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Legal Updates

Boo-Ware of Settlement Boo Boos

Stites & Harbison Client Alert, October 31, 2018
by Jamie F. Little

In Satterfield & Pontikes Construction, Inc. v. United States Fire Insurance Company, 2018 U.S. App. LEXIS 21488, the general contractor, Satterfield & Pontikes Construction, Inc. (“S&P”), purchased two (2) insurance policies for a project involving construction of the Zapata County Courthouse in Texas.  The first policy was for general commercial liability insurance and the second policy was for excess insurance through U.S. Fire Insurance Company (“U.S. Fire”).  The first policy had a limit of $2 million and second a limit of $25 million.  Both policies contained similar exclusions related to mold damage and U.S. Fire’s policy also excluded damages related to legal costs.  Further, S&P required its subcontractors on the project to sign indemnity agreements on behalf of S&P for damage caused by the subcontractors.

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Be on the Lookout for Trademark Registration Scammers

Stites & Harbison Client Alert, October 29, 2018
by John W. Scruton

The world is full of people trying to take your money, and the trademark world is no different.  When your trademark is registered with the U.S. Patent and Trademark Office, you join the ranks of those who may be the target of scam renewal notices.  When you receive a notice about your registration, be sure that you know who it is from and what it is offering before you act on it.

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SEC Amends Municipal Securities Disclosure Rule, Adding to List of “Event Notices”

Stites & Harbison Client Alert, August 28, 2018
by Alex P. Herrington, Jr. (Mike) and Luke F. Ervin

On August 20, 2018, the Securities and Exchange Commission (the “SEC”) announced that it adopted amendments to Rule 15c2-12 of the Securities Exchange Act of 1934, as amended (the “Rule”).  The SEC stated that it adopted the amendments to “enhance transparency in the municipal securities market” by focusing “on material financial obligations that could impact an issuer’s liquidity, overall creditworthiness, or an existing security holder’s rights.”  Below are some of the “highlights” of the new changes to the Rule and the effects on continuing disclosure.

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Sixth Circuit rules “tender back” doctrine inapplicable to Title VII and the Equal Pay Act

Stites & Harbison Client Alert, August 21, 2018
by Robin E. McGuffin and Shannon Antle Hamilton

In a divided opinion, the Sixth Circuit recently ruled that the common law “tender back” doctrine is inconsistent with the remedial purposes of Title VII and the Equal Pay Act (“EPA”).  Under the common law doctrine, when a party seeks to avoid a contract on the grounds that it was obtained by fraud, duress, or the like, she must first “tender back” any benefits received under the contract.  Under the Sixth Circuit’s ruling, employees who receive severance in exchange for a release of claims but later allege that the release was obtained under duress do not need to return the severance pay prior to instituting a lawsuit under Title VII or the EPA.  Instead, if their claims are successful, the severance pay will be deducted from any damages ultimately recovered.

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The Emerging Trend of Modular Construction

Stites & Harbison Client Alert, August 14, 2018
by Megan K. George and Aaron R. Klein

An emerging trend in cost-conscious and sustainable construction is modular construction. With traditional stick-build construction, all work is performed sequentially and on-site, and adjustments to design and construction can be made along the way. In modular construction, building units or “modules” are produced in a controlled factory environment and later delivered to the project site for incorporation into a larger building. Unlike more commonly recognized prefabricated systems, such as kitchen or bathroom “pods” often used in hotel and multi-family housing developments, modular construction involves the construction of full rooms or units. Modules are produced according to architect specifications, and structural and mechanical inspections may be performed in the factory setting prior to site delivery. State and local building codes still apply to modular construction, and many states have adopted legislation specific to modular construction and other prefabricated work. 

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Judge Rejects NLRB – McDonald’s Settlement in ‘Joint-Employer’ Case

Stites & Harbison Client Alert, July 20, 2018
by Michael C. White

The latest chapter in the ongoing joint-employer case between McDonald's USA, LLC ("McDonald's) and the National Labor Relations Board (NLRB) was written on Tuesday, as an administrative law judge ("ALJ") rejected a proposed settlement between the parties.  At issue in the case is whether McDonald's is a so-called joint employer of its franchisees' employees and thus liable for labor law violations by those franchisees.  

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The Ultimate Battle to Enforce Timely Payments

Stites & Harbison Client Alert, July 17, 2018
by Andrew J. Poltorak

A recent study reports that 88 percent of contractors receive slow payments on construction projects nationwide.   The report further finds that untimely payments cause lower tier subcontractors to shoulder approximately $40 billion dollars each year in additional financing costs - just to meet operating expenses. 

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Quick-Service Restaurant Chains Agree to End ‘No-Poach’ Restrictions

Stites & Harbison Client Alert, July 16, 2018
by Michael C. White

A typical provision in franchise agreements, known as a "no-poach" or "no-switching" clause, prohibits the franchisee from hiring employees employed by other franchisees in the same system.  Seven (7) large fast-food franchisors have agreed to discontinue this practice as the result of an agreement announced in a July 12, 2018 release by Washington State Attorney General Bob Ferguson's office.

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Electronic Transactions in Kentucky - A New Way of Doing Business? Maybe . . . Maybe Not.

Stites & Harbison Client Alert, June 18, 2018
by Elizabeth Lee Thompson, Member and Richard Simpson, Summer Associate

At the end of the 20th century, the international legal community attempted to address increasingly common issues with the use of electronic signatures.  At the federal level, Congress enacted the Electronic Signatures in Global and National Commerce Act (“E-SIGN”), to ensure the legal validity of electronic contracts and signatures in interstate and foreign commerce.  Meanwhile, states began to pass their own laws pertaining to electronic signatures.  In an attempt to harmonize and unify these e-signature laws, the National Conference of Commissioners on Uniform State Laws (“NCCUSL”) proposed the Uniform Electronic Transactions Act (“UETA”) for adoption by states.  As of today, only Illinois, New York, and Washington state have not adopted the UETA.  In Kentucky, the UETA is codified under KRS Chapter 369. 

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The steel tariff. What does it mean to the construction industry and to individual steel fabricators?

Stites & Harbison Client Alert, June 13, 2018
by David B. RattermanGregory P. ParsonsSteven M. Henderson

In 1933, Franklin Delano Roosevelt bolstered the national psyche by suggesting that “the only thing we have to fear is fear itself!”  Eighty-five years later, in the summer of 2018, we might paraphrase Roosevelt by suggesting that “the only thing of which we can be certain is that construction markets abhor uncertainty!”

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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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Kentucky Amends Public-Private Partnership Laws to Reduce Red Tape

Stites & Harbison Client Alert, April 20, 2018
by Steven M. Henderson

In 2016, Kentucky enacted legislation that opened the door for innovative market driven solutions for infrastructure projects through the use of public-private partnerships (“P3”).  P3 allows for a contractual agreement between a public owner and a private entity in which the private entity assumes financial, technical, and/or operational risk for the project.  P3s allow public and private entities to share their resources and expertise in delivering facilities to the public.  More importantly, they allow private entities to provide needed infrastructure improvements that might otherwise be impossible due to the lack of traditional public funding sources.  

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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

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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