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. …

August 16, 2019

West Virginia District Court Dismisses Citizen Groups’ Effort to Invalidate Mining Permit

Environmental Alert
(by Christopher (Kip) Power and Robert Stonestreet)
On August 12, 2019, the federal District Court for the Southern District of West Virginia (Judge Irene C. Berger) entered an order dismissing a lawsuit filed by the Sierra Club and other organizations (Citizen Groups) seeking to halt operations under a mining permit issued to Republic Energy, LLC (Republic) by the West Virginia Department of Environmental Protection (WVDEP).  Coal River Mountain Watch, et al. v. Republic Energy, LLC, Civil Action No. 5:18-cv-01449, S.D. W.Va. (Memorandum Opinion and Order, August 12, 2019). The Citizen Groups had sought to bring an end to mining under the permit because operations were not initiated until 2018, even though the permit was originally issued by the WVDEP in June 2008.  Pursuant to W.Va. Code § 22-3-8(a)(3) (a part of WVDEP’s approved program under the federal Surface Mining Control and Reclamation Act of 1977, 30 U.S.C. §1201, et seq. (SMCRA)), a mining permit terminates if mining activities under it are not initiated within three (3) years of its issuance, unless extended by the WVDEP.  The company that previously held the Republic mining permit never requested such an extension.  The WVDEP, however, granted an extension of the permit at issue in February 2012, after the agency had notified the permit holder of the expiration of the three-year limit and provided that company with an opportunity to seek a late (retroactive) extension.  After the permit was transferred to Republic, it sought and received a further extension in 2015 on the basis of financial hardship, which the Court noted “is not a recognized statutory justification for an extension.”
Before filing the federal civil action, the Citizen Groups had filed an administrative complaint about the situation with the federal Office of Surface Mining Reclamation and Enforcement (OSM), which is the oversight agency under SMCRA.  …

August 15, 2019

Five Babst Calland Attorneys Named as 2020 Best Lawyers® "Lawyers of the Year" and 38 Selected for Inclusion in The Best Lawyers in America©

Babst Calland is pleased to announce that five lawyers were selected as 2020 Best Lawyers “Lawyer of the Year” in the Pittsburgh, Pa. and Charleston, W. Va. (by BL Rankings). Only a single lawyer in each practice area and designated metropolitan area is honored as the “Lawyer of the Year,” making this accolade particularly significant.

Receiving this designation reflects the high level of respect a lawyer has earned among other leading lawyers in the same communities and the same practice areas for their abilities, professionalism, and integrity. Those named to the 2020 Best Lawyers “Lawyer of the Year” include:

Donald C. Bluedorn II, Environmental Law “Lawyer of the Year” in Pittsburgh, Pa. – In addition to the “Lawyer of the Year” award, Donald Bluedorn was also listed in the 2020 Edition of The Best Lawyers in America in Environmental Law, Litigation – Environmental, and Water Law.

Kevin J. Garber, Energy Law “Lawyer of the Year” in Pittsburgh, Pa. – In addition to the “Lawyer of the Year” award, Kevin Garber was also listed in the 2020 Edition of The Best Lawyers in America in Environmental Law, Natural Resources Law, Energy Law, Water Law, and Litigation – Environmental.

Blaine A. Lucas, Litigation – Land Use and Zoning “Lawyer of the Year” in Pittsburgh, Pa. – In addition to the “Lawyer of the Year” award, Blaine Lucas was also listed in the 2020 Edition of The Best Lawyers in America in Energy Law, Land Use and Zoning Law, Municipal Law, and Litigation – Land Use and Zoning.

Timothy M. Miller, Oil and Gas Law “Lawyer of the Year” in Charleston, W.Va. – In addition to the “Lawyer of the Year” …

August 9, 2019

Commonwealth Court again rejects a challenge to an ordinance authorizing oil and gas development in non-industrial zoning districts

The PIOGA Press

(by Robert Max Junker)

The argument that the Pennsylvania Constitution compels municipalities to classify natural gas extraction from shale formations as a “heavy industrial use” and therefore mineral development cannot occur in agricultural and rural residential zoning districts was roundly rejected by both the Commonwealth Court and the Supreme Court in the case of Frederick v. Allegheny Township Zoning Hearing Board, 196 A.3d 677 (Pa. Cmwlth. 2018) (en banc), appeal denied, ___ A.3d ___ (Pa., No. 449 WAL 2018, filed May 14, 2019). Nevertheless, opponents of natural gas development continue to be undeterred and refuse to give up this mantra. Attacks on municipalities’ legislative decisions on where natural gas development is appropriate within their own borders are still playing out in several Western Pennsylvania communities, with opponents seeking just one judicial decision that will breathe life into this moribund concept. With the June 26 decision from the Commonwealth Court in Delaware Riverkeeper Network v. Middlesex Township Zoning Hearing Board, No. 2609 C.D. 2015 (Pa. Cmwlth. June 26, 2019) (unreported decision), this tenuous theory was put on life support and yet its few remaining proponents stubbornly refuse to acknowledge the inevitable demise.

Middlesex Township is a rural community in Butler County. In 2014, the Board of Supervisors enacted a zoning ordinance amendment to expressly provide for the use and regulation of oil and gas operations within the township. The board decided that oil and gas well site development should be a permitted use by right in the rural residential, agricultural, residential agricultural and the restricted industrial districts; should be allowed as a conditional use following a public hearing in the commercial districts; and should not be permitted in certain other districts. …

August 8, 2019

Practice Pointers for Social Media Policies in the Workplace

The Legal Intelligencer

(by Alexandra Farone)

As social media continues to play an ever-more prominent role in our culture, employers are frequently faced with the uncomfortable situation of encountering an employee’s social media post that, at best, reflects unfavorably upon the employer or, at worst, is outright harassment or discrimination. Pennsylvania court decisions on the intricacies or enforceability of employers’ social media policies are few and far between, and do not create particularly useful guidance for employers in navigating the minefield of social media. Without such clarity, employers are encouraged to be mindful when drafting, revising or enforcing these policies to ensure compliance with existing guidance.

While public employers face the unique challenge of balancing employees’ constitutional free speech rights against protection of the employer’s reputation, private sector employers must also consider federal law when drafting a social media policy. The National Labor Relations Act (NLRA) gives unionized and nonunionized employees the right to act together to address wages, hours, and the terms and conditions of employment. Such “protected, concerted activity” could come in the form of an employee’s social media post complaining about, for example, vacation time, inadequate supervision or perceived poor safety measures. As early as 2012, the National Labor Relations Board (the board) issued a decision finding that a Facebook conversation can be protected, concerted activity, see Hispanics United of Buffalo and Carlos Ortiz, 359 NLRB No. 37 (2012). To qualify for protection, the speech has to be more than “mere griping.” Moreover, if the speech is egregiously offensive or knowingly and maliciously false, or if it disparages the employer without relating complaints to a term or condition of employment, it will likely not be protected. If, however, the speech raises a concerted or group complaint about a term or condition of employment, the employer must take care not to discipline the employee in a manner that runs afoul of the NLRA. …

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