August 23, 2019

Face it head on: How to resolve conflict among business owners

Smart Business 

(by Jayne Gest with Kevin Douglass)

Many business owners claim to be blindsided when a co-owner files a lawsuit against them detailing a list of grievances. The truth is that business owners often ignore disagreements with co-owners for years or even decades by focusing on pressing day-to-day business matters.

If your company does not address owner conflicts and succession planning issues, these matters will eventually disrupt, impact or injure the business. But with the right approach — and the right facilitator — these challenges can be identified and resolved.

“Disagreements among co-owners of a business are natural. They come up frequently. The key is how owners address those conflicts. Even a company with one owner eventually has to deal with succession issues to avoid potential tension between family members or others vying to be the next generation of owners,” says Kevin Douglass, shareholder at Babst Calland.

Smart Business spoke with Douglass about conflict resolution among business owners.

What events can trigger an escalation of a disagreement between owners?

The reasons why a disagreement may bubble to the surface are almost endless. One trigger is business financial health. If the company is doing very well, owners may feel entitled to more compensation or at least more input into how additional profits will be invested. If the business is struggling, an owner’s benefits may need to be decreased and tough decisions made about the company’s direction.

Other reasons for conflict include a change in an owner’s level of commitment or job performance, a desire to change the governance structure, conflicting business strategies, and compensation and benefit differences. Personal changes may also spark controversy, such as an owner’s marriage or divorce, owner children who are employed by the business, personal finances or advancing age. …

August 23, 2019

Deadline Approaching For Employers to Submit Mandatory Pay Data to EEOC

Employment & Labor Alert 
(by Stephen Antonelli and Alexandra Farone)
In May 2019, we issued a Client Alert after the U.S. District Court for the District of Columbia ordered the EEOC to collect employers’ pay and hours worked data (commonly referred to as “Component 2 Data”) from certain employers. Specifically, the Court ordered the EEOC to collect such data from employer-selected pay periods during the years 2017 and 2018.
We issue this follow-up Client Alert because, by September 30, 2019, all employers with at least 100 employees are required to collect and submit Component 2 Data for a “workforce snapshot period” as selected by the employer for the reporting years 2017 and 2018. 
The mandate for employers to collect Component 2 Data is the subject of an ongoing federal lawsuit. The Department of Justice has appealed the court order, but the requirement to comply and produce the data by September 30, 2019 remains in full force and effect during the pendency of the appeal.
The EEOC portal website through which employers can submit information can be found at: https://eeoccomp2.norc.org/.
Employers should keep the following steps in mind when preparing to produce Component 2 Data:

  1. Identify an appropriate workforce snapshot period—one pay period—for each reporting year.
  2. Gather, sort, and verify the relevant Component 2 Data including employees’ race/ethnicity, sex, W-2 payroll information, and hours worked.
  3. Provide actual hours worked by employees who are not exempt under the Fair Labor Standards Act (FLSA). For employees who are exempt from the FLSA, employers can provide either proxy hours or actual hours worked.
  4. Determine the number of full- and part-time employees pursuant to each of the 10 EEO-1 job categories.

    5. …

August 22, 2019

Third Circ. Clarifies First Amendment Level of Scrutiny of Billboards

The Legal Intelligencer

(by Blaine Lucas and Alyssa Golfieri)

Land use disputes arising from the regulation of outdoor advertising signs (i.e., billboards) are not foreign in Pennsylvania, and over the past several decades, have become an increasingly common source of litigation in both state and federal court. Most recently, the U.S. Court of Appeals for the Third Circuit added Adams Outdoor Advertising v. Pennsylvania Department of Transportation, 2019 U.S. App. LEXIS 20841 (3d. Cir. 2019), to the billboard case law progeny.

By way of background, in 1965 the Federal Highway Beautification Act, 23 U.S.C. Section 131 et seq., was enacted to establish a framework for federal-state agreements related to the regulation of outdoor advertising signs near highways. In order to meet the commonwealth’s obligations under the act, in 1971 the Pennsylvania General Assembly enacted the Outdoor Advertising Control Act, 36 Pa. Stat. Section 2718.101-115, which sets forth land use and permitting regulations applicable to outdoor advertising signs near the commonwealth’s interstate and primary highways. The Outdoor Advertising Act charges the Pennsylvania Department of Transportation (PennDOT) with administration of the Outdoor Advertising Act.

At issue in Adams Outdoor is a provision in the Outdoor Advertising Act known as the “interchange prohibition.” The interchange prohibition bars the construction of outdoor advertising signs within 500 feet of a highway interchange or “safety rest area.” The interchange prohibition expressly exempts “official” signs (i.e., directional or other official signs or notices erected and maintained by public officers or agencies for the purpose of carrying out official duty or responsibility) and “on premises” signs (signs that advertise the sale or lease of, or activities being conducted upon, the real property where the signs are located). …

July 18, 2019

New Work Product Waiver Analysis Provides Third-Party Communications Clarity

The Legal Intelligencer

(by Stephen Antonelli and Carly Loomis-Gustafson)

In mid-June, in a unanimous opinion, the Pennsylvania Supreme Court articulated a new work product doctrine waiver analysis in BouSamra v. Excela Health, No. 5 WAP 2018 (Pa. June 18, 2019). While the decision will be seen as a victory for corporate defendants in that it provides clarity concerning waiver of the attorney work product doctrine related to communications and consultations with third parties in anticipation of litigation, it should also be read as a cautionary tale in support of continued mindfulness in dissemination of privileged information.

The decision stems from a discovery dispute in a defamation case commenced by Dr. George R. BouSamra against Excela Health Westmoreland Regional Hospital and others. BouSamra filed suit after another cardiologist affiliated with Excela accused BouSamra and his colleague, Dr. Ehab Morcos, of regularly overestimating arterial blockages and, as a result, performing improper and medically unnecessary stenting. As part of an attempt to manage potential public relations issues stemming from the results of two peer review studies related to the accusations, Excela’s in-house counsel forwarded an email containing privileged information that it had received from outside counsel to a member of a third-party public relations firm, who then forwarded the email to other members of the firm.

After noticing the emails between Excela and its public relations firm on Excela’s privilege log, BouSamra filed a motion to compel production of the emails. A special master assigned by the trial court determined that Excela had not waived any privileges. The trial court sustained BouSamra’s exceptions to the special master’s recommendation, noting that the third-party was not an agent of Excela’s counsel. It therefore concluded that the attorney-client privilege had been waived. …

August 16, 2019

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

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

August 15, 2019

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

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

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

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

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

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

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

August 9, 2019

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

The PIOGA Press

(by Robert Max Junker)

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

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

August 8, 2019

Practice Pointers for Social Media Policies in the Workplace

The Legal Intelligencer

(by Alexandra Farone)

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

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

August 1, 2019

Partial Summary Judgment in Challenges to Unconventional Well Regulations

The Legal Intelligencer

(by Jean Mosites and Matthew Wood)

Editor’s note: Author Jean M. Mosites of Babst, Calland, Clements & Zomnir represents MSC in this litigation. Matthew C. Wood, an associate with the firm, reported on the decision.

On July 22, the  Pennsylvania Commonwealth Court  issued an opinion addressing an industry trade group’s challenges to parts of the state’s unconventional well regulations (25 Pa. Code § 78a). The regulations impose obligations on the development of natural gas wells in unconventional formations such as the Marcellus Shale and Utica. In 2016, petitioner, the Marcellus Shale Coalition, (MSC) challenged specific portions of the new regulations governing public resources, area of review, on-site processing, well development and centralized impoundments, site restoration, spill remediation and waste reporting. Following its August 2018 decision largely invalidating the public resource provisions challenged in count one of MSC’s petition, and oral argument on the remaining counts in October 2018, the court’s en banc panel decided applications for partial summary relief by MSC and respondents, the Department of Environmental Protection (DEP) and the Environmental Quality Board (EQB).

In its petition, MSC contended that the DEP and EQB lacked statutory authority to adopt the rules, that the new regulations conflicted with current law and were unconstitutional special laws, and that the new regulations were unreasonable. The agencies largely countered that they derived their authority from multiple statutory sources and that the new regulations were necessary for the protection of the environment.

The court reviews the challenges to regulations under the three-part standard articulated in Tire Jockey Services v. Department of Environmental Resources, 915 A.2d 1165, 1187 (Pa. 2007). Under Tire Jockey a regulation is valid if it was adopted within the agency’s granted power, issued pursuant to proper procedure, and is reasonable. …

July 31, 2019

Tim Goodman Interviews NHTSA’s Chris Perry on Regulatory Oversight, Recalls and Safety Standards

Mobility, Transport & Safety Practice Leader Tim Goodman interviewed NHTSA’s Christopher Perry, the agency’s chief legal officer for enforcement, on regulatory oversight, recalls and safety standards at ACI’s annual Automotive Product Liability Litigation Conference in Chicago on July 19. Chris Perry described NHTSA’s regulatory approach as promoting communication and innovation, including in AV technology, while maintaining NHTSA’s mission of safety.

For more information, click here.

July 30, 2019

Gas Pipeline Group’s Meeting Signals Stricter Safety Rules

Law360

(by Keith Coyle)

The Gas Pipeline Advisory Committee, or GPAC, the federal advisory committee that reviews the U.S. Pipeline and Hazardous Materials Safety Administration’s gas pipeline safety rulemaking proposals, met in Washington, D.C., late last month to consider proposed changes to PHMSA’s regulations for onshore gas gathering lines. Driven by recent developments in the oil and gas industry, particularly the expansion of pipeline infrastructure in the nation’s shale plays, PHMSA published a notice of proposed rulemaking in April 2016 that contained significant amendments to the federal safety standards and reporting requirements for rural gas gathering lines.

While the Trump administration had signaled a willingness to pursue a more measured approach, the GPAC largely endorsed the prior administration’s position, a decision that could ultimately produce a final rule with far-reaching impacts for the industry. According to PHMSA’s latest estimates, the GPAC’s recommended proposal would make about 90,000 miles of additional gas gathering lines subject to the agency’s gas pipeline safety standards. The Trump administration’s alternative would only extend the agency’s gas pipeline safety standards to about 25,000 miles of additional gas gathering lines greater than 12 inches in diameter.

The GPAC’s decision to back more ambitious rules for rural gas gathering lines could represent a dramatic turning point for the industry. Most of the nation’s gas gathering infrastructure has remained outside the reach of PHMSA’s jurisdiction for decades, due to a long-standing statutory exemption and the absence of sufficient safety data to justify federal regulations.

But the emergence in recent years of larger-diameter, higher-pressure gas gathering lines in the nation’s shale plays has raised concerns about the need for new safety standards and reporting requirements. Whether those concerns warrant the expansive rules contemplated by the GPAC, which would extend PHMSA’s safety standards to approximately 32,000 miles of 8-inch-diameter gas gathering lines in sparsely populated rural locations, will likely remain the primary point of contention throughout the remainder of the rulemaking process. …

July 26, 2019

Behind the hype: Adding context to autonomous vehicle commercialization

Smart Business

(by Jayne Gest with Justine Kasznica and Timothy Goodman)

At times, automated vehicles (AV) have dominated the headlines, so it can be easy to forget that the technology is still in the early stages of development and commercialization.

Justine Kasznica, shareholder at Babst Calland, is routinely asked: Why are AV companies and their automotive partners missing their stated deployment dates?

“This question raises an important point about current challenges to AV commercialization, with direct analogy to other autonomous mobility platforms, such as drones, personal delivery robots and more,” she says.

Some resources are being held back by the industry because of regulatory uncertainty, safety and security concerns, and the need for infrastructure that supports the technology, says Timothy Goodman, shareholder at Babst Calland.

“Even in view of this, progress is happening, particularly with regard to electrification and advanced driver-assistance systems (ADAS),” he says.

Smart Business spoke with Kasznica and Goodman, in the firm’s Mobility, Transport and Safety practice group, about AV development and commercialization.

Why should business executives stay aware of AV and other mobility development?

Automation has penetrated every segment of industry. In fact, warehousing, shipping, logistics and transportation are becoming more automated at a greater pace than ever before. In the future, whether it’s a drone, a legged robot or a wheeled delivery vehicle that solves the last mile problem, nearly every business will be impacted by AV. In addition, there’s plenty of opportunity to participate in this mobility evolution, even if it’s indirectly.

How is regulatory uncertainty playing a role in AV commercialization?

The federal government controls motor vehicle safety, with input from the automotive industry. …

July 15, 2019

The Expected and Unexpected of Working with Artificial Intelligence

Legaltech News

(By Christian A. Farmakis)

Stories of how AI will change the legal ecosystem forever are endless, yet ‘rubber meets the road’ proof that this is actually happening are few and far between. Here’s what one firm learned about knowing what AI can do and what they didn’t know it could do.

Like many law firms, Babst Calland is acutely focused on providing the best client service. However, pick up any corporate counsel survey and you quickly realize that the lack of quality legal service delivery by outside counsel is the number one point of dissatisfaction by GCs. While there’s disagreement between firms and clients about the degree of top-notch service delivery, there’s absolute agreement in identifying technology as the greatest service and innovation accelerator.

Enter artificial intelligence and machine learning, the proverbial silver bullets for every law firm looking to ‘do more with less’ and satisfy every client need. Stories of how AI will change the legal ecosystem forever are endless, yet ‘rubber meets the road’ proof that this is actually happening are few and far between. In fact, according to a Bloomberg Law survey on the state of legal operations and legal technology released during the recent Corporate Legal Operations Consortium (CLOC) Institute annual meeting, less than 25 percent of survey respondents indicated that they are using legal technology with artificial intelligence or machine learning. And of those deploying AI, I guarantee not all are game changing.

Our firm, along with our affiliate technology division Solvaire Technologies, are not only AI believers but after exhaustive AI tool evaluations, trials, and numerous AI projects under our belt, we have become our clients’ go-to resource in how we can leverage AI for their benefit. …

July 11, 2019

Major title issues in Pennsylvania, West Virginia and Ohio: Allocation wells royalty disputes, frac hits and water rights

The PIOGA Press

(The 2019 Babst Calland Report)

This article is an excerpt of The 2019 Babst Calland Report, which represents the collective legal perspective of Babst Calland’s energy, environmental and pipeline safety attorneys addressing the most current business and regulatory issues facing the oil and natural gas industry. A full copy of the report is available by writing info@babstcalland.com.

 Pennsylvania

 Emerging trend of allocation wells and cross unit drilling in the Appalachian Basin

 Allocation wells and cross unit drilling have the potential to create more economic wells using longer laterals, while overcoming unit size limitations commonly found in oil and gas leases. An allocation well is a lateral wellbore that crosses multiple lease boundaries of tracts that have not been pooled or unitized. Similarly, cross unit drilling involves laterals that traverse multiple units.

The use of allocation wells and cross unit drilling in Texas and Oklahoma has evolved out of legislation, administrative rulings and case law. Allocation drilling and cross unit drilling are not yet widely used in the Appalachian Basin, but as drilling technology evolves it is likely that operators will look to the feasibility of employing that technology across the basin.

The biggest risk with allocation wells in the Appalachian Basin is the lack of specific authority under most standard Appalachian Basin leases granting the operator the authority to drill allocation wells. Consequently, possible claims might be asserted challenging an operator’s transportation of non-native gas across leased lands or the commingling of native and non-native gas produced from separate units or leases. Another issue associated with the potential use of allocation wells is determining the appropriate method of allocating production royalties between the different lessors. …

July 3, 2019

Crossroads helps students reach their full potential

Pittsburgh Catholic

(by Paula A. Smith)

Dwayne Coleman, 24, speaking to a group of graduates at a college signing ceremony in May, said that if someone had told him as a teenager that he would travel to China and teach English he would have never believed them.

But with help from the Crossroads Foundation, his mother and the staff at Cardinal Wright Regional School, he came to believe in his academic abilities and potential for success.

Coleman, who was raised by a single mother with two younger children on Pittsburgh’s North Side, graduated from Central Catholic High School in 2012, thanks to assistance from Crossroads.

For the past nine months he worked with the Rand Corp. on the Phresh Project for Pittsburgh Hill/Homewood Research on Neighborhood Change and Health.

“Crossroads really fosters a sense of community,” Coleman said. “It’s easy for students like us to feel out of place because of having a lower socioeconomic background or for being disadvantaged students. But Crossroads provided financial support and tried to make sure the emphasis was on the whole person.”

The Crossroads Foundation is an organization like no other in Pittsburgh. It is a college preparatory program that began with 11 students in 1988 and recently celebrated its 30th academic year with 580 alumni.

Crossroads provides an integral approach committed to helping promising students of all ethnicities with a limited income to obtain a quality Catholic high school education and receive academic support to attend college. Students do not need to be Catholic.

Esther Mellinger Stief, executive director of Crossroads, said, “I make sure Crossroads keeps its commitment to every scholar of providing financial support, but more than that, the opportunities these young people need to fulfill their potential. …

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