AMM Blog

Welcome to the AMM Law Blog, a tool to help you keep up to date on current legal developments over the broad spectrum of our practice areas.  We welcome your comments and suggestions to create a dynamic forum that will be of interest to readers and participants.

It’s the hardest advice to give; do nothing.  As lawyers, we envision ourselves as problem solvers.  It’s our job to take on a client’s problem, real or perceived, and seek to find a solution.  We listen, we evaluate, we plan.  We apply our knowledge of the law, our experience and our judgment to develop a strategy to best address our clients’ concerns and maximize potential outcomes.  We are often type “A” personalities.  We are drawn to action.

So it makes sense that the hardest advice for a lawyer to give is to do nothing; to maintain the status quo, to grin and bear it, to forego that argument or claim. Sometimes, however, to do nothing is exactly what a situation requires.         

For example, consider the small business with two equal owners both of whom are “involved” but to differing degrees.  Each invariably believes the success of the business is primarily the result of their effort as opposed to the efforts of their co-owner.  Should they separate?  Dissolve the business?  Sometimes the answer is certainly yes, but just as often the answer is no.  The cost of the dispute, not only in terms of money spent but also revenue and opportunity lost, must be considered.   It may even be that the co-owners’ combined respective skills are what drove the success of the business and that combination may be lost forever.   Business factors such as proprietary trade secrets or exclusive trade agreements may render separation for value impossible.  There is rarely a quick resolution to a business control dispute.

Similarly, when considering litigation, a party must consider whether litigation is actually in their best interest and not an emotional reaction.  Whether claimant or defendant, the economics of litigation, success or failure, must be considered.  Sometimes, however, the litigation economics form only part of the story.  A business owner must also consider the business management distraction that litigation may cause, disharmony or disunity in the work force as employees and management personnel take up sides, or even the impact on customers and clients.  A further concern is the question of how that portion of the public which becomes aware of the dispute - or even which must become aware of that dispute for business reasons – might perceive the respective positions of the parties.   In some cases, litigation may force clients and customers to become concerned for their own business, thus creating significant stress on the relationship.     

Tax reporting obligations are another area ripe with conflict.   Often times an analysis of a business control dispute or damages evaluation in litigation will involve analysis of financial and tax reporting.  A party must consider whether tax and financial reporting is consistent and that the facts as reported substantiate the position espoused by the party.  In the litigation process, we often encounter all manner of tax financial recordkeeping and reporting issues; inaccurately reported income, misdirected payments, mischaracterized expenses and inventory value manipulation just to name a few.  The parties to any dispute must consider the implications of public disclosure and avoid “taxicide”.        

Many business relationships disintegrate to the point where continued co-existence is untenable and intolerable. In many cases, there are legal mechanisms that can be brought to bear to induce a change.  A business owner is wise to consult with experienced professionals so as to evaluate the broad ranging ramifications of a particular strategy before embarking on what could be a dangerous or damaging path.  Sometimes it is best to do…nothing.        

RETALIATION CLAIMS: EMPLOYERS BEWARE!

Written by Michael Klimpl Friday, February 21 2020 13:55

Most employers these days are aware of the many workplace claims an employee might bring, including allegations of discrimination on account of race, color, religion, sex, national origin, sexual orientation, pay, age, or disability. Among other claims are those brought under the Fair Labor Standards Act (minimum wage, overtime) and the Family Medical Leave Act.

Employers paradoxically seem less aware of a retaliation claim an employee may bring.  Paradoxically, because as reported by the Equal Employment Opportunity Commission (“EEOC”-the federal agency responsible for enforcing laws prohibiting employment discrimination), retaliation claims constituted the highest percentage of all charges filed in its fiscal year 2019.

Moreover, as discussed below, retaliation claims, by which an employee can obtain the same remedies as discrimination claims, are often easier for an employee to prove.  

A recent opinion by the United States Court of Appeals for the Third Circuit (covering Pennsylvania) illustrates what an employee must do to state a case for retaliation and how an employer might defend the action.    

In Pennsylvania, the paramount concern in a child custody proceeding is the best interest of the child. In determining the best interest of the child, courts engage in a comprehensive analysis of the factors outlined in 23 Pa.C.S.A. § 5328.  Pennsylvania Health and Safety Statute §10231.2013 states that the use of medical marijuana in accordance with state laws is not a consideration by itself in a custody case. The custody laws have not been amended to address the issue or make similar limitations regarding the use of medical marijuana by a parent.

On December 18, 2019, however, the Superior Court of Pennsylvania issued an opinion affirming an April 5, 2019 Schuylkill County Court of Common Pleas decision limiting self-represented Father’s contact with son, age 10, to periods of supervised physical custody. The case involves a child born in May of 2009 to Mother and Father, both who have struggled with substance abuse. The court noted that Father’s recreational use of marijuana has been a recurring issue throughout the custody litigation. Father obtained a medical marijuana license when the parties were living in Georgia. At the time of the hearing, the child’s maternal grandparents had primary physical custody of the child. The trial court had awarded maternal grandparents primary physical custody of the child adding a provision that conditionally extinguished Father’s supervised custodial time “upon Father’s willingness to demonstrate sobriety and continued abstinence.”

Father argued that in light of his license to use medical marijuana as a mechanism to manage his wrist pain, the trial court should not weigh the fact of his medical use against him. The trial court rejected Father’s argument and reinstated the prior custody arrangement and the hair-follicle-testing condition. The trial court reasoned that it is unknown to the Court what effect, if any, Father’s alleged medical condition and use of marijuana, whether prescribed or used recreationally, may have on his ability to care for a child. Father appealed, and the Pennsylvania Superior Court affirmed the trial court’s decision.

The Superior Court noted that the Medical Marijuana Act prohibits the fact-finder from penalizing a parent simply for using medical marijuana. However, in the instant case, the trial court concluded after a consideration of all of the best-interest factors and the evidence presented, that it was not in the child’s best interests to expand Father’s supervised partial custody to unsupervised overnight custody without requiring Father to continue to submit to the previously-ordered drug screening regimen. The Medical Marijuana Act does not preclude the court from making relevant findings concerning effective marijuana use, medical or recreational, on parent’s ability to care for a child. The Superior Court noted that the fact finder should consider not only the parent’s history of drug and alcohol use, but also the parent’s mental health and physical condition that might require the parent to rely on prescribed medication to subdue that pain. The Court concluded that a parent’s history of drug and alcohol abuse, including a parent’s legal use of any substance, should be considered in determining the child’s best interest.

On January 1, 2020, a new change to Pennsylvania’s Inheritance Tax Law became effective for decedents who pass away as of that date and leave assets to children under the age of twenty-one (21). Under the new law, inheritances from parents to children under the age of 21 will now be taxed at a zero percent rate, effectively passing inheritance tax-free.

Pennsylvania is one of six states that assesses an inheritance tax on the transfer of assets from a decedent to his or her heirs. Pennsylvania’s Inheritance Tax is applied to a decedent’s probate and nonprobate property, including real property based in Pennsylvania, cash accounts, IRAs, 401ks, and joint property. Out of state real property and life insurance proceeds are exempt from Pennsylvania Inheritance Tax.

The rate of Inheritance Tax depends on the relationship between the decedent and the recipient of the property. Under Pennsylvania’s prior Inheritance Tax law, transfers to all descendants, including children, stepchildren, and grandchildren, were taxed at a 4.5% rate. Now, with the new Inheritance Tax law becoming effective, transfers from a parent or stepparent to a child (including an adoptive child) or stepchild who is under the age of 21 on the date of the parent or stepparent’s death will be taxed at a zero percent rate. It is important to note that this new law only applies to transfers from a parent or stepparent to a child under the age of 21; transfers to all other descendants (including from grandparents to grandchildren under the age of 21) will continue to be taxed at the 4.5% rate.

As for other Inheritance Tax rates, they remain unchanged, so: transfers from a decedent to his or her surviving spouse are taxed at a zero percent rate, while transfers to siblings are taxed at 12%. Transfers to all other individuals are taxed at a rate of 15%. Finally, any distributions left to a charity are exempt from Pennsylvania Inheritance Tax.

The holiday season can be a stressful time of the year, especially for children whose parents have recently separated or have a tense custody arrangement.  I often remind my clients to keep in mind that the children have not asked to be put in this position, and parents should do all they can to ensure a happy and stress-free holiday for their children. After all, the children should be the focus in the holiday season.  Here are some tips to help reduce tensions for your children over the  holiday season . 

1. Make it clear to your children that you are genuinely happy for them to spend time with the other parent.

2. Help them make cards and gifts or take them out to buy something for the other parent.  It doesn’t have to be extravagant, but this small gesture will go a long way in bringing happiness to your children, and hopefully foster more civility with their other parent. The children will be excited that they have a gift to give,  and hopefully the other parent will reciprocate in the future.

3. If your children are having fun at the other parent’s house, spending time with family they haven’t seen in some time, and want extra time with that family, consider allowing them to spend a little extra time before you pick them up, especially if your plans are flexible. 

4. Don’t cancel Christmas or Hanukkah. Some parents decide that because they are not going to have their children at a specific time on the holiday, they are not going to celebrate this year. The only ones hurt with this approach are your children, who – after all -  did  not ask to be subject to a custody order. Make it clear to your children that you were excited to celebrate with them, and that you will be celebrating when they are back at your house. That will also give them peace of mind to enjoy the holiday more when they are with the other parent free of guilt and worry that you are sitting home alone and sad since they are not there with you.

5. Make sure you look at the custody order in advance. If you have any questions make sure to have those questions answered by your attorney or resolved in a discussion with the other parent well in advance to avoid disputes on  the eve of the holiday .

If your children see that you are happy to celebrate the holiday, no matter what the schedule is, that will allow them to more fully enjoy the holiday as well.

Wish you and your family a very happy holiday season.

As a business lawyer, I have spent years counseling small to mid-sized companies across a wide range of industries.  I have advised clients on routine to complex business legal issues that arise during the start-up stage through operation and growth stages, and have structured many exit strategies and created successful succession plans in various ownership documents.  What I love best about providing sound legal guidance to business owners through the life cycle of their business is helping them solve issues that arise both from a legal perspective and also from a financial perspective.  Helping clients navigate through contractual, employment, finance, IP protection, and other daily issues so they can focus on achieving their goals of growth, maximization of profits, and sustainability, all while minimizing their potential for risk and exposure is a vital objective in my practice. 

I have recently been invited to participate for the next several weeks as an advisor in an exciting new local event – The Spark Bowl.  Co-sponsored by Delaware Valley University, it’s Small Business and Entrepreneurship Center and the Central Bucks Chamber of Commerce, this event is a local competition aimed at fostering innovation, growth, and entrepreneurship.   At the First Annual Spark Bowl event to be held on December 11th, students and local entrepreneurs in and around Bucks County will “pitch” their businesses plans to Spark’s judges, who will select a winner who will receive prizes and benefits to include monetary funding as well as access to expert advisors.  The contest will be judged by experienced investors who have a desire to support innovation and economic growth and prosperity within the local community.  As part of DelVal’s experiential learning program, DVU student teams will work with final contestants to prepare for the competition under the guidance of DelVal faculty and SBEC advisors.  Professor William Viel of DVU’s Business and Information Management Department is the Director of the SBEC.  It is quite a valuable resource to this community to have such an incubator right here in Central Bucks. Please click here to learn more about The Spark Bowl at Delaware Valley University.

After many years of working with business owners, some who were successful, and some who were not, it seems evident that the best predicator of sustainable business growth and success is: planning by asking the right questions up-front; creating detailed business plans and product or service models; determining the expected demand for their product or service in a low or highly competitive market; understanding both traditional and non-traditional financing alternatives; putting together the right team of professionals to help them produce, deliver and promote their business and its products/services; dealing with operational challenges and various levels of legal compliance properly, all while being willing to assess weaknesses and promote strengths.

The Spark Bowl has inspired me to remind my clients to think about why they are doing what they are doing, as they work through the day-to-day challenges (legal and otherwise) of operating and sustaining a business they built and love.

Good Luck to all the participants on December 11th!     

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