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Legal Updates

Doing the Right Thing, But Not Doing It Right, Can Be Fatal: The False Claims Act

Stites & Harbison Client Alert, April 11, 2018
by Allyson True Cook

Today, there are more programs than ever at the federal, state and local levels to ensure the participation of small businesses in contracting opportunities.  Congress, as well as many state and local legislators, have enacted laws to support businesses owned by veterans, disabled veterans, minorities and women.  These businesses are usually referred to as “disadvantaged small businesses.”  Because governmental entities offer incentives and set aside a percentage of contracting dollars for small businesses, there are a growing number of fraud claims developing in this area.  According to a report issued by the Department of Justice in December, 2017, the number of lawsuits filed under the qui tam provisions of the federal False Claims Act are increasing with an average of twelve new cases being filed every week.  Given the competitiveness in the construction industry to obtain contract awards, and the increasing number of governmental and private “whistleblower” claims, it is important to know and understand the fraud that occurs with government contract work.

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Waters of the United States Forecast: Continued Cloudiness, No End in Sight

Stites & Harbison Client Alert, March 19, 2018
by William T. Gorton III

In previous alerts we addressed the continued national confusion about the nature and extent of federal jurisdiction over properties exhibiting “waters of the United States” asking, “What Are Waters of the United States” and “Why It Matters.”  Trying to get a consensus on defining them has been impossible as the political/environmental regulatory process cycles around in a never-ending analogue to the hydrologic cycle itself.  This alert briefly describes the latest twists and turns in the process.  

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Federal Energy Regulatory Commission Opens the Door for Energy Storage Development

Stites & Harbison Client Alert, February 23, 2018
by Kenneth J. Gish, Jr.

On February 15, 2018, the Federal Energy Regulatory Commission (FERC) unanimously issued Order No. 841  which has the potential to dramatically alter the electricity grid and wholesale energy market in large parts of the United States.  In Order 841, FERC directed the country’s regional transmission organizations and independent system operators (RTO/ISO), the entities that manage the wholesale electric markets in large parts of the country, to establish participation rules that remove barriers to full participation in the market by energy storage resources.  By recognizing the unique characteristics of energy storage resources, Order 841 has the potential to spur development of energy storage technologies and modernize the grid.

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State of Jobsite Safety: 2018

Stites & Harbison Client Alert, February 20, 2018
by William G. Geisen

Jobsite safety remains of paramount importance for all involved in the construction industry.  Recently published statistics from the National Institute for Occupational Safety and Health (“NIOSH”) and the National Safety Council (“NSC”) reflect that contractors must place continued emphasis on fall protection and on high-quality safety-training programs.

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When Do Grown-Ups Get Snow Days? Reviewing the FLSA’s Inclement Weather Rules

Stites & Harbison Client Alert, January 9, 2018
by Shannon Antle Hamilton and Robin E. McGuffin

With severe winter weather pummeling much of the country, employers may be forced to delay opening their doors, close their doors early, or even close for days at a time.  This leads to a persistent question—how should employees be paid during a weather closing?  Whether an employer has experience with winter weather or whether an employer is dealing with it for perhaps the first time, all employers would be wise to review their inclement-weather pay policies and practices to ensure that they are in compliance with the Fair Labor Standards Act (“FLSA”).

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Tax Reform and Sole Proprietorships, Partnerships and S Corporations

Stites & Harbison Client Alert, January 3, 2018
by Michael S. GoodeHerbert B. (Bert) Wolf, Jr.Andrew R. Jacobs

Much attention has been paid to the doubling of the standard deduction as well as the lowering of the corporate tax rates contained in the Tax Cuts and Jobs Act of 2017 (the “Act”).  The combined maximum corporate federal rate will now be 39.8 percent (corporate tax plus capital gains tax) and the top individual tax rate is 37 percent, which is the rate generally applied to the income of pass-through businesses (sole proprietorships, partnerships, and S corporations).  

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First Amendment Protects Trademark Owners from Government Censorship

Stites & Harbison Client Alert, December 22, 2017
by Joel T. Beres and Alexandra MacKay

On December 15, 2017, in In re Brunetti, Case No. 2015-1109 (Fed. Cir. Dec. 15, 2017), the United States Court of Appeals for the Federal Circuit held that the federal trademark statute’s (the “Lanham Act’s”) bar on registration of immoral or scandalous marks is an unconstitutional restriction of free speech. If this decision stands, Mr. Brunetti may obtain federal registration of his FUCT mark for use with clothing. The result is not terribly surprising in light of the United States Supreme Court’s holding earlier this year that the Lanham Act’s bar of disparaging marks violated the First Amendment. 

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High Court Enforces "Pay-if-Paid" Clause Protecting CM; But Allows Fabricator and Erector to Recover Extras Directly From Owner

Stites & Harbison Client Alert, December 18, 2017
by David B. Ratterman and Joseph L. Hardesty

On Thursday, December 14, 2017, the Supreme Court of Kentucky reversed an intermediate appellate court decision and reinstated a jury verdict of slightly more than $600,000 awarded to a structural steel fabricator and erector.  The award compensated the fabricator and erector for unpaid retainage and extras on a high rise project.

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Mantiply v. Horne: A Case Study of Attorney's Fees Awarded in Over Zealous Litigation

Stites & Harbison Client Alert, December 7, 2017
by Eric J. Breithaupt

What is a Court to do when an attorney knowingly violates the automatic stay in bankruptcy, and after being sanctioned for that transgression, challenges an award of attorney’s fees at every possible opportunity?  In its decision released on December 5, 2017, the Eleventh Circuit Court of Appeals considered just that question in affirming awards of trial and appellate attorney’s fees.  The Court affirmed prior fees incurred of $134,209.36, and imposed an additional fee award of $30,559.98 as to the current appeal.  This award of fees and expenses for nearly $165,000.00 was over four times the amount of the original award of actual damages of $40,000.00 made by the Bankruptcy Court for a violation of the automatic stay.

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New Amendments to Bankruptcy Rules Could Have a Major Effect on the Rights of Secured Creditors

Stites & Harbison Client Alert, November 15, 2017
by John S. Wathen

On April 27, 2017, the Supreme Court adopted and submitted to Congress various amendments to the Federal Rules of Bankruptcy Procedure.  The rules become effective December 1, 2017.  Some of the most significant changes affect filing requirements for proofs of claim of secured creditors under Bankruptcy Rule 3002.  These amendments greatly impact the rights of secured creditors in Chapter 7, 12, and 13 bankruptcy cases.  

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Kentucky Supreme Court Declines to Recognize New Tort of “Negligent Credentialing”

Stites & Harbison Client Alert, November 8, 2017
by Sarah Cronan Spurlock and Bethany A. Breetz

Do Kentucky patients have a cause of action against a hospital for the negligent credentialing of a non-employee physician who is given staff privileges by the hospital?  In March of 2016, the Court of Appeals answered that question in the affirmative, recognizing a new, stand-alone tort and avenue for recovery against Kentucky hospitals.  

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Tax Reform Prospects Should Spur a Closer Look at Roth Retirement Savings Plans

Stites & Harbison Client Alert, October 30, 2017

So answers the Second Witch in the opening scene of the “Scottish play” of Shakespeare, to the First Witch’s query:  when shall be the weird sisters’ fateful meeting with Macbeth?  At that meeting foreshadowing Macbeth’s rise to kingship (Act I, Scene III) it is clear that the witches are in the prediction business – as now must be American taxpayers anticipating some form of the Trump Administration’s tax reform proposals becoming law.

Among the many vexing problems with taxpayers’ planning is:  What changes will be made in the rules for the tax-favored retirement savings?  The estimated $115 billion per year of tax expenditures on retirement savings in the federal budget is perhaps the most tempting target for realization of tax savings needed to pay for the Trump tax plan’s ambitious business and personal tax cuts.  All the more so now, in the wake of evident resistance among urban state Republicans to initial proposals for cutback or elimination of the present deduction for state and local income and property taxes.  

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A New Era of Justice for Businesses, Too?

Stites & Harbison Client Alert, September 7, 2017
by Marc S. Murphy

When Jefferson Beauregard Sessions was sworn in as the 84th Attorney General of the United States in January, business owners were among those wondering what he meant when he declared:  “A new era of justice begins, and it begins right now”.  Unlike many political appointments, this member of President Trump’s cabinet’s role as the nation’s chief law enforcement officer has the potential for immediate direct and meaningful impact upon businesses, especially those in heavily-regulated industries.  What will that impact be?

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Highly Appreciated Property and Capital Gains: A Look at Charitable Remainder Trusts

Stites & Harbison, PLLC Client Alert, September 6, 2017
by Michael S. Goode

With rising real estate prices many people find themselves facing the prospect of high capital gains taxes when selling property.  Most people are familiar with like-kind exchanges (1031 transactions), a method of selling real property and then reinvesting the sales proceeds into a new property of “like-kind,” such as selling a rental property and then reinvesting in other real estate investment property.  However, not everyone wishes to reinvest.  Moreover, there might be other motivations for selling, such as receiving a stream of income or giving to charity.  As such, charitable remainder trusts are a useful alternative to like-kind exchanges, can achieve a stream of income and eventually satisfy charitable goals, and be another way to defer capital gains taxation.  Like 1031 transactions, charitable remainder trusts have specific rules that must be followed in order to receive the tax benefits, and we will briefly outline those in this article.  

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Federal Judge Strikes Down Obama Administration Overtime Rule

Stites & Harbison Client Alert, September 1, 2017
by Shannon Antle Hamilton and Rachel Dix Bishop

On Thursday, August 31, 2017, a federal judge struck down the Obama administration’s controversial rule that would have expanded overtime eligibility to more than 4 million U.S. workers. The rule, which was challenged by 21 states and more than 55 business groups, came before Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas in the case of State of Nevada et. al. v. U.S. Department of Labor et. al., 4:16-cv-00731. 

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New I-9 Form Takes Effect September 18, 2017 - What's Changed and Important Reminders to Ensure Compliance

Stites & Harbison Client Alert, September 1, 2017
by Shannon Antle HamiltonNina Maja BergmarRachel Dix Bishop

The U.S. Citizenship and Immigration Services (“USCIS”) has issued a new version of the Employment Eligibility Verification, Form I-9 that employers must begin using no later than September 18, 2017. Employers may begin using the new Form I-9 (revision date 07/17/17) immediately. However, as of September 18, 2017, only the new version will be accepted. 

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Statutory Right to Prompt Payment - Or Maybe Not

Stites & Harbison Client Alert, September 1, 2017
by R. Daniel Douglass

A recent court decision in Georgia illustrates how laws enacted by many states to ensure prompt payment in the construction industry don’t always achieve their purpose.  These “prompt payment” statutes typically require an owner to pay a contractor (and a contractor to pay a subcontractor) within a certain number of days and award interest on untimely payments.  These laws can provide important benefits to contractors and subcontractors, but are often subordinate to contract terms and therefore less helpful than they might appear.

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Rights of Equipment Lenders in Chapter 13, 11 and 12 Bankruptcy Cases

Stites & Harbison Legal Update, August 31, 2017
by Elizabeth Lee Thompson

The Federal Reserve ( reports that delinquency rates on agricultural loans are up from .78% in the 3rd Q 2015 to 1.53% in 2nd Q 2017.  Likewise, default rates on C&I loans are up from .90% in the 3rd Q 2015 to 1.35% in the 2nd Q 2017.  Due to the increase in delinquencies, Equipment Financers are experiencing an uptick in borrower bankruptcy filings.  

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Can You Spot a Fake Invoice? Don't lose out by paying official-looking trademark registration renewal and maintenance invoices

Stites & Harbison Legal Update, August 3, 2017

Today, we have a public service announcement in hopes you don’t fall victim to this ever-growing problem. If you have filed a federal trademark application or own a trademark registration with the U.S. Patent and Trademark Office (USPTO), you are probably going to receive—if you haven’t already—fake or misleading invoices. These scams are on the rise. 

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WannaCry Ransomware Attack Underscores Cyber Risks to the Construction Industry

Stites & Harbison Legal Update, July 24, 2017
by Adam M. Smith

In a single day in May 2017, a powerful new ransomware program known as “WannaCry” infected hundreds of thousands of computers across at least 74 countries.  Ransomware infects a target’s computer or network, encrypts the target’s files and then holds those files hostage, with the promise that the files will be unlocked if the target pays a monetary ransom. 

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Supreme Court Says "You Buy It, You Own It"

Stites & Harbison Legal Update, June 2,  2017
by Joel T. Beres

In a nearly unanimous opinion, the United State Supreme Court held “that a patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose or the location of the sale.” 

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