently violate the law: 

• How to “Avoid Hidden Interviewing Traps”
• “Common Stereotypes to Avoid During Job Interviews”
• “Avoiding More Discrimination Traps”

Jon makes the point that some perhaps seemingly innocuous questions can be impermissible under employment law.  To illustrate this, Jon gives some specific examples showing both the right way and wrong way to ask a question.  Some of them are more obvious than others such as “How old are you?” which I think we all know is a bad question for a variety of reasons.  Others such as “That is an interesting accent, where were you born?” were not things I would have necessarily thought impermissible.

Jon also provides some very helpful guideposts regarding topics and stereotypes to avoid during the interviewing process.  For example, when interviewing someone with a disability, don’t ask “What happened to you?” or “How will you get to work?” Jon also cautions against stereotypes in your advertisement of the position (e.g. “young grad”).

Here again, some are things you already know (or should know) better than to do and might be things you don’t think you would ever do anyway.  But others such as not over-emphasizing the city’s aspects as a family friendly environment and a terrific place to bring up children are much less obvious.   

In addition, Jon points out that what you write down in your notes  of the interview with the prospective employee can be just as devastating as failing to establish proper procedures or asking impermissible questions.  For example, if the applicant has a name commonly used by both men and women, don’t write “female” in your notes.  If you do and you ultimately don’t hire her, you might find yourself on the receiving end of a lawsuit alleging discrimination.  

Bottom line - stick as closely as possible to the job requirements and how an applicant’s work-related background matches up.  And be very careful what you write down in your notes of the interview.   

 

Spring Has Sprung - Baseball’s Back!!!! Watch for Zooming Balls

To me, one sure sign that Spring has finally arrived at long last is baseball’s Spring training.  And nothing says Spring more than major league baseball’s Opening Day!  Which happens next MONDAY!!!!!!!  So in honor of the return of professional baseball, it seems appropriate to remind everyone that if you’re going for the seats close to the field to impress that customer or client, make sure you keep an eye out for errant balls and broken bats. 

Once you enter the ball park, for the most part, you have “assumed the risk” of getting hit by a foul ball or flying broken bat - just like it says in that tiny print on the back of your ticket.  (Ohio cases actually think having that warning in microscopic type on the backside of your ticket is important.)  As the Ohio Supreme Court said way back in 1925 in Cincinnati Base Ball Club Co. v. Eno, 112 Ohio St. 175, 180-81: 

it is common knowledge that in baseball games hard balls are thrown and batted with great swiftness, that they are liable to be thrown or batted putside the lines of the diamond, and that spectators in positions which may be reached by such balls assume the risk thereof.

More recently (just last season, in fact), the Ohio Court of Appeals was asked to consider whether the presence/performance of The Famous San Diego Chicken (view video of Chicken at work) during a Dayton Dragons (Reds AA farm team) game was sufficiently distracting to negate this “assumption of risk” principle.  The injured spector, who was hit by a foul ball, sued both the baseball club and The  Famous San Diego Chicken (who interestingly is not further identified in the case).  In holding that “assumption of risk” still applied, the Court of Appeals opined in Harting v. Dayton Dragons Professional Baseball Club, LLC, 171 Ohio App.3d 310, 870 N.E.2d 766, 2007 Ohio 2100 (2nd App. Dist. (2007):

This argument ignores the fact that team mascots and their antics are a common phenomena, and mascots are normally present during the entire course of the game.  In many cases, the team mascots are more popular than the team itself.  Simply because the Chicken appeared while the game was being played does not absolve Harting from the duty to protect herself from the ordinary risks inherent in the sport….

Given the prevalence of costumed team mascots at sporting events such as baseball, football, or basketball games, it is perfectly reasonable for a spector at one of those games to expect to observe said mascots during the normal course of the game.  The fact that Harting was allegedly distracted by the Chicken during the bottom of the sixth inning when she was struck by the foul ball did not negate her duty to pay attention to the action taking place on the field.

I don’t know about you, but it wouldn’t matter how very attentive I was to action on the field - when that foul ball or broken bat fragment comes zipping my way, my reflexes just aren’t that fast.  I think what’s really happening is that courts look at the situation and essentially say, “Hey, it was an ACCIDENT.  S*** happens.”

In at least one part of the world - specifically Jersey - this “baseball rule” may be slowly crumbling.  In Masionave v. Newark Bears Professional Baseball Club, Inc., 185 N.J. 70 (2005), the New Jersey Supreme Court drew a distinction between “the stands” and other parts of the stadium such as concourses.  For commentary on this case reprinted by Law.com, click here. According to the article, in Japanese baseball stadiums, the entire lower deck of seats is screened.  

Earlier this year, Ryan McKeen of A Connecticut Law Blog (which describes itself as “Thoughts on Connecticut Law with a Side of Baseball”) posted on a similar case relating to “Foul Ball Liability in Connecticut (He’s Out Part 2)”.  Ryan’s take on all this? It may mean netting coming to a ball park picnic area near you soon.  Big SIGH!!!!!!

In the old days, the Cincinnati Reds (less than 2 hours south of Columbus) had the honor of leading off every season by playing the very first game in the majors -  always at home.  Even if other games were scheduled for the same day, NO ONE started play before the Reds’ game.  Why?  Because the Cincinnati Reds are the oldest team in MLB. 

As a result, Opening Day in Cincinnati is a HUGE holiday - there’s  entertainment and even the great Findlay Market Parade (see video of the 2007 Opening Day Parade).  In recent years, other teams have started play earlier in the day than the Reds, but Opening Day is still special in Cincinnati.  Here’s the info about 2008 activities.  

So as Spring turns to Summer and you decide to go out to the old ball park, heads up!  Unless of course you’re on the concourse in Connecticut or Jersey.