October 2, 2019

PHMSA Releases Enhanced Emergency Order Procedures

Pipeline Safety Alert 

(by James Curry, Keith Coyle and Brianne Kurdock)

On October 1, 2019, the Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency) published a Final Rule in the Federal Register updating its procedural requirements for issuing emergency orders (EO).  In 2016, PHMSA issued temporary regulations for issuing emergency orders in an interim final rule (IFR).  Unlike the process that ordinarily applies to PHMSA rulemakings under the Pipeline Safety and Administrative Procedure Acts, the Agency issued the temporary EO requirements without providing the public with prior notice or the opportunity to submit comments.  The final rule takes effect on December 2, 2019, and includes changes that the Agency deemed necessary based on comments submitted after the IFR.

What is an Emergency Order?

Congress authorized PHMSA to issue EOs in the Protecting Our Infrastructure of Pipelines and Enhancing Safety (PIPES) Act of 2016.  In response to an imminent hazard, PHMSA may issue an EO imposing restrictions, prohibitions, or safety measures on pipeline owners and operators.  Unlike a Corrective Action Order or a Safety Order, PHMSA may issue an EO to a group of operators that share a common condition or even the entire industry.  PHMSA anticipates issuing an EO to respond to natural disasters, when serious flaws are discovered in pipes or in equipment manufacturing processes, or when an accident reveals an industry practice is unsafe. Aggrieved owners and operators may challenge an EO by choosing a formal hearing before an administrative law judge (ALJ) or filing a written response with the Associate Administrator.  In either scenario, the Associate Administrator must issue the final decision within 30 days of receipt of a petition for review. …

October 1, 2019

Babst Calland Adds Artificial Intelligence to Accelerate, Enhance Due Diligence and Contract Review

Emerging Technologies Alert

Babst Calland announces the deployment of artificial intelligence to the due diligence and contract review process for capturing and managing critical business information in high-volume corporate and commercial transactions.

Babst Calland is among early law firm adopters to initiate and implement artificial intelligence, machine learning, and predictive analytics to legal contract review and document management, enhancing efficiency, intelligence and quality while reducing costs for clients.

With the addition of artificial intelligence software, Babst Calland can now deploy highly-trained machine learning algorithms in its due diligence process resulting in faster, more intelligent contract or document review for clients. The Firm can now rapidly review and execute business contracts quickly and accurately whether the client has 100 or 100,000 documents for review.

Providing measurable value requires experience. Babst Calland and our affiliate, Solvaire, have been performing complex due diligence, discovery, and document management projects for clients for more than 20 years. During the past year, together with Solvaire, the firm evaluated numerous options, applications before adopting new artificial intelligence software and designing its proprietary platform with the capacity for handling huge volumes of contracts and documents on an expedited basis.

Now leveraging AI technology, coupled with our proven proprietary process, we implement projects more accurately and efficiently than ever before. in fact, we cut manual document review time in half offering clients faster risk assessments and more confident decision-making.

 Clients are demanding more efficiency and enhancements in the due diligence process for complex deals and transactions, requiring more insight from attorneys, as well as more innovative resources to stay one step ahead in a time-sensitive, highly competitive marketplace. Our state-of-the-art approach, along with our systematic process that applies artificial intelligence technology, provides clients with the latest, flexible solution customized to meet their specific business needs. …

September 30, 2019

Department of Labor Finalizes New Overtime Rule

Employment and Labor Alert

(by Stephen Antonelli and Brian Lipkin)

As we previously reported, the United States Department of Labor (DOL) has been considering changes to the overtime laws.  Last week, the DOL finalized a new overtime rule, which takes effect on January 1, 2020.  Here are the biggest changes:

Higher Salary Threshold.  The new rule raises the salary threshold that exempts certain executive, administrative, professional, and outside sales employees from overtime.  Under the new rule, these employees will need to earn a salary of at least $35,568 per year ($684 per week) to be classified as “exempt” from overtime.  This is an increase from the current salary threshold of $23,660 per year ($455 per week).

Changes for Highly Compensated Employees.  Under the existing federal overtime rules, certain “highly compensated” employees, who earn a salary of at least $100,000 per year, are also exempt from overtime.  The new rule increases to $107,432 per year the minimum salary for employees to qualify as “highly compensated.”  (Pennsylvania does not recognize the highly compensated employee exemption, so this change may only affect employers in other states.)

Handling of Bonuses.  The new rule will allow employers to count nondiscretionary bonuses and incentive payments, which are paid at least once per year, toward up to 10% of the salary threshold.  For example, an employee who earns a salary of $33,000 per year and a nondiscretionary bonus of $3,000 per year satisfies the salary threshold under the new rule.

If the new rule takes effect, it will be the first increase in the salary threshold since 2004.  There is a still a chance, though, that a court will be asked to block or the delay the rule.  …

September 26, 2019

Stay Informed: Timely Alerts for Clients with Emerging Technologies

Emerging Tech Alert

We recognize the need for our clients to stay informed about the various legal, regulatory and policy matters impacting companies developing or investing in new technologies, new companies, and new ideas.

Our plan is to periodically share helpful business and legal insights specific to early-stage businesses and technology-driven companies from our team of attorneys experienced in the full spectrum of technology, commercial transactions, intellectual property, compliance, mobility, transportation safety, product quality, artificial intelligence (AI)/machine learning, Internet of Things (IoT), and automation matters.

Babst Calland’s Emerging Technologies practice provides strategic leadership with business and legal representation for manufacturers, suppliers, start-ups, technology companies, investors, universities, and government entities.

We hope that you will keep us as a resource reminder in your in-box. To learn more, contact us or visit Babst Calland/Emerging Technologies. Thank you!

 

Christian A. Farmakis

Shareholder
Chairman of the Board

September 23, 2019

Businesses beware: Courts are shifting the cybersecurity onus toward companies

Smart Business

(by Jayne Gest with Molly Meacham)

In early data breach and cybersecurity litigation, courts took the perspective that cybercriminals were bad-acting third parties and businesses should not be held responsible in negligence for economic losses. That’s changing, however.

“Courts, in general, are looking for ways to turn to companies that are the custodians of the data, versus the individuals who traditionally have borne the uncertain burden of potential future identity theft if their data is stolen,” says Molly Meacham, shareholder at Babst Calland.

Smart Business spoke with Meacham about data breach litigation trends.

What are examples of courts shifting their approaches to data breach litigation?

In Dittman v. UPMC, the Pennsylvania Supreme Court broke new ground, finding that companies have an affirmative duty of care to protect confidential personal data that they have collected. The court viewed the actions of cybercriminals as a foreseeable risk that’s not a shield from liability. The court also did not let UPMC point to the economic loss doctrine, which previously held that if the loss is only financial, it cannot be recovered under a negligence theory.

The Dittman decision drew nationwide attention, because litigants in other states will ask their courts to adopt or reject it.

In addition, courts are looking at data breach damages. Several federal judges rejected data breach class action settlements to demand a larger or simpler recovery for the individuals, including higher caps per plaintiff, larger pools of funds and/or easier hurdles toward getting those funds.

Courts have also pushed back against the threshold issue of whether plaintiffs have to show actual damages to participate in a class action, or whether the risk of future damage is sufficient. …

September 23, 2019

Personalities of Pittsburgh: Babst Calland’s Donald Bluedorn II

Pittsburgh Business Times

(by Patty Tascarella with Don Bluedorn)

A lawyer who’s energized by martial arts and draws on engineering skills is leading Pittsburgh’s sixth-largest firm with balance in mind.

Donald Bluedorn II built most of his career at Babst Calland and, in mid-2017, became just the second managing shareholder in the law firm’s 33-year history. In June, he took Babst Calland into Texas via a merger with The Chambers Law Group, based in Houston. Bluedorn, who also practices the martial art of Brazilian jiu-jitsu, is focused on energy and natural resources and environmental work.

You have an engineering degree. Did that figure into your decision to be a lawyer?

My father was the first person in our family to go to college — he got an engineering degree, then went to night school and got an MBA and then a law degree. He worked for the local power company and ran a country practice out of our farm. I’d always wanted to be a lawyer. My dad said, “You like science and math, get an engineering degree. If you decide not to go to law school, you can do something with that. With a political science degree, you’re committed to going to law school.” By the time I got to my senior year in college, I really wanted to go into law. But in some ways, engineering was a fantastic background: It taught economic rigor, discipline and to think problems through in a logical way. No one has ever hired me as a lawyer for my engineering skills, but it helps me to understand the science behind what we’re doing and to engage with the engineers or consultants clients might be using. …

September 20, 2019

Uniformity or More Chaos: EPA Finalizes Rule Repealing Obama Administration’s Definition of “Waters of the United States”

Environmental Alert

(by Lisa Bruderly and Gary Steinbauer)

On September 12, 2019, the U.S. Environmental Protection Agency (USEPA) and the Army Corps of Engineers (Corps) (collectively, the Agencies) released a pre-publication version of a final rule repealing the Obama administration’s 2015 rule re-defining “waters of the United States” (WOTUS) under the Clean Water Act (CWA), typically referred to as the “Clean Water Rule” (CWR). The repeal is intended to end the existing regulatory patchwork, where (1) the CWR’s WOTUS definition currently is in effect in 22 states (Pennsylvania and Ohio among them), (2) the pre-2015 definition of WOTUS is in effect in 27 states (including West Virginia), and (3) the applicable WOTUS definition is “under federal court consideration” in New Mexico. The repeal rule becomes effective sixty (60) days after publication in the Federal Register, which has not yet occurred as of September 20, 2019. Major national environmental groups have already vowed to challenge the repeal rule in court.

The Trump administration directed the Agencies to review the 2015 WOTUS definition in an Executive Order issued on February 28, 2017. The repeal rule completes step one of a two-step process designed by USEPA and the Corps to implement the Executive Order. Step two of the process is underway and involves replacing the CWR’s definition of WOTUS with a revised definition of the term. On February 14, 2019, USEPA and the Corps published a proposed rule to revise the definition of WOTUS. The comment period on the proposed revised definition ended on April 15, 2019. We have discussed the substance of the proposed revised definition of WOTUS in a previous Environmental Alert. According to the online docket, USEPA and the Corps received more than 621,000 comments on this proposed WOTUS definition. …

September 19, 2019

Employers Should Fix These 8 Common Problems With Restrictive Covenants

The Legal Intelligencer

(by Brian D. Lipkin and Carly Loomis Gustafson)

When an employee quits, the employer might dig through its files, dust off an old noncompete agreement, and see what rights (if any) it has under the agreement. Does this scenario sound familiar?

Unfortunately, by the time an employee has quit, it’s too late to go back and correct an outdated or insufficient agreement. So, we recommend that each fall, employers look through their existing noncompete agreements (and other restrictive covenants, such as nonsolicitation agreements), and fix these eight common problems:

Problem No. 1: Over the years, the employee signed multiple, conflicting agreements.

Fix: When an employee signs a new agreement, it should clearly state that it replaces all previous agreements.

Problem No. 2: The employee did not receive consideration—such as a new position, raise, bonus or promise of employment for a fixed time period—in exchange for signing the agreement.

Fix: If an employer realizes that an employee may not have received adequate consideration, the employer can pay a bonus in exchange for signing a new agreement. By timing its review of restrictive covenants in the fall, an employer can prepare for employees to sign updated agreements when they receive year-end bonuses or raises.

Problem No. 3: The agreement doesn’t detail what the employee is restricted from doing.

Fix: We often see agreements that prohibit an employee from going to work for a “competitor.” The problem with this language is that it inevitably leads to a dispute about whether the new and old employers really compete with each other.

If an employer is concerned about employees leaving for specific companies, those companies should be named in the agreement. …

August 22, 2019

2019 Pennsylvania AV Summit – Industry Leaders Discuss AV Regulations and Standards, Safety and Innovation, and Consumer Expectation

Justine M. Kasznica spoke at the Pennsylvania AV Summit on September 4-6 on a panel focused on autonomous vehicle regulations and standards.  Leaders within the industry discussed AV regulations and standardization, balancing safety and innovation, consumer expectation, and self-certification vs. third-party verification.

Panelists photographed left to right: William Gouse, Ground Vehicle Standards – SAE International, Justine M. Kasznica, Attorney at Law – Babst Calland, Monica Lopez, Chief Science and Art Officer – La Petite Noiseuse Productions, Kelly Funkhouser, Head of CAV/Program Manager for Vehicle Usability and Automation – Consumer Reports, Auto Test Center, Matthew Wood, Safety Engineering Lead – Aptiv, and Jackie Erickson, Senior Director of Communications – Edge Case Research.

September 12, 2019

September 30 deadline nearing for employers to submit Component 2 data to the EEOC

The PIOGA Press

(by Stephen Antonelli and Alexandra Farone)

For more than 50 years, the Equal Employment Opportunity Commission (EEOC) has required large and mid-sized employers to submit an annual report known as the EEO-1 Report, which identifies the number of employed workers in job categories based on sex, race and ethnicity. This data is now known as “Component 1” data because in 2016 the Obama administration proposed requiring a second component to this annual report that would require employers to also disclose the hours worked and annual earnings of these employees, in an effort to identify pay disparities. Known as “Component 2” data, the newly collected information should include employees’ W-2 earnings as well as hours worked in 12 pay bands for each of the 10 EEO-1 job categories.

In 2016, the Office of Management and Budget (OMB) approved the proposed requirement, and the requirement was slated to take effect in 2018. However, in 2017 the Trump administration stayed the implementation of this requirement, citing the burden of compliance upon employers. The validity of the stay became the subject of litigation in November 2017. The United States District Court for the District of Columbia vacated the stay in March 2019, and ultimately ruled to extend the Component 2 reporting deadline until September 30, 2019.

The court’s ruling had no effect on the standard May 31, 2019 deadline for employers to submit their yearly EEO-1 Reports for Component 1 data. The Department of Justice has appealed the ruling, but the requirement to comply and produce the data by September 30 remains in full force and effect during the pendency of the appeal. Therefore, by September 30 all employers with at least 100 employees are required to collect and submit Component 2 Data for a “workforce snapshot period” as selected by the employer for the reporting years 2017 and 2018. …

September 1, 2019

Never Trust Your Cotenants – Ouster in West Virginia

Institute for Energy Law Oil & Gas E-Report

(by Anthony DaDamo)

“My possession of said land has been, and is, actual, hostile, visible, notorious, exclusive, continuous and peaceable.” One of several cotenants to land in northern West Virginia attested to this in an affidavit in 1903. While it is clear that the affiant was attempting to adversely possess the property, can one cotenant, who has an equal right to the possession of commonly held property along with all other cotenants, adversely possess the interests of his cotenants? West Virginia courts recognize the doctrine of ouster, which allows a cotenant in possession to acquire all interest of his or her cotenants in property, similar to adverse possession. As with its sister concept, adverse possession, recorded evidence of ouster is difficult to identify. In situations satisfying the elements for ouster, identifying and applying the principle is an effective way to clear clouds on title.

West Virginia courts recognize that the ouster of a cotenant may occur when all elements of adverse possession are met and there are objective facts to show specific intent to oust the cotenant. Ouster requires a tenant in common to occupy common property openly, notoriously and exclusively as the sole owner, while keeping up improvements, paying the real estate taxes and receiving the rents and profits. Proof of these elements shows an intention to ignore the rights of the ouster’s cotenants and such acts amount to an expulsion of non-possessing cotenants. The ouster’s possession will be regarded as adverse to his cotenants from the time the cotenants are shown to have knowledge of such acts and claims. The ousting cotenant must take actual possession of the property and claim title to the entire property for a period that satisfies the statute of limitations for adverse possession (10 years in West Virginia). …

August 23, 2019

Face it head on: How to resolve conflict among business owners

Smart Business 

(by Jayne Gest with Kevin Douglass)

Many business owners claim to be blindsided when a co-owner files a lawsuit against them detailing a list of grievances. The truth is that business owners often ignore disagreements with co-owners for years or even decades by focusing on pressing day-to-day business matters.

If your company does not address owner conflicts and succession planning issues, these matters will eventually disrupt, impact or injure the business. But with the right approach — and the right facilitator — these challenges can be identified and resolved.

“Disagreements among co-owners of a business are natural. They come up frequently. The key is how owners address those conflicts. Even a company with one owner eventually has to deal with succession issues to avoid potential tension between family members or others vying to be the next generation of owners,” says Kevin Douglass, shareholder at Babst Calland.

Smart Business spoke with Douglass about conflict resolution among business owners.

What events can trigger an escalation of a disagreement between owners?

The reasons why a disagreement may bubble to the surface are almost endless. One trigger is business financial health. If the company is doing very well, owners may feel entitled to more compensation or at least more input into how additional profits will be invested. If the business is struggling, an owner’s benefits may need to be decreased and tough decisions made about the company’s direction.

Other reasons for conflict include a change in an owner’s level of commitment or job performance, a desire to change the governance structure, conflicting business strategies, and compensation and benefit differences. Personal changes may also spark controversy, such as an owner’s marriage or divorce, owner children who are employed by the business, personal finances or advancing age. …

August 23, 2019

Deadline Approaching For Employers to Submit Mandatory Pay Data to EEOC

Employment & Labor Alert 
(by Stephen Antonelli and Alexandra Farone)
In May 2019, we issued a Client Alert after the U.S. District Court for the District of Columbia ordered the EEOC to collect employers’ pay and hours worked data (commonly referred to as “Component 2 Data”) from certain employers. Specifically, the Court ordered the EEOC to collect such data from employer-selected pay periods during the years 2017 and 2018.
We issue this follow-up Client Alert because, by September 30, 2019, all employers with at least 100 employees are required to collect and submit Component 2 Data for a “workforce snapshot period” as selected by the employer for the reporting years 2017 and 2018. 
The mandate for employers to collect Component 2 Data is the subject of an ongoing federal lawsuit. The Department of Justice has appealed the court order, but the requirement to comply and produce the data by September 30, 2019 remains in full force and effect during the pendency of the appeal.
The EEOC portal website through which employers can submit information can be found at: https://eeoccomp2.norc.org/.
Employers should keep the following steps in mind when preparing to produce Component 2 Data:

  1. Identify an appropriate workforce snapshot period—one pay period—for each reporting year.
  2. Gather, sort, and verify the relevant Component 2 Data including employees’ race/ethnicity, sex, W-2 payroll information, and hours worked.
  3. Provide actual hours worked by employees who are not exempt under the Fair Labor Standards Act (FLSA). For employees who are exempt from the FLSA, employers can provide either proxy hours or actual hours worked.
  4. Determine the number of full- and part-time employees pursuant to each of the 10 EEO-1 job categories.

    5. …

August 22, 2019

Third Circ. Clarifies First Amendment Level of Scrutiny of Billboards

The Legal Intelligencer

(by Blaine Lucas and Alyssa Golfieri)

Land use disputes arising from the regulation of outdoor advertising signs (i.e., billboards) are not foreign in Pennsylvania, and over the past several decades, have become an increasingly common source of litigation in both state and federal court. Most recently, the U.S. Court of Appeals for the Third Circuit added Adams Outdoor Advertising v. Pennsylvania Department of Transportation, 2019 U.S. App. LEXIS 20841 (3d. Cir. 2019), to the billboard case law progeny.

By way of background, in 1965 the Federal Highway Beautification Act, 23 U.S.C. Section 131 et seq., was enacted to establish a framework for federal-state agreements related to the regulation of outdoor advertising signs near highways. In order to meet the commonwealth’s obligations under the act, in 1971 the Pennsylvania General Assembly enacted the Outdoor Advertising Control Act, 36 Pa. Stat. Section 2718.101-115, which sets forth land use and permitting regulations applicable to outdoor advertising signs near the commonwealth’s interstate and primary highways. The Outdoor Advertising Act charges the Pennsylvania Department of Transportation (PennDOT) with administration of the Outdoor Advertising Act.

At issue in Adams Outdoor is a provision in the Outdoor Advertising Act known as the “interchange prohibition.” The interchange prohibition bars the construction of outdoor advertising signs within 500 feet of a highway interchange or “safety rest area.” The interchange prohibition expressly exempts “official” signs (i.e., directional or other official signs or notices erected and maintained by public officers or agencies for the purpose of carrying out official duty or responsibility) and “on premises” signs (signs that advertise the sale or lease of, or activities being conducted upon, the real property where the signs are located). …

July 18, 2019

New Work Product Waiver Analysis Provides Third-Party Communications Clarity

The Legal Intelligencer

(by Stephen Antonelli and Carly Loomis-Gustafson)

In mid-June, in a unanimous opinion, the Pennsylvania Supreme Court articulated a new work product doctrine waiver analysis in BouSamra v. Excela Health, No. 5 WAP 2018 (Pa. June 18, 2019). While the decision will be seen as a victory for corporate defendants in that it provides clarity concerning waiver of the attorney work product doctrine related to communications and consultations with third parties in anticipation of litigation, it should also be read as a cautionary tale in support of continued mindfulness in dissemination of privileged information.

The decision stems from a discovery dispute in a defamation case commenced by Dr. George R. BouSamra against Excela Health Westmoreland Regional Hospital and others. BouSamra filed suit after another cardiologist affiliated with Excela accused BouSamra and his colleague, Dr. Ehab Morcos, of regularly overestimating arterial blockages and, as a result, performing improper and medically unnecessary stenting. As part of an attempt to manage potential public relations issues stemming from the results of two peer review studies related to the accusations, Excela’s in-house counsel forwarded an email containing privileged information that it had received from outside counsel to a member of a third-party public relations firm, who then forwarded the email to other members of the firm.

After noticing the emails between Excela and its public relations firm on Excela’s privilege log, BouSamra filed a motion to compel production of the emails. A special master assigned by the trial court determined that Excela had not waived any privileges. The trial court sustained BouSamra’s exceptions to the special master’s recommendation, noting that the third-party was not an agent of Excela’s counsel. It therefore concluded that the attorney-client privilege had been waived. …

Top