◊ VRP Law-The Intellectual Property and Employment Law Blog.
Provided by Vihar R. Patel and Sponsored by Enterprise Law Group, LLPArchive for Employment Law Updates
Buying and Selling a business (Mergers and Acquisitions)
Properly negotiating and structuring a purchase or sale of a business can be a challenging endeavor. Having a good team of accountants, legal advisers, valuation experts, tax advisers, lenders or investors is crucial to successfully buying or selling a business. There are a variety of considerations in buying or selling a business, but there are two major ways to structure a deal: an asset purchase or a stock purchase.
An advantage of an asset purchase is that it allows the buyer to be selective in terms of the assets that it wants to acquire from the target company. Also, the buyer is generally not liable for the seller’s liabilities, unless the asset purchase agreement has such language. Some disadvantages of an asset purchase are that the bill of sale must be comprehensive enough to ensure that no key assets are overlooked and third party consents will likely be required.
Some advantages of a stock purchase are that the business identity, licenses, permits can be preserved, and continuity of the business may be maintained. However, the buyer may be liable for unknown or contingent liabilities, and may be forced to contend with the seller’s minority shareholders.
Also, there are variety of employment and intellectual property law considerations that go into structuring a proper purchase or sale of a business. Such as the following:
a) negotiating key employee agreements and non-competition restrictions;
b) contending with collective bargaining agreements;
c) resolving anticipated or outstanding claims by employees;
d) acquiring the desired intellectual property (business name or marks, copyrights, patents or trade secrets);
e) restricting the other party from using the intellectual property (business name or marks, copyrights, patents or trade secrets); and
f) recording assignments or transfers of intellectual property (business name or marks, copyrights, patents or trade secrets).
Properly, structuring a purchase or sale of a business can often mean the success or failure of the venture. If you have any concerns or questions regarding the purchase or sale of a business, then please feel free to contact us.
Failure to contest arbitration properly, can waive access to courts!
Plaintiff was acquired by a new company and sued the defendant on a breach of contract theory in an American Arbitration Association (“AAA”) Complaint. The AAA Complaint alleged breach of a written agreement; however, Defendant counterclaimed requesting reformation or rescission of the contract from the arbitrator. The Defendant asserted a mutual mistake of fact as the basis for seeking a reformation remedy, and alternatively sought rescission of the contract.
In the arbitration proceeding, the Plaintiff asserted that reformation was not necessary as there was no mutual mistake of fact and no scrivener’s error. However, Plaintiff did not argue that an arbitrator could not reform a contract. Subsequently, Plaintiff filed a motion with the trial court to vacate the arbitration award asserting that the arbitrator lacked the authority to reform the 2004 written contract.
The trial court held that Plaintiff’s failure to assert at arbitration that the Arbitrator lacked the authority to reform the contract was a waiver of the argument. The trial court held that to object to arbitration, a party must object to the arbitration proceeding in a timely manner. The appellate court affirmed and stated that there is a mandate by the Illinois Supreme Court that arbitration awards should be construed as to uphold their validity whenever possible.
The presumption is that an arbitrator did not exceed his or her authority, and grant a petition to vacate an arbitration award only in extraordinary circumstances. Judicial review of an arbitration award is extremely limited. Consequently, litigators must be more cognizant and advise their clients of the need to assert all claims and arguments in arbitration proceedings.
See: First Health Group v. Ruddick, N0 1-083236; 2009 WL 1940702 (1st Dist). First Health Group Corp_Arbitration.
Discrimination based on genetic information prevented by GINA!
GINA is not the name of my favorite aunt, but the acronym for the Genetic Information Nondiscrimination Act (42 USC 2000 et. seq.). GINA prevents the discrimination of individuals on the basis of their genetic information for providing health insurance (Title I) and employment (Title II). Title II will be effective as of November 21, 2009.
GINA will prevent “covered entities” (employers, labor unions, etc…) from discrimination against current and former employees, union members, apprentices and trainees based on their genetic information. GINA has prohibitions against intentionally acquiring information about your employees, union members, apprentices, and trainees. If a “covered entity” has genetic information about these individuals, then it must keep the information in the strictest of confidence.
“Genetic Information” is defined as follows: any information about an individual’s genetic tests, including requesting or receiving genetic services, the individual’s family members’ genetic tests or the manifestation of diseases or disorders among the individual’s family members. “Genetic tests” is defined as an analysis of human DNA, RNA, chromosomes, proteins, or metabolites that detects genotypes, mutations or chromosomal changes.
GINA authorizes the EEOC to enforce its prohibitions against discrimination, acquisition and dissemination of genetic information. Employees must file a charge with the EEOC to enforce their rights under GINA. Feel free to contact us to understand how to implement policies and practices that comply with GINA, or to assert your rights under GINA.
Investigating and responding to Employment Retaliation Claims!
Investigating and responding to allegations of retaliation by employees or former employees often makes managers, supervisors and officers angry, frustrated or upset. However, these natural and human feelings about a potentially false retaliation claim can be used against employers in a retaliation lawsuit.
A manager’s hurt feelings, anger, upset demeanor, unhappiness or defensiveness can be used as evidence of retaliatory animus. See. Woods v. Washtenaw Hills Manor Inc., Case No. 07-cv-15420, 2009 U.S. Dist. Lexis 22358, *47 (E.D. Mich. 2009); Anderson v. Royal Crest Dairy Inc., 281 F. Supp. 2d 1242, 1250 (D. Colo. 2003); Kinzel v. Discovery Drilling, Inc., 93 P.3d 427, 436 (Ak. 2004); Miller v. National Life Insurance Co., Case No. 00364, 2009 U.S. Dist. Lexis 10626, *27 (D. Conn. 2009).
Making sure that officers, managers, supervisors, and employees are trained and properly investigating claims of retaliation is crucial in avoiding liability for employers. At the same time, mechanical or uncompassionate reactions often make the employer less credible during EEOC or IDHR investigations, or a lawsuit.
Understanding the tightrope that employers have to walk in this regard can be the difference between winning or losing a dispositive motion or a trial. If you have any concerns or questions about implementing a proper training procedure or defending against retaliation claims, then feel free to contact us.
Motions to Dismiss and the new Plausibility Standard under Rule 8!
The Supreme Court extended and changed the requirements for pleading a cause of action under Rule 8. In Twombly, the Court first applied the plausibility standard to a claim for antitrust violations by telecommunications providers. The Court, stated merely reciting that the telecommunications providers had entered into a contract, combination or conspiracy to prevent competition was insufficient to make the Plaintiffs’ claim plausible.
In Ashcroft, the Court applied the plausibility standard to a Plaintiff’s complaint of discriminatory treatment of detainees by the Immigration and Naturalization Officers. The Court stated that merely asserting conclusory allegations that Ashcroft was the principal architect of invidious discrimination and that Mueller was instrumental in adopting the policy was insufficient to meet the plausibility standard.
The Court went to on to reiterate that we must still accept all well plead allegations as true, but essentially, stated that we are not required to accept legal conclusory allegations, unless there are facts that turn the conceivable into the plausible. However you interpret Twombly or Ashcroft, it is clear that a Defendant’s motion to dismiss in Federal court has greater teeth and district court judges are now empowered to dispose of claims they find incredible.
It also seems that the plausibility standard is not limited to Antitrust complaints.
See. Ashcroft
Tricky Settlement Agreements in Seventh Circuit…
If you are a litigator in Illinois, the Seventh Circuit decisions in Lynch, Shapo, and Blue Cross have just made your job a lot more difficult. Especially, if your practice involves business, employment or intellectual property matters, where settlement agreements often contain a payment plan for royalties, profits, backpay or future earnings.
It used to be that based on Kokkonen you could simply enter a dismissal order with prejudice that allowed the court to retain jurisdiction to enforce the settlement agreement. However, based on the 7th Circuit’s recent rulings in Lynch, Shapo, and Blue Cross entering such an order will deprive the court of jurisdiction to enforce the settlement agreement.
In which case, your client may be standing outside the courtroom trying to find a way back in by filing a new lawsuit for a breach of contract. The other common alternative is to enter a dismissal order without prejudice to allow the court to retain jurisdiction to enforce the settlement agreement.
Unfortunately, entering such an order may deprive your client of the res judicata effect of a dismissal order that is with prejudice. In this scenario, your client will be back in the courtroom defending against claims that it believed were resolved, and may have helped fund its opponent’s lawsuit.
Understanding how the drafting of settlement agreements has changed in light of the US Supreme Court’s decision in Kokkonen and the Seventh Circuit’s decisions in Lynch, Shapo, and Blue Cross is crucial to properly representing your client’s interests.
Employment Related Torts-Assault, Battery, IIED, and False Imprisonment!
Often times, employers and employees do not realize that there are common law torts associated with many forms of sexual harassment. If sexual harassment involved some form of touching or locking up of an employee in an employer facility, then the employer may be liable for common law torts, as well as, sexual harassment.
It used to be that the Illinois Human Rights Act (“IHRA”) pre-empted many of these common law torts; however, due to recent changes in the law these common law claims are now permitted. However, the common law torts must not be inextricably linked to the sexual harassment claim. A common law tort claim that is inextricably linked is still pre-empted by the IHRA. Johnson v. Chicago Board of Ed., 2002 WL 1769976 *5-7, (N.D. Ill.) and Quantock v. Shared Marketing Services Inc., 312 F.3d 899, 904-06 (7th Cir. 2002).
In addition, these common law tort claims are still subject to traditional common law defenses, such as the following: laches, statutes of limitations, consent, etc. In fact, voluntarily entering a room with the harasser can be the basis of a strong consent defense for an employer. Hanna v. Marshall Field & Co., 279 Ill. App.3d 784 (1st Dist. 1996) (affirming a trial courts dismissal of a false imprisonment claim based on the consent defense pursuant to the employer’s summary judgment motion).
Of course, this can vary based on the gravity of the sexual harassment from touching hair or genitalia, use of threats, weapons and/or physical violence. Understanding these employment related torts requires a careful review of current court opinions on these matters. If you have any concerns or questions relating to these matters, then please feel free to contact us.
Attorneys’ fee awards, Prevailing Parties and Reasonable Fee Awards!
Attorneys’ fees are often a huge point of contention in a lawsuit, especially, in consumer and employment law areas. Often fee shifting provisions are utilized to negotiate concessions from opposing parties. However, understanding how fee petitions are awarded by courts is crucial to litigating these disputes, advising business owners, individuals, employers, employees, collection agencies and consumers.
A court will look at the following factors: 1) the nature of the law and the expertise required; 2) the local rates of attorneys specializing in that area of law; 3) the use of multiple attorneys; 3) the complexity of the task performed by the billing attorneys; 4) the amount of recovery obtained for the client; 5) the efficient use of paralegals or administrative staff; 6) the number of conferences and attorney meetings; and 7) the length of the litigation.
In a recent opinion, the 7th Circuit, affirmed a district courts award of $6500 in fees, based on the following findings: 1) four attorneys were used, when one attorney with a billing $260 could have performed the work; 2) duplicative tasks were performed by attorneys with a billing rate of $425 and $375; 3) the lawsuit was resolved in a matter of months; 4) $6500 seemed roughly proportional to the amount recovered for the Plaintiffs under the Fair Debt Collections Practices Act (FDCPA); and 5) the courts determination that the proffered evidence did not justify the billing rates claims by Plaintiffs’ attorneys.
See: Fee_7th_Schlacher_0809. If you have any concerns or questions regarding the attorneys’ fee matters, then please feel free to contact us.
Continuation of Health Insurance Coverage in IL?
Continuation of Health Insurance Coverage by IL may seem unnecessary, but it is required under Illinois Continuation laws. The Illinois Continuation laws apply to employers or companies of any size and provides for the following:
1) spousal and dependent continuation of health insurance coverage;
2) written notice to the employee of his or her right to elect Illinois Continuation Health Coverage;
3) the employee bears a 100% of the premiums costs for electing the coverage;
4) the employee must elect the coverage within 60 days of the date his or her employment was terminated;
5) benefits for hospital, surgical or major medical are the same as that under the previous group coverage; and
6) the Illinois Continuation coverage lasts for nine months from the date of termination or separation of employment.
If you have any questions regarding the requirements for Continuation of Health Insurance Coverage in IL, then please feel free to contact us.
When is an Employer required to provide a Reasonable Accommodation to disabled employees?
In the legal world, a Reasonable Accommodation is not a stay at a five star hotel or resort. Instead these terms, refer to the balance that courts attempt to strike between a disabled employee’s rights and an employer’s duty to accommodate the employee.
Typically, the employer or Company does not have to provide a Reasonable Accommodation under the American’s with Disabilities Act (ADA), unless the employee asks for the accommodation or the employer knows of the disability. Hedberg v. Indiana Bell Tel. Co. Inc., 47 F.3d 928, 934 (7th Cir. 1995).
In order for the employer’s obligation to accommodate to be triggered, without the employee’s request, the symptoms of the disability must be obvious enough to reasonably infer that the employer actually knew about the disability. Hedberg, 47 F.3d 928, 934 (7th Cir. 1995) and Jovanovic v. In-Sink-Erator Div. of Emerson Elec. Co., 201 F.3d 894, 899 (7th Cir. 2000).
However, this inquiry is often very fact specific, and courts will make a case by case determination about whether or not the employer or Company, had a duty to provide a Reasonable Accommodation to its disabled employees.
