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Chime in on Payment of Oil Spill Claims
Since capping the leak, the news on the Deepwater Horizon oil spill has been sparse. But the multi-district litigation is progressing before the Louisiana federal court, and individuals and businesses continue to file claims for damages sustained with the Gulf Coast Claims Facility, an entity developed pursuant to BP’s statutory obligations as a responsible party. Many of these claims have gone unpaid and unanswered.
Claims Administrator Kenneth Feinberg will appear in Tallahassee next week before the Florida House Economic Affairs Committee to answer lawmakers’ questions about why claimants have had such difficulty in getting paid and speaking directly with decision-makers. The appearance is scheduled for February 18 at 8 a.m. in Webster Hall.
Until then, the public has the opportunity to chime in on the criteria for evaluating claims and the methodology for determining the amount to be paid to claimants. The Claims Facility has posted a proposal, which includes sample calculations for individuals and businesses and supposed expert reports.
The proposal sets forth the requirement that claimants establish an “identifiable link” between losses and the oil spill:
Evidence establishing this connection is required. For example, a claimant might provide documentation of cancelled orders for goods or services, disruptions to the supply of Gulf seafood, a termination of employment or reduction in wages that an employer confirms was caused by the Oil Spill, etc. Likewise, the GCCF will not presume that a claimant’s 2010 income or profits would have been greater or less than the claimant’s 2009 income or profits. Providing financial information about losses sustained in 2010 is but one form of proof, and will not be sufficient documentation for many individuals and businesses …
In discussing final payment calculations, the proposal states that the Claims Facility takes into account both documented losses and a “future losses factor,” which essentially assumes that losses in 2011 will be 70% of those sustained in 2010 and losses in 2012 will be 30% of those sustained in 2010. This works out neatly to a payout of two times any documented 2010 losses. There are exceptions for oyster harvesters, who get twice that amount, and those who sustained damages of at least $500,000. Those who don’t like the “future losses factor” are free to pursue an interim payments option.
Several comments have already been sent in via email and mail and are posted daily on the Claims Facility webpage. These comments often focus on the fact that not all businesses “fit the mold” of the proposal. The Claims Facility will review all public comments and then adopt final rules for determining and paying on claims.
The proposal and comments can be viewed here: http://www.gulfcoastclaimsfacility.com/methodology
All public comments must be received by February 16.
Social Media – No Right to Privacy during Discovery
Share with one, share with all. Not a mantra accepted by many Facebook and MySpace users who set their profiles to “Friends Only.” But the New York Supreme Court recently landed another blow to the social media users’ right to privacy claims. In Romano v. Steelcase, Inc., the court granted access to and copies of all of the plaintiff’s private records and information from her social networking accounts. The information tended to disprove that the plaintiff was unable to engage in an active lifestyle after allegedly suffering serious injuries from a fall from a defective desk chair. The court cited cases from Canada and across the United States and noted that refusing access to private postings goes against the trend towards liberal discovery policies and “would condone … attempt[s] to hide relevant information behind self-regulated privacy settings.”
The lessons learned from this trend are numerous. For example, an employer with a restrictive covenant over his past employees can use social media to determine the past employee’s current business endeavors and solicitations. Or, as occurred in an Indiana federal court this year, a sexual harassment claimant may have her wall postings and messages reviewed to determine if there was emotional or mental distress. The court in that case stated as follows:
“Although privacy concerns may be germane to the question of whether requested discovery is burdensome or oppressive and whether it has been sought for a proper purpose in the litigation, a person’s expectation and intent that her communications be maintained as private is not a legitimate basis for shielding those communications from discovery. … [A] requesting party is not entitled to access all non-relevant material on a site, but … merely locking a profile from public access does not prevent discovery either.”
(Read the full Order in EEOC v. Simply Storage Management, LLC)
But once social media is discoverable in a court near you, your expenses during discovery may skyrocket. Before producing the full extent of your wall and every wall to which you’ve ever posted, your attorney will need to review for information that shouldn’t be produced because it is prejudicial or otherwise objectionable. The party receiving discovery from its opponent or third-party provider encounters the same problems. Given the transient, dynamic, and voluminous nature of social networking profiles, the experience of sophisticated information technology professionals who conduct structured searches is necessary to keep down the costs of having your attorney laying eyes on and analyzing every post. For example, KAGM employs IT professionals and is establishing other connections with experts who can assist in discovery.
One should proceed with the presumption that every “tweet” is an electronic record that will be held for an eternity. Once it is out there, you cannot get it back. Companies who want to avoid the staggering costs of such e-discovery should take the preventative measure of adding social media to their information governance plan. A failure to do so puts a company at risk. Adding social media to your governance plan may be more than a mere recommendation. The Financial Industry Regulatory Authority issued guidance in January 2010 regarding the monitoring and maintaining of records by financial services firms on social media site usage. Regulations in other industries are sure to follow.
Is arbitration the smart choice?
Recently, I traveled to Pensacola with a client to take on the mysterious world of arbitration. For one-and-a-half days, we sat at a long table with the defendant and a relatively omnipotent construction lawyer who we paid to listen to two disgruntled companies and two stubbornly determined attorneys. We walked away after closing arguments, traveled back home, and waited a couple weeks to get an award letter from the arbitrator. What luck! KAGM’s client is victorious. But this sounds a lot different than your typical lawsuit, involving a salaried judge bound tightly by precedent, sitting high upon a bench, and determining your fate before you exit the courtroom. Arbitration is common in the construction and government contracting world from where my client hails, because it’s generally required by the contracts. Litigants may opt for arbitration when not required by contract for various reasons:
- Quicker resolution. This lawsuit where close to seven figures were at stake could have been tied up in discovery, motions to compel, and the slow-moving court dockets for a while. Instead, we opted, as is generally the case in arbitration, to allow no depositions, prohibit more than one round of discovery, and obtain a final award just seven months after filing the arbitration demand with the American Arbitration Association. The drawback, however, is that a drawn out discovery process, while time-consuming and expensive, allows the parties to smoke out every possible fact that could be relevant to their argument. With just one round of discovery, you might learn something new and not be able to ask follow-up questions until the final hearing.
- Cheaper. The client had times where he questioned whether this was true. After all, for a $500,000 construction lawsuit, you have to pay the American Arbitration Association $6,200 just to file the claim. Then another $2,500 if you make it to a first hearing. Add that to the arbitrator’s travel and hourly fees and you’re talking about a significant investment that you will incur even if you end up settling the case. But see the above bullet point on quicker resolutions. The attorney time saved in streamlined discovery can easily make up the difference.
- Ease of presentation. Many claims require the introduction of vague and less reliable evidence. For example, in construction cases, a party may have to rely heavily on affidavits and memories of conversations with employees who are unavailable for the hearing. Or a party may have to present a cumbersome set of daily reports and invoices to substantiate damages. Well, the affidavits and prior conversations might be excluded by a court as hearsay. The reports and invoices, if contested, might have to go through the excruciating process of authentication. Our arbitrator allowed everything to come into evidence, believing he could sort out what was relevant and probative. The drawback, of course, is that your opponent can easily get prejudicial evidence into the record.
- A “fair” and final resolution by a knowledgeable decision-maker. The parties generally confer and attempt to agree on the arbitrator based on, among other things, arbitration experience and subject matter expertise. A lawyer who has spent his career litigating contracting cases may understand the issues that come up on a construction site better than a Circuit Judge that spends one hearing making a child custody decision and the next figuring out whether a real estate broker is entitled to commissions. Couple this experience in your arbitrator with the fact that he is less bound to the strict confines of black letter law than a trial court. He might find a breach of contract but choose not to award lost profits, based on an inequitable result. This balance of equities can have its advantages and disadvantages. Many worry that arbitrations have a tendency to “split the baby.” That is, in close calls, the claimant will essentially just get about half of what he seeks. But where you feel wronged and your case is weak, you might be able to obtain a small award in arbitration while you’d be barred from bringing your claims in a court.
There are various other reasons why parties prefer arbitration, including the fact that it allows parties to continue working relationships without creating the bad blood that can develop during adversarial litigation. Further, while arbitrators should beware of a manifest disregard of the law, their awards generally are not appealable unless a party can show that a bias. Thus, the parties feel a sense of finality once the award letter is delivered. If you have the choice between arbitration and litigation, you should speak to an attorney to determine what is best for you.
How does health care reform affect employers?
I recently had the opportunity to present several seminars throughout the local area on the topic of health care reform. As most everyone knows by now, in March of this year, Congress passed legislation that created a sweeping overhaul of the current health care system we currently have. While many of the significant changes in the legislation are not effective until January 2014, there are many provisions, particularly those affecting employers and insurers, that are effective beginning September 23, 2010, just one short week away.
In my representation of numerous employers in Northwest Florida, I have encountered countless questions about what this new legislation means for employers. They want to what will happen to health care costs, what they are required to do, and whether they will be subject to the employer mandate to provide coverage. These inquiries led me to create a presentation on these issues that could be presented to local business leaders and owners in our area. The response was great. For those of you who missed it, here is a very brief rundown of what is important to know:
1. If you have more than 50 full-time equivalent employees, you will be required to provide health insurance to your employees by January 2014 or face a penalty. Depending on whether you provide inadequate coverage or no coverage at all, that penalty can run from $2,000 to $3,000 per employee.
2. All individuals will be required to have health care coverage in 2014 or face a penalty.
3. If you are a small business (under 25 employees), you may be eligible for small business tax credits if you provide health care coverage to your employees and pay at least 50% of the cost. These credits are attainable now. Please feel free to contact me if you believe you may be eligible and would like additional information on where to sign up for these credits.
4. If you provide retiree health coverage, there is a federal pool of money that is being used to reimburse claims costs for retirees and their spouses and dependents. The U.S. Department of Health and Human Services has already announced the initial recipients of these funds. Please contact me for more information about this program.
5. There are various changes that will be made to the insurance market itself with respect to what restrictions may or may not be placed on coverage. For example, annual and lifetime limits are out the window, as are restrictions on pre-existing conditions. Certain cost sharing agreements will be prohibited and there will be restrictions on the use of health savings accounts, flexible spending accounts and other types of accounts used for health care reimbursement.
With all of the major changes that have come and will continue to come from this legislation, it can be difficult to determine what each new change means for you and your business. Continue to check back as more information is made available regarding this comprehensive legislation.
Contact me directly for more information on the specific changes.
Save Florida Shellfish or Atlanta’s Water Supply?
For two decades, the tri-state area has engaged in a battle over the allocation of water in two basins that flow from northwest Georgia: the Apalachicola-Chattahoochee-Flint basin, which empties into Florida’s Apalachicola Bay, and the Alabama-Coosa-Tallapoosa basin, which empties into Alabama’s Mobile Bay. Alabama and Florida need enough water to support fisheries, power generation, and other uses. But more water for us means metro Atlanta runs the risk of coming up short.
These “water wars” have spurred numerous lawsuits. A year ago, federal Judge Magnuson essentially found that Georgia had illegally tapped Lake Lanier as a water supply. He gave the state until July 2012 to settle with Florida and Alabama or lose access to the lake upon which metro Atlanta relies. So yesterday, a consortium of Georgia riverkeeper organizations announced that they will work with Georgia’s next governor to bring this battle to a final resolution. The Georgia environmental groups urged action through the plan entitled “Charting a New Course for Georgia’s Water Security,” which is available here: http://www.chattahoochee.org/charting-a-new-course.php
The riverkeepers unveiled the new strategy – respect, reveal, and reduce. Respect for downstream users in their right to clean water, a sustainable environment, and a prosperous future. Revealing more open negotiations and rejecting secrecy. Reduction of Atlanta’s demands on the water systems through watering restrictions, more efficient cooling systems, and other conservation efforts.
With conservation and respect for downstream users in mind, hopefully Georgia’s next governor will work hard to reach a settlement that keeps all three states afloat. Florida needs freshwater to reach the Apalachicola Bay to sustain a multi-million dollar shellfish industry.
Disaster Inspires
The Deepwater Horizon oil spill has flooded hotels with cancellations, prevented boat rental businesses from operating, and left fishers with nothing to fish. But in the wake of a disaster—particularly an ongoing one—people work together to protect and rebuild. More than 100,000 innovative suggestions have come into BP for capping and skimming of oil. Music superstars have put on free concerts to attract people back to our tourist-dependent communities and beaches. Now, Pepsi will throw another $1 million towards good ideas for community rebuilding and solidarity.
Earlier this year, Pepsi began fostering innovation with the Refresh Project, awarding grants from $5,000 to $250,000 for community-serving ideas like the development of alternative cancer treatments, the rebuilding of destroyed and unsafe schools and playgrounds, the installation of wind turbines, and the granting of wishes for terminally ill military veterans. Each month, ideas are submitted on the project’s website. Popular vote decides the awardees.
Now, Pepsi directs its efforts to the Gulf Coast. Between now and Friday, creative thinkers will submit ideas geared towards benefiting communities affected by the oil spill. The rest of us can then vote in August for the 32 award recipients, for a total of $1.3 million in grants.
So, what’s the best way to direct these grants to the Emerald Coast? A community expo or market promoting local businesses affected by the spill? An environmental, health, and financial literacy seminar on surviving the spill and moving forward? A battle of the bands, 5K, or amateur sports competition on the sand?
Take a look at the Pepsi Refresh Project and submit your idea this week. Check back in August to vote.
The Ongoing Story of Invasive Species (and What You Can Do)
A 19-pound, 3-foot Asian carp tells the story of how lack of care in traversing the world’s waterways can put us in a treacherous environmental situation. When the large fish was found near the shores of Lake Michigan recently, Michigan Attorney General Mike Cox called it the Great Lakes region’s “worst fears” realized. In April, Solicitor General and now Supreme Court nominee Elena Kagan convinced the Supreme Court to not hear a dispute over a navigation lock that some thought would prevent the introduction of the Asian carp to the lake system. The coalition of Great Lakes states seeking closure of the lock believed that, without intervention by the Army Corps of Engineers, it was inevitable that the fish would make it to the Great Lakes. This exotic, invasive species may now wreak havoc to fish populations and the ecosystem throughout the region.
How does the invasion of the Asian carp into the Great Lakes affect us on the Emerald Coast? Across the nation, the spread of exotic or non-native species has become a serious threat to native plants, animals, and, thus, the economy. The Gulf of Mexico has a multitude of invasive species, primarily along the Florida coastline. These species include plants like hydrilla, water hyacinth, and giant salvinia and animals like the Asian claim, nutria, marine swimming crab, and Mozambique tilapia. The introduction of Asian carp to the Great Lakes was likely through shipping vessels transporting and releasing their ballast water into American waterways. But even recreational water users can inadvertently instigate the spread of nuisance species.
Harmful plants, animals, and other organisms can hitch a ride on our clothing, boats, and other items we use in the water. When we then go to another lake or stream, the nuisance species can be released and propagate. The results of such propagation may include reduced game fish populations and native species, destruction of boat engines and steering equipment, increased costs of operation for drinking water facilities and power plants, ecosystem degradation, reduced property values, adversely affected human health, and harmed water-dependent economies. Emerald Coast residents love to spend time on the water. Protecting these resources is important to our way of life. Removing visible mud, plants, fish, or animals before moving your boating equipment is a start. Ideally, recreational users should clean and dry everything that comes into contact with the water, including boats, trailers, clothing, and pets.
Preventing invasive species can be difficult. Canal system netting and a $1.5-million fish-poisoning program were insufficient to block the Asian carp from reaching the Great Lakes. But removing an introduced species that propagates quickly is even more of a challenge. The release of plants, fish, or animals into a body of water from which they did not come can be devastating. The five Gulf Coast states have statutory provisions applicable to the introduction of non-indigenous species, have prohibited and/or restricted species lists, and maintain permit programs to regulate the transport of selected species. Environmental groups are always lobbying, however, for more comprehensive invasive species management plans. Over the past few years, I have been lucky enough to work with attorneys from the National Wildlife Federation, the Natural Resources Defense Council, the Great Lakes Environmental Law Center, and other public interest environmental groups that have fought for legislation and regulations to prevent the introduction of invasive species. One such attorney, Thom Cmar, led the NRDC’s successful effort to have New York’s highest court uphold the state’s strict new ballast water standard. Success at this entryway for ships entering the Great Lakes System is success for those seeking to block invasive species in the Great Lakes.
Back here in Florida, the oil spill, which has caused numerous sightings of sea life surprisingly close to the shore, may be a new complication in the fight against invasive species.
Clearing Up the Myths of Wage and Hour Laws
The wage and hour laws governing employers today can pose serious threats to employers’ financial well-being and easily put a snag in the normal business operations of small to mid-sized employers. An expansion of overtime eligibility in 2004, increased enforcement by the Department of Labor under the Obama administration, aggressive plaintiffs firms and increased lay-offs and terminations due to a poor economy have created a perfect storm in Florida for exponential growth in overtime lawsuits filed under the Fair Labor Standards Act (“FLSA”).
The danger of FLSA claims to small and mid-sized businesses is that they allow the aggrieved employee to collect attorney’s fees, they place the burden of proof on the employer, and they are frequently litigated as class action claims. The defenses available to the employer are often scarce. Faced with the potential exposure of an award of attorney’s fees to a prevailing plaintiff, employers hit with wage and hour claims of relatively low value frequently must treat these as nuisance-type claims and buy them off.
Making the situation even more disconcerting to the employer is the fact that the Court in any wage and hour litigation must approve any settlement agreement as fair and reasonable, and the Court must look at the agreement with a fresh eye, not depending on the representations made by the parties. What more, provisions generally favorable and desirable to the employer, such as confidentiality provisions, can cause an otherwise valid settlement agreement to be declared unreasonable by the Court.
When you hire on employees to help grow your business, you get the good with the bad. While you cannot completely eliminate the risk that a former employee (or even a current employee) will file a claim against your company for unpaid wages, there are things you can do to ward off as many of these claims as possible. One thing you can do is understand the truth behind the myths associated with how you pay and classify your employees.
Myth #1: The FLSA doesn’t apply to my small business – I have less than 15 employees.
While many employment laws have threshold limits regarding the number of employees an employer must have before the law applies, the FLSA does not. If you have even one employee, the FLSA applies to you.
Myth #2: If I pay all my employees on salary then I can avoid having to pay them overtime.
This is perhaps the biggest misconception of employers. The manner in which you pay employees compensation has nothing to do with whether they are exempt or non-exempt for purposes of the FLSA. How you classify an employee for purposes of the FLSA is based on the employee’s job duties. The three most common categories of exempt employees are executive employees, administrative employees, and professional employees. The Department of Labor website provides fact sheets guiding employers in the requirements of these particular exemptions. While those fact sheets are helpful, they are no substitute for developing accurate job descriptions and seeking legal counsel to help you determine whether employees should be classified as exempt or non-exempt.
Many employees, although non-exempt, still prefer to be paid by salary and that’s OK. But if they work overtime, you must divide that weekly salary by 40 hours to create an hourly rate and pay 1.5 times the hourly rate for overtime. So, if you have a non-exempt employee who strongly favors being paid on a salary, you would be wise to start the salary at a lower level than normal.
Myth #3: I have a bi-weekly pay period, and as long as my employees only work 80 hours in that pay period, I don’t have to pay overtime.
The FLSA doesn’t measure overtime by pay period, whatever yours may be. It measures entitlement to overtime by hours worked in a 7 day period. So if your assistant helps you with a big project and has logged in 60 hours by Friday, you can’t tell her to work only 20 hours the second week of the pay period to avoid paying overtime.
Myth #4: If an employee is not authorized to work overtime and does so anyway, I don’t have to pay them for the unauthorized time.
Being required to pay an employee overtime wages for hours you expressly told him or her not to work can make you want to pull your hair out. But generally, the law doesn’t let you off the hook for those kinds of wages. To discourage such conduct by employees, make sure your employee handbook strictly prohibits unauthorized overtime and enforce the policy when it is broken, either through disciplinary action or termination.
Myth #5: I don’t really need to make my exempt employees keep track of their hours worked since they are not entitled to overtime.
Well, this is technically true. But, from a practical standpoint, it can be troublesome to the employer. The FLSA puts the burden on the employer to keep accurate time records of its employees. If you are faced with a situation in which an employee has been misclassified and you must go back and pay overtime wages, you won’t have an accurate record of the employee’s time worked if you haven’t required exempt employees to keep track of their hours.
For further information on the FLSA or other wage and hour issues, please contact Jamie Avery at javery@kagmlaw.com .
Widening of Public Beaches Without Compensation
Today, the United States Supreme Court unanimously—save Justice Stevens, a Florida waterfront property owner taking no part in the case—rejected the position of Florida panhandle waterfront property owners that they should be compensated for beach renourishment projects that create a public beach through the addition of sand to the shoreline.
In response to erosion from several hurricanes, the Florida Department of Environmental Protection permitted the City of Destin and Walton County to restore 6.9 miles of beach, add about 75 feet of dry sand seaward of the mean high-water line, and call the new sand a public beach. Homeowners called the beach widening project an unconstitutional taking. The “Takings Clause” requires that a government compensate private property owners when their property is taken for public use.
In Stop the Beach Renourishment v. Florida Department of Environmental Protection, the Supreme Court faced the intersection of the constitutional Takings Clause and the environmental concepts of avulsion and accretion. Littoral (i.e. waterfront) property owners generally will lose or gain land as the high water mark changes through a process called “accretion.” If the change is sudden, however, the boundary does not change. Such “avulsion” most often occurs in Florida when a hurricane washes away and erodes the shoreline. Courts have determined that littoral owners still have the right to all the land that they owned prior to the avulsion. Instead of erosion, this lawsuit involved the addition of land. If viewed as avulsion, new public beach would further separate the littoral properties from the water.
The Court held that the State of Florida, as owner of the submerged land adjacent to littoral property, has the right to fill that land and have such filling deemed an “avulsion,” thus cutting off the property owners’ rights to newly accrued shoreline. The beach-widening program that, without providing compensation, turns waterfront property into waterview property is not, according to the Court, an unconstitutional taking of private beaches. This decision may have unpredictable results on property values. Disconnection from the water decreases the allure of beachfront property, but the widened beaches also provide protection from property damage from hurricanes.