Labor and Employment
Weddings, Honeymoons, and Milestones: Employer Guidance for Time Off Requests
For HR leaders and business owners alike, the question is not whether employees will request time off for major life events, but when and how your organization will respond. Weddings, honeymoons, and personal milestones do not fall under FMLA or mandatory leave laws, but how you handle these moments speaks volumes about your culture, legal risk tolerance, and ability to retain top talent. There’s No Legal Right — But There Are Legal Risks It’s true: U.S. employers have no legal obligation under federal or state law to offer “wedding leave.” These events are not protected by the Family and Medical Leave Act (FMLA), paid sick leave laws, or any other statutory entitlement. But do not mistake a lack of mandate for a lack of risk. Employers who approve or deny time-off requests inconsistently, particularly in ways that appear to impact employees based on gender, race, religion, or other protected characteristics, may face claims under Title VII or state anti-discrimination laws. The U.S. Department of Labor (DOL) continues to emphasize enforcement around leave and accommodation policies that have a disparate impact. While “wedding leave” is not protected, your process must still comply with anti-discrimination and fair treatment standards. FMLA and Paid Leave Interaction: Be Clear on What Applies While weddings and honeymoons typically fall outside the scope of the FMLA, some related events might trigger protected leave. For example: Destination wedding involving a serious health condition (e.g., pre-surgical travel): FMLA may apply. Caring for a seriously ill spouse during or after a wedding or travel abroad: FMLA may apply. Employee illness or complications resulting in an inability to return to work: also potentially protected under FMLA. Moreover, the DOL recently clarified that when employees receive state or local paid family or medical leave benefits, employers cannot require them to simultaneously use accrued paid time off (PTO). This rule limits an employer’s ability to control how leave is structured when overlapping benefits are involved. Employers must understand the interplay between federal FMLA rights and state/local paid leave programs. Suppose an employee receives paid benefits through a government program (e.g., California PFL, DC Paid Family Leave). In that case, employers must designate FMLA leave when appropriate but may only allow PTO to be used as a supplement if mutually agreed, not mandated. Build Goodwill Without Losing Control Your policies should reflect both empathy and operational discipline. A wedding is not a frivolous request — it is a once-in-a-lifetime event that deeply matters to your employee. When employers respond with humanity and structure, it creates loyalty. That does not mean granting every request or disrupting workflow. It means having a clear, written policy that: Requires advance notice (e.g., 30–60 days). Reserves approval based on business needs. Clarifies whether PTO or unpaid leave may be used. Avoids any ambiguity about the consequences of overstaying approved leave. Consider including a “personal leave” clause in your employee handbook to address non-medical, non-FMLA, and non-emergency time off. Your language can be simple and clear: personal leave may be granted at management’s discretion, subject to operational needs. Watch Out for International Travel If the honeymoon involves international travel, extra scrutiny is warranted. Confirm the return-to-work date in writing before the employee departs, and clearly communicate that unapproved extensions may be treated as unexcused absences. Lingering COVID-era entry restrictions, visa issues, or logistical complications can cause delays, but those are not excuses for avoiding your leave policies. Where possible, plan backup support and document expectations in writing to avoid any disputes upon return. Small Gestures, Big Impact From a culture-building perspective, do not underestimate the power of a simple “Congratulations!” A card, a team mention, or a verbal note from leadership can make an employee feel valued. Some employers go a step further — offering a “wedding day off” or an extra PTO day. These gestures are optional, but impactful. Policy Consistency Is Your Best Defense If your leave policies are outdated, vague, or silent on personal time off, now is the time to revise them. Review and align them with current DOL guidance, FMLA regulations, and your state’s paid leave laws. Train your managers, document every request and response, and apply the same standards to every employee, regardless of role, relationship, or circumstance. Bottom Line for Employers Personal milestones matter to your employees and your business. They can create resentment, attrition, or even litigation when handled poorly. When handled well, they can build trust and reinforce culture. Be fair. Be clear. Be compliant. Be human. And most importantly, be consistent.
May 21, 2025
Immigration Law
Top Mistakes That Jeopardize Your Green Card—and How to Avoid Them
As we are currently in a time of extensive scrutiny of immigration actions, individuals must understand their status, rights and obligations. Legal Permanent Residents possess many protections that nonimmigrants do not have, but must carefully maintain their status. One of the key aspects of maintaining a green card is maintaining an existing “intent” to permanently reside in the United States. This is an issue that comes up with green card holders who move abroad or spend significant time outside of the United States. If the Department of Homeland Security (DHS) has reason to believe an individual does not have the intention to reside in the United States, then they can bring proceedings against the individual to remove their green card. The law and policy are summarized by the U.S. Citizenship and Immigration Services (USCIS) as follows: Permanent Resident Cards become technically invalid for reentry into the United States if the holder is absent from the United States for 1 year or more. U.S. permanent residence status may be considered abandoned for absences shorter than 1 year if the green card holder takes up residence in another country. The first point is technical; if one is out of the country for a year or more, their green card is no longer valid for entry. Customs and Border Protection (CBP) will raise this issue at the Ports of Entry to the United States. It can be waived at entry, but the CBP rarely allow that. Instead, they follow a “hawkish” approach to individuals with absences of a year or longer. It should be noted that legal permanent resident status is protected by law and must be removed by legal proceedings. The second point is where individuals can potentially incur CBP scrutiny through a prolonged periods of absence from the United States. For example, if an individual comes into the U.S. twice a year for several years to maintain their green card, questions may arise about the individual’s intent to reside in the U.S., even though that they were technically compliant. Generally speaking, if a legal permanent resident thinks they will spend more than six months outside the United States, they should talk to an immigration attorney. On May 1, 2025, CBP updated its guidance to legal permanent residents returning to the United States. This policy document states that legal permanent residents who have been out of the country for longer than six months will be subject to new immigration inspection procedures. No further details of these new and increased inspections have been released. See Traveling outside U.S. - Documents needed for Lawful Permanent Residents (LPR)/Green Card holders Certain key actions can automatically raise a question of the green card holder’s intent if they leave the United States, specifically: Clearly manifesting an intent of permanently residing in another country (i.e., applying for long-term status in that country. Green card holders must file US taxes on their global income, and they must file taxes as residents for tax purposes; failure to file resident tax returns can be seen as an intentional abandonment of status. Making statements to CBP or DHS that do not support the green card holders’ assertions that their trips abroad are temporary. Accordingly, green card holders who move abroad temporarily must be diligent in maintaining ties to the United States and take proactive steps to protect their green card. They must realize they are jeopardizing their status by extended time abroad. Returning to the United States once a year will eventually draw the ire of the CBP, and the green card holder can expect to receive progressively more intrusive and sustained questioning upon entry to the United States. Steps that green card holders who live abroad could take to protect their status include the following: Travel with evidence of why your trip outside of the US is temporary – temporary job offer, extended care for a family member, explanations for delays, etc. Continue to file US Income taxes. Maintain a residence in the US. Be diligent in not spending 365 days outside of the United States. Registering with the Selective Service is required. Updating their home address with USCIS via Form AR-11. Obtain a Re-Entry Permit:Re-Entry Permits protects a green card holder’s status for two years upon approval. Although not a guarantee of entry, the Re-Entry Permit is excellent evidence to present to CBP that the individual’s absence abroad is temporary. Re-Entry Permits can be renewed depending on the circumstances that the individual faces. Re-Entry Permits must be applied for in person in the U.S.; Having the USCIS receipt notice as evidence of the application is good evidence to demonstrate to the USCIS. Been out of the country for a year or longer?The safest route is to apply for an SB-1 immigrant visa at your local U.S. Embassy to avoid issues entering the country. Lastly, should an individual face potentially denial of entry to the United States for circumstances beyond their control, they can apply for a returning resident special immigrant visa to ensure they can enter the U.S.
May 20, 2025
Healthcare
Recent Dietary Supplement FDA Alerts and Warning Letters
The FDA has the authority to regulate dietary supplements pursuant to the federal Food, Drug, and Cosmetic Act and other laws. FDA provides guidance documents to help the developers of dietary supplements understand their compliance requirements. These guidance documents include the following: Current Good Manufacturing Practice (CGMP) New Dietary Ingredients Warning Letters & Safety Information Labeling and Claims Adverse Events Reporting and Recordkeeping General Compliance and Inspection Information for Industry Special Issues/Miscellaneous Items Archived Items of Interest We’ve discussed some of the key compliance requirements for dietary supplements previously. We also have a video presentation on the compliance requirements for dietary supplements. In this article, we discuss a few additional compliance issues. Navigating FDA and Healthcare Laws for Dietary Supplements: Compliance Made Clear Learn essential FDA and healthcare compliance requirements for dietary supplements, including labeling, marketing claims, and manufacturing practices. Insights from Cohen Healthcare Law Group. Dietary Supplement Compliance: Labeling, Marketing, and Manufacturing Strategies for Success In this video, Michael discusses the importance of making assertive yet compliant claims, adhering to good manufacturing practices, and ensuring ingredient safety to avoid FDA warnings. FDA oversight of dietary supplements The FDA coordinates its oversight of dietary supplements with the Human Foods Program’s Office of Food Chemical Safety, Dietary Supplements, and Innovation. FDA regulates the dietary ingredients for dietary supplements and the finished dietary supplement products. FDA’s oversight of dietary supplements differs from its oversight of “conventional” foods and drug products. Based on the Dietary Supplement Health and Education Act of 1994 (DSHEA), the makers and distributors of dietary supplements are not permitted to market products that are “adulterated or misbranded.” The burden is on the manufacturers and distributors to evaluate the safety of their products and the labeling of their products before manufacturers and distributors can market their products. Dietary supplements must comply with all the requirements of the Federal Food, Drug, and Cosmetic Act as amended by DSHEA and FDA regulations. If a dietary supplement is adulterated or misbranded after the supplement reaches the market, FDA can take appropriate actions. Dietary supplement alerts by the FDA FDA publishes press releases about recalls of dietary supplements that may risk the health of consumers though not all press releases have recalls. FDA also issues warning letters to companies to inform companies about FDA violations and alert companies about what corrective actions the businesses must take. In 2024, FDA issued the following notices: Update on FDA launches new directory of ingredients used in products marketed as dietary supplements. On February 21, 2025, FDA updated FDA’s Ingredient Directory, including renaming the web page to be Information on Select Dietary Supplement Ingredients and Other Substances. The changes are in response to feedback from stakeholders. The new directory includes new categories to “classify the type of FDA action or communication for each listed ingredient; recording the date each listed ingredient was added to the directory; and streamlining the introductory text on the page.” FDA issues draft guidance on new dietary ingredient notification master files for dietary supplements. On April 3, 2024, FDA announced the availability of a draft guidance for the dietary supplement industry titled “New Dietary Ingredient Notification Master Files for Dietary Supplements.” This guidance document is in response to requests from the dietary supplement industry for “recommendations about Master Files for new dietary ingredient notifications (NDINs).” NDINs can help “facilitate the submission of NDI-related identity, manufacturing, and/or safety information to the FDA for use in evaluating a potential future NDIN.” “The recommendations in this draft guidance expand upon and replace the recommendations related to Master Files in the FDA’s revised draft guidance, “Dietary Supplements: New Dietary Ingredient Notifications and Related Issues.” Ingredient directory FDA has an ingredient directory to help manufacturers, sellers, and consumers keep current about the ingredients and other substances found in products labeled as dietary supplements. The directory links to FDA’s actions and communications which include the “evaluation of health claims, safety communications, and compliance and enforcement actions.” The directory comes with this FDA caveat: “As a reminder, FDA does not approve dietary supplements for safety and effectiveness. This directory is not intended to be a comprehensive list of all ingredients used in dietary supplements and may not include all actions the agency has taken with respect to a particular ingredient.” A sample ingredient in the directory includes the following: Agency actions/statements.21 CFR 101.72 Health claims: calcium, vitamin D, and osteoporosis Qualified Health Claims: Letter Regarding Calcium and Colon/Rectal, Breast, and Prostate Cancers and Recurrent Colon Polyps (October 2005) 1. Ingredient is the subject of an authorized health claim or qualified health claim. Entry date. April, 2023. Dapoxetine (also called Dapoxetinum)Agency actions/statements.Shoreside Enterprises, Inc. Warning Letter (December 2014) Category 4. Ingredient is excluded from the dietary supplement definition under section 201(ff)(3) of the FD&C Act Entry date. April, 2023. The list of categories includes the following: “Ingredient is the subject of an authorized health claim or qualified health claim Ingredient is the subject of a safety communication Ingredient is not a “dietary ingredient” under section 201(ff)(1) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) Ingredient is excluded from the dietary supplement definition under section 201(ff)(3) of the FD&C Act Dietary ingredient has not met the safety standard in section 402(f)(1)(A) of the FD&C Act New dietary ingredient has not met the safety standard in section 402(f)(1)(B) of the FD&C Act New dietary ingredient requiring a premarket safety notification under section 413(a)(2) of the FD&C Act but for which no notification has been submitted.” Additional FDA guidelines for dietary supplements Additional guidelines for dietary supplements include the following: Information for Industry on Dietary Supplements. “Resources and links for submissions for new dietary ingredient notifications and structure/function claim notifications, applications, guidance, regulations, and other items of interest to industry members.” New Dietary Ingredient Notification Process.” Background information for industry, instructions for submitting premarket notifications, and links to relevant guidance and Federal Register documents.” Notifications for Structure/Function and Related Claims in Dietary Supplement Labeling “Background information for industry, instructions for submitting notifications, and links to relevant guidance and Federal Register documents.” Information for Consumers on Using Dietary Supplements FDA warning letters for dietary supplements A few of the more recent warning letters to makers of dietary supplements by the Food and Drug Administration include the following: A warning letter was issued on March 4, 2025, to C & A Naturistics by the Center for Drug Evaluation and Research (CDER) for an unapproved drug/misbranded. The letter states that their dietary supplement is actually a drug. A warning letter was issued to Pivo IV Inc. on March 6, 2025, by CDER for an unapproved drug/misbranded. The letter states that their dietary supplement is actually a drug. A warning letter was issued to IsoThrive Inc. on February 4, 2024, by CDER about objectionable conditions at the facility observed by an FDA clinical investigator. A warning letter was issued to Western Innovations, Inc. on 11/13/24 by Human Foods Program about adulterated dietary supplement violations, including Current Good Manufacturing Practice (CGMP) violations. The Food and Drug Administration has the authority to regulate dietary supplements and their ingredients. FDA provides numerous guidance documents to help manufacturers, medical practitioners, and consumers. When manufacturers fail to comply with the FDA regulations, FDA has the authority to enforce its regulations through warning letters and other actions.
May 18, 2025
Healthcare
Risk Management and Compliance for Direct-to-Consumer Genetic Testing Companies
The DTC genetic testing industry has experienced rapid growth and now finds itself in a climate of intensified scrutiny from federal and state regulators. Numerous companies that offer DNA-based health insights, ancestry results, or genetic predisposition information are feeling the heat and being forced to ensure that their operations are in line with an increasingly fragmented federal and state regulatory scheme. It is no easy task. These companies risk enforcement actions from the FDA, penalties for lapses in data privacy, and legal exposure for making false or misleading marketing claims. This guide covers the critical legal aspects that DTC genetic testing companies must deal with, such as the following: FDA regulations concerning genetic testing; HIPAA and state privacy laws that concern you and your customers; FTC standards for marketing your product; and regulatory pitfalls that DTC companies commonly fall into. DA Regulations for Genetic Testing: Is Your Product a Medical Device? One of the first inquiries about compliance for DTC genetic testing firms to consider is whether their offering is subject to FDA oversight, specifically, whether it is a medical device. Health-related tests—those that might indicate a person’s likelihood of coming down with a specific disease, for example—usually have some federal scrutiny. That can be as light as a product being “cleared” by the FDA through a rather straightforward process for low-risk devices. Genetic tests typically can be divided into three main categories. Medical device tests, which are regulated by the FDA, comprise those that detect genetic markers linked to some disease risk, including the chance of getting certain cancers. In contrast are the general wellness tests that report, among other things, ancestry information. These tests are not regulated by the FDA. A third, mixed bag category includes the Laboratory-Developed Tests., which are used in the somewhat mysterious manner the title suggests. Companies can refer to the FDA’s guidance on direct-to-consumer (DTC) genetic testing to understand how the agency differentiates between medical and nonmedical devices. This guidance can be found online here. It’s important to note the 2013 FDA action against 23andMe. In this case, the FDA barred the company from marketing genetic health reports because of concerns over the unsubstantiated claims that the health reports made a person’s genetic makeup could impact their health. The company subsequently worked with the FDA to obtain market approval for some of its reports. You can find the FDA’s warning letter here. HIPAA and State Privacy Laws Governing Genetic Data Though numerous DTC genetic testing firms aren’t governed by HIPAA because they don’t qualify as covered entities, they’re still bound to comply with the stringent privacy laws that states have put in place. And in an ever-growing number of states, those laws include specific provisions that deal with the collection and use of genetic data—by both the entities that do the collecting and by the law enforcement agencies that might come a-callin’ after the fact. A principal piece of federal legislation is the Genetic Information Nondiscrimination Act (GINA). It bars the use of genetic information in making decisions about health insurance, or employment. For more information about GINA, please see: https://www.eeoc.gov/statutes/genetic-information-nondiscrimination-act-2008. California has established the Genetic Information Privacy Act (GIPA), which mandates that before any genetic information can be shared, companies must first obtain explicit written consent. To read the full text of this piece of legislation, go to Senate Bill No. 41, Chapter 596. Other states, like Vermont and New York, have enacted similar laws requiring detailed disclosures and consent before any testing can occur. To safeguard genetic information, firms must unfailingly secure elucidated consent from individuals before gathering any biosamples, employ robust encryption methods for the storage and transfer of delicate data, and follow the path of least resistance by ensuring robust transparency through privacy policies that the average layperson can decipher. A good place to view state-specific genetic privacy laws is the website of the International Association of Privacy Professionals. FTC Advertising Guidelines: Avoiding Misleading Genetic Test Claims The FTC closely watches the marketing of DTC genetic testing companies. They want to be sure consumers aren’t being sold a bill of goods. Genetic tests that purport to tell you something useful about your health are supposed to have rigorous and reliable science behind them. Claims of this nature must be backed by solid handfuls of even better science if a company making them want to be on the right side of the law. To remain compliant, companies need to ensure that all health outcome advertising claims are backed by credible data. Customer testimonials that imply unrealistic, too-good-to-be-true results must be avoided. And whenever a genetic test is used, the limitations of that test must be fully and plainly disclosed. In 2021, the FTC enforcement case against a DTC genomic testing company resulted in the company’s discontinuation of promotional practices that involved making dubious DTC genomic health risk claims. State Licensing Requirements for DNA Testing Laboratories An additional layer of compliance requires that the lab performing the genetic testing be licensed and certified to operate under both state and federal laws. Most laboratories must be certified under the Clinical Laboratory Improvement Amendments (CLIA), and numerous states—most notably California and New York—have laboratory licensing requirements that exceed those of CLIA. DTC genetic testing companies should either partner with laboratories certified under the Clinical Laboratory Improvement Amendments (CLIA) or obtain the necessary licenses if they operate their own laboratory. For medical device-type tests, it is likely that some level of physician oversight is also required. Even for non-medical tests such as those for ancestry or lifestyle, companies should very clearly state that the results are not to be used for making medical decisions. You can find the federal CLIA requirements online. Information regarding state-specific lab licensing—like that which is needed in New York—is located here. Best Practices to Avoid FDA, FTC, and Privacy Law Violations To limit legal liability, companies that offer direct-to-consumer genetic tests should first ascertain whether the tests are legally classified as medical devices and thus governed by the FDA. If so, the next step is to obtain the necessary clearances and/or approvals before commencing on any marketing efforts. Compliance with both federal and state privacy laws is very much in order, especially when the company in question is working with genetic information that is obviously very sensitive. These practices would seem to eliminate any potential for very likely troublesome FTC actions. In conclusion, businesses ought to get into the practice of examining and refreshing their privacy policies to keep pace with the new laws being enacted and the old ones undergoing reinterpretation. For instance, last July, the Federal Trade Commission and the Food and Drug Administration, both of which have significant authority to regulate the health marketplace, took a serious look at some of the emerging practices they feel are potentially harmful to consumers. Conclusion & Call to Action To work in the DTC genetic testing area requires careful advance planning in the law and active, ongoing compliance. This is a closely watched sector, with the FDA, FTC, and various state agencies taking a close interest. And with all that interest, you can be sure that violations are not going to be looked upon kindly—and they could prove quite costly. If you need help with matters like those we’ve listed here, you might want to give the Cohen Healthcare Law Group a call.
May 15, 2025
Business
Avoiding Common Contract Pitfalls: Legal Landmines in Agreements
Contracts are the backbone of every business relationship. Whether buying a business or entering into a new commercial agreement, many small to mid-sized businesses do not fully negotiate critical clauses within the document. Failing to fully negotiate certain language, relying on informal agreements, or failing to update commercial contracts with appropriate amendments as the relationship evolves can become a significant liability to a company. Informal arrangements may feel efficient in the short term but can create significant issues if a dispute arises. In this edition of Search Fund Operate, we break down the most commonly negotiated (and litigated) provisions in contracts. The below is an overview of how acquirers, operators, and business owners can proactively protect themselves from exposure. The Risk of Informal Agreements Many business relationships begin with trust — a handshake deal, an email exchange, or a PDF template someone downloaded online years ago. But when disputes arise, courts look for formal agreements. Informal or undocumented agreements often lack enforceable provisions around risk allocation, dispute resolution, and payment mechanics. Even worse, they often fail to outline each party’s actual responsibilities, deadlines, or remedies. Tip: If a dispute reaches litigation, and there is no signed agreement or only partial documentation, courts may rely on the parties' prior conduct or applicable statutory rules that might not reflect the parties’ original intentions. Inconsistencies can lead to conflicting testimony and unpredictable results. Without formal terms, operators risk operational confusion and disruptions, customer dissatisfaction, and expensive court battles. This risk grows exponentially when the business is being sold or scaled, as buyers expect to inherit clear, enforceable rights and obligations. Liability and Indemnification Indemnification Clauses Indemnity provisions shift the burden of financial responsibility for specific claims. These are some of the most heavily negotiated clauses. Poorly drafted clauses can: Leave you liable for the other party’s negligence or misconduct. Fail to include third-party claims (e.g., customer injuries from vendor products). Omit procedural requirements for notice and defense, leaving you without control of litigation that affects your reputation. Tip: Ensure that the indemnification clause is protective of your interests. Push for mutual indemnification, defense, and settlement rights, not just reimbursement. Also consider whether to limit indemnification to direct damages or extend it to consequential losses. Environmental Indemnity In certain industries — such as manufacturing, logistics, or commercial real estate — environmental risk requires special attention. Contracts should: Clearly allocate responsibility for environmental conditions, both known and unknown. Include representations about compliance with environmental laws and past environmental issues. Address remediation costs and third-party claims. Tip: Require the disclosing party to provide environmental reports and clarify who bears responsibility for pre-existing contamination. Liability Carve-Outs Clauses that attempt to shift risk should specify whether they cover negligence, gross negligence, or willful misconduct. The broader the language, the greater the protection. Sophisticated parties often negotiate carve-outs for fraud or breaches of confidentiality. Limitation of Liability: Know Your Exposure Exclusion of Damages Most contracts attempt to exclude certain categories of damages: Consequential damages (e.g., lost profits or reputational harm) Incidental damages (e.g., additional shipping or handling costs) Punitive damages (rare, but potentially significant in litigation) However, these clauses must be: Clearly drafted and conspicuously presented in the agreement Consistent with governing law and not prohibited by statute Tied to specific breaches or defined categories of claims Tip: Courts may strike down limitation clauses if they are hidden in boilerplate language or conflict with public policy (e.g., consumer harm or gross negligence). Careful drafting is necessary to ensure these clauses are enforceable. Caps on Damages Liability caps are common. These are often limited to: The total fees paid under the agreement over a certain period A multiple of the monthly or annual contract value These types of damages caps should be: Commercially reasonable Include carve outs for egregious conduct (e.g., fraud, IP infringement) Reviewed for enforceability in high-risk jurisdictions (such as California or New York) Tip: Combine caps on damages with tailored indemnification clauses and insurance requirements offer the most balanced protection. Right to Recover Damages Parties should not assume that silence on damages means full recovery. Contracts should affirmatively state: Whether consequential or incidental damages are recoverable Whether lost profits are compensable Whether the right to injunctive relief is preserved for breaches such as misuse of IP, confidential information, or violation of non-competes (if included and within a jurisdiction where enforceable) Tip: Courts can be reluctant to award damages not clearly contemplated in the contract language. Assignability and Change of Control An often overlooked provision is whether contracts can be assigned to another party — a crucial issue during a business sale or restructuring. If assignment is restricted, it may require: Written consent from the counterparty Disclosure of assignee's financial information Attorney fees associated with any legal review prior to consenting to the assignment Some contracts even treat a change of ownership or control as a default or termination trigger. Tip: Failing to secure assignability can delay or derail an acquisition, especially if key customer contracts are involved. Operators should inventory and review top agreements well before a contemplated sale. Payment Terms and Dispute Mechanics Clear Payment Language Contracts should specify: Invoice frequency and delivery method Payment deadlines, accepted payment methods Grace periods, late fees, and interest charges Whether payments are conditional on acceptance, delivery, or milestones Right to stop future delivery of services or products in the event of non-payment Vague or missing language around payment terms is a common source of cash flow disruption. Courts often apply standard practices or industry norms — which may not reflect your business model. Tip: Use net terms that clearly reflect the payment terms. Add provisions for disputed invoices and partial payments. Condition of Delivered Goods or Services Ensure the contract addresses: Acceptance criteria and inspection periods What constitutes a material defect Remedies for nonconforming or damaged goods Whether services must meet a defined performance standard Tip: If materials are delivered late or defective, and the contract is silent, the buyer may have limited options to reject or recover costs. Dispute Resolution Well-structured dispute resolution clauses can minimize litigation costs and clarify where and how conflicts are resolved. These clauses should address: Venue and jurisdiction Governing law (state of choice) Mediation or arbitration requirements before litigation Scope of issues subject to arbitration Tip: Choose arbitration only when you can afford and control it — not all arbitration is cheaper or faster than court. Choice of Law and Venue Failing to specify a governing law can create confusion and increase cost. Choose a state with predictable case law and commercial friendliness Clarify venue for both lawsuits and arbitration (county and state) Tip: Courts generally uphold these clauses, but ambiguity can invite satellite litigation over which rules apply. Recovery of Attorneys’ Fees By default, parties generally pay their own legal fees unless the contract provides otherwise. A prevailing party clause can: Deter frivolous lawsuits Improve recovery leverage for the aggrieved party Help offset enforcement costs in breach scenarios Tip: Ensure the clause clearly defines "prevailing party" and whether partial victories count. Other Heavily Litigated Provisions Force Majeure Since COVID-19, courts have closely scrutinized force majeure clauses. These should be specific and include: Pandemics, epidemics, and public health emergencies Cybersecurity incidents and data breaches Labor strikes, natural disasters, and government actions Tip: Clarify notice requirements and what obligations are suspended or excused. Termination Rights Contracts should clearly state: Whether either party may terminate for convenience Grounds for termination for cause (e.g., material breach, insolvency) Required notice periods Obligations upon termination (e.g., final payments, transition support) Tip: Courts often look to see if the termination provisions were exercised in good faith and consistent with the contract’s intent. Integration Clause A merger or integration clause ensures that only the written agreement governs the relationship. This is a critical protection against claims of oral promises or email side agreements that contradict the final document. Conclusion Contracts are not just formalities — they are critical risk allocation tools. Whether you are acquiring a business, managing a commercial relationship, or selling to customers, business owners should ensure that agreements are thorough, clear, and enforceable. This will reduce litigation risk and protect your enterprise value. For buyers and operators, reviewing all critical contracts pre- and post-close is an essential part of your diligence and compliance process. Don’t assume the existing agreements are sufficient — many are not. Where possible, standardize contract templates, build clear negotiation guardrails, and involve legal counsel to spot ambiguous or dangerous provisions before they become problems.
May 14, 2025
Commercial Litigation
AI Ain’t Atticus: Why Machine Learning Can’t Master Legal Reasoning (Yet)
An increasing number of litigators are relying on artificial intelligence to streamline their workflows and generate legal products, from research and memos to predictive insights. While the efficiency and capabilities of these tools are advancing rapidly, as a seasoned litigator in both federal and state courts in various arbitration fora such as AAA and FINRA, I would strongly caution practitioners—and the clients who hire them—to use AI as a supplement, not a substitute, for sound legal judgment. AI’s Role in Litigation AI-driven platforms are helping lawyers analyze vast amounts of data, uncover patterns, and even predict case outcomes based on historical decisions. Tools like e-discovery software can process and categorize thousands of documents in a fraction of the time it would take a human team. Firms also use chatbots and virtual assistants for preliminary client intake and communication, and some even use AI to recommend settlement strategies or assist in jury selection. These types of time saving techniques are obviously attractive to many practitioners, particularly smaller firms who are attempting to compete with much larger adversaries in complex litigation matters. Having practiced at both large firms and boutiques, I know that timing and resources are paramount considerations when taking on any new matter. But like anything in life, when it seems too easy, there may be a catch…. Key Considerations Bias and Fairness AI systems are only as reliable as the data they’re trained on. If historical data contains bias—such as racial, socioeconomic, or gender disparities—AI could unintentionally replicate or reinforce these inequities. Ensuring fairness and transparency in algorithms is essential. Accountability and Ethics Lawyers are held to ethical standards that no machine can shoulder. AI may support decision-making, but it cannot assume responsibility. Over-reliance on AI can lead to missteps; ultimately, the attorney who must answer for them. Accuracy of Legal Content Some AI programs have been found to generate case citations that are incomplete, misleading, or outright fictitious. Indeed, certain AI programs have produced case results for cases that do not exist. This undermines the credibility of the legal product and can raise serious concerns in the courtroom. If an attorney submits filings containing fabricated or incorrect citations, the consequences may include sanctions, reputational damage, or even adverse rulings. Moreover, this has broader equity implications—clients with fewer resources may disproportionately suffer from lower-quality work products that rely too heavily on unchecked AI output. Privacy and Confidentiality AI tools often require access to large datasets, including sensitive client information. Maintaining confidentiality and compliance with privacy regulations is paramount, especially as cyber threats and data breaches become more sophisticated. Explainability Many AI systems function as "black boxes," delivering results without a transparent explanation of how those results were reached. In a legal context, particularly when presenting arguments in court, being able to explain and defend reasoning is non-negotiable. Regulatory Compliance As AI’s presence in legal practice grows, regulators are beginning to set standards for its use. Law firms and their practitioners must remain vigilant, ensuring their use of AI adheres to both current and emerging legal ethics and professional conduct rules. Conclusion Many practitioners and pundits believe that AI holds great promise for litigation, from enhancing efficiency to revealing insights that might otherwise be missed. But its role should be that of an assistant, a tool or a resource (at most) — not a decision-maker nor a substitute for a seasoned, educated and skilled practitioner. Practitioners must therefore exercise judgment, skepticism, and caution, recognizing that the practice of law remains, at its core, a human endeavor.
May 12, 2025
Commercial Litigation
Serving Hard-to-Find Defendants – Motions for Alternate Service
Filing a complaint in a New York court can be easy. But after a plaintiff files that complaint, the plaintiff must serve the defendant with the summons and complaint. Failing to serve the defendant properly may lead the case to be dismissed. For many plaintiffs, attempting to serve the complaint on the defendant is as far as they get. Often, defendants know that if they can make it difficult for the plaintiff to serve the complaint, they have a chance to make the lawsuit go away. However, when plaintiffs have difficulty serving the defendant, they can take advantage of New York’s laws and creatively serve the complaint and move their case forward. In New York, CPLR 308 is the law that identifies the methods a plaintiff must use for completing personal service on a defendant. Ideally, a plaintiff can serve a defendant by personally delivering the summons to him or her. CPLR 308(1). But if not, a plaintiff may deliver the summons to a person “of suitable age and discretion” at the defendant’s “actual place of business” or “dwelling place or usual place of abode.” CPLR 308(2). Suppose plaintiff cannot serve the defendant by personal delivery or to a person of suitable age and discretion despite the plaintiff’s due diligence. In that case, the plaintiff may affix the summons to the door of the defendant’s “actual place of business, dwelling place or usual place of abode” and then mail a copy of the summons to the defendant’s “last known residence” or “actual place of business” in the specific manner called for in CPLR 308(4). For many plaintiffs, one of those three service methods will do the trick. But what if a plaintiff cannot track down the defendant’s actual place of business? Or does the defendant’s place of business have security that won’t permit access to the defendant’s office? Or the plaintiff cannot access the defendant’s home because it’s in a gated community? This is where CPLR 308(5) comes in: when serving a defendant is “impracticable,” a plaintiff may ask the court for permission to serve the defendant in any “such manner as the court . . . directs.” To request this from the court, a plaintiff can file a motion. Sometimes, these motions are called motions for substitute service or for alternate service. In that motion, the plaintiff must show the efforts undertaken and that serving the defendant is “impracticable”—not impossible. Then, the plaintiff may request the court to allow it to serve the defendant by some method other than CPLR 308 prescribes. In considering these types of motions, courts require that the defendant receive due process and that the service on the defendant is “reasonably calculated, under all circumstances, to apprise the defendant” of the lawsuit. Courts have wide latitude in fashioning the method of service and adapting that method to the particular facts of the case. In deciding these motions, some courts have prescribed plaintiffs to serve the summons and complaint on a defendant’s attorney, insurance company, or family member, and some have even allowed service by email. The circumstances for each situation are different. However, if a plaintiff is having difficulty serving a defendant—perhaps because the defendant is evading service—then that plaintiff might consider pursuing a motion under CPLR 308(5). This is particularly important because serving the summons and complaint must be completed within 120 days after commencing the lawsuit. CPLR 306-b. When a plaintiff prepares a motion under CPLR 308(5), it is crucial to include documentation of the plaintiff's efforts. Those efforts will not only tend to show that service on the defendant is “impracticable” but also that the proposed method of service that the plaintiff seeks to use is fair and will give the defendant due process.
May 8, 2025
Healthcare
Legal and Compliance Strategies for Health Coaching Businesses
The health coaching industry is expanding. At this time, it is essential for coaches and wellness entrepreneurs to be aware of the legal landscape. The industry is expanding so quickly that in some states, laws governing health coaching don’t even exist yet. Because the laws are lagging, there’s no clear path to follow, and you know what that leads to—confusion. And operating under a cloud of confusion puts your business at risk. It opens you up to the possibility of being sued and even having to declare bankruptcy. Without a clear direction, this is where a lot of wellness entrepreneurs seem to be headed. This guide covers several of the major compliance problems that health coaches, wellness startups, and coaching platforms seem to have a hard time grasping. Some of the most important ones are outlined here. They are important because ignoring them could lead to serious legal and financial trouble. They are also important because they affect a lot of people, and dumb compliance problems can make you look untrustworthy or lead to the kind of appearance that makes you seem untrustworthy. Do Health Coaches Need a License? Understanding State Laws In the majority of states, you don’t need a license to work as a health coach. But depending on the kind of services you offer, especially if they are of a certain kind, you could be violating state laws that require professionals to be licensed. For instance, if you are offering detailed nutrition plans (more than just broad dietary guidelines) or any kind of medical advice, you could be interpreted as practicing without a license. Several states—including Florida and North Carolina—confine the provision of dietary counsel to licensed dietitians. The same applies to services that resemble psychotherapy; offering those could trigger mental health licensing rules. If you’re giving advice that could be considered medical—like diagnosing or treating health conditions—you could confront claims of practicing medicine without a license. Avoiding the Corporate Practice of Medicine (CPOM) Health coaching businesses that necessitate a partnership with a licensed professional must be particularly careful regarding the corporate practice of medicine. Why? Because in many states, entities providing medical services must be owned by a physician. If your business model requires the presence of a licensed practitioner, a careful structure is critical—because the alternative could put you in the path of regulatory enforcement. To investigate the functionality of CPOM and the nature of business structures that are compliant, see this page. Typical legal structures include the formation of a Management Services Organization (MSO) that oversees administrative functions while the licensed provider has clinical control. Another structure is to operate as a strictly wellness or life-coaching service, avoiding all regulated health services. Some businesses contract with licensed providers instead of hiring them directly. Marketing Health Coaching Services: FTC Rules and Red Flags Also, federal laws govern health coaching. The Federal Trade Commission has rules about advertising, and health coaches must follow those rules. The FTC requires that all marketing be truthful and not misleading. This means you can’t promise clients guaranteed results or make unsubstantiated health claims. See the complete guidance on health-related advertising from the FTC. You can state, “This program promotes wellness through lifestyle strategies,” but you must avoid saying things like, “This program cures diabetes naturally.” When it comes to making health claims of any sort, you best have them lined with credible scientific evidence. Using disclaimers such as “Results vary” or “Not intended as medical advice” can also help you keep legal risk to a minimum. Be especially careful with testimonials; they should not exaggerate or imply that the program can bring about any more than what it is expected to do. HIPAA Compliance and Client Health Information You might be subject to HIPAA regulations if your business collects or stores any sort of client health information. If you’re a small business, especially, don’t make the assumption that just because you’re not a health insurance company or a hospital, you don’t count. You might. Verify your HIPAA standing. If your business is regulated by HIPAA, you must use secure communication tools, such as encrypted video conferencing platforms, to talk with clients about anything but the least sensitive health information. You should collect only the information you need to do business—make it a habit to always ask for the client’s informed consent first—and you should almost never store any sensitive health information. More comprehensive security counsel can be obtained from this page. Protecting Your Business Through Legal Best Practices To protect your business from legal risk, always make it clear what your role is with proper disclaimers. A typical one is: “This program provides general wellness advice and is not a replacement for your doctor’s orders or prescriptions.” It is also prudent to obtain professional liability insurance, which can assist you if disagreements with clients occur. And prior to launching your services, think about collaborating with a healthcare attorney to verify that your contracts and business model comply with applicable laws. Operating a health coaching business entails meeting various compliance mandates. This can be a bit of a balancing act at times because health coaches are not legally licensed as health professionals. Fortunately, the following section clarifies the main compliance challenges health coaches are likely to face, including the following: Licensing and Advertising Issues Data Privacy and Security Concerns
May 8, 2025
Landlord Representation
New D.C. Law on Pet Fees & Policies – What to Know for October
The newly enacted Pets in Housing Amendment Act of 2024 D.C. law will impose significant new limits on pet-related fees and restrictions for rental housing providers. For leases starting on or after October 1, 2025: You may charge a refundable pet security deposit, but it must not exceed 15% of one month’s rent and must be kept separate from the standard security deposit. You may charge monthly pet rent, but only within strict limits:Up to 1% of the first full month’s rent per dog; and No more than 1% total for all other common household pets combined. You may not charge any fee, deposit, or rent related to a service or assistance animal, which is protected under federal and local disability laws. Reasonable pet policies (e.g., number limits) are still permitted, but must not be arbitrary or overly restrictive. For leases starting on or after October 1, 2026: You may not impose restrictions or charge fees based on a pet’s breed, size, or weight. Any pet-related charges or conditions must comply strictly with the limitations described above. These rules do not apply to leases that begin before October 1, 2025, but any lease renewed or newly executed on or after October 1, 2025, will be subject to the new requirements. We recommend reviewing your current lease templates, pet addenda, and fee schedules well in advance of these dates.
May 6, 2025
Construction
How Long Is Too Long? What Statutes of Repose Mean for Your Liability Exposure
How long are you on the hook for defects in a completed construction project? It’s a question that keeps many contractors and design professionals up at night—and for good reason. No project is flawless, and the duration of responsibility for construction or design defects depends on numerous factors, including the contract language, the type of harm or injury that is the subject of concern, and statutes of repose. Typically, construction and design work are performed under written contracts. As an initial starting point, if a design or construction defect arose and was identified during the project itself, most construction contracts have specific clauses that require the claims to be noticed, raised and submitted timely, often within a short time period of days or weeks. Thus, if an issue is discovered during the project itself, the accrual date might be immediately at that time, and, under the contract, prompt notice and submission of the claim are often required. For incidents that occur after the project is completed, the written contract may contain clauses that identify the “accrual” or starting point for claims that occur or are discovered after the project is completed. For example, some versions of AIA contracts identify Substantial Completion as the date when claims “accrue,” meaning that Substantial Completion is the triggering start date for when the clock on a statute of limitations (deadlines) begins to run. B143-2004, Section 3.6.3. Thus, for latent, unknown defects in construction or design, the contract might identify a specific milestone (e.g. Substantial Completion) as the accrual date, with a deadline that runs from there. The contractual clauses identified and discussed so far typically pertain to construction or design defects that are pursued as claims between the parties on the project, who typically have a contract where the cause of action would likely be a breach of contract or perhaps negligent design/construction. Statutes of Repose and Contractual Repose Additionally, if a contract clause does not govern the issue, deadlines for claims are typically found in statutes of limitation and statutes of repose. These are state specific statutes; thus, different states will likely have different rules, deadlines and interpretations. A statute of limitations is a deadline to file claims from the date the claim accrues, typically the date of the injury. Thus, under a statute of limitations, once the injury occurs, a claimant has a specific period of time (going forward) to file the lawsuit. It is a deadline that looks forward from the date of loss. Sometimes, the statute of limitations can be extended if the defect was unknown, or if the injury did not occur until a much later date. Depending on the circumstances, the deadline might be extended further than anticipated if the loss was hidden, concealed, or the injury is delayed. On the other hand, a statute of repose is a backward-looking deadline. Instead of looking from the date of injury, it pegs a milestone date and imposes a hard cutoff looking backwards. Once the repose period expires, no legal action can be brought, regardless of when the defect was discovered or the injury occurred. Statutes of repose create a deadline with an absolute bar on claims brought outside the set time limit. Repose periods vary by jurisdiction, and construction professionals working across state lines must be aware of those differences. Some notable examples in the Mid-Atlantic include: Pennsylvania: 12 years Maryland: 10 years Virginia: 5 years District of Columbia: 10 years Delaware: 6 years Thus, for example, in Virginia, five years after the date of performance of the work, no matter what the circumstances, all claims are barred. To be clear, the statute of limitations might run sooner than five years, depending on the type of claim, but with a statute of repose, there is no availability for an extension if the defect was concealed, latent, or unknown. Thus, it acts as a final cutoff, regardless of when the injury occurred, and regardless of who the claimant is. Understanding these timelines is essential when assessing long-term liability and risk on completed projects—especially during the negotiation and drafting of contract provisions. In some cases, parties may choose to establish a contractual clause of repose that is shorter than the statutory period provided under state law. These contract clauses should be drafted carefully to define clearly: The types of claims covered (e.g., contract, tort, breach of warranty, contribution, etc.) The event that triggers the limitations period (such as substantial completion or final payment) The duration of the contractual repose period (e.g., one year or longer duration). When drafted with precision, time limitation clauses can offer powerful protection by limiting claims to a shorter period. To further reduce exposure, contractors and design professionals should take proactive measures throughout the project, such as detailed recordkeeping to establish the scope of work performed and decisions on the project, along with establishment of the actual dates of substantial and final completion. Understanding statutes of repose and contractual clauses of repose is essential to limiting long-tail liability and thus protecting your business. These strategies won’t just help you sleep better at night—they’ll significantly strengthen your position against claims that arise long after you’ve completed a project. When drafting contract clauses and implementing risk management strategies, consulting with experienced construction lawyers, accountants, and insurance experts is best.
May 6, 2025
Business
Unexpected Tax Penalties in Talent Contracts: Could Your Motion Picture, Recording, or Sports Contract be Subject to IRC Section 409A?
Could your motion picture agreement, recording agreement, or sports contract be a non-qualified deferred compensation arrangement? You may think it unlikely, but a non-qualified deferred compensation arrangement refers to any agreement under which an employee or independent contractor—i.e., a “service provider”—may receive a payment in a taxable year later than the year in which the service provider had a legal right to the payment. There are specific rules governing non-qualified deferred compensation arrangements: Code Section 409A of the Internal Revenue Code of 1986, as amended. Failure to comply with the detailed requirements of Code Section 409A can trigger the immediate taxation of deferred income and impose an additional 20% penalty tax on that income. Any contract providing for the provision of services that provides that some payments may be made after the year that the contract was entered into may be a non-qualified deferred compensation arrangement. This is because the Internal Revenue Service takes the position that a service provider first has a legal right to payment when the contract is entered into, and this applies even if the contract requires the service provider to provide services and the services have not yet been provided. Entertainment Industry Examples: How Code Section 409A May Apply Motion picture contracts frequently provide top talent with a percentage of the box office as compensation for services. In recording contracts, a new artist is generally given an advance to deliver a master recording to a record company. The record company owns the master recording, but the agreement provides the artist receives a “royalty” equal to a certain percentage of sales that will be offset against the advance that the artist received. Since the artist does not have a property right in the master recording, the “royalties” are compensation and will be subject to Code Section 409A, unless an exception applies. Sports contracts often provide for deferred compensation in a colloquial sense. Since the payment to be received by the athlete is not a payment under a qualified retirement plan governed by ERISA, the deferred compensation will be subject to Code Section 409A unless an exception applies. One exception to Code Section 409A is the short-term deferral exception. A payment qualifies as a short-term deferral if the payment must be made by March 15 (for a calendar year service recipient) of the year following the year in which the payment becomes vested or is no longer “subject to a substantial risk of forfeiture.” In this case, this is a short-term deferral and Code Section 409A does not apply. Permissible Payment Events Under Code Section 409A If a payment constitutes non-qualified deferred compensation, then there are only certain events on which the payment can be made: An objectively determinable time or schedule set forth in the agreement (e.g., on January 1 of a certain year or the athlete’s 50th birthday) Death or disability Separation from service (with a very specific definition) Change of control (also a very special definition) Unforeseen emergency Once the payment terms are set forth in an agreement, the terms cannot change, except in very limited circumstances. The payment can never be accelerated by more than 30 days, and there are very strict rules regarding further deferral of the payment. One of those rules is that if a payment is deferred, it must be deferred by more than 5 years from the original payment date. Consequences of Violating Section 409A If Code Section 409A applies and is violated, the penalties are generally imposed on the service provider. These penalties include acceleration of recognition of income for all payments to be made under the agreement in the year in which the violation occurs. Additionally, the service provider is required to pay a 20% penalty tax, as well as ordinary income tax on these accelerated payments. Code Section 409A is complex and often overlooked in entertainment and sports agreements. But if your contract includes future payments tied to services performed now, it is worth asking whether these rules apply. Careful planning can help avoid unexpected taxes and penalties.
May 5, 2025
Commercial Litigation
Virginia Court of Appeals Clarifies Impact of the CARES Act on Eviction Actions
In a recent decision, the Virginia Court of Appeals clarified the impact of the CARES Act on Virginia eviction proceedings. Read the full ruling here. The ruling is significant for Virginia landlords, property managers, and tenants, particularly those managing or residing in properties covered under the CARES Act. Background: The landlord filed an eviction action (unlawful detainer) against residential tenants after they allegedly failed to pay rent. Under Virginia law, the landlord issued a five-day notice to pay rent or vacate the premises. However, the notice also stated the tenants had 30 days to vacate pursuant to the CARES Act. The trial court dismissed the eviction action, ruling it violated the CARES Act’s 30-day notice requirement because the action was filed before the 30-day vacate period expired. On appeal, the Court of Appeals reversed the trial court’s decision. Key Implications of Ruling: Filing an Eviction Action Does Not Require a Tenant to Move Out: Filing an eviction action is only the first step in the legal eviction process, and it does not require the tenant to leave the property. Therefore, a landlord who files an eviction action within the 30 days allowed by the CARES Act does not violate the CARES Act. Difference Between Summons and Execution of a Writ: The CARES Act prohibits landlords from taking action that would require a tenant to vacate the premises before the 30-day notice period has expired. However, it does not prevent landlords from initiating an eviction action. Only a physical eviction of a tenant, performed by a Sheriff, would violate this provision if done within the 30-day timeframe. Practically speaking, a physical eviction cannot occur this quickly. Preemption of State Law by Federal Law: When there is a conflict between federal and state law, federal law preempts state law. Thus, the CARES Act’s requirements, if applicable, provide tenants in covered properties with 30 days before they must vacate, superseding any contrary provision of Virginia law. Impact on Virginia Landlords and Tenants: Proceed with Filing: Landlords can file eviction actions within the 30-day notice period without violating the CARES Act. Understand Tenant Protections: The ruling reinforces the requirement for landlords, subject to the CARES Act, to allow the full 30-day period before proceeding with any action that would physically remove tenants from the property. Any attempt to execute a writ of eviction within that period could lead to legal consequences. Clarity on Lease Termination: Even if a lease is terminated under Virginia law, the tenant still has the right to remain on the premises for 30 days after receiving notice, in accordance with the CARES Act. Conclusion The Court of Appeals’ ruling affirms that landlords may lawfully file eviction actions during the CARES Act’s 30-day notice period, while still upholding federal protections for tenants. Understanding the intersecting requirements of federal and state law is key to ensuring compliance and avoiding disputes. For those facing landlord-tenant issues, seeking qualified legal guidance remains an important step.
May 2, 2025
Mergers and Acquisitions
Younger Generations Looking to Sell: What Millennial and Gen X Business Owners Need to Know
I recently wrote about the “Gray Tsunami” and the mass numbers of Baby Boomers that will be retiring over the next few years. For Boomers, there are specific considerations that must be addressed if sale is their exit option. Similarly, there are age-oriented issues facing younger generations looking to sell their businesses. There are approximately 138 million Americans across the Millennial and Gen X generations as of the latest data. Millennials, born between 1981 and 1996, make up about 72.7 million Americans, and Gen X, born between 1965 and 1980, is not far behind at about 65.35 million. Data also shows that Millennials own 13% of small businesses, with Gen X owning 47%. As such, these two massive generations combined account for the majority of small business owners in the US. When looking at a transition at a much younger age, there are different issues to consider as opposed to those who sell later in life. Timing and Valuation A business owned by someone in their 30’s, 40’s, or 50’s will typically have a shorter life span than one owned by a Boomer. This means there might not be decades of financial performance to demonstrate stability to a buyer, and the business could be at a stage of high growth potential, but not maturity. While this is not always the case, buyers tend to prefer a strong history of stable cash flow and profitability. This is why timing is a critical factor. Younger generations should strategically plan their exit so that the timing works in their favor to maximize their valuation. Shifting market conditions and economic trends can impact valuations as well, so it is important to consider a variety of factors when determining the right timing that results in the greatest valuation. The retiring Boomer generation is also a major consideration in terms of timing. If a flood of Boomers are looking for buyers simultaneously, younger generations might look to delay their sales to reduce the competition for buyers. Conversely, this also presents a significant and unique opportunity to younger generations looking to buy. Planning for the Future Individuals in the Millennial or Gen X generations will likely have a great deal of life in front of them, so planning for the future is essential if they are going to sell their business. Consider the short and long-term goals of the sale. Do you want to be acquired to start a new business? Is your goal to retire early? Are you looking at other employment opportunities? Do you want to only sell a portion of the business to a strategic partner such as a PE firm, as opposed to a full exit? These are all important points to consider as they will help you to determine what kind of valuation will be required to meet your specific needs and how you need to structure the sale. These are different for everyone based on life goals, thus, looking at your future and what you need to make it happen is key. It is also important to work closely with your legal advisor to ensure the transaction is structured in a way to allow for the necessary financial and legal protections Selling to Start Again If your goal is to sell the company and start a new venture, then there are some very specific points that will need to be negotiated with the seller. For example, what kind of agreements does the buyer require? A non-compete agreement could prevent you from starting a similar business within a specific region or time frame, and a non-solicitation clause could restrict the hiring of former employees or soliciting clients. These are points that need to be front of mind if you are considering starting a similar business down the road, as they could seriously impact its success. Company Culture vs. Financial Gain Younger generations also tend to place a greater sense of value on company culture, employee retention, and customer loyalty. So, finding the buyer that will carry on the established company values and culture can play a larger role. Younger sellers must work to find the balance between carrying on the long-term vision for the company and maximizing the financial return from the sale. Selling your business at any age requires careful planning and preparation. But when selling earlier in life, there are complexities that exist due to the longer road that lies ahead. Having a clear long-term vision and understanding how the acquisition fits into your plan will help you to maximize the benefits and carry out your goals.
May 2, 2025
Healthcare
Advertising Compliance for Medical Devices: FTC and FDA Requirements
The Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) finely regulate the promotion compliance of medical devices—both in terms of the claims made and in the manner of their making. The upshot is that promotional claims about medical devices, including advertising, must be truthful and not misleading. To achieve this, the FDA and the FTC have established a series of very clear guidelines, and they have also set forth some basic, mostly “common sense” rules that any entity promoting a medical device would be wise to follow. This document is your essential guide to, and entryway into, the world of promotional compliance for medical devices. Understanding FDA Regulations for Medical Device Labeling and Promotional Claims: The Food and Drug Administration supervises the medical device promotional world, ensuring that claims made therein are truthful and based on solid evidence. They cover a lot of ground. The world of medical devices is not a small one, with hundreds of thousands of individual items that need to be carefully and clearly labeled. “Labeling” is a gigantic umbrella that covers any and all materials used to explain or promote the device. That means everything from brochures to website content to instructions. For a look at their comprehensive requirement list, hit up their webpage. Scientific evidence must back medical claims. If a device manufacturer claims that the device can diagnose or treat a condition, there must be clinical data to back this up. Promoting a device for unapproved or off-label use is prohibited and can lead to enforcement actions. For example, a developer encountered FDA fines for offering unsupported therapeutic representations about a wearable device. Once the firm fixed its labeling to drop these representations, it was able to get back on track and avoid further action. Find additional information about device labeling from the FDA at https://www.fda.gov/medical-devices/overview-device-regulation/device-labeling. Adhering to FTC Truth-in-Advertising Standards for Medical Devices: Ensuring the truth in advertising is the main mission of the FTC, especially when it comes to advertising for medical devices. The statements made in the promotional purview must be clear, and more importantly, they must be substantiated. This means that when a device is being promoted, the claims that are made cannot be misleading or exaggerated in any way. Furthermore, there can be no deceptive language, and absolutely no omissions that might lead the consumer to think something different than what’s actually true. Claims related to health necessitate a great deal of proof—usually clinical trials or large-scale scientific studies. When it comes to using a person to represent a product (i.e., endorsements), the FTC requires that what is said be an accurate representation of the typical user’s experience. Also, if a person is being used to represent a product, and that person is being paid, the audience must be told so. A medical device company learned this lesson the hard way not too long ago. Visit https://www.ftc.gov/business-guidance/resources/advertising-faqs-guide-small-business for additional details. Navigating Social Media and Digital Advertising Compliance: When it comes to using digital platforms and social media to promote medical devices, there are defined compliance risks to consider. The FDA and FTC both have a hand in the regulation of these devices, but the FTC claims primary authority over the type of promotional speech (and the speakers) used in these venues. Mandatory disclosures that go along with related claims should not be hard to find. They should be right there in plain view. To see what the FTC requires, rule-wise, you should look up their endorsement guides. The same standards of truth and substantiation that apply to traditional advertising should also apply to social media posts. When influencers and affiliates promote medical devices on social media, they must ensure that their endorsements are in line with Federal Trade Commission (FTC) guidelines. This was not always the case, as evidenced by a recent revision of fitness device company social media influencer partnerships. The company in question now mandates that its partners include a clear and unmistakable disclosure of the kind of relationship they have with the company (in this case, that they are paid to promote the company’s devices). Detailed FTC disclosure requirements can be found at https://www.ftc.gov/business-guidance/resources/ftcs-endorsement-guides. Conducting Regular Compliance Audits and Staff Training: Regular audits of marketing materials and thorough training of marketing personnel are critical to ensure compliance with the FDA and FTC. Promotions of all kinds must meet the standards set by these two agencies. Audits should encompass all promotional content, including digital media and printed materials—to guarantee compliance. Regular training in labeling rules, claim substantiation, and the standards of honesty in advertising should be received by the marketing teams. When audits find compliance issues, companies must take immediate and corrective actions. A medical device manufacturer has successfully implemented an advertising audit and progressed to a level of compliance in their external communication. They are a case study in being better safe than sorry when it comes to the truth in advertising. Guidance on this topic can be found on the Federal Trade Commission’s website. Common Legal Risks and Penalties for Non-Compliance: The FDA and FTC mandate how advertising should be done in the supplement industry, and they make it very clear which ways are not acceptable. They require actual science to back up what is said in an advertisement. They do this to ensure that consumers are not being misled. They also want to make sure that defendants in lawsuits do not have “but the supplement told me to take it” as a defense. Compliance with FDA and FTC regulations is crucial for medical device manufacturers to avoid penalties and enhance consumer trust. Companies can achieve compliant advertising by substantiating claims, ensuring clear digital disclosures, and regularly auditing advertising practices.
May 1, 2025
Bankruptcy
Director & Officer Duties: What Every Leader Should Know
Earlier this year, the FDIC, acting as receiver for Silicon Valley Bank (“SVB”), filed a breach of fiduciary duty lawsuit against six officers and eleven directors of the bank. The FDIC alleged that these individuals ignored internal risk warnings, prudent banking standards, and SVB’s own risk management policies in pursuit of short-term profits and a boost to the stock price of SVB Financial Group (SVBFG). According to the complaint, SVB’s downfall stemmed from critical errors, including an overreliance on long-term, unhedged, interest-rate-sensitive securities. This exposed the bank to significant risk amid a rising interest rate environment. Compounding the issue, executives allegedly manipulated internal risk models to conceal problems rather than address them. Between 2021 and mid-2022, SVB removed key interest rate hedges in an effort to inflate short-term earnings and SVBFG’s stock price, increasing its exposure to rate volatility. In late 2022, despite signs of financial distress, SVB paid a $294 million dividend to its parent company, further depleting its capital reserves. This filing serves as a timely reminder of the critical responsibilities that directors and officers (D&Os) hold—especially during periods of financial instability. The current environment of uncertainty, market volatility, and fear of recession heightens the risk of bankruptcies and the accompanying scrutiny of the actions of officers and directors. What should directors and officers consider when a company transitions from solvency to insolvency? D&O Duties Two fundamental fiduciary duties exist under Delaware law1: the duty of care and the duty of loyalty. Fulfilling the Duty of Care To satisfy the duty of care, directors and officers must make decisions based on a reasonably informed process. This means they must actively gather and consider all material information relevant to a decision. The standard for breaching this duty is gross negligence. Delaware law—specifically §102(b)(7) of the Delaware General Corporation Law—permits corporations to include charter provisions that exculpate directors from monetary liability for breaches of the duty of care. While this makes awarding money damages rare, breaches may still give rise to equitable remedies or support claims for aiding and abetting. Fulfilling the Duty of Loyalty The duty of loyalty requires directors and officers to act in good faith and in the best interest of the company, not in pursuit of personal benefit. This duty focuses on avoiding conflicts of interest. To fulfill the duty of loyalty, directors and officers must be disinterested, meaning having no personal financial stake in the matter, and independent, or in other words not being under the control or influence of someone with a personal financial interest. Who Are the Duties Owed To? Directors and officers must remember that fiduciary duties are owed to the corporation itself, with the goal of maximizing the value of the enterprise. When the company is solvent, fiduciary duties are effectively owed to shareholders, as they are the residual beneficiaries of the corporation’s success. Ordinarily, the board of directors owes fiduciary duties to both preferred and common stockholders. However, in the event of a conflict between their interests, the board is obligated to prioritize the interests of common stockholders over those of preferred stockholders When the company becomes insolvent, the focus shifts. Insolvency gives creditors standing to bring derivative claims for breaches of fiduciary duties since the value of the enterprise is now effectively for their benefit. A corporation is considered insolvent under two main tests: 1) balance sheet test – when liabilities exceed the fair market value of assets; and 2) cash flow test – when the corporation is unable to pay its debts as they come due. This evolving fiduciary landscape underscores the importance of responsible governance, especially when a company is under financial stress. Directors and officers must remain vigilant, informed, and unbiased to fulfill their legal and ethical obligations—and avoid the kind of fallout we saw with SVB. T A couple of other examples of director and officers’ actions that led to successful breach of fiduciary duty claims come from the case of TransCare Corporation and AMC. TransCare – Insider Transaction In TransCare, a Chapter 7 trustee brought claims against the sole director of TransCare. TransCare Corporation was a Delaware corporation headquartered in Brooklyn, New York. TransCare Corporation, by and through its subsidiaries, provided ambulance services to hospitals and municipalities for emergency and non-emergency patients and paratransit services to the New York Metropolitan Transit Authority (“MTA”) for individuals with disabilities. At all relevant times, Lynn Tilton served as the sole director of TransCare. The officers of TransCare did not have the authority to (a) approve an annual operating plan budget or any interim operating plan or budget; (b) negotiate the sale or disposition of any assets; (c) recapitalize or make other changes in the capital structure; (d) disclose any financial information to any third party; (e) enter into any contract or license agreement not contemplated by the approved Annual Plan (of which there was none); (f) enter into any financing or loan agreement; (g) dispose of any unusable asset or write off any receivable, or make a charitable contribution; (h) change auditors; (i) engage legal counsel; (j) settle or compromise any claim; (k) engage any consultant; or (l) conduct any reduction in force. Accordingly, Tilton made all decisions for TransCare and managed TransCare through her employees at related entities. TransCare encountered financial difficulties and Tilton decided to split it into OldCo and NewCo. First, OldCo would be wound down in one of two ways: (i) outside of bankruptcy over ninety days followed by Chapter 7 or (ii) through a Chapter 11. Second, Patriarch Partners Agency Services, LLC, an entity indirectly owned and controlled by Tilton and acting as an administrative agent for a term loan extended to TransCare, would foreclose on collateral and sell it to NewCo which would continue to operate as a going concern. The foreclosure and sale to NewCo became the problem. Lynn Tilton’s fundamental error was turning what should have been an arm’s-length sale into a one-sided, self-dealing foreclosure and sale to herself without any of the procedural safeguards that Delaware law requires for “entire fairness.” In particular, she: Controlled every step of the deal — conceived, negotiated, approved, and executed the strict foreclosure and subsequent sale through her own affiliates, with no independent board or special committee involvement. Fixed the price unilaterally — she set the $10 million “foreclosure credit” herself (and even miscalculated it, including receivables she never bought), rather than having a neutral advisor or market process test the value. Failed to explore alternatives — she never retained a financial advisor to solicit third-party offers, didn’t consider a Section 363 sale in bankruptcy, didn’t seek debtor-in-possession financing or reach out to known interested buyers, and simply decided that only she would lend to or buy the assets. By standing on both sides of the transaction and excluding any bargaining, oversight, or competitive bidding, she tainted both the process (“fair dealing”) and the price (“fair price”), breaching her fiduciary duties of loyalty and good faith. AMC – Interfering with Shareholder Vote In the case of AMC, its board was accused of using its power to issue new securities and structuring those securities’ voting rights to sideline ordinary shareholders, force through dilutive capital aising proposals, and secure a management-friendly outcome—even when the bona fide majority of investors opposed it. AMC’s board ran afoul of basic shareholder‐protection principles in several i ways. Despite retail investors rejecting two proposals (in Jan. and June 2021) to increase the number of authorized common shares, the board kept coming back, effectively trying to dilute holders who’d already rejected the proposal.” In July 2022, instead of going back to common holders, the board created a new class of units (APEs) that enjoyed special voting rules—unvoted APEs would be “tacked on” proportionally to the votes cast, magnifying the weight of any single APE vote. This design guaranteed that APE holders could override the common stockholders en masse, even if most common shares sat out the vote. After the unsuccessful public sale of APEs , AMC quietly sold $75 million worth of them to Antara Capital and swapped additional units for debt relief—on the explicit condition that Antara vote them in lockstep with management’s agenda. Leveraging those “committed” votes, the board pushed through both (a) an increase in authorized common shares (to enable APE conversion) and (b) a 1-for-10 reverse split—despite a clear lack of support (or even participation) from the ordinary shareholders. Because most common holders either voted “no” or didn’t vote, the Antara backed APE votes tipped the scales. The plain effect was to disenfranchise the broad base of retail investors—many of whom had amassed shares precisely to have a voice in corporate governance. By structuring the APE vote the way they did, the board effectively “hijacked” the voting process, turning what should have been a straightforward shareholder decision into an engineered outcome. Retail investors brought lawsuits alleging that the board had breached its duty of loyalty (by putting its own fundraising goals ahead of shareholders’ interests) and duty of care (by adopting convoluted voting schemes without proper disclosure or shareholder debate). The court’s preliminary block on converting APEs into common shares underscores that the directors have to exercise extreme caution when they use corporate power to intrude on shareholder rights. Key Takeaways for Leadership Stay Informed: Implement robust risk monitoring and reporting systems. Act Swiftly: Confront bad news Guard Capital: Resist dividend payments or share buybacks when liquidity or solvency is in question. Document Decisions: Keep minutes and expert analyses to demonstrate an informed process. Prevent Conflicts: Establish clear recusal policies and independence protocols. By anchoring decision making in these fiduciary principles—especially during times of financial stress—directors and officers can both protect the enterprise and shield themselves from liability. On March 25, 2025, Delaware adopted amendments to Section 144 of the DGCL that became effective immediately and among other things, establish statutory safe harbors in defense of breach of fiduciary duty actions related to controlling stockholder transactions and interested director and officer transactions.
April 30, 2025
Labor and Employment
Under-Performing Pregnant or Disabled Employees: Balancing Performance Management with the ADA, FMLA, and Pregnant Workers Fairness Act
Performance conversations can quickly become legal minefields when an employee is pregnant, has a disability, or has requested protected leave. Too often, well-meaning employers delay intervention, mishandle documentation, or apply policies inconsistently, opening the door to claims under laws like the Americans with Disabilities Act (ADA), the Pregnant Workers Fairness Act (PWFA), and the Family and Medical Leave Act (FMLA). Employers navigating sensitive performance management matters should understand the laws at play and focus on the fundamentals: document thoroughly, communicate clearly, and take decisive action. Know the Landscape: ADA, PWFA, and FMLA in the Performance Context Americans with Disabilities Act (ADA) The ADA prohibits discrimination against qualified individuals with disabilities. It requires employers to provide reasonable accommodations that enable those individuals to perform the essential functions of their jobs—unless doing so would cause an undue hardship. Importantly, employees with disabilities must still meet legitimate performance and conduct standards. But before disciplining or terminating such an employee, an employer must consider whether: The performance issue is related to the disability. A reasonable accommodation could help the employee meet expectations. The employee was given a meaningful opportunity to improve. Pregnant Workers Fairness Act (PWFA) Effective June 27, 2023, the PWFA expands protections for pregnant workers by requiring employers to offer reasonable accommodations for known limitations related to pregnancy, childbirth, or related medical conditions—similar to the ADA framework. Key differences between the PWFA and ADA include: The PWFA applies even to temporary or moderate limitations (e.g., lifting restrictions, more frequent breaks, and part-time schedules). Employers cannot require a pregnant employee to take leave if another accommodation is available. The statute prohibits retaliation for requesting or using a pregnancy-related accommodation. Performance issues that arise in the context of pregnancy or a related condition should be handled carefully—especially if the employee has requested (or is entitled to) accommodation under the PWFA. Family and Medical Leave Act (FMLA) The FMLA entitles eligible employees to up to 12 weeks of unpaid, job-protected leave for serious health conditions (including pregnancy), family caregiving, and bonding with a new child. Employers must tread carefully if an employee is underperforming while on FMLA leave or shortly after returning. Disciplining or terminating an employee for conduct related to a protected leave period can easily be construed as interference or retaliation—even if the employer’s intent was neutral. Common Pitfalls When Performance and Protected Status Intersect Ignoring the Role of Accommodation Employers must explore accommodations under both the ADA and PWFA before taking adverse action. If an employee’s performance is suffering due to a medical condition or pregnancy-related limitation, your first step is not discipline—it’s engagement. Legal obligation: Initiate the interactive process to determine if a reasonable accommodation would enable the employee to meet expectations. Failing to engage in this process is a leading cause of liability under both laws. Accommodations may include modified duties, schedule changes, ergonomic supports, remote work or temporary reassignment. Inconsistent Application of Performance Standards If an employer holds a pregnant or disabled employee to a higher (or lower) standard than others, the result is rarely good. Legal risk: Disparate treatment claims under Title VII, the ADA, the PWFA, or state human rights laws. Ensure your expectations, metrics, and disciplinary procedures are applied consistently—particularly regarding attendance, deadlines, and work quality. Poor or Biased Documentation Vague or emotionally charged performance documentation (“She’s not committed anymore since becoming pregnant”) is both unhelpful and legally risky. Best practice: Stick to objective, quantifiable facts. Instead of “seems distracted,” document details, like: “missed three deadlines in March; quality of reports has declined, with five factual errors noted.” Good documentation provides a legitimate, non-discriminatory basis for action—and will support your decision if it’s challenged later. Disciplining During or After FMLA Leave Without a Clear Basis Courts closely scrutinize adverse actions taken during or shortly after FMLA leave. Even if you have valid concerns, timing matters. Tip: If an employee’s performance issues predate the leave, ensure you have clear records to show that the concerns existed—and were addressed—before the leave began. Avoid the appearance of retaliation by proceeding only when the documentation supports your decision. Practical Steps for Employers: How to Manage Performance Issues Lawfully and Effectively Train Managers to Spot Accommodation Triggers. Supervisors should loop in HR or legal before acting whenever an employee references a medical condition, pregnancy limitation, or medical leave. Engage Early and Document Diligently. Don’t delay performance conversations out of fear—address issues early, but do so thoughtfully. Document any meetings, expectations, improvement plans, and accommodations discussed or offered. Apply Policies Uniformly. Consistency is key, whether it’s an attendance policy, quality standard or progressive discipline process. Explore Accommodations Before Discipline. Particularly where medical or pregnancy-related limitations are at play, you must first assess whether the employee can meet expectations with reasonable support. Avoid “Gotcha” Terminations. Avoid abrupt disciplinary action if performance concerns haven’t been clearly documented and communicated. Courts frown on surprise terminations, especially after protected leave or accommodation requests. Consult Counsel Before Termination. Before terminating a pregnant or disabled employee—or one who recently returned from leave—have a legal review of the facts, documentation, and process. A brief consultation can prevent months of costly litigation. Pregnancy and disability do not shield employees from accountability, but they do change how employers must approach performance management. With the passage of the Pregnant Workers Fairness Act and the continued complexity of ADA and FMLA compliance, employers must proceed with care, compassion, and a clear understanding of their legal duties. Performance issues don’t go away on their own, but mishandling them can create far bigger problems. The key is to act early, engage meaningfully, and document everything.
April 30, 2025
Commercial Litigation
Stop! … In the Name of Injunctions: The Benefits of Seeking Temporary Restraints and Injunctive Relief in Intellectual Property Disputes and Measures for Litigation Avoidance
As a commercial litigator with extensive experience in protecting clients' interests (through applications for temporary restraints and emergent relief, I’ve seen firsthand how quickly intellectual property (IP) disputes can escalate and the significant risks they pose to businesses. Whether dealing with IP infringement in the franchise industry or defending against claims related to employee misappropriation of proprietary information, securing immediate legal protection can often make the difference between a company maintaining its competitive edge or suffering irreparable harm. This article discusses the benefits of seeking relief through temporary restraints and injunctive relief, along with some effective measures businesses can take to avoid these disputes in the first place. The Need to Protect IP in a Fast -Paced Competitive Business Environment Intellectual property (IP) has become one of a company’s most valuable assets. Businesses rely on IP to maintain their competitive advantage, from patents and trademarks to trade secrets. However, when IP is infringed upon or misused—whether by competitors or employees—the damage can be swift and irreversible. In such cases, taking immediate action in state or federal court by seeking temporary restraints or injunctive relief can be critical. These legal remedies help businesses stop ongoing harm while the case is resolved. In addition, businesses can proactively take several steps to reduce the risk of IP disputes and avoid costly litigation altogether. Intellectual property is often the backbone of a company’s identity, growth, and success. Whether it’s a unique product design, a trademarked logo, or a trade secret that fuels innovation, IP represents a competitive edge that must be protected. Unfortunately, when IP is stolen, misused, or infringed upon, the consequences can be severe, ranging from lost revenue and market share to irreparable damage to the company’s reputation. Fortunately, businesses do not have to wait for a full trial to start protecting their rights. In cases of IP infringement or misuse, courts offer remedies like temporary restraints and injunctive relief. These legal tools can provide immediate relief by halting harmful activities and preserving the status quo until a final resolution can be reached. In this paper, we’ll take a look deeper at the benefits of these remedies and explore steps businesses can take to proactively avoid disputes. Legal Remedies for IP Infringement: Temporary Restraints and Injunctive Relief What are Temporary Restraints and Injunctive Relief? Most businesses are familiar with injunctive relief in the broad sense, but for the benefit of the uninitiated, temporary restraints (referred to as temporary restraining orders, or TROs) and injunctive relief are court-ordered remedies designed to prevent further harm in situations where a party’s actions pose a threat to another’s rights. In the context of IP disputes, these measures can be used to halt the unauthorized use or misappropriation of a business’s intellectual property before a full trial occurs. Benefits of Temporary Restraints and Injunctive Relief Immediate Protection for Your IP When a company’s intellectual property is under threat, time is of the essence. Temporary restraints or injunctive relief can stop the infringing party from continuing their harmful actions immediately, preventing further damage while the legal case is being decided. Preservation of the Status Quo These legal tools help preserve the status quo by halting the alleged infringement or misuse. This ensures that the business’s IP remains protected and that the defendant cannot profit from the unlawful actions during the ongoing litigation. Demonstrating Irreparable Harm Courts are more likely to grant temporary relief if the plaintiff can demonstrate that the irreparable harm—meaning that simply awarding monetary damages won’t fix the situation. IP disputes often meet this standard because of the unique and lasting damage that can result from the theft or misuse of proprietary information. Deterrence Injunctive relief provides immediate protection and sends a strong signal to the defendant—and potentially others—that the company is serious about enforcing its intellectual property rights. This can deter future misuse and reduce the likelihood of ongoing or further infringement. Strengthening Your Legal Position Successfully obtaining an injunction can improve your position in settlement talks. The threat of an injunction often nudges parties toward a quicker, more favorable resolution. Maintaining Competitive Advantage Intellectual property is often what sets a company apart from its competitors. Taking swift legal action to protect that IP ensures competitors can’t use the stolen or misappropriated information to gain an unfair advantage in the marketplace. Legal Framework for Temporary Restraints and Injunctive Relief Whether in federal or state court, the process for securing temporary restraints or injunctive relief follows a similar framework. Courts typically evaluate the following factors: Likelihood of Success on the Merits: Is there a strong case that the party seeking the injunction will ultimately prevail in the litigation? This is generally easiest to establish when presenting a contractual provision establishing rights to injunctive or other equitable relief if IP is compromised. Irreparable Harm: Will a party suffer harm that can’t be fixed by financial compensation alone? Balance of Equities: Does the harm to the plaintiff outweigh the harm that granting the injunction would cause to the defendant? Public Interest: Does the granting of the injunction serve the public interest? These criteria are used by courts to help ensure that injunctive relief is granted in appropriate circumstances and prevents the misuse of valuable intellectual property. Measures for Litigation Avoidance: Preventing Employee Infringement and Misuse of IP One of the most critical aspects of litigation is to counsel one’s clients in litigation avoidance. In other words, what actions or precautions can a business take to avoid having to file an expensive application in court? While seeking legal relief can be essential in some cases, businesses should ideally work to prevent IP disputes before they occur. Below are several practical measures companies can implement to minimize the risk of IP infringement or misuse by employees: Clear IP Agreements Ensure all employees, contractors, and collaborators sign comprehensive agreements that clarify IP ownership and include non-disclosure (NDA) and non-compete clauses. This establishes clear expectations and prevents unauthorized use or sharing of proprietary information. Regular Training on IP Protection Educate employees on the importance of intellectual property and the legal ramifications of misusing company assets. Training programs should cover what IP includes and how to safeguard it in day-to-day business operations. Implement Strong Access Controls Restrict access to sensitive IP based on job roles and responsibilities. Limiting exposure reduces the risk of accidental or intentional misuse of proprietary information. Exit Protocols and Ongoing Obligations When employees leave the company, conduct exit interviews to reinforce their post-employment obligations, including the return of proprietary information and compliance with any non-compete or non-disclosure agreements. Monitor IP Use Regularly Regular audits and monitoring of how employees use company IP can identify potential issues before they escalate. If unauthorized use is detected, immediate corrective action can be taken. Consistent Enforcement of IP Rights It’s crucial to enforce intellectual property rights consistently. If employees or third parties misuse or infringe upon your IP, taking swift and decisive action demonstrates that you’re serious about protecting your assets. Leverage Technology to Protect IP Implement digital security measures such as encryption, cloud storage protections, and access controls to safeguard sensitive IP from misappropriation. Consult Legal Counsel Regularly Work with legal counsel to ensure that your employment contracts, non-compete clauses, and NDAs are up-to-date and enforceable. A proactive legal review can prevent future disputes from arising. The Bond Requirement – Another Variable and Significant Cost While seeking temporary restraints or injunctive relief can offer swift protection against IP infringement, one important consideration is the possibility that a court may require the party seeking the injunction to post a bond. This requirement is often viewed as a safeguard to protect the defendant from potential harm if it turns out that the injunction was wrongfully granted. What is a Bond in the Context of Injunctive Relief? In many cases, when a plaintiff applies for a temporary restraining order (TRO) or preliminary injunction, the court may require them to post a bond. The bond is a financial assurance that the defendant will be compensated for any damages they suffer if the injunction is later determined to have been improperly granted. The bond amount can vary significantly depending on the court's assessment of the case, but it can often be substantial. Below, we outline some of the key risks and considerations involved with posting a bond in intellectual property disputes: Potential Risks of Posting a Bond Financial Burden The requirement to post a bond can create a significant financial burden, particularly for smaller businesses or startups. While the bond amount is intended to cover any damages the defendant may suffer from the injunction, it represents an upfront cost that could be difficult to manage, especially when seeking emergency relief. Bond May Be Higher Than Expected Courts have discretion over the amount of the bond. They may set the bond higher than the plaintiff anticipates in certain cases. This can be especially challenging for businesses that are already under financial strain from IP theft or infringement. The bond is typically required before the injunction is granted, meaning the plaintiff must have the resources available to post it in a timely manner. Risk of Financial Loss Suppose the court ultimately rules in favor of the defendant and determines that the injunction was wrongly granted. In that case, the bond posted by the plaintiff may be forfeited to the defendant as compensation for any damages suffered due to the injunction. This means that a business could lose a substantial amount of money, even if the injunction were necessary to protect its IP in the short term. No Guarantee of Full Recovery Even if the defendant does suffer damages due to a wrongly granted injunction, the bond amount may not fully cover the total financial losses. This leaves the defendant potentially under-compensated, creating a risk that they could pursue further legal action or claims for additional damages. Mitigating the Risk of Bond Requirements While posting a bond is common in many IP litigation cases, there are strategies businesses can employ to reduce the risk or financial burden associated with this requirement: Negotiate the Bond Amount: In some cases, it may be possible to negotiate the bond amount with the court, especially if the defendant is a competitor or party with limited financial resources. Courts sometimes allow for smaller bonds or even waive the requirement entirely if the plaintiff can show that the defendant is unlikely to suffer harm. Request a Lower Bond: When requesting an injunction, the plaintiff can present evidence showing that the bond amount should be minimal. For instance, if the financial damage to the defendant would likely be low or if the plaintiff’s IP is clearly valid, the plaintiff can argue for a lower bond amount. Seek a Limited or Conditional Injunction: Another potential strategy is to request a more limited or conditional injunction that would reduce the possible harm to the defendant and, in turn, lessen the court’s concerns about the bond amount. Prepare Financially: Businesses seeking injunctive relief should plan ahead and ensure they have the financial resources available to cover the bond, should the court require it. This proactive step can prevent delays in obtaining relief. In conclusion, intellectual property is one of the most important assets for any business, and its protection is crucial for maintaining a competitive edge. When IP is threatened by infringement or misuse by a current or former employee or competitor, seeking relief through temporary restraints and injunctive relief in state or federal court can provide immediate and effective protection. However, seeking injunctive relief through the courts can be costly, involving legal fees, expert witness costs, and the potential requirement to post a bond—each carrying its own financial burden and risk. As a business litigator with extensive experience in emergent applications (bringing and defending against them), litigation should not be the first line of defense. By implementing proactive measures—such as clear agreements, employee training, and robust monitoring systems—businesses can reduce the risk of IP disputes and avoid the need for costly legal battles. Access to capable attorneys with strong backgrounds in litigation and preventative strategies is essential.
April 29, 2025
Immigration Law
Heightened Scrutiny at U.S. Borders: What Travelers Need to Know
There has been a significant increase in media coverage of travelers subjected to increased scrutiny at ports of entry to the United States. In some cases, individuals have been refused entry and detained until sent back home. Furthermore, U.S. Customs and Border Protection have increased their searches of travelers’ electronic devices upon entry to the United States. Is it considered safe for nonimmigrants and legal permanent residents to travel? Increased scrutiny at ports of entry We are now seeing the impact of the implementation of President Trump’s Executive Action: “Protecting the United States from Foreign Terrorists and other National Security and Public Safety Threats”1. There have been media reports of individuals from NATO Allied countries being detained at border crossings and, in some cases, subjected to expedited removal. Aside from the news, we have seen advanced vetting and security screenings reported at the US border. This vetting has included legal permanent residents and non-immigrants. This vetting is likely to continue and may be introduced at U.S. Consulates in the coming months and in the processing of matters with the U.S. Citizenship and Immigration Service. Is it safe to travel on my green card? Legal permanent residents (LPRs) are provided significant protections and rights similar to those of United States citizens regarding international travel. In the last few months, we have seen an increased scrutiny of LPR travel. Certain fact patterns have come to light, including increased interviews of LPRs with active (even if minor) criminal matters or a history of certain immigration violations. In addition, LPRs who spend significant time outside of the United States and who, in previous years, would be let back without issue if they visited every six months are now subject to harsher scrutiny of their ties to the country. Finally, LPRs from countries floated as soon to be subjected to a travel ban have also faced issues coming into the United States. (See Draft List for New Travel Ban Proposes Trump Target 43 Countries - The New York Times.) In light of the above – is it safe to travel on my green card? The answer is generally yes; however, if you fit into one of the above situations we advise consulting with an immigration attorney immediately. Furthermore, your status may be at risk if you have been outside the United States for longer than six months or even a whole year. Lastly, legal permanent residence may only be taken by a legal process initiated in the immigration court system. Travelers should be exceptionally wary of signing any document that purports to surrender their legal permanent residence at a port of entry. Is it safe to travel on my nonimmigrant visa? Non-immigrant visa holders report increased vetting at ports of entry, and US Customs and Border Protection agents possess the power to deny entry to visa holders. Most nonimmigrant travelers should be prepared for additional questions regarding their status and should carry evidence regarding their status. This could include USCIS petition approval notices, evidence of continued employment, and itineraries for travel. Employment-based non-immigrants should inform their HR of international travel if specific immigration advice is needed. We advise all nonimmigrants who are not confident regarding travel to consult an immigration attorney for guidance. Certain nonimmigrants should be especially vigilant now; this includes J1 and F1 scholars and students. Both visa holders should consult with their school Designated School Official (DSO) regarding their ability to travel and travel with up-to-date evidence regarding their status. Student and Exchange Visitor Information System (SEVIS) termination of student status with little to no warning or evidence has been reported, and affected students should contact their DSO and an immigration attorney immediately. Electronic device searches – what you need to know The United States Customs and Border Protection (CBP) has significant powers of search and seizure at ports of entry to the United States. These powers are part of the “border exemption” to the Constitution's Fourth Amendment and have been upheld by the Supreme Court. (See United States v. Ramsey, 431 U.S. 606 (1977)). This power can be used regardless of the nationality of the traveler. Further, this search power has been used by CBP to search the electronic devices of travelers, which can include their social media. Travelers are advised to be exceedingly careful regarding social media usage and content on their mobile devices. By way of example of this vetting, current administration priorities include extreme vetting of individuals supporting designated terrorist organizations, which includes Hamas and the conflict in Palestine. The only exception to this search power that the courts have upheld is attorney-client privilege. Be calm, be courteous, be contrite The process of additional scrutiny at border crossings can be intimidating and stressful. It is important to remain calm during the process. Traveling with evidence of your status and activities in the United States is a good idea to support your statements to upon entry.
April 25, 2025
Business
How Buy-Sell Agreements Can Help Prevent a Messy Business Divorce
Just like any kind of relationship, not all business partnerships are built to stand the test of time. They can sour just as easily as a romantic partnership or friendship as vision and long-term goals diverge, financial stress comes into play, or personal issues enter the business relationship. When these kinds of factors arise, it can often result in a “business divorce.” A business divorce has the potential to be just as messy, emotionally charged, and costly as a marital divorce, particularly when there is no established plan in place to outline how the two parties will separate. This is why buy-sell agreements can be critical, helping to ensure a smooth and fair process in the case of a business divorce. It is always best to agree on buyout terms in advance while everyone is getting along and not leave it to the expense and risk of legal proceedings before an arbitrator or judge who does not understand your business. What is a Business Divorce? A business divorce occurs when two or more parties decide to end a business partnership, and it is estimated that anywhere from 50-70% of business partnerships will fail. There can be numerous contributing factors that lead to the dissolution of the partnership. As stated earlier, there are typically differing visions for the company’s future, the strategies used to achieve long-term goals, financial disagreements, or even personal issues that begin to impact the partnership. However, there can also be actions taken by a partner that reflect negatively on the company or even an illness or death that would require the partnership to dissolve. No matter the root cause of the divorce, there are several avenues that can be taken when the partners make the decision to split. This could be one partner buying out the other, fully dissolving the business, or some kind of restructuring that occurs. It is at this stage of deciding which path to take where emotions can start to come into play, and lawsuits and other disputes can arise if there is not an agreed-upon method to end the partnership. This is where buy-sell agreements can be a game changer. Why Buy-Sell Agreements are Critical Think of a buy-sell agreement as a prenuptial agreement for business owners. When a married couple has a prenup in place, it provides a roadmap for how to divide the assets if they divorce. Buy-sell agreements provide the same kind of roadmap for a partnership, outlining a course of action should one partner want or need to leave. As with a prenup, these are typically negotiated when the partnership is established; however, it is never too late to negotiate this in a partnership if one does not already exist. These agreements allow for a smoother process and minimize conflict, as they provide an established business valuation methodology as well as liquidity and exit plans, including the terms of the payout to the departing partner, which could be over several years so as not to impair the business cash flow. They can also prevent a spouse or heirs from attempting to assume a partnership role in the case of a partner’s death or disabling illness, and they can help stabilize the business during what can be a chaotic time. When considering structures for a buy-sell agreement, there are several options. These can include one or more owners buying out a departing owner’s stake, the actual business buying the departing partner’s stake, or some of combination of the two. In the case of death, the buy-sell can provide for the purchase of life insurance on the deceased partner. The structure of a buy-sell agreement is specific to the individual business and partnership and must be agreed upon by all parties involved. At the end of the day, a buy-sell agreement can save a great deal of heartache and expense if you find yourself in the middle of a business divorce. A little bit of additional planning on the front end could be the key to an amicable split that allows for the continuity of the business and avoids a legal mess.
April 18, 2025
Family Law
Navigating the Unique Challenges of LGBTQ Divorces in a Changing Legal Landscape
The legalization of same-sex marriage in the United States in 2015 with the landmark Obergefell v. Hodges decision marked a monumental step toward equality. However, the journey does not end with marriage; LGBTQ couples face unique challenges when it comes to divorce. While the process may seem similar to that of heterosexual couples on the surface, the reality reveals nuanced differences rooted in evolving laws, social norms, and disparities in legal protections. Understanding these distinctions is crucial for navigating the complexities of LGBTQ divorces and protecting one’s rights in a constantly shifting legal world. Key Differences Between LGBTQ and Heterosexual Divorces Legal Recognition and the Length of Marriage: Problem For many LGBTQ couples, legal recognition of their relationships began far later than their commitment to one another. States only began recognizing same-sex marriages at different times, leaving couples who were together for decades without a legal timeline for their unions. When it comes to divorce, courts often calculate marital property division, spousal support, and other factors based on the duration of the legally recognized marriage, not the entirety of the relationship. This discrepancy can lead to inequitable outcomes. For example, an LGBTQ couple that was together for 20 years but legally married for only five years may see their financial obligations and property rights evaluated based on the shorter timeline. Custody and Parental Rights Child custody is one of the most contentious areas in divorce, and LGBTQ couples face unique hurdles. Many LGBTQ families rely on alternative reproductive methods, including Artificial Reproductive Technology (ART), surrogacy, adoption, or donor insemination. If only one partner is the biological or legal parent, the non-biological parent’s parental rights may not be automatically recognized, even if they were actively involved in raising the child. This can lead to complex custody battles where courts may prioritize biological connections over emotional bonds. Discrimination in Court While legal protections for LGBTQ individuals have improved, implicit biases still exist within the court system. Some LGBTQ individuals may encounter judges or attorneys who lack experience with or understanding of same-sex family dynamics. This can result in decisions that do not fully account for the nuances of LGBTQ divorces. Division of Assets and Property In LGBTQ divorces, asset division may be complicated by how property and financial arrangements were managed before same-sex marriage became legal. Property acquired before legal recognition of the relationship may be deemed separate property rather than marital property, creating challenges when dividing assets equitably. How to Protect Yourself in an LGBTQ Divorce Preparing and understanding your rights are essential to safeguarding your interests in this evolving legal world. Here are key steps LGBTQ individuals can take to protect themselves: Legal Protections Before Marriage For those entering a marriage, creating a prenuptial agreement is one of the most effective ways to protect assets and clarify financial arrangements. A prenuptial agreement can specify how property will be divided and how spousal support will be managed in the event of a divorce. For those already married, a postnuptial agreement can serve a similar purpose. Address Parental Rights Proactively LGBTQ couples with children should ensure both parents’ legal rights are established, even before a divorce becomes a possibility. For non-biological parents, this may involve formal adoption or obtaining a court order recognizing their parental status. By securing legal parentage, non-biological parents can strengthen their custody and visitation claims in the event of a divorce. Keep Comprehensive Records In cases where the length of the relationship predates legal marriage, maintaining records of financial contributions, shared property and joint decision-making can be invaluable. These records can help demonstrate the extent of the partnership and support equitable asset division during a divorce. Consult an Experienced LGBTQ Divorce Attorney Given the unique legal and social dynamics of LGBTQ divorces, working with an attorney who has specific experience in LGBTQ family law is crucial. Such attorneys understand the complexities of same-sex relationships and can advocate effectively for your rights. Stay Informed About Changing Laws The legal landscape for LGBTQ individuals continues to evolve. Court rulings, legislation, and shifting political climates can impact rights related to marriage, divorce, custody, and more. Staying informed about changes in the law can help you anticipate challenges and adjust your approach as needed. The Ever-Changing Legal Landscape for LGBTQ Divorces While the right to marry was a monumental victory, LGBTQ couples still face challenges that heterosexual couples typically do not. For example, the potential for the Supreme Court to revisit Obergefell v. Hodges or other related rulings creates uncertainty about the durability of marriage rights. Additionally, state laws governing issues such as parental rights, property division, and spousal support vary widely, leading to disparities in how LGBTQ divorces are handled across the country. Recent challenges to protections for LGBTQ individuals, including attempts to narrow the interpretation of anti-discrimination laws and redefine parental rights, underscore the need for vigilance. Advocating for continued progress and awareness ensures equality in the family law system. Conclusion LGBTQ divorces, while sharing similarities with heterosexual divorces, present unique challenges rooted in legal history and societal biases. By understanding these differences and taking proactive steps to protect their rights, LGBTQ individuals can navigate the complexities of divorce with confidence. In an ever-changing legal world, preparation, advocacy, and informed decision-making are the keys to achieving equitable outcomes and safeguarding hard-won rights.
April 17, 2025
Mergers and Acquisitions
Every M&A Transaction Is a “Big Deal”
M&A over the last number of years has been “hot.” Despite slower-than-expected first quarter, we are anticipating another strong year for sell-side M&A. With stories of success, however, certain assumptions tend to follow. Business owners looking to buy or sell sometimes mistakenly believe Offit Kurman is too busy or expensive for their needs. A common objection typically sounds like: “My deal is probably too small for you.” I’ve been hearing from sellers with businesses worth $5 million or less lately. In any other context, it would be a bizarre thing to say. One million dollars is not “small.” For most of us, a check of that size would be a life-changing amount of money. However, the marketplace has a way of skewing perceptions. M&A advisors and investment bankers typically chase transactions in the eight and nine-figure range, and many refuse to go after anything worth less than $10 million. The same holds true for many law firms. As a result, owners of closely held businesses become jaded and self-select out of the market. Other business owners, meanwhile, believe the opposite: that our firm is exclusively focused on small or mid-market transactions, and we do not have the capability to handle large, multimillion-dollar deals. As someone who has seen hundreds of transactions through to completion, I can provide some perspective: every M&A transaction is a big deal. Especially if you’re a seller, we’re talking about what may be the single largest transaction in your lifetime. Moreover, at Offit Kurman, we are enterprise value agnostic. That means we are happy to provide representation and guidance to any business owner regardless of the potential size of a transaction. Here are a few more reasons why deal size should not limit your ability to work with a qualified M&A attorney: The size of the deal has no bearing on your legal fees. At Offit Kurman, we do deals at $1 million, $10 million, $100 million, and above (and below) because the purchase price has no financial impact on our billing structure. Our job is to zealously represent and protect every client. In contrast to investment bankers, who usually get paid a percentage of the deal, our attorneys bill at an hourly rate. That means time — not size — is what counts. Factors such as the condition of your business and the complexity of the deal determine how much work your attorneys must do. M&A demand is market-driven. Buyers and sellers control the M&A market. You could have a massive, multinational business — with advisors lining up to help you sell it — but if there’s no demand for the company, there’s no deal. Similarly, a small, well-positioned firm could be a hot commodity in its niche. A five-person government security contractor, for instance, might be able to leverage its relationships and intellectual property to create competition among multiple potential buyers. You don’t need to pay big money for expertise. Be wary of working with advisors who only take on enterprise M&A — there’s a good chance they’re overcharging and under-experienced. At Offit Kurman, we have successfully negotiated complex deals of various sizes, industries, and geographies. We bring this experience to every client matter. We can scale our representation to the size and character of the business, as well as the personality of the owner, at a price point and workflow that meets the client’s needs. Ultimately, M&A transaction size is relative to one’s frame of mind. As a seller, you may not be able to quickly change the value of your business, but you can control the value of the experience in shaping your future. Instead of worrying about how your purchase price compares to another business, focus on your own goals. Retiring wealthy? Now that’s a big deal.
April 17, 2025
Estates and Trusts
Estate Planning: Peace of Mind for Uncertain Times
In the late 19th century, death was almost fashionable. Funerals were well attended and even rivaled weddings in their splendor and expense. Department stores offered an array of luxury clothing for grieving mothers and widows. Black fabrics were reserved for those in deep mourning. Then shades of gray and mauve were mixed in as one felt able to rejoin society. If death wasn’t celebrated, it was at least taken very seriously. But then, our Victorian cousins were closer to death than we are today. The average person didn’t live to see his 50th birthday, and more than three-quarters of all deaths occurred in children under the age of five. Today, people are living longer than ever, and as a consequence, death is considerably less in vogue. Improvements in medical care, diet, and occupational safety have prolonged life. Still, they have done little to combat the new threats to our existence. The terrors of shootings and random acts of violence, the perils of hurricanes and other natural disasters, and the specter of civil unrest and even all-out war are reason enough to worry about what might lie ahead. In times like these, peace of mind comes controlling the things you can and being prepared for the unexpected, which means setting aside money for an emergency, having health and life insurance, and even safeguarding against your own disability or death. This last item can be the most challenging to consider. It includes thinking about what would happen if you couldn’t manage your own finances or health care. Someone should be put in charge of these essential responsibilities under a durable power of attorney and an advance medical directive. Armed with these documents, your spouse, partner, or someone else you trust can look out for your best interests if you ever become incapacitated. Without a power of attorney, it could be necessary for a loved one to become your legal guardian through a court proceeding. Guardianships usually require letters of certification from two healthcare professionals who have examined you, as well as an attorney to represent both you and the person seeking to become your guardian. The process is expensive and time-consuming, but it can be avoided altogether with a durable power of attorney. Failing to prepare an Advance Health Care Directive can also lead to unfortunate results. Responsibility for medical decision-making would probably fall to your next of kin, regardless of who that might be. It could be a spouse, but for a single person, an estranged family member could suddenly be responsible for making life-and-death decisions on your behalf. Without an advance medical directive, it’s not uncommon for multiple people to have this authority. For example, if your next of kin were a group of siblings, they might argue among themselves as to what sort of medical care you should receive. Some could remember you as a fighter who would want to try every possible treatment before giving up, while others might feel that you should be kept comfortable and not be allowed to suffer. An even worse outcome can occur when someone fails to prepare a will. It’s tempting to think that the “right people” will inherit when someone dies without a will. However, the rules of inheritance may provide only a portion of the estate to a surviving spouse and nothing at all to an unregistered domestic partner. In these times of uncertainty, take control of the things you can. Speak with an Estates & Trusts attorney about preparing a will and other planning documents to protect yourself and the people you care about. Then, enjoy the peace of mind that comes from knowing that you are prepared for some of life’s uncertainties.
April 16, 2025
Labor and Employment
Does Your Dress Code Discriminate? What Employers Need to Know
In the ever-evolving landscape of workplace discrimination laws, savvy employers are reexamining longstanding policies—including those that may not seem controversial at first glance. One of the most commonly overlooked (yet frequently litigated) areas? The company dress code. What was once a straightforward requirement—“business casual” or “jeans on Fridays”—has become a complex legal issue, especially as courts and administrative agencies scrutinize how dress and grooming policies intersect with anti-discrimination laws. From hairstyle protections to gender identity accommodations, the modern workplace dress code carries more legal weight than many employers realize. Here’s what you need to know to ensure your company’s dress code reflects both current legal standards and best practices. The Legal Foundation: Employers May Set Reasonable Standards As a general matter, employers are permitted to impose reasonable restrictions on workplace appearance. Courts have long recognized a company’s legitimate interest in maintaining a professional image—especially for employees who interact with clients, vendors, or the public—or in enforcing safety-based attire requirements depending on the nature of the work. However, dress codes must be implemented in a way that does not discriminate directly or indirectly. Your workplace dress code should not: Impose unequal burdens on certain groups Reinforce outdated gender stereotypes Fail to provide religious or medical accommodations Be applied inconsistently or selectively Gender-Specific Policies: Proceed with Caution Historically, some courts have permitted different grooming or dress requirements for male and female employees—as long as the policy is applied evenly and doesn’t impose a greater burden on one gender. However, employers relying on these traditional standards may be exposing themselves to risk. Courts have increasingly accepted Title VII claims based on gender stereotyping, where policies require employees to present in ways that conform to traditional gender roles—for instance, requiring women to wear skirts or prohibiting men from growing long hair. These requirements can give rise to claims when they compel employees to dress in a manner inconsistent with their gender identity or personal expression. Several states and municipalities have taken a more explicit approach. In California, for example, it is unlawful to require women to wear skirts. In Washington, DC, the law prohibits discrimination based on appearance, which includes dress and grooming. Employers operating in multiple jurisdictions should review policies with a careful eye toward state and local requirements, which may be more protective than federal law. Gender Identity and Expression: Aligning with Bostock and Beyond In the wake of the U.S. Supreme Court’s 2020 decision in Bostock v. Clayton County, employers must recognize that Title VII prohibits discrimination based on gender identity and sexual orientation. As a result, enforcing gender-specific dress codes or grooming policies that conflict with an employee’s gender identity may constitute unlawful discrimination. Many jurisdictions have adopted laws that go even further, requiring employers to affirmatively allow employees to dress in accordance with their gender identity or expression. Employers should carefully assess whether their appearance standards respect these legal obligations and provide sufficient flexibility. The Rise of Hairstyle Discrimination Laws A growing number of states have passed legislation recognizing that grooming policies can serve as proxies for racial discrimination. Laws in Maryland, Virginia, California, New York, and others prohibit workplace restrictions that ban natural hairstyles or protective styles such as afros, braids, locks, and twists. These laws are often framed as extensions of race discrimination protections under Title VII. Employers should avoid policies that prohibit or limit hairstyles unless there is a demonstrable, legitimate business justification—such as a safety concern in an industrial setting—and even then, the policy must be narrowly tailored. Accommodations for Religious Beliefs and Medical Conditions Under Title VII, employers must reasonably accommodate sincerely held religious beliefs, including those that conflict with dress or grooming policies. This may include permitting head coverings, religious jewelry, or exceptions to attire norms due to modesty practices. Similarly, under the Americans with Disabilities Act, employers must accommodate qualified employees with disabilities. For instance, a blanket ban on facial hair may need to yield to an employee with a medical condition that makes shaving painful or harmful. Failure to consider these accommodations not only exposes employers to liability—it also undermines inclusivity and employee morale. Union Activity and Protected Expression Dress codes must also respect employees’ rights under the National Labor Relations Act (NLRA), which protects their ability to engage in concerted activity, including the right to wear union insignia or clothing expressing workplace concerns. A policy that broadly bans “derogatory” or “inappropriate” attire without a clear connection to legitimate business interests—like safety or security—may be deemed unlawfully overbroad by the National Labor Relations Board. Best Practices for Employers To ensure that dress codes meet legal standards and reflect modern workplace norms, employers should consider the following: Use Neutral Language: Policies should be gender-neutral, avoiding references to attire “expected” of men or women. Avoid Over-Specification: Instead of listing every acceptable or unacceptable item of clothing, opt for broader, flexible guidelines (e.g., “employees must present a clean and professional appearance appropriate to their role”). Be Consistent: Apply the policy uniformly across departments and roles, unless a legitimate business reason supports a distinction. Build in Flexibility: Include language acknowledging the need to accommodate religious practices, cultural expression, or medical conditions. Review Regularly: Revisit your dress code periodically in light of new legal developments and cultural trends. Final Thoughts While office dress codes may seem like a minor issue, they often sit at the intersection of major employment law concerns. A policy that is too rigid—or worse, discriminatory in application—can lead to reputational harm and costly litigation. The good news is that most companies can maintain professionalism without micromanaging wardrobe choices. A thoughtful, updated policy can reinforce your company’s values while keeping you compliant with the law. If you have questions about your company’s dress code or need assistance revising your policies, consult employment counsel familiar with the latest developments in federal, state, and local law. A well-drafted dress code can do more than keep the office looking sharp—it can help your company avoid some very real legal pitfalls.
April 16, 2025
Family Law
Why You Need to Update Your Estate Planning After a Divorce
Divorce is a major life change that affects far more than just your relationship status. One crucial—but often overlooked—aspect that needs immediate attention after a divorce is your estate plan. Failing to update your estate planning documents can lead to unintended consequences that may not align with your new reality or wishes. Here’s why updating your estate plan after a divorce is essential: Your Ex-Spouse May Still Be in Control Many people name their spouse as the executor of their will, trustee of a trust, or as a power of attorney for healthcare and finances. If you don’t change these designations after a divorce, your former spouse could still be legally empowered to make life-altering decisions on your behalf or manage your assets if something happens to you. What to update: Will and trust documents Powers of attorney (medical and financial) Health care directives Your Beneficiaries Might Not Reflect Your Current Intentions A divorce doesn’t automatically remove your ex-spouse as a beneficiary from all accounts and policies. Life insurance, retirement accounts (like IRAs or 401(k)s), and transfer-on-death designations often bypass your will—meaning your ex could still inherit these assets unless you update them. What to review: Life insurance policies Retirement accounts and pensions Payable-on-death or transfer-on-death accounts Investment accounts and bank accounts Guardianship of Minor Children If you have minor children, your estate plan likely includes a guardian designation. While the surviving parent (your ex) is usually the default guardian, you might want to designate a backup guardian if your ex becomes unable or unwilling to care for the children. What to consider: Updating guardian nominations in your will Including provisions for minor children in trusts Your Financial Picture Has Changed Divorce usually involves the division of assets and liabilities, which can dramatically alter your financial situation. Your estate plan should reflect your current assets, liabilities, and goals—whether that means protecting your children’s inheritance, funding a trust, or planning for long-term care. What to update: Asset and debt inventory Trust funding and asset titling New financial goals and obligations You Might Want to Name New Trusted Individuals Whether it's a sibling, adult child, new partner, or trusted friend, you’ll likely want to name new individuals to serve in key roles within your estate plan—such as executor, trustee, or power of attorney—now that your former spouse is no longer in the picture. Divorce is emotionally and logistically complex, and it’s easy to overlook your estate plan in the process. But making these updates is vital to protect your assets, your wishes, and your loved ones. Consulting with an experienced estate planning attorney can help ensure everything is properly revised and legally sound. Remember: an outdated estate plan can be just as risky as not having one at all.
April 14, 2025
Family Law
How to Divide Retirement Accounts During Divorce Amid Market Fluctuations
Dividing retirement accounts during a divorce is already complex, but the process becomes even more complicated when you factor in market volatility.. Stock market fluctuations can dramatically change the value of retirement accounts, which makes equitable distribution a moving target. Understanding the impact of these fluctuations—and planning accordingly—can help divorcing couples avoid unnecessary losses and ensure a fair outcome. Understanding the Basics: Types of Retirement Accounts Before discussing market impact, it’s important to recognize the common types of retirement accounts: Defined Contribution Plans (e.g., 401(k), 403(b), IRAs): These fluctuate based on the performance of the investments within them. Defined Benefit Plans (pensions): These are typically based on years of service and salary, with less direct impact from market swings. Roth vs. Traditional Accounts: Roth accounts are funded with after-tax dollars; traditional accounts grow tax-deferred and are taxed upon distribution. Each account type has different rules for division and tax implications, which need to be considered in light of market performance. The Challenge: Market Volatility Retirement accounts tied to stocks, mutual funds, or exchange-traded funds (ETFs) can experience wide swings in value. If assets are divided based on a snapshot in time—say, the date of separation or a particular court hearing—the actual value distributed could be significantly different by the time the account is divided. Example: If a 401(k) is worth $200,000 on the separation date but drops to $180,000 before it’s divided, the spouse receiving their share may end up with less than intended unless safeguards are in place. Options for Dividing Accounts Amid Fluctuations Use Percentage-Based Division Instead of awarding a fixed dollar amount, divide the account by a percentage. For instance, awarding one spouse 50% of a 401(k) ensures they receive half of the value at the time of division, regardless of market changes. Use Qualified Domestic Relations Orders (QDROs) Wisely For employer-sponsored plans like 401(k)s and pensions, a QDRO is necessary. This legal document outlines how the plan should be divided and allows for the transfer without taxes or penalties. The QDRO must specify division as a percentage, not a flat dollar amount, especially in volatile markets. Consider Timing Carefully If markets are highly unstable, it may be worth pausing division until some stability returns. Alternatively, couples can agree to an average value over a specific period (e.g., last 30 days) to avoid basing the division on a market peak or trough. Account for Investment Type Some investments within retirement accounts may be riskier than others. If one spouse receives mostly equities while the other gets more stable bond funds, it could create an imbalance in future value—even if the division looks fair on paper at the time. A financial advisor can help rebalance the allocations for fairness. Tax Consequences Matter Traditional accounts will be taxed upon distribution. If both spouses receive different account types (e.g., one gets Roth, the other gets Traditional), the net value could be very different. These tax effects should be a factor in negotiations. Post-Division Market Movement Once retirement assets are divided, each party is typically responsible for gains or losses moving forward. It’s essential to clarify the “cut-off” date for shared responsibility in the divorce agreement. Dividing retirement accounts in a fluctuating market is as much about strategy as it is about fairness. Consulting a divorce financial planner or an attorney with experience in high-asset divorces can help ensure the division is equitable, tax-efficient, and insulated from unnecessary market risk. In the end, clear communication, well-drafted legal documents, and smart timing can all help protect your financial future during an emotionally charged and financially complex time.
April 11, 2025
Labor and Employment
Key Trends in PAGA Arbitration Decisions: Insights for Employers and Legal Counsel
The proliferation of wage and hour litigation in California and recent significant changes to the law have created uncertainty for employers and their lawyers alike. Both recent PAGA (Private Attorneys General Act of 2004) reform legislation and critical court decisionsi have changed the landscape for employers seeking to prevent and defend these wage and hour claims. Generally speaking, PAGA allows employees who have suffered Labor Code violations (such as the failure to provide minimum wage, overtime, accurate wage statements, and proper meal and rest breaks) to sue their employers on behalf of the state for Labor Code violations—even for violations that affect other employees. In essence, the California Attorney General has deputized employees to pursue Labor Code violations on their behalf in an effort to enforce wage and hour laws. While most employers are familiar with the risk associated with wage and hour class actions, the companion PAGA claims are on the rise and being pursued by employees at a rapidly increasing rate. While recent PAGA reform law has arguably helped to limit aspects of the law, including requiring employees to suffer violations and have standing to do so, before bringing lawsuits, reducing certain repetitive damages, and allowing for the potential early cure or resolution of claims in some instances, ultimately the reforms have not slowed the momentum of these lawsuits against employers. More precisely, the reform has provided additional tools and defenses to employers to address the lawsuits. With this in mind, it becomes even more apparent that the goal of every employer should be to take steps to prevent or minimize the chances of large representative wage and hour lawsuits against their business. The drafting and implementing arbitration clauses and class action/PAGA waivers can accomplish this. Many employers seek to use arbitration agreements to keep these kinds of claims out of court. However, recent legal decisions threaten to make it much more difficult to use these measures to avoid legal claims unless the agreements are carefully drafted. More recently, California courts have been active in issuing decisions that clarify the effectiveness of arbitration provisions in subsequent lawsuits to force employees into less dangerous and less expensive individual arbitrations versus full-blown representative actions. Three very recent decisions issued in 2025 from California’s Second District Court of Appeal underscore the importance of well-crafted arbitration and class action and PAGA waivers.ii Key Legal Decisions Shaping Arbitration Agreements Ballesteros v. FormFactor, Inciii In a clear example of courts nitpicking imprecise arbitration clause language to allow employee representative claims to proceed to court, the Court of Appeal in Ballesteros interpreted the employer arbitration agreement, to exclude all PAGA claims from the scope of the arbitration agreement. The court based its decision on some imprecisely drafted language in an arbitration clause that failed to accurately list PAGA claims as claims pursued on behalf of the state of California. As a result, rather than the arbitration agreement being interpreted to send claims to arbitration, the Court found that the arbitration agreement specifically allowed representative PAGA claims to be pursued in court.iv The Court determined that the arbitration agreement excluded from arbitration PAGA “representative actions” without distinguishing between claims brought on an individual or nonindividual basis. This decision is instructive because the Court chose a very favorable interpretation of the arbitration clause for the employee and went to great lengths to justify its position. The decision serves as a warning that arbitration clauses must be regularly updated to avoid these types of consequences. Cusimano v. Brilliant Earth, LLCv In the Cusimano decision, the Court of Appeal ruled that the entire arbitration agreement was unenforceable because the agreement to arbitrate contained an unenforceable waiver of nonindividual PAGA claims. Initially, the Court concluded that the arbitration agreement was flawed because it improperly barred employees from bringing representative actions against their employers. The Court found that the arbitration agreement contained a nonseverability clause that tied the validity of the agreement as a whole to the validity of the defective waiver of nonindividual PAGA claims and found the full agreement to be invalid, directing the entire matter for resolution in court.vi Much of the Court’s decision was premised on the flawed and unenforceable draft language in the employer documents. The Court was even more assertive in Cusimano in declaring that imprecise drafting and defects will result in employers being forced to litigate class action and PAGA claims in court. Cusimano reinforces the trend of courts strictly scrutinizing employer-drafted arbitration clauses, allowing costly representative litigation to proceed for employees against their employers. Arzate v. ACE American Insurance Companyvii In Arzate, a costly appeal was won, at least in part due to effective (while imperfect) drafting of their arbitration language. The Court of Appeal’s analysis in Arzate centered on the interpretation of arbitration agreements and which party was required to initiate arbitration. The arbitration language at issue required that any party who sought to initiate arbitration must do so within thirty days. The Court determined that the only party who would seek to initiate a claim would be a party seeking relief or, in other words, an employee. As a result, the Court of Appeal found that the employer was not required to initiate arbitration and, as a result, did not breach the arbitration agreements or waive its right to arbitrate. Tellingly, the Court made clear that while the employer “arguably could have used different language in the arbitration rules and procedures to underscore this point, [] the document appear[ed] to be written with a minimal amount of legalese for the benefit of employees without legal training. Read in the context of the entire agreement, the colloquial language shows that the plaintiffs were the party that “want[ed] ... [a]rbitration,” and that they were required to file a demand to initiate the process given their agreement that they would “submit” their employment-related claims to arbitration.” While, ultimately, this decision favored the employer, the trend is clear: Employers must seek regular guidance from their attorneys who monitor these decisions and can provide cutting-edge advice to avoid these types of legal issues. Implications for Employers These cases illustrate a trend in Second District jurisprudence regarding the importance of precision in drafting arbitration provision language. While the law has an underlying strong public policy favoring arbitration, these decisions establish a recurring pattern of the refusal to enforce unclear arbitration provisions in a variety of contexts. Poorly drafted provisions can result in significant litigation, which likely would have been avoided if carefully considered language was utilized. These problems are clearly demonstrated through the various interpretations of the arbitration clauses invalidity and the Court’s unwillingness to enforce them in various scenarios. A carefully crafted arbitration provision and class action/PAGA waiver should be clearly worded, voluntary in nature, fair, and mutual, and include adequate notice to the employee. The provisions should also take into consideration recent decisions which, provide more specific guidance as to pitfalls that must be avoided. These recent decisions serve as a warning: employers who fail to seek regular review may find themselves embroiled in costly and unnecessary litigation without defenses that were otherwise available to them. Action Plan: Steps Employers Should Take Every employer should take this opportunity to seek a review of existing forms provided to their employees or put in place new forms that will ensure adequate protection and insulate them from costly wage and hour litigation in the future.
April 8, 2025
Healthcare
Nurse Practitioner Practice Authority
According to the American Medical Association (AMA), physician involvement of nurse practitioners is required for diagnosis and treatment. The AMA identifies the nurse practitioner practice authority for all 50 states and the District of Columbia. Cal. Bus. & Prof. Code §2835.7, according to the AMA, defines a nurse practitioner as an RN (registered nurse) “Who possesses additional preparation and skills in physical diagnosis, psychosocial assessment, and management of health-illness needs in primary health care, and who has been prepared in a program conforms to board standards as specified in Section 1484. (16 Code Cal. Rules 1480 (a)).” In addition to any other criteria, standardized procedures may be implemented that authorize an NP to do any of the following: (1) Order Durable Medical Equipment. (2) In collaboration with a physician and surgeon – and after the performance of a physical examination by the nurse practitioner – certify that a patient has a disability as defined by Section 2708 of the Unemployment Insurance Code. (3) “For individuals receiving home health services or personal care services, after consultation with the treating physician and surgeon; approve, sign, modify, or add to a plan of treatment or plan of care.” A “standardized procedure” is the legal mechanism for RNs and NPs to perform functions that would otherwise be considered the “practice of medicine.” To use standardized procedures, an organized healthcare system must collaboratively (by agreement) develop standardized procedures with the system’s nursing, medicine, and administration departments. Standardized procedure functions “are the diagnosing, prescribing, and severing or penetrating of tissue functions under the ‘MPA’.” The standardized agreement should clarify: When a nurse must obtain a second opinion What limitations on the standardized procedure apply What education the nurse must have to utilize the standardized procedure The settings where standardized procedures can be used How the standardized procedure will be evaluated California’s New Scope of Practice Law for Nurse Practitioners – Part Two California passed a new law, effective January 1, 2023, that permits nurse practitioners in specific settings to provide care (under certain conditions) that does not meet “standardized procedures.” What are collaborative agreements? A few of the key points that medical practitioners and practices should understand about “collaborative agreements” are the following: State requirements. Each state, such as California, determines the necessity and terms of nurse practitioner (NP) practice agreements (called collaborative agreements). Essentially, collaborative agreements “define the scope of medical care provided by NPs in collaboration with licensed physicians.” Medicare requirements. Medicare may also require collaborative agreements (even in states with “full practice” environments to obtain reimbursement. Hospitals may also mandate the use of collaborative agreements to control their liability and oversight requirements – especially where NPs can prescribe medications. According to The Intake, California (in part due to the COVID-19 pandemic) began to relax the “regulatory requirements on NPs, including temporarily waiving certain supervisory requirements.” As the country emerges from the pandemic, the opportunities for NPs to expand their medical care duties are still continuing due to an ongoing national physician shortage. In California, and most other states, collaborative agreements/practice agreements will continue to play a role in how NPs perform their duties. Additional California’s NP considerations California also has different NP categories with different restrictive practice obligations. According to the California Board of Registered Nursing, these two new nurse practitioner categories permit NPs to “function within a defined scope of practice without standardized procedures.” “103 NP – Works under the provisions outlined in Business and Profession Code Section 2837.103. This NP must work in a group setting with at least one physician and surgeon.” “104 NP – Works under the provisions outlined in Business and Professions Code Section 2837.104. This NP may work independently within the population focus of their National Certification.” California Assembly Bill (AB)-890 and Two New Nurse Practitioner Categories California AB-890 authorizes two categories of nurse practitioners who can practice without physician supervision if specific criteria are met. What doctors and NPs should know about collaborative agreements A collaborative agreement is a contract between the collaborating physicians and NPs to expand the medical services NPs can provide. Physicians and NPs should understand the different types of medical practices and their state’s collaborative agreement requirements for each type of practice. According to the American Association of Nurse Practitioners (AANP), NP medical care is regulated as follows: Full practice states. In these states (such as New York, New Mexico, Colorado, and Washington) all NPs can: “Evaluate patients; diagnose, order and interpret diagnostic tests; and initiate and manage treatments, including prescribing medications and controlled substances, under the exclusive licensure authority of the state board of nursing.” Restricted practice states. In these states (such as California, Michigan, Florida, and Texas),“State law requires a career-long regulated collaborative agreement with another health provider in order for the NP to provide patient care or state law limits the setting of one or more elements of NP practice.” Reduced practice states. In these states (such as Pennsylvania, Louisiana, Indiana, Ohio, and Illinois), the NP must have a regulated collaborative agreement with another health provider to provide patient care. “State law requires career-long supervision, delegation, or team management by another health provider in order for the NP to provide patient care.” Nurse Practitioner Telehealth Functional Medicine vs. Coaching (Laws & Legal) In today’s video, we are going to combine three different threads: a Nurse Practitioner wants to start a functional medicine practice, via telehealth, multi-state, and she wants to call it “coaching.” Practice agreements and Medicare requirements The Medicare Regulations state that: “Medicare Part B covers nurse practitioners’ services in all settings in both rural and urban areas, only if the services would be covered if furnished by a physician and the nurse practitioner … Performs them while working in collaboration with a physician. [Emphasis added]. Collaboration under Medicare is defined as ‘a process by which the nurse practitioner has a relationship with one or more physicians to deliver health care services’.” This means that even in full-practice states, an NP will need to execute a collaborative/practice agreement in order for the NP to receive reimbursement from Medicare. Hospitals, long-term care facilities, and other institutions may also require collaborative agreements for other reasons. Many states, like California, permit nurse practitioners to provide some patient care – provided that there is a collaborative agreement (also known as a practice agreement) between the NP and a medical practice or medical institution that sets forth the specific criteria for providing patient care.
April 5, 2025
Estates and Trusts
Building Adaptive Trusts: Ensuring Tax Efficiency in an Evolving Tax Landscape
The lifetime estate tax exemption amount is as high as ever. The estate tax exemption amount rose from $1,000,000 in 2002 to $5,000,000 in 2011. Then, Congress doubled the amount of the estate tax exemption in 2018. As of this writing, the current lifetime exemption amount is nearly $14,000,000 per individual. With such high exemption amounts, there are few estates subject to federal estate tax. The focus of estate planning has, therefore, shifted from removing assets from a decedent’s estate to minimize or eliminate estate taxes, to ensuring that assets remain in the estate for estate tax purposes so that the assets receive a step-up in capital tax basis at the time of death. The “step-up” in the capital tax basis of assets means that for capital gains tax purposes, assets in a decedent’s estate will reset to the fair market value of these assets at the time of their death. By way of illustration, if a stock were bought for $100 and appreciated to $1,000 at the time of the account holder’s death, the beneficiary would only pay capital taxes on any further appreciation above $1,000. If the beneficiary sold the stock for exactly $1,000, no taxes would be owed. On the other hand, assets gifted during lifetime or held in an irrevocable trust do not receive a step up in capital tax basis. With the ever-shifting tax landscape, the estate planner must carefully balance the likelihood that their client will have a taxable estate at the time of their death with the desire to include appreciated assets (especially assets with a low capital tax basis) in the Decedent’s estate so that they will enjoy the step-up. But what happens if that calculation seems imprudent or unwise based on facts and circumstances in the future? For example, suppose Peter wishes to provide all his assets to his wife, Mary. Peter’s assets, when combined with Mary’s assets, will be close to or exceed the lifetime estate tax exclusion amount. When Peter passes away, assets received by Mary will not generate any estate tax liability because spouses enjoy an unlimited marital tax deduction. However, it is possible that Mary may now have a taxable estate upon her death, especially if her assets continue to appreciate over her lifetime. Thus, the beneficiaries of Mary’s estate will pay estate taxes on the assets they receive in excess of the lifetime exemption amount in effect at the time of Mary’s death. There are several ways to address these concerns and minimize or eliminate any estate taxes that may be owed in the future. Peter could remove some of his assets from his estate by establishing an irrevocable trust. This trust could be established either during his lifetime or via the use of testamentary trusts (i.e., a trust established at the time of Peter’s death). However, Peter may want to avoid the costs and inconvenience of trust administration if it is possible that he and Mary will never have estate tax issues. Another option is the “wait and see” approach using a “disclaimer trust” that may or may not be funded after Peter’s death. Peter could direct in his will or revocable trust that his assets will pass outright to Mary. Mary may then make a qualified disclaimer, effectively refusing to accept some or all of Peter’s assets. Any disclaimed assets will bypass Mary’s estate and go into the disclaimer trust, which can be used to support Mary for the remainder of her lifetime. The assets that pass to the disclaimer trust, and any subsequent appreciation in these assets, will remain outside of Mary’s estate and will pass estate tax-free to her future beneficiaries. Suppose after funding the disclaimer trust that Mary’s assets are significantly spent down and exhausted during her lifetime. Perhaps a future Congress will increase the estate tax exclusion amount further or completely eliminate the estate tax. In any of these scenarios, the disclaimer trust will serve no tax purpose for Mary. Worse, the assets in the disclaimer trust will not receive the “step-up” in the capital tax basis at the time of Mary’s death. Is there a way to unwind the disclaimer trust and ensure that these assets are includable in Mary’s estate at the time of her death? With careful planning, the answer is “yes”. One powerful technique to resolve this issue is by appointing a trust protector for the disclaimer trust. A “trust protector” is a disinterested party with specific enumerated powers. The trust protector could be given the power to confer upon Mary a general power of appointment to choose any beneficiary she wishes to receive her estate assets, even her own estate. Pursuant to IRC § 2041, assets subject to a general power of appointment are includable in the power holder’s estate for estate tax purposes. Now, whether Mary exercises her general power of appointment or not, the assets will be included in her taxable estate and receive a step-up in capital tax basis. While this planning technique can provide significant tax benefits, it is not always the right choice in every situation. For instance, if Mary were to face creditor issues, granting her a general power of appointment would subject the entire disclaimer trust’s assets to creditor claims. However, when implemented thoughtfully, incorporating a trust protector with the ability to grant a general power of appointment adds valuable flexibility, allowing the estate plan to adapt to the ever-evolving tax laws and optimize tax outcomes.
April 3, 2025
Estates and Trusts
Trustee's Standing in Estate Distribution: A Legal Analysis of Estate of Barry Tarlow
In a groundbreaking decision that could reshape the landscape of California estate law, the Court of Appeal in the Second District Division Four has ruled in favor of trustee David Henry Simon, affirming his right to seek a judicial determination of trust assets under Probate Code section 11700. The court's ruling clarifies the legal framework under which trustees can seek judicial determination of their rights to trust assets, emphasizing the application of Probate Code section 11700. This pivotal ruling is a must-read for estate law practitioners, trustees, and beneficiaries as it navigates the complexities of estate administration with unprecedented clarity and precision. Factual Background Barry Tarlow, a prominent criminal law attorney, executed a will in 2005, with minor modifications in 2006, which held terms for a testamentary trust. The will divided his estate between his siblings, Barbara and Gerald. Gerald was to receive his share outright, while Barbara's share was to be placed in the "Barbara Tarlow Trust," with David Henry Simon named as trustee. Following Barry's death in April 2021, Barbara and Gerald became executors of the estate, and Simon retained his role as trustee. The Barbara Tarlow Trust was a spendthrift trust, which provided that upon Barbara’s passing, the residue would go entirely to Gerald, if living, or otherwise, to a donor-advised fund at Fidelity Charitable Gift Fund. The estate administration process revealed that Barbara's share, intended for the trust, was valued at over $20 million. Barbara disagreed with the use of the spendthrift trust and purchased from the contingent remaining beneficiary, donor-advised fund at Fidelity Charitable Gift Fund, the interest that might go to them to have a power of appointment. Further, to gain control over the trust assets, Barbara and Gerald filed an ex parte petition to replace Simon as trustee and modify the trust terms. After a denial of the ex parte petition, Barbara then disclaimed her entire interest in testamentary trust and Gerlad disclaimed his interest in the estate's personal property. As the joint executors, Barbara and Gerald filed a petition for final distribution, which would remove any distribution to the testamentary trust based on the disclaimers. This led to a series of legal disputes over the final distribution of the estate, including Simon filing a petition to determine beneficiaries of the estate under Probate Code section 11700. Legal Issues and Court's Analysis The central legal issue was whether Simon, as the named trustee, had standing to file a petition under Probate Code section 11700. This section allows any person claiming to be entitled to a share of the estate to seek a court determination of their rights. Simon argued that his role as trustee entitled him to such standing, while Barbara held that her disclaimer prevented such an interest to Simon as there was, therefore, no testamentary trust for him to administer. The court first analyzed the language of the code section as far as standing, providing that "any person claiming to be a beneficiary or otherwise entitled to distribution." In rendering their ruling, the court stated that this phrase, as included by the legislature, was broad and inclusive, allowing a wide range of individuals to file a petition for court determination. As such, it encompasses not only direct beneficiaries but also trustees and others who may have a claim to the estate assets. The Court of Appeals held that trustees are indeed "persons claiming to be entitled to distribution of a share of the estate" under Probate Code section 11700, reasoning that trustees are "persons entitled to distribution" because they are responsible for managing and distributing trust assets according to the terms of the will. This decision underscores the trustee's legal title to trust property, which vests as of the decedent's death, giving them a legitimate claim to the estate's distribution. The court's interpretation of section 11700 provides a clear precedent for future cases involving trustee standing in probate matters. Although Barbara argued that her disclaimer presumptive prevented Simon’s standing, the court highlighted that the presumption of the validity of disclaimers is not conclusive and can be challenged, which was contrary to the trial court’s assumption in these proceedings. This aspect of the ruling emphasized the need for a thorough judicial review of disclaimers and other estate-related documents. Ultimately, the Court of Appeals remanded the case for further proceedings to determine the validity of Simon's claims and Barbara's disclaimer, indicating that factual disputes should be resolved through evidentiary hearings. Conclusion and Implications The Estate of Barry Tarlow marks a pivotal moment in estate law, reinforcing the vital role of trustees and the necessity of procedural rigor in probate proceedings. By affirming the trustee's standing and emphasizing the importance of judicial review, this ruling ensures that the administration of estates is conducted with fairness and transparency. Legal practitioners, trustees, and beneficiaries can look to this case as a guiding beacon, illuminating the path to equitable and just estate distribution. This ruling has significant implications for drafting attorneys, trustees and beneficiaries alike. For drafting attorneys, the decision underscores the need for precise and detailed trust provisions to account for potential court involvement, which could complicate the estate planning process and necessitate more extensive legal advice. Trustees gain enhanced authority to manage and distribute trust assets, but they must be vigilant against potential misuse of their standing and be prepared for increased litigation risks. Beneficiaries benefit from greater protection, as trustees can now more confidently seek court intervention to safeguard their interests. However, this ruling may also lead to more frequent challenges to trustee actions, potentially straining relationships and increasing disputes. Overall, while the ruling strengthens the legal framework for trustees, it introduces complexities that all parties must navigate carefully. As the legal community absorbs the implications of this landmark decision, it is clear that the principles established here will resonate through future probate and trust law cases, shaping the landscape of estate administration for years to come.
April 2, 2025
Intellectual Property
Trademark Registration Misconceptions: What Brand Owners Should Know
Many business owners view trademark registration as a smart investment—and they’re right. A federal registration gives you valuable legal advantages, including nationwide priority, a presumption of ownership, and stronger tools to protect your brand. But registering a trademark doesn’t give you absolute control. Whether you can prevent someone else from using a similar name or logo often depends on a few key questions: Who used the trademark first? If another party has prior rights, their use may be protected. Are they using it for the same or related goods/services? If you're operating in unrelated industries, another party’s use may not be infringing. Understanding these factors can help you protect your brand more effectively and avoid common trademark misconceptions. Trademark Protection Is Limited to Specific Goods and Services A trademark registration does not prevent others from using a similar or identical name, logo, or slogan in unrelated industries. Trademark law is designed to prevent consumer confusion—not to grant brand owners exclusive control over a word or phrase in all contexts. Your trademark rights are fundamentally tied to the goods and services that you sell under your brand name, logo, or other source indicator (i.e., trademark). You can register a trademark to use in connection with the sale of specific goods and services, not for everything. A perfect, real-world example of this can be found at the corner of Broadway and W 68th Street in New York City, where for several years, a LOWE’S® hardware store sat directly across from a LOEWS® movie theater. Despite the nearly identical pronunciation and similar spelling, both brands coexisted peacefully—and legally—because they operate in entirely different industries. Even though the names are similar, consumers are not likely to confuse a home improvement store with a movie theater or think that there is any shared ownership. The goods and services they offer are so different that consumers would not likely assume the two businesses are affiliated. (The Lowe’s eventually closed, but it was likely due to the lack of need for a big-box home improvement store in the heart of Manhattan rather than any trademark conflict.) If two businesses operate in distinct industries with different audiences and purposes, similar names can often legally coexist. “I Had It First”: Why First Use Still Matters When two companies are trading in related commercial spaces (i.e., selling similar goods or services to one another) under the same or similar trademarks, U.S. trademark law will generally favor the party that was using it first. That’s why, before applying for federal registration, your trademark attorney will typically conduct a search to identify existing registrations, pending applications for registration, and unregistered (or “common law”) uses of the mark. The term "common law" refers to trademark rights that arise through the actual use of the mark in commerce, even without formal registration. Suppose you're opening a bakery in North Carolina called “Maple & Bean.” A common law search reveals a small café in Vermont that has used that name locally for years but never registered it. If you and your trademark attorney agree that the reward outweighs the risk and there are no other conflicts, the USPTO may grant you a trademark registration. But even with that registration, the Vermont café would retain the right to use the name in its existing geographic area because it used it first. Your registration would, however, generally allow you to prevent others from using the same or a confusingly similar name for related goods or services going forward. However, it wouldn’t give you the right to stop someone from using “Bean & Maple” for products in unrelated industries, like glassblowing tools or HVAC systems. In short, trademark protection is both industry-specific and use-based. Registration strengthens your rights but doesn’t erase earlier uses—or give you absolute authority over all uses. Conclusion A federal trademark registration is a valuable asset, but its scope is not unlimited. Trademark rights are determined by both first use and the specific goods and services involved, making enforcement a fact-specific analysis. Understanding these nuances can help businesses manage their trademark rights effectively and avoid common misconceptions about registration.
April 2, 2025
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