Articles, Alerts & Perspectives

The Legal Intelligencer

(by Carla Voigt and Molly Meacham)

Recent guidance from two federal agencies indicates a push by the current administration toward classifying gig economy workers as independent contractors under federal workplace laws. Last month, the Department of Labor’s Wage and Hour Division (WHD) and the National Labor Relations Board (NLRB) each authored guidance declaring certain workers in the gig economy independent contractors, rather than employees.

In an opinion letter issued on April 29, the WHD analyzed whether workers for an unnamed “virtual marketplace company” (VMC) are employees or independent contractors under the Fair Labor Standards Act (FLSA). In refining the definition of independent contractor, the WHD focused on the economic reality test, which considers the totality of the circumstances to determine the degree of economic dependence the worker has on his employer. The WHD opinion letter describes workers’ “economic dependence” on businesses as “the touchstone of employee versus independent contractor status” and evaluated the nature of the relationship using the existing six-factor test previously developed by the U.S. Supreme Court in Rutherford Food v. McComb, 331 U.S. 722, 729 (1947).

Shortly after the WHD issued its opinion letter, in May the NLRB published its own advice memorandum dated April 16, in which it declared a group of Uber drivers to be independent contractors under the National Labor Relations Act (NLRA). Applying the board’s SuperShuttle classification test, the NLRB determined that the drivers have “significant opportunities for economic gain and, ultimately, entrepreneurial independence.” Accordingly, the NLRB opined that the drivers were properly classified as independent contractors and therefore not eligible to unionize under the NLRA. These publications indicate a significant trend by the current administration in favor of classifying workers as independent contractors. …

Smart Business

(by Jayne Gest with Chris Farmakis)

Artificial intelligence (AI) is adding efficiencies and transforming businesses everywhere, and legal practices are no exception.

“General counsels and executives that are hiring lawyers need to understand that this technology is available now, so they can make sure their lawyers leverage the latest technology tools,” says Christian A. Farmakis, shareholder and chairman of the board at Babst Calland. “AI can increase speed, increase efficiency and lower costs for clients — if the law firm has the right tools, but more importantly knows how to use those tools.”

Smart Business spoke with Farmakis about the advancement of AI technology in the legal space, which business executives may want to take advantage of.

How is AI technology disrupting the legal industry?

AI is a term generally used to describe computers performing tasks normally viewed as requiring human intellect.

AI legal technology won’t replace lawyers, but these tools will drastically change the way lawyers provide services for their clients. While estimates vary, 23 percent to 35 percent of a lawyer’s job could be automated. As a result, lawyers will need to be more strategic and supervisorial, able to act as project managers and supervise the information being fed into systems, and knowledgeable about the assumptions underlying the machine learning algorithms.

So far, projects that classify data have been impacted the most, allowing those projects to be done faster and more efficiently. This includes:

• E-discovery.
• Due diligence.
• Research.

Law firms can already pass these savings on to clients, but this is only the beginning of the transformation.

What will be the next wave of AI legal technology? …

The PIOGA Press

(by Keith Coyle)

On April 10, President Donald Trump signed an executive order, “Promoting Energy Infrastructure and Economic Growth.” In addition to outlining U.S. policy toward private investment in energy infrastructure and directing the U.S. Environmental Protection Agency to take certain actions to improve the permitting process under the Clean Water Act, the executive order instructs the U.S. Department of Transportation (DOT) to update the federal safety standards for liquefied natural gas (LNG) facilities.

The executive order notes that DOT originally issued those safety standards nearly four decades ago and states that the current regulations are not appropriate for “modern, large-scale liquefaction facilities[.]” Accordingly, the executive order directs DOT to finalize new LNG regulations within 13 months, or by no later than May 2020, an ambitious deadline given the complex issues involved and typical timeframe for completing the federal rulemaking process.

Why does dot regulate LNG safety?

The LNG industry has a long history in the United States. The first LNG plant went into service in West Virginia in the World War I era, and a commercial liquefaction plant in Cleveland, Ohio, went into operation in the 1940s. In 1944, the Cleveland plant experienced an LNG tank failure that led to a fatal explosion and fire and resulted in extensive property damage. The first commercial shipment of LNG by vessel occurred 15 years later, in 1959, when the Methane Pioneer sailed from Louisiana to the United Kingdom. Several large-scale LNG terminals were constructed during the late 1960s and 1970s in places like Alaska, Louisiana, Georgia, Maryland, and Massachusetts, a period that coincided with DOT’s initial efforts to establish federal safety standards for LNG facilities.

In the Natural Gas Pipeline Safety Act of 1968, Congress authorized DOT to prescribe and enforce minimum federal safety standards for gas pipeline facilities and persons engaged in the transportation of gas. …

The PIOGA Press

(by Jean Mosites)

In May 2016, various environmental groups, including the Environmental Integrity Project and the Natural Resources Defense Council, filed a lawsuit in federal court alleging that the United States Environmental Protection Agency failed to evaluate its regulations for managing wastes associated with oil and gas development activities as non-hazardous under Subtitle D of the Resource Conservation and Recovery Act (RCRA). The suit alleged that EPA had a non-discretionary duty under RCRA to periodically review and, if necessary, revise its Subtitle D regulations for solid waste disposal facilities and state solid waste management plans with respect to oil and gas development wastes. It further alleged that EPA had not done so since 1988 and that EPA should be ordered to conduct a subsequent review. The 1980 Bentsen Amendment to RCRA had exempted oil and gas wastes from regulation under RCRA Subtitle C as hazardous waste and permits regulation of such wastes under Subtitle D as non-hazardous. Earlier, EPA had declined a 2010 petition by NRDC requesting E&P waste be regulated as hazardous under Subtitle C.

The May 2016 lawsuit was resolved in December 2016 through the entry of a consent decree in which EPA agreed to either propose revisions to its Subtitle D regulations for oil and gas wastes or make a determination that revision of such regulations is unnecessary by April 23, 2019. On April 23, EPA determined that revising its Subtitle D regulations was not necessary.

To arrive at its determination, EPA examined regulatory programs in states such as Pennsylvania accounting for the vast majority of oil and gas production in the United States. EPA reviewed current waste management practices, waste characteristics, and E&P waste release/spill incidents in these states. …

WASHINGTON, DC and PITTSBURGH, PA – May 13, 2019 – Babst Calland announced today the lateral move of Gina Falaschi, who joined as associate in the firm’s Washington, D.C. office in the Environmental, Mobility, Transport and Safety, and Litigation practice groups.
Ms. Falaschi’s move to Babst Calland, along with Julie Domike, another seasoned environmental attorney who recently joined Babst Calland as shareholder in late April, further represents the firm’s commitment to meet clients’ needs related to environmental and emissions mobile source services before EPA, the California Air Resources Board, and other regulatory agencies as a part of its best-in-class team.
Ms. Falaschi provides advice to clients in the energy, transportation, and technology sectors regarding environmental regulatory compliance.  She has assisted companies with disclosure of regulatory violations to state and federal agencies, and has counseled clients in negotiations with the U.S. Department of Justice, U.S. EPA, and California Air Resources Board. In addition to counseling on compliance issues, she has worked with technology and energy companies in developing new projects and has advised clients on regulatory issues arising from joint ventures, mergers, and acquisitions.
She has litigated cases in federal court, represented clients in administrative cases before various federal agencies, and has experience with administrative rule challenges before the U.S. Court of Appeals for the District of Columbia Circuit.  Ms. Falaschi is admitted to practice in the District of Columbia, California, U.S. Court of Appeals for the District of Columbia Circuit, and U.S. District Court for the Eastern District of California.
Ms. Falaschi earned her J.D. from Georgetown University Law Center in 2016 and her A.B., magna cum laude, from Georgetown University in 2013.

WASHINGTON, DC and PITTSBURGH, PA – May 6, 2019 – Law firm Babst Calland today announced the lateral move of Julie Domike, a veteran environmental attorney, who joined the firm’s Washington, D.C. office as shareholder, effective April 29.

Ms. Domike will provide senior-level legal counsel in key practice areas including Environmental, Mobility, Transport and Safety, and Litigation. Ms. Domike has represented numerous clients across the country in complex negotiations with the U.S. Department of Justice and EPA, resulting in global settlements affecting multiple company facilities. Much of Ms. Domike’s practice involves permitting and other issues under the Clean Air Act, addressing issues associated both with mobile and stationary sources.  Ms. Domike has worked with companies engaged in developing new projects or modifying existing plants, and she has worked with clients on environmental audits and subsequent correction and disclosure to state and federal environmental agencies.

Having previously served as an attorney and manager at the United States Environmental Protection Agency (EPA) Headquarters, Ms. Domike understands the Agency’s enforcement approach and counsels clients to engage with EPA in rulemaking, and enforcement. She has represented a variety of companies that have been the focus of EPA’s regulations, including refineries, engine manufacturers, independent power producers, chemical plants, fuel producers, and construction and farm equipment makers.

Commenting about this lateral move to the Firm, Donald C. Bluedorn II, managing shareholder of Babst Calland, said, “We are very pleased to welcome Julie to our Firm and to our established team in Washington, D.C. She is a natural fit for us and her experience further complements the existing synergies that we offer clients, particularly in the Energy, Mobility, and Transportation industries.”

Julie Domike’s arrival at Babst Calland also represents sustained growth in the Mobility practice, led by Firm shareholder Tim Goodman, responding to our clients’ requests to provide environmental and emissions mobile source services before EPA, the California Air Resources Board (CARB), and other regulatory agencies as a part of our best-in-class team. …

The Legal Intelligencer 

(by Molly Meacham)

One of the key questions for any dispute is forum. Most parties are limited to selecting from the available court or courts provided by state and federal law as a function of jurisdiction and venue. Some contracting parties choose the courts of a particular forum in advance as part of their agreements. Other businesses and individuals take it a step farther and choose to opt out of the courts entirely by agreeing to resolve some or all of their disputes through arbitration.

There are aspects of arbitration that may be advantages or disadvantages, depending upon your viewpoint: privacy, typically faster resolution and streamlined discovery, lack of a jury’s emotion in the verdict and limited appellate rights. In addition, arbitration can have significantly higher up-front forum costs in the thousands of dollars, as compared to the relatively low forum cost in the hundreds of dollars to file a complaint in the courts.

Given the higher forum costs, some plaintiffs—particularly those with smaller claims—may seek to bring their arbitrations as class claims. In recent years the U.S. Supreme Court has addressed several questions relating to arbitrability of class claims. In Stolt-Nielsen v. AnimalFeeds International, 559 U.S. 662 (2010), the Supreme Court prohibited class arbitration where the agreement is silent on whether the parties agreed to classwide arbitration. On April 24, the Supreme Court released its opinion in Lamps Plus v. Varela, No. 17-988, __ U.S. __ (2019), extending the holding of Stolt-Nielsen to also bar class claims where the agreement is ambiguous on whether the parties agreed to classwide arbitration.

In 2016, a malicious hacker used a phishing and social engineering scheme to convince one of the employees of Lamps Plus to send that hacker the W-2 forms of over 1,000 of the company’s employees. …

Smart Business

(by Jayne Gest with Kevin Wills)

Founders should understand that choosing a business entity isn’t one size fits all. That’s why founders should consult with legal and tax advisers to make sure that they choose the entity that works best for their circumstances.

“A big issue is that clients don’t always consult legal and tax advisers. They Google ‘start a company’ and go with one of the first links they find,” says Kevin T. Wills, shareholder at Babst Calland.

People also will call and say, ‘I want to start a company. Everyone says I should be a Delaware corporation,’ he says. That may be the case, but it’s important to talk it through first. A different structure may be better for your business.

Smart Business spoke with Wills about legal structures for startups.

What are some potential entity types?

When starting a business, most founders tend to consider three options.

• C corporation (C-corp). A traditional corporation that is run by a board of directors, owned by stockholders and subject to federal income taxation.
• Limited liability company (LLC). More of a contractual arrangement that is governed by an operating agreement and offers pass-through taxation.
• S corporation (S-corp). This is a corporation, but the company’s revenue passes directly through and is only taxed at the shareholder distribution level.

What about limited partnerships (LPs)?

LPs are still prevalent in certain industries, but LLCs have limited the utility of LPs. Generally, you can structure an LLC to operate like an LP, where a board of managers runs the company and members are passive investors who get distributions. …

The Legal Intelligencer

(by Blaine Lucas and Alyssa Golfieri)

Defenses or claims based in equity have long been recognized by Pennsylvania courts in zoning and other land use matters. There are three main equitable theories, all of which bar a municipality from enforcing its land use regulations and permit property owners to continue a use or activity in violation of applicable ordinances—equitable estoppel, vested rights and variance by estoppel. Pennsylvania courts consider all three theories unusual remedies that should only be granted in the most extraordinary of circumstances, as in Lamar Advantage GP v. Zoning Hearing Board of Adjustment, 997 A.2d 423 (Pa. Commw. Ct. 2010). These three theories are closely related and the elements of each vary only subtly.

Equitable Estoppel

The doctrine of equitable estoppel applies when:

• The municipality intentionally or negligently misrepresented a material fact;

• The municipality knew or had reason to know that the property owner would justifiably rely on the misrepresentation; and

• The misrepresentation induced the property owner to act to his detriment because of his justifiable reliance, as in Cicchiello v. Bloomsburg Zoning Hearing Board, 617 A.2d 835, 837 (1992).

The Commonwealth Court has consistently held that the theory of equitable estoppel cannot be relied upon to provide relief when the property owner asserting it “knew or should have known that the alleged promisor was without authority to effectuate the alleged promise,” as in DiSanto v. Board of Commissioners, 172 A.3d 139 (Pa. Commw. Ct. 2017). For example, a property owner cannot reasonably rely on the statement of an appointed official when the property owner knew, or should have known, that the official does not have the authority to bind the municipality with his statements.  …