Latest News - Taft Stettinius & Hollister LLP

Mullins and Smith Published in the Spring Issue of Dayton Area Chamber FOCUS

Maria Porter — Thu, 16 May 2013 14:43:53 -0500

An article written by Taft attorneys Jeffrey A. Mullins and Ryan T. Smith was published in the spring edition of FOCUS, a Dayton Area Chamber of Commerce publication. The article, "The Affordable Care Act - Surviving Implementation," indicates that companies should develop a proactive strategy for dealing with the ACA and suggests three steps companies should take when developing such a strategy.

The full article is available here.

Brey Quoted in Columbus Dispatch Article

Jen Mixson — Thu, 16 May 2013 14:18:09 -0500

Taft partner Donald C. Brey was quoted in an article titled "Morality clauses attract attention after Watterson firing," which appeared in the May 13 issue of the Columbus Dispatch. The article discusses the legal status of morality clauses in private and religious school teacher contracts. Click here to read the article.

Thompson Recognized by CMBA Foundation

Kathy Major — Thu, 16 May 2013 14:14:50 -0500

Adrian D. Thompson was among a special group of Cleveland Metropolitan Bar Association members and community leaders invited to attend a unique celebration in recognition of their contributions to the CMBA Foundation and the Greater Cleveland community. A celebratory cocktail reception was held at the Cleveland Union Club on May 16.

Thompson is a former chief legal counsel for the Cleveland Metropolitan School District and currently serves as president of the board of directors of the Legal Aid Society of Cleveland. He also is a member of the board of directors of the Cleveland Area Chapter of the Alzheimer’s Association. Thompson is a member of the Public Law, Education - Litigation, Labor and Employment, College and University Law, and School Public Finance practices at Taft.

Ungerman Quoted in Dayton Business Journal Article

Jen Mixson — Thu, 16 May 2013 14:12:11 -0500

Taft Labor & Employment partner Fred A. Ungerman Jr. was quoted in an article titled “Court ruling on union postings good for employers, Dayton lawyers say,” which appeared in the May 10 issue of the Dayton Business Journal. Click here to read the article.

Miller Selected as Deputy Commander for 6th Legal Operations Detachment of the U.S. Army Reserve Legal Command

Kathy Major — Wed, 15 May 2013 14:30:59 -0500

Taft partner and Army Reserve JAG Officer Adam C. Miller has been selected as Deputy Commander for the 6th Legal Operations Detachment of the U.S. Army Reserve Legal Command. His tour started May 15, 2013. The 6th LOD provides trained Judge Advocates in support of U.S. Army operations worldwide. The LOD also has responsibility for Rule of Law and Soldier’s Medical Evaluation/Physical Evaluation Board missions.

A JAG Officer since 1996, Lieutenant Colonel Miller focuses his legal practice on representing public governmental entities, including local, city and exempted village school districts, single and multi-county educational service centers, joint vocational school districts and statewide educational associations.

He serves as vice chair of the Ohio State Bar Association Military and Veterans' Affairs Committee and served with the 10th Mountain Division during his deployment to Afghanistan in 2004. He is also an honor graduate of the John F. Kennedy Special Warfare Center School, Civil Affairs Officer Advanced Course.

In addition to managing a growing legal career over the last 18 years, Miller is a former public school teacher, head coach, superintendent of schools and current school board member. He resides in Grandview Heights, Ohio.

Felson to Speak at OHPELRA Conference

Jen Mixson — Wed, 15 May 2013 08:31:02 -0500

Taft attorney Cynthia C. Felson will speak at the OHPELRA (Ohio Public Employer Labor Relations Association) summer conference on June 21 at the Columbus Police Academy. The focus of the seminar is workers’ compensation law in Ohio. Felson and a hearing officer from the Industrial Commission will participate in a mock hearing. Immediately following the mock hearing, Felson will give a presentation on idiopathic falls and relevant case law.

SBA Issues Interim Final Rule Removing Cap on Contract Value for Women-Owned Small Business Set-Asides

Maria Porter — Wed, 08 May 2013 11:40:13 -0500

On May 7, 2013, in response to recent statutory changes to the Small Business Act, the Small Business Administration ("SBA") issued a final interim rule, effective immediately, that removes the dollar value limitations on Women-Owned Small Business (“WOSB”) and Economically Disadvantaged Women-Owned Small Business (“EDWOSB”) set-asides. Contracting officers may now set aside any contract for competition among WOSBs or EDWOSBs for federal contracts within the enumerated industries when: (1) there is a reasonable expectation that two or more WOSBs (in the case of industries in which WOSBs are underrepresented) or EDWOSBs (in the case of industries where WOSBs are substantially underrepresented) will submit offers; and (2) the contracting officer anticipates that the contract can be awarded at a fair and reasonable price.

Under the original statutory scheme that created WOSB/EDWOSB set-asides, contracts being set aside under this program could not exceed $5 million for manufacturing contracts or $3 million for all other contracts. Although the SBA adjusted these statutory amounts for inflation, raising the thresholds to $6.5 for manufacturing contracts and $4 million for all other contracts, it was still found that the ceilings had the unintended effect of severely reducing the number of potential WOSB set-asides. This, in turn, prevented the government from satisfying its 5% contracting goal for WOSBs.

While WOSB/EDWOSB set-asides are still restricted because they are limited to contracts under a specific listing of NAICS codes applicable to industries in which WOSBs have been either underrepresented or substantially underrepresented, there is no doubt that lifting the dollar threshold restriction removed a large hurdle to meeting the 5% goal for WOSB contract awards. Qualifying WOSBs/EDWOSBs should be sure to respond to RFIs and communicate with contracting officials whenever possible to make them aware of the WOSB’s/EDWOSB’s ability to fulfill the contract at a fair and reasonable price—regardless of the value of the contract.

Court Strikes Down NLRB's Notice Posting Requirement

Kelly Sharpe — Wed, 08 May 2013 09:48:29 -0500

On May 7, 2013, the United States Court of Appeals for the District of Columbia Circuit struck down the National Labor Relations Board’s rule requiring employers to post a notice created by the NLRB that purported to “inform” employees about their rights under the National Labor Relations Act (“Act”). The rule contained three enforcement provisions, making non-compliance: (1) an independent unfair labor practice; (2) evidence of union animus that could support other unfair labor practice findings (such as an unlawful discharge); and (3) toll the six-month statute of limitations established by the Act.

The court found that all three of these enforcement provisions violated the law. The first two enforcement provisions violated Section 8(c) of the Act, which prevents the NLRB from finding an employer’s speech that does not contain threats or promises of benefits unlawful or evidence of an unfair labor practice. The court said the NLRB’s rule punished employers for refusing to speak, which violated Section 8(c). According to the court, the third enforcement provision impermissibly changed the Act’s statute of limitations, which the NLRB lacked the power to do.

Because all three enforcement provisions violated the law, the court also struck down the rule’s requirement that employers post the notice. Based on the preamble to the NLRB’s final rule, the court stated that the NLRB “would not have issued a posting rule that depended solely on voluntary compliance.”

In a concurring opinion, two of the three judges would also have found that the rule exceeded the NLRB’s statutory authority to make rules under Section 6 of the Act.

Because employers can always appeal unfair labor practice cases to the D.C. Circuit Court of Appeals, this court decision is particularly important. The NLRB’s options in response to this latest legal setback include: (1) seeking to have the D.C. Circuit rehear this case; (2) appealing to the United States Supreme Court; (3) trying to have other federal appeals courts uphold the rule; or (4) creating a new rule. Another case challenging this rule is currently pending before the United States Court of Appeals for the Fourth Circuit; the lower court in that case struck down the rule.

Should you have additional questions regarding this decision, please contact any member of Taft’s Labor and Employment group.

Taft Announces Law Exploratory and Career Readiness Program at IPS Ralph Waldo Emerson School 58

Kelly Sharpe — Mon, 06 May 2013 07:34:34 -0500

INDIANAPOLIS, IN - Taft Law is pleased to announce a new program for sixth-grade students at IPS Ralph Waldo Emerson School 58.

In partnership with the United Way of Central Indiana, Indianapolis Metropolitan Police Department, IPS Police Department, and Reach for Youth, Taft has created a law exploratory and career readiness program. Students will learn about various career opportunities in law and safety and will take a field trip to the federal courthouse.

“We are very excited about this new program,” said Robert J. Hicks, partner-in-charge of Taft’s Indianapolis office. “As part of our partnership with IPS 58, one of our goals is to help bring resources to the school to enhance the learning experience and educate students about career opportunities.”

“This is a unique collaboration between these organizations, and we are grateful for this opportunity for our students,” said Vicky Kelley, School 58 principal. “Each organization offers a different perspective about the various careers in law and safety, opening our students’ eyes to the many opportunities.”

During the month of May, representatives of the four organizations will visit the classroom for a career day presentation. Each representative will discuss their position, job responsibilities and career path. In addition, Reach for Youth will conduct an interactive explanation of Teen Court and will discuss law concepts and terms for every day use.

The program will feature a field trip to the federal courthouse on May 16. The visit will include orientation, a tour, an educational activity and a visit with a judge. Afterward, students will enjoy lunch at Taft’s downtown office.

Taft adopted IPS 58 in 2011 and has since pledged more than $450,000 to the school. In partnership with the United Way, Taft has developed a program with the school that supports areas of need and improvement. The main areas of focus are building and expanding after school programming and increasing academic achievement of the Indiana English/Language Arts and Math Standards. In addition to financial support, Taft employees volunteer their time and talents and get involved with the students through tutoring and mentoring.

To learn more about Taft's partnership with IPS 58, please click here.

Labor & Employment Law Breakfast Briefing - Indianapolis

Kelly Sharpe — Wed, 03 Apr 2013 08:01:33 -0500

Corporate Governance – The Heightened Focus On Tax Risk

Maria Porter — Tue, 30 Apr 2013 09:51:35 -0500

Evolving business models, governmental policies and capital markets affect tax risk and increase the importance of having tax leadership present in strategic or transformational planning. Appropriate corporate governance should include thoughtful approaches to tax risk policy and to communicating and resolving risks at the C-suite or board level.

Recently, Padric Kelly O’Brien provided insight on proposals from the U.S. Treasury Department that are designed for tax professionals who practice before the Internal Revenue Service. The proposals were developed in an effort to give clarity on written communications and provide additional requirements for competence and management oversight. You can read the assessment here.

Managing tax risk by return filers is explicitly or implicitly at the core of each of the three proposals. Members of the tax bar, whether in private practice or as corporate counsel, have noted in speeches by or comments attributed to senior IRS management the heightened appreciation the agency has for promoting effective management techniques by taxpayers and their advisers. For example, when noting that taxes are one of the biggest expenses of a corporation, retired Commissioner Shulman said that boards of directors should play an important role in overseeing tax risk and tax strategies of corporations. That comment was an attention-grabbing statement from the IRS. But, in truth, satisfying tax administrators is only one of the many reasons an entity should consider implementing formal tax risk management policies. The chief tax officer or tax counsel can and should have a role to play in that process.

There is an increased focus on corporate governance in general, as well as tax risk management. This focus has resulted in greater demands for transparency and disclosure. The passage of Sarbanes-Oxley legislation, adoption of FIN 48 in the accounting area, and heightened media attention on the complexity of taxes and significant impact they can have on a corporation’s reputation and value all combine to emphasize the need for a corporation to focus on managing tax risk.

Managing tax risk includes developing a workable definition of that element of enterprise risk. In addition, tax leadership needs to identify where the risks arise. Finally, as an internal control or process matter, an enterprise should implement a plan to integrate the tax risk management policy with the entity’s enterprise risk management policy.

Broadly speaking, tax risk encompasses all sources of risk that may create an unexpected outcome from a tax position. Tax practitioners are fully aware that the potential for tax risk is embedded in all aspects of the business. Risks may arise in operations, transactions, compliance, financial accounting and controversy management.

Analysis of the scope of the risk requires a more granular examination of the sources of risk within each of those categories. For example, transactional risk includes the risk associated with the application of the tax laws, regulations and interpretations to specific transactions. The following areas of concern can be identified when assessing the scope of tax risk in relation to transactions: a challenge to the technical basis for the tax treatment of the transaction, a change in law that affects the transaction, a change in facts or circumstances, insufficient tax planning, or failure to implement the planning. A similar list can be prepared for each of the other categories of tax department responsibilities.

The nature of these risks will vary by enterprise, but a baseline understanding for every enterprise is that tax risk is substantially more than getting the numbers wrong in a filing. Just as important is the acceptance of the view that the areas in which tax risks can arise are not limited to the tax department alone. The challenge is to create an internal awareness among affected constituencies that will not only aid in risk identification but will also foster creation of a framework for monitoring risk treatment or resolution. This significant undertaking will involve the active collaboration of the tax department, the finance department, the “C Suite” and the responsible committees of the board.

The benefits of this in-depth analysis are many. It is not just addressing what the tax administrators have by regulatory fiat established as their base comfort level for tax departments and tax advisors. Hopefully, such an analysis can result in increased confidence that 1) the tax function is operating in a manner consistent with the organization’s overall business goals; 2) there is control from the organization’s center; and 3) there is clarity on the roles, responsibilities and accountability for each element of the plan.

Please direct comments or questions on these thoughts to pobrien@taftlaw.com.

Teaming Agreements – District Court Puts the “I” Back in TEAM

Maria Porter — Tue, 30 Apr 2013 11:25:13 -0500

A Virginia District Court recently held that a negotiated and executed teaming agreement was unenforceable; it was merely an agreement to agree in the future.¹

The plaintiff, Cyberlock Consulting (“Cyberlock”), and the defendant, Information Experts (“IE”), had a history of working together. In fact, they had teamed together for other federal projects. It was during one such project that the parties learned the same federal agency would be seeking bids for a new project involving similar work. The parties then negotiated and entered into a new teaming agreement.

The stated purpose of the teaming agreement was “to set forth the arrangement between [IE] and [Cyberlock] to obtain an [IE] prime contract…and to set forth the basis for a subcontract between [IE] and [Cyberlock].” The parties were to exert reasonable efforts to obtain the prime contract for IE and to negotiate a subcontract. The teaming agreement also indicated that the eventual subcontract would state that IE was to perform 51% of the scope of work, with Cyberlock obtaining 49%.

IE did win the procurement and was awarded the prime contract. However, the parties were unsuccessful in negotiating the subcontract. Cyberlock sued IE, alleging breach of contract, fraud and unjust enrichment. The court found against Cyberlock.

After reviewing the terms of the teaming agreement, the court opined that the parties did not have an enforceable agreement. Per Virginia law, an agreement to negotiate at some point in the future is unenforceable. As such, a teaming agreement that contains terms stating that the parties will “negotiate open issues in good faith” or “reach a contractual objective within an agreed timeframe” in the future is viewed as an agreement to agree rather than as a valid contract.

Here, the parties expressly stated in the teaming agreement that they would negotiate a subcontract once IE was awarded the prime contract. In essence, all the teaming agreement did was state the objectives or framework for the parties to negotiate a subcontract; it did not bind or obligate the parties to actually execute a subcontract.

The takeaway from this case is that you should make sure that you are very comfortable with your choice of a teaming partner, i.e., do your due diligence. In addition, be aware that, should there be a dispute between teaming partners, asking a court to enforce a teaming agreement may not achieve the expected results—depending upon how the teaming agreement is worded.

¹Cyberlock Consulting, Inc. v. Info. Experts, Inc., 2013 U.S. Dist. LEXIS 49092 (E.D. Va. Apr. 3, 2013)

The Top Three Changes in Commercial Real Estate Environmental Due Diligence in 2013

Kelly Sharpe — Wed, 13 Mar 2013 10:31:04 -0500

Who’s a Government Subcontractor Now?

Maria Porter — Tue, 23 Apr 2013 08:44:39 -0500

Much has been written lately about the U.S. District Court for the District of Columbia ruling in UPMC Braddock v. Harris where three hospitals providing medical services to an HMO with a prime contract with the United States government are, in fact, considered “subcontractors”.¹The upshot of this label is that these hospitals are now subject to regulation by the Office of Federal Contract Compliance Programs (“OFCCP”) in the Department of Labor. OFCCP enforces the federal statutes and regulations related to affirmative action, equal employment opportunity and equal pay required of those who do business with the federal government.

In UPMC Braddock, the three hospitals contracted with the UPMC Health Plan, an HMO, to provide medical services to federal employees. When the covered employees received medical services at one of the UPMC hospitals, the hospital billed the HMO. The UPMC hospitals believed that while the HMO qualified as a federal subcontractor, they did not. The hospitals provided multiple reasons why they believed they were exempt from the OFCCP’s jurisdiction. The District Court rejected each argument in turn.

The hospitals argued that they failed to meet the definition of “subcontractor” because they did not provide “nonpersonal services” to the health plan as defined in OFCCP’s regulations. There is no explicit definition of the term “nonpersonal services” in the regulations and no such exception in the Federal Acquisition Regulations (“FAR”) exempting them as a subcontractor. The court noted that it would be illogical for the regulations to “exclude nurses, doctors, and other hospital staff members from the laws’ protection while insurance company staffers and construction workers, for instance, remain within the ambit of that protection.”

The hospitals also argued that the contractual language with the HMO excluded the hospitals as subcontractors. The court held that the hospitals could not escape their obligations under federal equal opportunity statutes merely through contract and that OFCCP’s definition of “subcontractor” is binding. The court rejected the argument that the hospitals never consented to the equal opportunity clauses, as required by OFCCP's regulations to be included in covered federal subcontracts. The court noted that OFCCP's equal opportunity clauses apply to covered entities by operation of federal law and consent is not necessary.

Interestingly, while UPMC Braddock was developing, there was another case in which hospital providers under another federal government health care plan were challenging the OFCCP’s jurisdiction on the grounds that they were not a subcontractor. Florida Hospital of Orlando provided health care services to members of the armed forces and their families through TRICARE under an agreement with the TRICARE prime contractor in Florida. Like the UPMC Braddock case, the government had provided in the TRICARE contracts that the HMO providers were exempt from OFCCP’s regulations. Therefore, Florida Hospital’s contract contained none of the OFCCP-required equal opportunity clauses. When OFCCP sent Florida Hospital a notice of an audit of its affirmative action compliance, the hospital refused to supply the requested information, asserting that OFCCP lacked jurisdiction. OFCCP issued a show cause notice before the Department of Labor Administrative Law Judge ("ALJ").

In October 2010, the ALJ concluded that Florida Hospital was required to comply with OFCCP’s demands. The hospital appealed the ALJ ruling. While on appeal, Congress included a provision in the National Defense Authorization Act for 2012 (“NDAA”) expressly stating that the “TRICARE managed care support contract that includes the requirement to establish, manage, or maintain a network of providers may not be considered to be a contract for the performance of health care services or supplies” in determining whether TRICARE providers are subcontractors “for purposes of the Federal Acquisition Regulation or any other law.” The ALJ then reversed the earlier Florida Hospital decision, citing the 2012 NDAA. While health care providers everywhere hoped that this would be the end of OFCCP’s quest to expand its jurisdiction, clearly their hopes were in vain. UPMC Braddock presents the same issues but under a different federal health care plan. For those keeping score, it is OFCCP 1 (Federal Employee Healthcare Benefit Plan), hospital providers 1 (TRICARE).

At this writing it is unclear whether Congress will take action to prevent countless hospitals and providers from falling under OFCCP’s jurisdiction due to the UPMC Braddock decision and, if so, whether it will exempt them regardless of the federal health care plan involved, or tackle the issue one program at a time. The greater cause for apprehension, however, is whether OFCCP will seek to expand its jurisdiction to MEDICARE and MEDICAID providers.

In the wake of the UPMC Braddock ruling, health care companies should now analyze whether their contracts with health plans expose their entities to consideration by the OFCCP as federal subcontractors. This comes at a difficult time as health care providers prepare for the onset of the Affordable Care Act and now, apparently, have to consider how, and at what cost, OFCCP’s regulations will affect their operations.

¹UPMC Braddock v. Harris

Taft E-Discovery Professional Awarded CEDS Certification

Kathy Major — Tue, 23 Apr 2013 08:05:28 -0500

Elizabeth A. Conaway, manager of litigation support at Taft, has earned the right to use the prestigious designation CEDS - Certified E-Discovery Specialist. She is among the select maiden group of e-Discovery professionals to pass the rigorous four hour certification examination that provides a tough and objective measure of mastery of the challenging field of e-Discovery. The test is administered by the Association of Certified e-Discovery Specialists (ACEDS), the premier membership organization of e-Discovery professionals in the field worldwide, and Kryterion, a psychometric firm.

The exam was assembled over eight months by a team of 40 leading e-Discovery professionals under the guidance of ACEDS and Kryterion management to ensure that the exam was technically sound and legally defensible. The computer-based examination has 145 items. The certification exam is offered at 560 secure ACEDS-Kryterion Testing Centers worldwide, including 320 in the United States and 30 in Canada.

For more information on CEDS certification, please visit: www.ACEDS.org.

Ask the Experts: The Future of Health Care

Kelly Sharpe — Tue, 16 Apr 2013 14:00:30 -0500

Anthony E. Dowell and Brian P. Lynch Join Taft's Indianapolis Office

Kelly Sharpe — Mon, 15 Apr 2013 08:57:58 -0500

INDIANAPOLIS, IN — Taft Stettinius & Hollister LLP announces that Anthony E. Dowell and Brian P. Lynch have joined the firm’s Indianapolis office.

Dowell is of counsel and a member of the firm’s Intellectual Property and Litigation practice groups. He is an experienced trial lawyer who has litigated complex commercial cases throughout the United States. Dowell focuses on patent litigation and licensing and has also tried other types of intellectual property and complex commercial litigation cases. He has successfully litigated intellectual property disputes in diverse areas, including contact lenses, asphalt plants, sunglasses, papermaking machinery, furniture, home decorations, gaming devices, maps and steam heating systems. Dowell received his B.S. in Interdisciplinary Engineering from Purdue University and earned his J.D., magna cum laude, from the University of Notre Dame Law School.

Lynch, a registered patent agent, has worked with Dowell on patent litigation and prosecution matters since 2007. He received his bachelor’s degree in chemistry from Colorado College and his doctorate in chemistry from Purdue University.

Dowell and Lynch join an already robust intellectual property practice at Taft. The firm’s Intellectual Property group now includes 25 professionals, including eight registered patent attorneys and two patent agents, who cover a full range of engineering and scientific disciplines, including mechanical, electrical, chemical, computer software and biological/life sciences. Taft’s IP attorneys also provide advice on trademark prosecution and litigation, anti-counterfeiting programs and strategies, licensing, trade secret issues and global portfolio management.

Gerald Rapien Receives Professionalism Award

Jen Mixson — Thu, 04 Apr 2013 08:53:51 -0500

Taft Stettinius & Hollister LLP is pleased to announce that retired Taft attorney Gerald Rapien has been selected to receive the Cincinnati Bar Association’s John P. Kiely Professionalism Award. Each year, the CBA’s Professionalism Committee presents the award to a trial lawyer who possesses outstanding trial skills and demonstrates the highest degree of professionalism, civility and ethical standards in his or her daily practice. Rapien will officially receive the award at the CBA’s annual luncheon on April 26.

Throughout his career at Taft, Rapien focused his practice on personal injury, product liability, employer tort liability, pharmaceutical and medical device claims, insurance coverage, Qui Tam and other civil litigation cases in state and federal courts. He was the state chair for Ohio and a fellow of the American College of Trial Lawyers, a member of the American Board of Trial Advocates, and a member of the Defense Research Institute, the Ohio Association of Civil Trial Attorneys, the Association of Trial Lawyers of America, and the Cincinnati, Kentucky and American Bar Associations. In addition, Rapien was an adjunct faculty member of the University of Cincinnati Law School and gave numerous continuing legal education presentations on trial practice, evidence and other litigation-related subjects. He was also one of the recipients of the 2005 Trial Lawyer of the Year Award, presented by The Trial Lawyers for Public Justice (TLPJ) Foundation.

About Taft
At Taft Stettinius & Hollister LLP, delivering outstanding legal performance to help clients succeed is what drives and motivates our more than 330 attorneys every day. Taft has offices in Cincinnati, Cleveland, Columbus and Dayton, Ohio; Indianapolis, Indiana; Covington, Kentucky; and Phoenix, Arizona. The firm practices across a wide range of industries, in virtually every area of law, including Business and Finance; Litigation; Labor and Employment; Intellectual Property; Business Restructuring, Bankruptcy and Creditor Rights; Environmental; Health and Life Sciences; Private Client Services; Real Estate; and Tax. With a proven track record of experience since 1885, the firm offers breadth and depth of legal expertise coupled with a trusted business perspective to help our clients, big and small, regionally, nationally and internationally, reach their goals.