A Victory for a Levin Ginsburg Client in the Seventh Circuit Court of Appeals
In a victory for Levin Ginsburg’s client Nano Gas Technologies, Inc., the United States Court of Appeals for the Seventh Circuit reversed the district court’s interpretation of an arbitration award, holding that the defendant could not “wait until he dies” to pay a portion of a damage award. In Nano Gas Technologies, Inc. v. Roe, Case Nos. 21-1809; 1822 (7th Cir., Apr. 25, 2022) the Seventh Circuit ruled that the district court had misinterpreted an arbitration award in concluding that the defendant could satisfy a $500,000 judgment “in such manner as Roe chooses.” In refusing to allow Nano Gas to immediately enforce the underlying arbitration award, the district court interpreted the arbitrator’s “in such manner as [defendant] chooses” language as allowing the defendant to choose when to satisfy the arbitration award, if ever, including by whatever assets he had left at the time of his death. Nano Gas appealed from the district court’s judgment.
Agreeing with Nano Gas, the Appellate Court concluded that, although Mr. Roe “invited ambiguity” through an alternative reading of “in such manner as Roe chooses,” his reading was unreasonable. The Appellate Court recognized that Roe could not “refuse to turn over his only identifiable asset, choose hypothetical forms of payment that may never come to fruition, or require Nano Gas to wait until he dies.” The court agreed with Nano Gas that both the language of the arbitrator’s opinion and common sense resolved this issue. Finally, recognizing that although in certain cases district courts may send a case back to the arbitrator to clarify an award, the Seventh Circuit rejected that procedure in this case because the award’s language compelled only one conclusion.
The panel reversed the district court’s findings regarding Roe’s discretion to satisfy the $500,000 award and remanded to allow Nano Gas to resume enforcing the entire judgment without delay. Levin Ginsburg Shareholder and Chair of Litigation Department, Howard L. Teplinsky, authored the appellate briefs and argued the case on appeal.
Register for Upcoming Webinar-Branding Concerns
On May 11, 2022, at 12PM CT, the latest LG Webinar will focus on branding concerns from trademark, licensing and litigation perspectives. Presented by Joseph LaPlaca, Roenan Patt, and Kevin Thompson, this webinar will focus on the issues from multiple viewpoints which should be considered when branding your company. Kevin Thompson will discuss general IP concepts relating to branding, Joseph LaPlaca will discuss common branding concerns which arise when licensing your IP, and Roenan Patt will discuss common pitfalls when branding which could help you avoid litigation. This webinar will help brand owners issue-spot these areas of concern and know when to consult with their LG Attorneys. A recording will be available later for those who register. To register, visit https://bit.ly/37pDMnK.
Branding is important to any company, but especially to startups. For a startup, particularly at the outset, its intellectual property may be its only asset. It’s important to understand how protectable this new brand may be, both as a sword and as a shield. It’s important to be able to stop others from infringing, but the new brand also needs to be safe from interference from third parties. Rebranding later on can be the death knell of a business. It’s important to consider all aspects of branding, including packaging, the website, any promotional materials, and whether or not to have a social media presence. How will your business interact with its customers? How will new customers find your business?
To learn more, please attend the webinar, or reach out to Kevin Thompson at (312) 368-0100 or kthompson@lgattorneys.com with any questions.
Today’s BIPA Ruling is Brought to You By the Letter I
Some judges have an extraordinary ability to explain their decisions in an easily understood and relatable manner. Such was the case in a very recent decision involving whether an employer’s commercial general liability insurance policy (“CGL”) covered an employee’s claims under the Illinois Biometric Information Privacy Act (“BIPA”). In State Automobile Mutual Insurance Company v. Tony’s Finer Foods, No. 20-cv-6199, Judge Steven Seeger of the United States District Court for the Northern District of Illinois was tasked with deciding whether a standard exclusion in a CGL policy relieved the insurer of its duty to defend a BIPA claim. BIPA is an Illinois statute that, among other things, requires private entities that obtain biometric information from an individual to first inform the individual that the information was being collected and stored and obtain a release from the subject. In the employment context, oftentimes employers collect biometric information (such as fingerprints) for time keeping purposes. In the last seven years, litigation over alleged BIPA violations have exploded and employers often look to their insurance companies to assist in the defense. Judger Seeger ultimately held that the “employment-related practices” exclusion did not preclude insurance coverage, undoubtedly good news for employers.
An “Employment-Related Practices” exclusion is common in CGL policies. Essentially, the exclusion precludes coverage for certain employment-related claims made by employees against their employers. In the policy at issue in the State Automobile case, coverage was specifically excluded for “personal or advertising injury” to “any person” arising out of “(a) refusal to employ that person; (b) termination of that person’s employment; or (c) employment-related practices, policies, acts or omissions, such as coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, or discrimination…” The court recognized that subparts (a) and (b) were not at issue and the only question was whether the underlying lawsuit was about an injury to the employee arising out of “employment-related practices.” The insurance company argued that the exclusion applied because the case arose out of the manner in which employees clock in and out of work. While the argument was “an appealing one,” the court took a closer look at the exclusion and determined that it did not apply. First, the court recognized that the exclusion was the “third part of a trilogy” with the first two parts covering hiring and firing. The judge reasoned that the third subpart, “arising out of employment related practices,” read with parts one and two appears to apply specifically to adverse employment action “and not any and all claims about something that happens at work.” The judge further stated that even though clocking in or out is an employment practice or policy, the fact that the text then contains a “laundry list” of targeted disciplinary practices, “using one’s finger to clock-in and clock-out is an awkward fit in that string, at best.” In determining that the third clause, when read in tandem with the first two clauses, could not be interpreted as generally excluding all claims arising out of employment, Judge Seeger cited to the well-known and respected Sesame Street doctrine of “one of these things is not like the others – one of these things just doesn’t belong.” After recognizing that other courts have come to differing conclusions, the court nonetheless ruled in favor of the employer and denied the insurer’s motion for summary judgment on whether it had a duty to defend the BIPA claim.
If you would like to discuss these or similar issues in more detail, please contact Howard L. Teplinsky at (312) 368-0100 or hteplinsky@lgattorneys.com.
No More Surprise Medical Bills
The No Surprises Act (“Act”) for healthcare went into effect on January 1, 2022. There are several key provisions.
Most significantly, the “Self-Pay Rule” under the Act generally requires healthcare facilities and providers to:
- Post required notices concerning an “uninsured (self-pay)” patient’s right to obtain a good faith estimate at the provider’s offices and on its website.
- When a person seeks care, determine whether the patient is a self-pay patient.
- Inform self-pay patients orally and in writing that they have the right to obtain a good faith estimate of charges upon request or upon scheduling an appointment.
- Provide the required written good faith estimate to the self-pay patient within the time required, as follows:
- If the service is scheduled at least 3 business days in advance: not later than one 1 business day after the date of scheduling;
- If the service is scheduled at least 10 business days in advance: not later than 3 business days after the date of scheduling; or
- If a good faith estimate is requested by a self-pay patient, or if a patient inquires about the cost of care: not later than 3 business days after the date of the request.
The Self-Pay Rule requirements seem to apply only to self-pay patients who schedule their appointment at least 3 days in advance, and possibly to those who request an estimate in advance. However, in the case of a patient who schedules an appointment less than 3 business days in advance, the rules require the provider to provide the good faith estimate not later than 1 business day after the date of such scheduling. The rules also acknowledge that in the case of emergency care, a good faith estimate may not be required.
The main consequence for billing an amount in excess of the good faith estimate is that a patient may initiate a Selected Dispute Resolution process and likely avoid paying his or her full bill if the actual charges are more than $400 over the estimated charges. In addition to the Selected Dispute Resolution consequences, failure to comply with the No Surprises Act may subject the provider to additional adverse action by state or federal agencies. States have the primary responsibility for enforcing the No Surprises Act and related regulations; however, if a state fails to substantially enforce the requirements, the U.S. Department of Health and Human Services can impose a corrective action plan and/or monetary penalties of up to $10,000 per violation.
If you would like to discuss these or similar issues in more detail, please contact Jonathan M. Weis at (312) 368-0100 or jweis@lgattorneys.com.
Dispute Resolution and Default Clauses in Commercial Contracts
Business transactions close principally because of the relationship between the parties. While seemingly crucial, parties frequently neglect to see past the strength of their relationship to determine what potential risks lie ahead should the business deal turn sour. When formalizing business transactions in writing, parties are often hesitant to include language that could “upset the other side” or that they think could cause the deal to fall through. Accordingly, the parties may leave out important language in contracts addressing, for example, a party’s failure to perform, believing it could never happen. Yet, the decision to exclude such contractual provisions could lead to time consuming and costly litigation.
Contracts traditionally address dispute resolution through arbitration or mediation, but there are other creative solutions. Any dispute resolution provision should be tailored specifically to the transaction after careful consideration of what would happen if either side breaches the contract.
An arbitration clause requires the parties to proceed with resolution of their disputes outside of the court system. Arbitration is a confidential proceeding presided over by individuals who are typically selected by the parties who have a particular expertise in the relevant industry. The arbitrators will hear the case and formulate a decision based on the evidence presented. Arbitration can be more efficient and less expensive than litigating in court because it is a less formal process without the motion practice, pleadings, discovery, and rules of evidence typically involved in litigation.
Additionally or alternatively, the parties could agree on a mediation provision. A mediation provision would compel the business owners or other company representatives to confer in-person or via video conference and make a good faith effort to resolve their disputes before either party may file a lawsuit. In addition to litigation avoidance, such a provision often ensures contract longevity through renewed communications between the same individuals who originally negotiated the contract.
Another way to prevent hair-trigger filings of breach of contract suits is through a default clause. A default clause requires the complaining party to first provide notice of the obligation they believe the other party failed to meet and an opportunity to cure that default. Contract terms are usually agreed to once the “why” behind them is communicated appropriately with the other party.
Levin Ginsburg prides itself on carefully and effectively negotiating contracts on behalf of its clients and helping contracting parties understand why certain provisions are in place to protect their interests. If you would like to schedule a consultation to prepare, review or negotiate your commercial contracts or to discuss any other business-related matter, please contact Joseph A. LaPlaca at jlaplaca@lgattorneys.com or (312) 368-0100.
No Contract, No Problem: How to Recover What You Are Owed
Business relationships are typically governed by written or oral contracts. However, not all contracts are alike. Sometimes, the contract is not signed by all of the parties. Other times, the contract is missing key material terms. Generally, businesses and individuals assume that the entities they do business with will keep their word and pay them after services are performed.
What happens when the entity for whom you performed work refuses payment, contending that no contract exists? If there is in fact no legally enforceable contract, how do you recover the money you are owed?
Thankfully, the law has developed equitable remedies that will allow you to recover for the services you performed, even if no contract exists. Specifically, you may have a claim for either quantum meruit or unjust enrichment (or both). Both equitable principles assume that no contract exists between the parties. Quantum meruit is Latin for “what one has earned” and it stands for the equitable principle that an individual who performed non-gratuitous work should be entitled to the reasonable value of his or her services. Similarly, unjust enrichment imposes an equitable obligation on someone who has received a benefit to the detriment of another, which includes compensating the party who incurred the detriment.
Asserting a claim based on either theory, however, would not entitle you to recover your attorneys’ fees. This underscores the importance of having a written contract in place to ensure you receive the full value of the work you perform.
If you would like to schedule a consultation to discuss a contractual dispute, or if you need to update your existing contracts, please contact Roenan Patt at rpatt@lgattorneys.com or (312) 368-0100.
Intellectual Property In a Time of War
The world’s attention is now focused on the ongoing situation in Ukraine. However, the battle lines are not always easily seen on a map. In modern warfare, even intellectual property rights can be caught in the crossfire.
As part of its response to the war, the United States joined other countries in declaring economic sanctions against Russia. One ongoing situation involves existing intellectual property rights in Russia that are up for maintenance. Filings would involve financial payments to the Federal Service for Intellectual Property of the Russian Federation, known as Rospatent. Presently, it is recommended that companies in this situation contact the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) for current guidance regarding those payments.
Even before Russia’s invasion of Ukraine, U.S. companies doing business in Russia have had difficult choices to make. Russia has already announced that it will not enforce the patent rights of those from countries it deems “unfriendly.” The McDonalds Corporation, for example, closed all its locations in Russia. It is believed that the physical stores may be seized and reopened under new ownership. A new trademark application was recently filed in Russia which shows the McDonalds logo on its side above the words “Uncle Vanya” in Cyrillic, which could signal plans to reopen the restaurants.
We will continue to monitor this developing situation. If you have specific questions regarding protection of your business’s intellectual property rights, please contact Kevin Thompson at kthompson@lgattorneys.com or (312) 368-0100 or schedule an appointment via https://calendly.com/kthompson-lg/30min.
DOJ Issues Updated Guidance on ADA Website Accessibility
Many business owners are familiar with Title I of the Americans with Disabilities Act (“ADA”) in the context of making reasonable accommodations for their disabled employees. However, any private business that is open to the public is also potentially subject to Title III of the ADA, which protects individuals with disabilities from discrimination in accessing places of “public accommodation.” One commonly litigated issue under Title III is whether and to what extent a covered business must make its website accessible to people with disabilities.
This accessibility requirement has resulted in a significant wave of lawsuits filed against businesses. These lawsuits are often pursued by “serial plaintiffs” that serve as class representatives in other lawsuits. In response to this trend, the Department of Justice (“DOJ”) recently provided updated guidance for business owners.
Website Accessibility Concerns
There are several ways in which a website could create a challenge for someone with a disability, such as:
- Color Contrast – Customers with limited vision or color blindness often require high-contrast to read text.
- Text alternatives for images – Customers who are blind need to understand the content of a picture.
- No captions – Customers with hearing disabilities need captions to understand videos.
- Mouse-only navigation – Customers who cannot use a mouse need to be able to access web content with a keyboard.
Key Takeaways for Businesses
The DOJ’s guidance provides a high-level review of the issues facing businesses and does not address many of the nuances being litigated in courts right now. However, there are a few notable key takeaways:
- All services offered by a covered business (even if it is not offered online) are subject to Title III compliance.
- The DOJ emphasized that businesses have several options to become Title III-compliant and there is no one-size-fits-all solution that businesses must follow.
- The DOJ provided examples of what businesses can do right now:
- Ensure there is adequate color contrast for all text on your website.
- Add captions to your videos.
- Ensure your website can take advantage of a browser’s zoom capabilities.
- Provide a way for a customer to notify you about accessibility problems.
- Businesses should use automated accessibility checkers to review potential accessibility issues with a website.
What’s the Risk?
While plaintiffs are not entitled to receive damages for these lawsuits, there are some hard costs that a business may face if it is sued for a Title III violation:
- Their own attorneys’ fees
- The Plaintiffs’ attorneys’ fees
- Expensive compliance obligations mandated by a court
The more a business can get ahead of these claims, the better it can position itself to avoid a Title III lawsuit. If you have questions about whether your business or its website is ADA-compliant, please contact Walker R. Lawrence at wlawrence@lgattorneys.com or (312) 368-0100.
Arbitration vs. Mediation vs. Litigation in a Post-COVID World
On the two-year anniversary of when the world shut down, I found myself reflecting on how my life as a commercial litigator has changed. COVID-19 has disrupted the entire judicial system as we once knew it, forcing courts with already congested dockets to shutter and quickly embrace modern technological advances to enable remote proceedings. With rare exception, Zoom hearings have now become the default, as have years-long delays and undesirable uncertainty—all of which lead to increased costs. While as counsel we have always been faced with the dilemma of how to most effectively and efficiently resolve contentious business disputes consistent with our clients’ objectives, with the COVID-related backlogs courts across the country are facing, arbitration and mediation offer desired alternatives.
Arbitration and mediation are confidential proceedings, whereas litigation is not. Court proceedings are open to the public and copies of nearly all filings are accessible to anyone. Thus, particularly in high-stakes disputes, many businesses prefer the opaque nature of alternative dispute resolution.
What are the primary differences between arbitration and litigation?
• Generally speaking, arbitration is more flexible, less formal, less expensive, simpler, and quicker than a trial.
• Arbitration affords flexibility in the selection of panelists, whereas judge assignments are purely random and, for defendants, depend entirely on where the plaintiff files the case. With arbitration, the parties can select arbitrators with a specific expertise or background in the relevant industry or subject matter of the dispute.
• With arbitration, parties have greater flexibility and control over deadlines and the discovery process. Among other things, parties can limit the types of discovery exchanged as well as the number of depositions.
• Arbitration promotes finality. When the arbitration panel renders a decision, this terminates the dispute (subject to a court’s confirmation of the award, or any of the very limited grounds for challenging an award), whereas the appeal of a court decision can prolong the proceedings for years to come.
What are the primary differences between arbitration and mediation?
• In arbitration, a neutral third-party acts as the judge, hears evidence, and makes a binding decision.
• In mediation, a neutral third-party offers non-binding recommendations and negotiates with the parties to assist them in reaching a resolution. However, unless all parties agree to specific deal points and terms of a resolution, the process is non-binding.
• Parties can agree to mediate a dispute at any point, whereas with arbitration, the hearing typically happens only after motion practice, discovery, and pre-hearing briefing.
The best method of dispute resolution depends on the particular facts and circumstances of your case. Bearing in mind that some disputes are contractually required to be resolved via mediation and then arbitration, having counsel experienced in business disputes is critical to evaluating the risks and benefits of each option. If you would like to discuss these or similar issues in more detail, please contact Katherine A. Grosh at (312) 368-0100 or kgrosh@lgattorneys.com.
Use Employee Compensation Plans to Keep Your Valued Employees
As many employers have discovered, it is becoming increasingly difficult to attract and retain talented employees. One method is to provide an attractive deferred compensation plan for your key employees.
Deferred compensation plans may be of two general varieties – “qualified” or “non-qualified”. In a qualified plan, such as a profit-sharing plan or a 401k plan, there are various laws regarding the terms of those plans. These terms may include who is eligible to participate, vesting schedules, and the permitted amount of annual contributions. In these plans, the employer receives an income tax deduction when it makes a contribution to the plan. The employee includes in its income the amount it receives from the plan upon distribution. If the employee leaves the employer, the employee may take all vested amounts.
In “non-qualified” plans, the governing laws are less rigid in terms of eligibility and other terms of the plan. The employer may choose who may participate, provided the employer does not discriminate based on protected classes, such as race and gender.
In a non-qualified plan, the employer may add different vesting schedules and include non-competition provisions, as well as other provisions intended to encourage the employee to remain in the employ of the employer. In non-qualified plans, the employer is entitled to an income tax deduction when the employee is required to include the amounts in its income.
Some of the more common provisions in non-qualified plans include the following:
- Vesting- The vesting schedule could be as long as the employer feels is necessary. Practically speaking, it should not be so long that the employee does not “see” the benefit in remaining with the employer.
- Incentives- The contribution could be dependent on the business attaining certain revenues or profits.
- Payouts to Employee- Amounts could be payable to the employee upon the employee’s death, disability, or retirement at a certain age. Payments could be made over a period of time (e.g., monthly over five years) and can be tied to certain restrictive covenant periods.
- Non-Competition- The employee would agree not to compete with the employer after termination of employment.
- Payments Upon Sale of Business- The plan could be structured so that the employee would receive payments upon the sale of the business. Often these types of plans issue “phantom equity” to the employee. This “phantom equity” has no voting rights or any other rights that an equity holder might have. However, the “phantom equity” has a value attributed to it, and that value is paid to the employee upon the sale of the business.
While many employees expect that the employer will have a “qualified plan”, a qualified plan does not provide an incentive for the employee to remain employed with the employer because the employee may leave at any time and take all vested benefits. With a “non-qualified plan”, the employee is provided an incentive to remain with the employer. If the employee leaves “early”, then he or she may forfeit any benefits which would have been provided.
If you would like to discuss the benefits of a non-qualified plan, please call (312) 368-0100 and ask to speak with Morris Saunders or Walker Lawrence.
