Facebook is taking certain steps to prevent infringement of intellectual property through “name-squatting.” In connection with this, Facebook is allowing Federally registered trademark holders to prevent the registration of usernames that would infringe their intellectual property rights.

There is a link to the form on Facebook’s Web site if you want to complete the form yourself. You will need the trademark registration number and the exact wording of the trademark as registered.

For more information, or to protect your trademark, please contact Pamela Baxter at pamela.baxter@keanmiller.com (225.389.3761) or Russel Primeaux at russel.primeaux@keanmiller.com (225.382.3454).

June marks the beginning of Hurricane Season and should serve as a reminder to review your personal and business property insurance coverage. The effect of recent Hurricanes on the Gulf Coast generally and Louisiana specifically have been significant with respect to both damages and the insurance covering those damages.

The losses caused by the 2008 Hurricanes in South Louisiana will make property insurance renewals more difficult and expensive. Coverage provided by many property carriers is expected to be narrowed and subjected to higher named storm deductibles.

Beginning the renewal process on property coverage at least 120 days in advance of the renewal date is advised to ensure a fair opportunity to negotiate acceptable terms and to avoid unpleasant surprises such as excessive rate increases and non-renewals.

When purchasing property insurance an insured should also remember that Business Interruption Insurance is usually included in property insurance coverage. Business Interruption Insurance comes in many forms and must be specifically purchased in most cases as an additional coverage under a property policy. Understanding the different type of business interruption coverage is important and may be the difference between a company surviving or not surviving a catastrophic loss.

A comprehensive legal review of your insurance programs including your property insurance is recommended on a regular basis.   

The judge overseeing Chrysler LLC’s bankruptcy entered an order on June 1, 2009 approving Chrysler’s motion seeking permission to sell substantially all of its assets to a new company.  The procedure by which this sale was accomplished, and by which a similar sale in the GM bankruptcy will likely be accomplished, is known in the bankruptcy and finance worlds as a “363 Sale,” after the relevant provision of the U.S. Bankruptcy Code.

(For those well-versed in 363 Sales, see Stephen Sather’s thoughtful post about practical and ethical concerns with the Chrysler sale here. )

Companies outside of bankruptcy that have strong cash reserves or access to capital should look for opportunities to acquire new product lines, expand their footprint, or strengthen their intellectual property portfolio when reading headlines about troubled firms.  363 Sales are not just for multi-billion dollar bankruptcies; businesses of any size in any type of industry can sell all or part of themselves through a 363 Sale.  There are no restrictions on the type of assets that can be sold through a 363 Sale.  Inventory, equipment, patents, trademarks, customer lists, trade secrets, accounts receivable, and other rights to payment are all possibilities for a 363 Sale.  There are limitations, however, on the sale of a Debtor’s assets in which a third party has an interest.  If a third party has an interest in a particular asset, whether a security interest, lien, etc., then that particular asset may only be sold in a 363 Sale if the third party’s claim is satisfied from the proceeds, or if other criteria are met.  

Generally, the purchaser at a 363 Sale acquires only the Debtor’s rights in the asset.  For example, if the Debtor was a co-owner of an asset, then the purchaser would only obtain the Debtor’s co-ownership interest.  In some instances, however, a 363 Sale can deliver outright ownership of an asset to the purchaser even when the Debtor has only a partial ownership interest in the particular asset.  This is often an appealing solution to resolve a dispute where a joint venture sours and the partners cannot agree on price or terms to move on.  The purchaser can acquire the entire asset—including an entire operating business or just a part of one—outright instead of merely owning the Debtor’s partial ownership interest in the asset.
 

As we continue our shift to a more knowledge-based economy, frequently the greatest assets of a company reside in the creativity of its employees. This is especially true for service companies in which the services can be repeated for multiple customers (example: software). Whether or not a company owns something that has been created by one of its employees will depend to a great extent on the category of intellectual property into which the creation is classified. Generally, the creations or discoveries of employees will fall into the intellectual property categories of copyright, patent, or trade secret.

The legal standard used in determining whether a company owns a patentable invention is narrower than the “scope of employment” standard used in copyright law. For patentable inventions, the courts look to whether the employee had a “duty to invent.” We return to the above example of Mr. Jones, the dispatcher. Suppose the creation by the dispatcher was capable of patent protection. Because Mr. Jones was a dispatcher, who did not have a specific duty to invent, it is likely the company would not own any patent that might be issued to cover the invention.

For trade secrets, the law is less clear than the law for copyright and patent. Generally, trade secret law states that a trade secret will exist if the underlying information has value by not being generally known and is the subject of reasonable measures to keep it secret. Trade secrets are normally the property of the company, and not the individual employees. However, as a practical matter trade secrets are harder to control than patents or copyrights. If an employee maintains a list of customer contacts on her personal cell phone, and the employer does not have a specific policy stating that customer contacts are the property of the employer; it will be difficult for the employer to assert that the contact information is a company trade secret when that employee leaves the company.

Companies should use their information technology management practices to bolster the company’s trade secret practices. For example, if the sales person above had been provided a company Blackberry, and if the system ensured that all contact information was stored on company servers; the company would have a stronger basis for arguing that the customer contact information is a trade secret. The company would be in an even stronger position if it had a written policy regarding the company’s trade secret practices. Additionally, trade secret obligations should be included in employment agreements as well.

Employment agreements can also be used to clarify the company’s ownership of copyrights and patents. The company can make clear that the “scope of employment” for copyrights is considered very broad. Also, the company could impose a duty to invent on all employees. Additionally, the employee agreement can clearly state, under a simple contractual basis, that all inventions or works of authorship created by employees are owned by the company.

A company can properly protect and claim ownership over the creations of its employees. Doing so requires a knowledge of the different areas of the law that apply and appropriate company practices. Those practices should take advantage of the applicable law and should fill in the gaps where the law does not adequately address the situation.
 

A recent court case illustrates the need for having advance tax planning when selling a business. In the case of Muskat v. U.S., No. 08-1513, 103 AFTR 2d _____, the taxpayer was majority shareholder in a corporation. He and the other shareholders sold all of the stock in the corporation to a third party interested in buying the business. The buyer also agreed to pay the taxpayer $1,000,000.00 for a non-compete agreement. The transaction was documented in this manner.

After the fact, the taxpayer realized that the non-compete proceeds would be taxable as ordinary income to him. He attempted to re-characterize the $1,000,000.00 payment as the sale of his personal goodwill and claim capital gains treatment.

The IRS denied his claim for a refund and the court agreed with the IRS. The court found that the taxpayer had a significant burden of proof to overcome the manner in which the transaction was documented. The taxpayer could not overcome his burden of proving that the payment was not for his non-compete agreement given the fact that all of the documentation reflected that was the purpose for the payment.

Perhaps the result would have been different if the taxpayer had considered this issue prior to the sale and agreed with the buyer that the payment was for his personal goodwill. There have been some cases where courts have allowed shareholders to sell their “personal goodwill” as opposed to corporate goodwill when selling a business. Therefore, proper tax planning in negotiating a sale or other transaction is very important.
 

On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (the “ARRA”), the comprehensive economic stimulus package. Among its other provisions, the ARRA includes an extension of the right to elect COBRA coverage, a reduction in COBRA premiums for eligible participants, and new notice obligations for employers.

Reduction of COBRA Premium: In addition to the opportunity to elect COBRA coverage, the ARRA offers a reduction in COBRA premiums for assistance eligible individuals. Assistance eligible individuals can receive a 65% premium reduction subsidy for the cost of COBRA coverage after February 17, 2009 (the day the ARRA was signed). But the premium reduction ends upon the sooner of: the eligibility for other group coverage or Medicare; after 9 months of receiving the reduction; or when the maximum period of COBRA coverage ends, whichever occurs first. Individuals paying reduced COBRA premiums must also inform their plans if they become eligible for coverage under another group health plan or Medicare.

Assistance eligible individuals are those former employees (and members of their families) who were eligible for COBRA at anytime between September 1, 2008 and December 31, 2009, lost their job due to an involuntary termination, and who elect COBRA coverage. Assistance eligible individuals are required to pay only 35% percent of the COBRA premium. Under the ARRA, once the beneficiary pays his or her 35% of the COBRA premium, the COBRA premium is considered paid. The employer, insurer, or health plan then picks up the remaining 65% of the premium, but is allowed a tax credit against certain employment taxes. The credit can only be taken after the 35% premium has been paid. According to the IRS, if the credit claimed is greater than the tax due, the Secretary of the Treasury will directly reimburse the employer, insurer or plan for the excess. The premium reduction only applies to periods of coverage beginning on or after February 17, 2009.

Additional Notice Obligations: Finally, the ARRA requires employers or plan administrators to provide eligible employees and covered family members with notice regarding the special COBRA-election period on or before April 17, 2009. Notice must also be provided regarding the premium reduction for those who had a COBRA-qualifying event between September 1, 2008 and December 31, 2009. This notice must be sent regardless of whether COBRA coverage was elected.

The Employee Benefits Security Administration is working on guidance regarding the ARRA, and the IRS may be able to provide additional guidance. Also, model notices are expected to be issued.
 

The federal First Circuit Court of Appeals recently rejected a taxpayer’s claim for a refund based on recharacterization of a payment for a non-competition agreement. Muskat v. United States, 2009 WL 211067 (1st Cir. 2009).

In connection with the sale of a business structured as an asset sale, the Buyer and the CEO (who was also the largest shareholder of the Seller) agreed in definitive documents that $1.0 million of the retained CEO’s new compensation package would be allocated to his non-compete covenants. Although the CEO initially recorded that payout as ordinary income for his 1998 taxes, in 2002 he filed an amended return for 1998, recharacterizing the $1 million payment as consideration of his personal goodwill, which he argued entitled him to capital gain treatment (which would have entitled him to a refund of over $200,000). The IRS denied Muskat’s request so he brought an enforcement action against the IRS. The district court, too, denied his request, finding that Muskat lacked “strong proof” that the non-competition payment was intended as payment for personal “goodwill” rather than as a covenant not to compete.
 

This case, however, raises a point of consideration for drafters and parties to non competition agreements and asset purchase agreements where one of the primary assets is goodwill. Although Muskat had to overcome a significant burden (of strong proof) to reverse the IRS qualification, the First Circuit did note that the compensation under the agreement expressly was for Muskat’s promise not to compete against the Buyer and “to protect [the target’s] goodwill.” Query whether Muskat would have prevailed if the documents allocated a portion of the consideration paid to his personal goodwill. Companies and individuals dealing in non-competition agreements in connection with the sale of a business or goodwill should consult a tax professional for advice about these issues.
 

Offers and sales of “securities” must be registered unless there is an applicable exemption from the federal and state securities laws. The most commonly known exemption is the private placement exemption set forth in Regulation D promulgated by the Securities and Exchange Commission under the Securities Act of 1933 (and corresponding private placement exemptions under applicable state “blue sky” laws).

Regulation D was primarily designed to facilitate capital raising transactions, as opposed to employee stock option or stock purchase plans. Many people are unaware that when an employer (or controlling Shareholder) sells stock to an employee (even at a discount, or even if to an executive), such a sale is subject to the securities laws and applicable federal and state exemptions from registration must be found.
 

In 1988, the SEC adopted Rule 701 which exempts from registration securities issued pursuant to a written compensatory employee benefit plan or written contract by a nonreporting (i.e., privately held) company. An employee benefit plan includes any purchase, savings, option, bonus, stock appreciation, profit sharing, thrift, incentive, pension, or similar plan. The participants in the plan (or party to the contract) must be employees, directors, general partners, trustees (if a business trust), officers, consultants, or advisers.

The plan or the contract setting forth the arrangement must be in writing and a copy must be given to the employees. The exemption is available only to the securities offered or sold by the issuer, which means the employee must find another exemption for their resale.

Rule 701 contains a limitation on aggregate sales price or amount sold in any consecutive 12-month period based upon the greatest of $1 million, 15 percent of the company’s assets, and 15 percent of the outstanding securities of the class.

Rule 701 also contains a disclosure requirement. The disclosure requirements apply only if the aggregate sales price or amount of securities sold during any consecutive 12-month period exceed $5 million. Subject to that qualification, an issuer relying upon Rule 701 is required to provide to investors, a reasonable period of time prior to sale, (1) a copy of the plan or contract; (3) a copy of the summary plan description required by ERISA or, if the plan is not subject to ERISA, a summary of the material terms of the plans; (3) information concerning risks associated with the securities sold; and (4) financial statements required by Part F/S of Form 1-A as of a date no more than 180 days prior to sale. Providing financial statements would be difficult for some issuers since, even though the statements do not have to be audited unless the issuer otherwise has audited statements available, they must be prepared in accordance with GAAP. It should err on the side of caution and make the required disclosures if there is a possibility that sales will exceed the $5 million limitation.

State Law

Until recently, Louisiana did not exempt sales of stock by employers to employees unless the sale was effected pursuant to a special type of stock option plan or pursuant to a stock purchase plan qualified under the Internal Revenue Code of 1986 (as amended), as Louisiana did not automatically exempt all types of transactions exempt under Federal Rule 701. Thus, unless one of the narrow Louisiana exemptions applied, privately held companies which desired to sell stock to Louisiana employees were forced to try to find another exemption, absent which they were forced to either (a) register the transactions with the Louisiana Commissioner of Securities, or (b) as was more likely the case, simply not proceed with the proposed sale to employees. However, the Louisiana Office of Financial Institutions recently promulgated a rule which provides that any transaction exempt under Federal Rule 701 is now exempt under Louisiana law. Louisiana Administrative Code, Title 10, Part XIII, § 801. A copy of the Rule can be found at www.ofi.louisiana.gov. The promulgation of this new rule has the effect of broadening the exemptions available to privately held companies which desire to sell stock to Louisiana employees.

For example, the sale of stock pursuant to a stock purchase plan (regardless of whether qualified under the Internal Revenue Code) or other written compensatory agreement which meets the requirement of Federal Rule 701 will now be exempt under Louisiana law. In addition, although Louisiana law has long exempted the issuance of stock options (and the exercise of such options) if issued pursuant to a plan which limited participation to employees only, Louisiana law did not exempt stock plans if the plan allowed for the issuance of options to non-employees (e.g., non-employee directors). Federal Rule 701 contains no such limitation with respect to option plans which authorize the issuance of options to non-employees and thus the new Rule seems to provide more flexibility for stock option plans as well.

Privately held companies which desire to sell stock or other equity ownership to one or more Louisiana employees should consider the securities laws implications of doing so before effecting any offers or sales.

Historically, the IRS has said that a disregarded entity could (and maybe should) use the owner's taxpayer identification number for income and other tax purposes. For employment tax reporting, the IRS issued Notice 99-6, 1999-1 CB 321 , which said that employment taxes for employees of a disregarded entity could be reported by a disregarded entity in one of two ways:

(1) Calculation, reporting, and payment of all employment tax obligations with respect to employees of a disregarded entity by its owner (as though the employees of the disregarded entity are employed directly by the owner) and under the owner's name and taxpayer identification number; or

(2) Separate calculation, reporting, and payment of all employment tax obligations by each state law entity with respect to its employees under its own name and taxpayer identification number.

The regulations provide the following example:

(i) LLCA is an eligible entity owned by individual A and is generally disregarded as an entity separate from its owner for Federal tax purposes. However, LLCA is treated as an entity separate from its owner for purposes of subtitle C of the Internal Revenue Code. LLCA has employees and pays wages as defined in sections 3121(a), 3306(b), and 3401(a).

(ii) LLCA is subject to the provisions of subtitle C of the Internal Revenue Code and related provisions under 26 CFR subchapter C, Employment Taxes and Collection of Income Tax at Source, parts 31 through 39. Accordingly, LLCA is required to perform such acts as are required of an employer under those provisions of the Internal Revenue Code and regulations thereunder that apply. All provisions of law (including penalties) and the regulations prescribed in pursuance of law applicable to employers in respect of such acts are applicable to LLCA. Thus, for example, LLCA is liable for income tax withholding, Federal Insurance Contributions Act (FICA) taxes, and Federal Unemployment Tax Act (FUTA) taxes. See sections 3402 and 3403 (relating to income tax withholding); 3102(b) and 3111 (relating to FICA taxes), and 3301 (relating to FUTA taxes). In addition, LLCA must file under its name and EIN the applicable Forms in the 94X series, for example, Form 941, “Employer's Quarterly Employment Tax Return,” Form 940, “Employer's Annual Federal Unemployment Tax Return;” file with the Social Security Administration and furnish to LLCA's employees statements on Forms W-2, “Wage and Tax Statement;” and make timely employment tax deposits. See §§31.6011(a)-1, 31.6011(a)-3, 31.6051-1, 31.6051-2, and 31.6302-1 of this chapter.

(iii) A is self-employed for purposes of subtitle A, chapter 2, Tax on Self-Employment Income, of the Internal Revenue Code. Thus, A is subject to tax under section 1401 on A's net earnings from self-employment with respect to LLCA's activities. A is not an employee of LLCA for purposes of subtitle C of the Internal Revenue Code. Because LLCA is treated as a sole proprietorship of A for income tax purposes, A is entitled to deduct trade or business expenses paid or incurred with respect to activities carried on through LLCA, including the employer's share of employment taxes imposed under sections 3111 and 3301, on A's Form 1040, Schedule C, “Profit or Loss for Business (Sole Proprietorship).”

These regulations do not change the fact that a disregarded entity will continue to be disregarded for other Federal tax purposes.
 

Louisiana's non-competition statute, La. R.S. 23:921, was amended effective August 15, 2008, to provide additional situations in which non-competition agreements may be enforced. The recent amendments allow for the enforcement of certain non-competition and non-solicitation agreements between a corporation and its individual shareholders; between a partnership and its individual partners; and between a limited liability company and its individual members.

As with other types of non-competition and non-solicitation agreements, we anticipate the courts will enforce only those agreements which meet the strict wording of statute. Thus, it is extremely important that special care be taken in the drafting of such agreements.

        On May 19, 2008, OSHA Directive Number 08-03 became effective. That directive provides the criteria by which OSHA will conduct the 2008 Site-Specific Targeting (“SST-08”) plan. OSHA’s SST program is the main programmed inspection plan for non-construction workplaces that have 40 or more employees.

       OSHA’s SST-08 plan has three listings of “establishments” that will be targeted. The focus of the agency’s unannounced comprehensive safety inspections under SST-08 are approximately 3,800 high-hazard workplaces contained on OSHA’s Primary List.  The workplaces on the Secondary List and Tertiary List will only be inspected pursuant to SST-08 if all of the workplaces on the Primary List are inspected. 

          The Primary List of workplaces for the STT plan for 2008 (“SST-08”) is based on OSHA’s 2007 Data Initiative. The 2007 Data Initiative is based on injury and illness data reported to OSHA for the 2006 year by 80,000 workplaces with 40 or more employees in historically high-rate industries. Appendix A to SST-08 lists the workplaces that were the focus of the 2007 Data Initiative Survey.

          The 3,800 workplaces on the SST-08 Primary List are:

(1)      those worksites that have a DART rate at or above 11.0 – any           worksite that reported 11 or more injuries or illnesses resulting in       days away from work, restricted work activities, or job transfer for      every 100 full-time employees; or

(2)      those worksites that have a DAFWII (the Days Away From Work Injury and Illness) case rate at or above 9.0- meaning 9 or more           cases that involve days away from work per 100 full-time           employees.

         OSHA will also include 175 worksites from high-rate industries that reported low injury and illness rates to OSHA on the Primary List. The purpose for inspecting those low rate workplaces is to allow OSHA to verify the reliability of claims by establishments that have achieved low DART rates. The 175 worksites are approximately 10 percent (10%) of the workplaces that meet the low rate criteria. Moreover, the low rate workplaces chosen for inspection will not be eligible for a “records only” inspection.   Also, the low rate workplaces can only be deleted from the Primary List if the Area Office determines that the establishment consists only of an office.

        Additionally, a random sample of worksites that did not provide rate information in accordance with the 2007 OSHA Data Initiative survey will also be placed on the Primary List for the SST-08 plan. The purpose of the inspections of the non-responding workplaces is to discourage employers from not responding to the data initiative surveys to avoid inspections. These establishments may not be deleted from the Primary List.

SECONDARY LIST-

          A Secondary List for worksites to be inspected under the SST-08 plan will also be created. The Secondary List will contain workplaces:

          (1)      with DART rates of 7.0 or greater, but less than 11.0, or

          (2)      with DAFWII case rates of 5.0 or greater, but less than 9.0.

          The Dart rate for the Secondary List under the SST-08 plan did not change, but the DAFWII case rate was increased to 5.0 (meaning 5 or more cases that involve days away from work per 100 full-time employees). The OSHA notice states the Area Office can obtain additional workplaces to inspect from the Secondary List “[i]f an Area Office completes its inspections of all establishments on its Primary List before the expiration of this SST program . . . .”

TERTIARY LIST-

          SST-08 also allows an Area Office that completes all of the inspection on its Primary List and Secondary List before the expiration of the SST program to obtain additional workplaces to inspect from the Office of Statistical Analysis (“OSA”). The OSA will randomly select and provide each Area Office with the number of workplaces the office requested. However, no workplace with a DART rate of 4.6 or lower and a DAFWII case rate of 2.6 or lower will be included in the Tertiary List.

SST-08 INSPECTIONS IN WORKPLACES WITH FEWER THAN 40 EMPLOYEES-

          If a workplace that is on an inspection list under the SST-08 plan has fewer than 40 employees at the time the inspector arrives on site to begin the inspection, the inspection will be conducted if:

(1)      the workplace has more than 10 employees and

(2)      its DART rate or its DAFWII case rate is at or above twice the           private sector 2006 national incidence rate- meaning that the DART          rate is 4.6 or the DAFWII case rate is 2.6. 

          Further, the inspection will also occur if there are no records available at the time of the inspection. 

OSHA’S EMPHASIS INSPECTION PROGRAM-

          In Directive 08-03, OSHA has indicated that in addition to the SST-08 program, that it will continue the use of national and local “emphasis” inspection programs to target high-risk hazards and industries. The eight National Emphasis Programs (NEPs) now focus on amputations, crystalline silica, shipbreaking, trenching/excavations, petroleum refinery process safety management, microwave popcorn processing plants, and combustible dust. Furthermore, OSHA has 140 Local Emphasis Programs (LEPs) in place at this time.   

          Additionally, OSHA runs the Enhanced Enforcement Program (EEP) that focuses on employers that repeatedly ignore safety and health obligations under the OSHA regulations. The EEP cases can result from a programmed OSHA inspection (a SST, NEP, or LEP inspection), or an un-programmed OSHA inspection resulting from imminent danger, a fatality or catastrophic incident, complaints, or referrals.

FULL CONTENT OF DIRECTIVE 08-03-

          The full text of Directive 08-03 which establishes SST-08 can be located at http://www.osha.gov/OshDoc/Directive_pdf/CPL_02_08-03.pdf. Importantly, the method for setting the inspection schedules, including deferrals, the specifications for deletions of workplaces from the inspection cycle, and the inspection procedures are located at Sections XII, XIII, and XIV, respectively in the full text. 

In New Investment Properties, L.L.C. v. ABC Company, et al, 2007 W.L. 4305464 (4^TH Cir. 2007), the Court of Appeals addressed the range of personal jurisdiction. Like that of a shepherd’s crook, the court exercised personal jurisdiction over a non-resident defendant. Plaintiffs, New Investment Properties, L.LC. and Creek Apartments Team, L.L.C. (“Creek Apartments) are both Louisiana corporations and the owners of two apartment complexes in New Orleans. Defendant, R. P. Beckendorf, is a California corporation with its principal place of business in Los Angeles. It is an independent insurance agency which obtained flood and wind policies for an apartment complex. The policies were delivered to the Champion Group, Inc., which is a California corporation with its principal place of business in Los Angeles.   The two managers of the plaintiffs are both residents of California, who are also managers of the Champion Group in California.

The Court of Appeals reversed this ruling. It concluded that R. P. Beckendorf could have reasonably anticipated being brought into court in Louisiana as a result of the insurance policy it secured for the property. R. P. Beckendorf dispensed advice with regard to insurance policies and the levels of insurance coverage and ultimately secured the various insurance policies for the real property in Louisiana. The court found that it would be unreasonable to conclude that the minimum contacts were lacking simply because R.P. Beckendorf did not solicit business, place phone calls, or mail documents to Louisiana in connection with insurance for the Louisiana property. The court stated, “Although territorial presence frequently will enhance a potential defendant’s affiliation with a State and reinforce the reasonable foreseeability of suit there, it is an inescapable fact of modern commercial life that a substantial amount of business is transacted solely by mail and wire communications across state lines, thus obviating the need for physical presence within a State in which business is conducted. So long as a commercial actor’s efforts are purposefully directed toward residents of another State, we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there.” The court concluded that R. P. Beckendorf was cognizant of the fact the policies were procured for property in Louisiana and thus it should have reasonably anticipated being hailed into court to defend a claim of failure to procure appropriate insurance coverage.

On January 22, 2008, in Allen v. Administrative Review Bd., ____ F.3d ____, 2008 WL 171588 (5th Cir. 2008), the United States Court of Appeals for the Fifth Circuit (the federal appellate court circuit that includes Louisiana, Mississippi, and Texas) issued its first ruling addressing the employee whistleblower protections provided by the Sarbanes-Oxley Act (“SOX”). In the Allen ruling, the Fifth Circuit interpreted the scope of “protected activity” under SOX narrowly. Hopefully, this trend will continue and this new whistleblower protection for employees of publicly-traded companies will not be unreasonably broadened by the courts.

In Allen, the plaintiffs alleged their terminations in a company-wide reduction-in-force were retaliation for engaging in protected activity under SOX. Specifically, the plaintiffs alleged the following protected activity: (1) expressing concern to supervisors that the employer was not complying with an SEC Staff Accounting Bulletin; and (2) complaining about the employer’s erroneous interest calculations for customers and untimely refunds and billing problems related to the same. In order to satisfy the “protected activity” requirement of the statute, the employee need only show that he or she had a “reasonable belief” the employer was engaged in an unlawful employment practice, not that an actual violation occurred.

An administrative law judge held a six-day hearing and determined that plaintiffs did not have a reasonable basis for believing that the subject-matter of any of their whistleblowing involved potential violations of the laws for which SOX provides whistleblower protection. An administrative appellate board reviewed these findings and affirmed. The Fifth Circuit then affirmed and held the plaintiffs lacked a reasonable belief that they were reporting violations of law.

In reaching its decision, the Fifth Circuit held the plaintiff who expressed concern about the SEC Staff Accounting Bulletin could not have reasonably believed that she was reporting a violation of a law covered by SOX because that plaintiff was an accountant who should have known that an SEC Staff Accounting Bulletin was not an SEC rule or regulation and did not carry with it the force of law. Regarding the employee complaints about interest calculations, untimely refunds, and billing problems, the plaintiffs argued SOX applied because the company intentionally refused to disclose the problem to their shareholders. The Fifth Circuit rejected the argument this rendered the plaintiffs’ complaints “protected” because it only alleged a violation of some unidentified law relating to fraud against shareholders and not one of the laws enumerated under SOX.

In conclusion, the Allen decision is promising for employers who are publicly-traded companies. It indicates that the Fifth Circuit will likely interpret the scope of “protected activity” under SOX narrowly and not extend broad protections to a large class of employees of publicly-traded companies. Hopefully, this approach will discourage employees who have adverse actions taken against them for legitimate business reasons from bringing frivolous whistleblower suits under SOX.

The Louisiana Fourth Circuit Court of Appeal recently held that the single business enterprise theory may apply in a breach of contract case.

The single business enterprise theory, a jurisprudential theory under which one or more entities affiliated with another entity may be held liable for such other entity’s debts or liabilities, was first recognized in Louisiana by the First Circuit Court of Appeal in 1991 in the case of Green v Champion Insurance Co. This theory is somewhat unique to Louisiana and greatly erodes traditional corporate laws which generally shield shareholders and affiliated entities from the debts or liabilities of a corporation or other entity.   Although the Louisiana Supreme Court has not expressly adopted the single business enterprise theory, it has had opportunities to repudiate or criticize such a theory but has not done so; and as a result, other appellate courts in Louisiana have continued to invoke the theory.

In the recent Fourth Circuit Court of Appeal case of Sarpy vs. ESAD, Inc., 2007 WL 2966382 (La. App. 4 Cir.), the court squarely faced the question of whether the SBE theory could be applied in a breach of contract case. The case involved a claim by a sublessor against its sublessee and a group of entities affiliated with the sublessee. The Fourth Circuit concluded that the SBE theory can be applied in a contract claim and remanded the case to the trial court for factual determinations which bear on whether it would be appropriate to hold the affiliated entities liable for the obligations of the sublessee under the facts at issue. [NOTE: THE SARPY OPINION HAS NOT BEEN RELEASE FOR PUBLICATION AND IS SUBJECT TO REVISION OR WITHDRAWAL]

GENERAL DUTIES OF EMPLOYERS

Louisiana Revised Statutes 23:1306: requires employers to notify the Office of Workers’ Compensation within ten (10) days of actual knowledge of an injury resulting in death or lost time in excess of one week after the injury. This rule applies even if no claim for workers’ compensation benefits has been filed. 

Ø    The form generally used for this purpose is a Form 1007 Employer First Report of Injury/Illness (a copy of which is attached for your ready reference).

Ø    If an employer elects not to use the Form 1007, he must provide, at the minimum, the following information: (1) The name, address, and business of the employer; (2)  The name, Social Security number, street, mailing address, telephone number, and occupation of the employee; (3) he cause and nature of the injury or death; (4) The date, time, and the particular locality where the injury or death occurred; (5) The wages, as defined in R.S. 23:1021(10), the worker was earning at the time of the injury.

Ø    All information and records submitted pursuant to this Section shall be confidential and privileged, shall not be public records, and shall not be subject to subpoena. However, such information or records may be used to compile statistical data wherein the identity of the individual or employer is not disclosed.

Louisiana Revised Statutes 23:1301: This statutory provision provides that “No proceeding under this Chapter for compensation shall be maintained unless notice of the injury has been given to the employer within thirty days after the date of the injury or death. This notice may be given or made by any person claiming to be entitled to compensation or by anyone on his behalf.”

Ø    Despite the mandatory language of this provision, it is rarely enforced against employees.

Ø    In order to benefit from this provision, the employer must show that it was prejudiced by the lack of notice.

Ø    When supervisor(s) and co-employees are aware of the incident and should know that the claimant might have an injury, an employer cannot assert that it was prejudiced by alleged lack of notice.  

THE CLAIM PROCESS

Compensable Injury, Definition: A compensable injury is defined as a personal injury by accident arising out of and in the course of employment. 

Ø    The term “accident” is statutorily defined as “an unexpected or unforeseen actual, identifiable, precipitous event happening suddenly or violently, with or without human fault, and directly producing at the time objective findings of an injury which is more than simply a gradual deterioration or progressive degeneration.” See Louisiana Revised Statutes 23:1021(1).

Ø    Certain occupational diseases are also compensable. Specific rules concerning the compensability of occupational diseases are set forth in Louisiana Revised Statutes 23:1031.1. 

Initiation of a Claim: Workers’ compensation claims made be initiated by either a Form 1008 Disputed Claim for Compensation (a copy of which is attached for your ready reference) or a formal petition.

Ø    Mailing of the form or petition constitutes initiation of the claim.

Ø    If a claimant chooses not to use the Form 1008, the following information must, at a minimum, be included in the petition:

§      The names and addresses of the parties.

§      A statement of the time, place, nature, and cause of the injury, or such fairly equivalent information as will put the employer on notice with respect to the identity of the parties.

§      The specific compensation benefit which is due but has not been paid or is not being provided.

Ø    Under prior law, upon receipt of the Form 1008 or petition, the claim would be assigned for a mediation conference within fifteen days of receipt of the form specifying the proper parties unless all parties agree to waive the mediation conference. If the mediation conference was not successful, the Form 1008 or Petition would be served on the defendant(s) and litigation of the claim would proceed.

Ø    Act 48, effective May 16, 2006, revises the procedures for filing a workers’ compensation claim to allow faxing and/or e-mailing a Form 1008 Disputed Claim for Compensation and Answer. Act 48 also revises the procedure for scheduling a mediation conference, and provides that the matter will be set for an initial mediation conference only if the injured employee requests such a mediation. If a mediation is not requested, service of process must be affected in any manner provided by law or by certified mail. Act 48 further provides for a mandatory pre-trial mediation – a mediation which must be attended by all parties, in person.        

Ø    Generally, claims are initiated by employees or their family members. However, Louisiana law does permit employers to initiate claims under certain circumstances (e.g., when an employer believes that benefits should be terminated, or to assert an offset.)

Responsive Pleadings: A defendant who is served with a Form 1008 or Petition must file responsive pleadings within fifteen (15) days of receipt of the form or petition. A defendant who wishes to file exceptions should file them with the answer. If responsive pleadings are not timely filed, a default judgment may be taken against the employer.  

Ø    Affirmative defenses available to an employer should be listed in the Answer and include:

§      An employee’s willful intention to injure himself or to injure another.

§      An injured employee’s intoxication at the time of the injury, unless the employee's intoxication resulted from activities which were in pursuit of the employer's interests or in which the employer procured the intoxicating beverage or substance and encouraged its use during the employee's work hours.

§      An injured employee who was the initial physical aggressor in an unprovoked physical altercation, unless excessive force was used in retaliation against the initial aggressor.

§      An injured employee’s deliberate failure to use adequate guard or protection. 

Discovery: Discovery in a Louisiana workers’ compensation claim follows the same rules and guidelines as any other civil suit in Louisiana. Methods of discovery include: Interrogatories, Requests for Production of Documents, Requests for Admissions, Depositions, Subpoenas and the like. 

Ø    In terms of impeachment evidence (such as surveillance videos and the like), same is generally not discoverable until after the plaintiff has been deposed. See Wolford v. JoellenSmithPsychiatric Hospital, 693 So.2d 1164, 96-CC-2460 (La. 5/20/97).  

Trials: Louisiana Revised Statutes 23:1310.8 provides that “The workers' compensation judge may have a full hearing on the petition, and take testimony of physicians and others relating to the permanency or probable permanency of the injury, and take such other testimony relevant to the subject matter of such petition as the workers' compensation judge may require. The workers' compensation judge may consider such petition and dismiss the same without a hearing if in his judgment the same shall not be set for a hearing.”

Ø    Expert Testimony: At the hearing, medical or physical rehabilitation evidence may be presented by providing certified copies of medical records, by a verified or declared report, by deposition or by live testimony.

Ø    The Burden of Proof, In General: At trial, the plaintiff has the burden of prove the following by a preponderance of the evidence: (1) an accident; (2) a disability; and (3) a causal connection between the two. 

Ø    Heightened Standards of Proof:  Employees bear a heightened standard of proof (called the “Clear and Convincing” standard) for mental injury claims, temporary total disability claims, permanent and total disability claims and hear-related or perivascular injuries. Employers must satisfy this heightened standard to succeed in defeating a claim based on a claim that the employee was unreasonable in refusing to submit to treatment or physical rehabilitation or that the employee’s misconduct is the cause of the continued disability.

Ø    Presumptions: Louisiana statutory law affords employees several presumptions to make the burden of proof easier. For example, there is the presumption of employment status if an individual is rendering service for another in any trade, business or occupation covered by the workers’ compensation laws.

Motions for New Trial: Motions for new trial are entertained by Louisiana workers’ compensation judges. Such motions must be filed within 7 days. The 7 day period commences to run on the day after the judgment was signed or on the day after the district office has mailed the notice of judgment as required by Louisiana Code of Civil Procedure Article 1913, whichever is later. 

Appeals: Louisiana Revised Statutes 23:1310.5 provides that any party feeling aggrieved by the workers’ compensation judge’s order, decision, or award has the right to take an appeal to the circuit court of appeal for the judicial district elected by the claimant upon the filing of the petition. The motion and order for appeal shall be filed with the district office assigned to handle the claim, which shall be responsible for preparation of the record for the appellate court.

Ø    If the appellant desires to suspend the effect of the judgment, the appeal must be filed within thirty days.

Ø    If the appellant desires to appeal the judgment, but does not wish to suspend the effect or execution of the judgment, the appeal must be filed within sixty days.

Ø    Appeal delays commence to run on the day after the judgment was signed or on the day after the district office has mailed the notice of judgment as required by Louisiana Code of Civil Procedure Article 1913, whichever is later. 

Settlements: A lump sum payment or compromise settlement in exchange for full and final discharge and release of the employer, his insurer, or both from liability under this Chapter shall be allowed only: (1) Upon agreement between the parties, including the insurer's duty to obtain the employer's consent; (2) When it can be demonstrated that a lump sum payment is clearly in the best interests of the parties; and (3) Upon the expiration of six months after termination of temporary total disability. However, such expiration may be waived by consent of the parties (which it often is). See Louisiana Revised Statutes 23:1271.

Ø    Louisiana Revised Statutes 23:1272 sets forth specific requirements and procedures which must be followed when a lump sum settlement is entered into by the parties. This provision requires that the settlement be presented to the workers' compensation judge for approval through a petition signed by all parties and verified by the employee or his dependent, or by recitation of the terms of the settlement and acknowledgment by the parties in open court which is capable of being transcribed from the record of the proceeding.

Ø    If a suit has been filed against a third party pursuant to the provisions of Louisiana Revised Statutes 23:1101, the district court hearing the third-party suit shall, in addition to a workers' compensation judge, have the authority to approve a lump sum or compromise settlement of the workers' compensation claim under the same conditions and terms set forth in this Section for approval of such settlements by a workers' compensation judge, and such authority shall include approval and establishment of the credit due the employer. 

Ø    All compensable medical expenses incurred prior to the date of the settlement shall be paid by the payor unless the terms of the settlement specifically provide otherwise.

BENEFITS RECOVERABLE

Louisiana Revised Statutes 23:1221: Louisiana Revised Statutes 23:1221 sets forth the various types of disability benefits recoverable. Such benefits include the following:

Ø    Temporary Total Disability Benefits: Temporary Total Disability Benefits are awarded to an employee as a result of an injury which produces temporary total disability such that the employee cannot engage in any self-employment or occupation for wages, whether or not the same or a similar occupation as that in which the employee was customarily engaged when injured, and whether or not an occupation for which the employee at the time of injury was particularly fitted by reason of education, training, or experience. Such benefits total sixty-six and two-thirds (66-2/3%) percent of wages during the period of such disability.

Ø    Permanent Total Disability Benefits: Permanent Total Disability Benefits are awarded to an employee who is permanently unable to engage in any self-employment or occupation for wages, whether or not the same or a similar occupation as that in which the employee was customarily engaged when injured, and whether or not an occupation for which the employee at the time of injury was particularly fitted by reason of education, training, and experience. Said benefits are equal to sixty-six and two-thirds (66-2/3%) percent of wages during the period of such disability. Compensation for permanent total disability shall be awarded only if the employee proves by clear and convincing evidence, unaided by any presumption of disability, that the employee is physically unable to engage in any employment or self-employment, regardless of the nature or character of the employment or self-employment, including, but not limited to, any and all odd-lot employment, sheltered employment, or employment while working in any pain, notwithstanding the location or availability of any such employment or self-employment.

Ø    Supplemental Earnings Benefits:   Supplemental Earnings Benefits are awarded when, as a result of a compensable injury, an employee is unable to earn wages equal to ninety percent (90%) or more of wages at time of injury.   In such cases, an employee is paid sixty-six and two-thirds (66-2/3%) percent of the difference between the average monthly wages at time of injury and average monthly wages earned or average monthly wages the employee is able to earn in any month thereafter in any employment or self-employment, whether or not the same or a similar occupation as that in which the employee was customarily engaged when injured and whether or not an occupation for which the employee at the time of the injury was particularly fitted by reason of education, training, and experience, such comparison to be made on a monthly basis. Average monthly wages shall be computed by multiplying his "wages" by fifty-two and then dividing the quotient by twelve. The right to supplemental earnings benefits pursuant to this Paragraph shall in no event exceed a maximum of five hundred twenty weeks, but there are other specific grounds for termination of such benefits under the statute.

Ø    Permanent Partial Disability:   Provides specific awards to employees for anatomical loss of use or amputation of various body parts. In cases not falling within any of the specific provisions, and where the employee is seriously and permanently disfigured or suffers a permanent hearing loss solely due to a single traumatic accident, or where the usefulness of the physical function of the respiratory system, gastrointestinal system, or genito-urinary system, as contained within the thoracic or abdominal cavities, is seriously and permanently impaired, compensation not to exceed sixty-six and two-thirds (66-2/3%) percent of wages for a period not to exceed one hundred weeks may be awarded. In cases where compensation is so awarded, when the disability is susceptible to percentage determination, compensation shall be established in the proportions set forth in Subparagraph (o) of Louisiana Revised Statutes 23:1221.

Medical Expenses: Louisiana Revised Statutes 23:1121 provides that the employee shall have the right to select one treating physician in any field or specialty. After his initial choice the employee shall obtain prior consent from the employer or his workers' compensation carrier for a change of treating physician within that same field or specialty. The employee, however, is not required to obtain approval for change to a treating physician in another field or specialty. Significantly, Louisiana Revised Statutes 23:1121 requires an employee to submit to medical examinations by the employer’s choice of physicians as well. 

Death Benefits: Louisiana Revised Statutes 23:1231 sets forth the death benefits which are recoverable by the surviving spouse and/or dependents of an employee. This provision provides as follows: “For injury causing death within two years after the last treatment resulting from the accident, there shall be paid to the legal dependent of the employee, actually and wholly dependent upon his earnings for support at the time of the accident and death, a weekly sum as provided in this Subpart. B. (1) If the employee leaves legal dependents only partially actually dependent upon his earnings for support at the time of the accident and death, the weekly compensation to be paid shall be equal to the same proportion of the weekly payments for the benefit of persons wholly dependent as the amount contributed by the employee to such partial dependents in the year prior to his death bears to the earnings of the deceased at the time of the accident. (2) However, if the employee leaves no legal dependents entitled to benefits under any state or federal compensation system, the sum of seventy-five thousand dollars shall be paid to each surviving parent of the deceased employee, in a lump sum, which shall constitute the sole and exclusive compensation in such cases.”

When Benefits Are Due: The first installment of compensation payable for Temporary Total Disability, Permanent Total Disability, or Death are due on the fourteenth (14^th) day after the employer or insurer has knowledge of the injury or death. Supplemental Earnings Benefits are due on the fourteenth (14^th ) day after the employer or insurer has knowledge of the compensable supplemental earnings benefits. Permanent Partial Disability benefits are due on the thirtieth (30^th ) day after the employer or insurer receives a medical report giving notice of the permanent partial disability on which date all such compensation then due shall be paid. Medical benefits must be paid within sixty (60) days after the employer or insurer receives written notice thereof. See Louisiana Revised Statutes 23:1021. 

Penalties and Attorneys’ Fees: Failure to provide payment in accordance with Louisiana Revised Statutes 23:1021 or failure to consent to the employee's request to select a treating physician or change physicians when such consent is required by Louisiana Revised Statutes R.S. 23:1121 shall result in the assessment of a penalty in an amount up to the greater of twelve percent of any unpaid compensation or medical benefits, or fifty dollars per calendar day for each day in which any and all compensation or medical benefits remain unpaid or such consent is withheld, together with reasonable attorney fees for each disputed claim; however, the fifty dollars per calendar day penalty shall not exceed a maximum of two thousand dollars in the aggregate for any claim. The maximum amount of penalties which may be imposed at a hearing on the merits regardless of the number of penalties which might be imposed under this Section is eight thousand dollars. An award of penalties and attorney fees at any hearing on the merits shall be res judicata as to any and all claims for which penalties may be imposed under this Section which precedes the date of the hearing. Louisiana Revised Statutes 23:1021 sets forth specifically how such penalties are assessed.   

Several provisions in Louisiana’s Code of Civil Procedure were amended in the last legislative session, and those changes are now in effect. One change made by the new law, Act 140 of the 2007 Regular Legislative Session (H.B. 203) (hereinafter, “Act 140”), is that the Code of Civil Procedure now specifically provides for the discovery of electronically stored information (hereinafter, “ESI”). Act 140 modifies Articles 1460-62 of the Code of Civil Procedure to explain how ESI should be requested and produced. The changes are intended to make Louisiana civil procedure more similar to federal procedure with regard to the discovery of ESI.   There are still many differences, however, between federal procedure and the changes made by Act 140. The Act did not copy and paste the recent federal rule changes regarding ESI (discussed here http://www.louisianalawblog.com/general-litigation-electronic-evidence-update-for-inhouse-counsel.html into our state Code of Civil Procedure. 

Act 140 also makes Louisiana’s procedure for the recovery of inadvertently produced privilege information more similar to federal procedure. Parties and/or their attorneys who inadvertently disclose material covered by the attorney-client or work product privileges have the opportunity to preserve the privilege if they act promptly to notify the receiving party of the inadvertence of their disclosure and their intent to assert a privilege. This language is similar to Federal Rule of Civil Procedure 26(b)(5)(B). Unlike the federal rules, however, the new Louisiana rule imposes an affirmative obligation on a party who receives what may be privileged information from its adversary: the receiving party is supposed to return or “safeguard” material that its adversary produced if it is “clear” that the material is privileged and was inadvertently produced.  This provision could easily lead protracted litigation over ancillary matters such as what the receiving party knew or should have known, and when they knew or should have known it.

Other litigation practices and procedures affected by Act 140 include: codifying the requirement that parties must provide detailed information on documents withheld on the basis of privilege; protecting certain communications between an attorney and an expert witness from discovery; allowing for the presentation of witnesses at trial by live video in certain circumstances; and relaxing the requirement of who must verify delivery of process to a defendant served via long-arm statute before a default judgment can be entered. You can see the text of Act 140 and how it changes the Code of Civil Procedure by visiting the Louisiana Legislature’s website linked here: http://www.legis.state.la.us/billdata/streamdocument.asp?did=447007

Many businesses have come to realize the value of having a document retention/ destruction policy as part of their regular operations. A policy that is well planned and consistently followed will help a business increase its efficiency, reduce its document storage costs, and protect itself from allegations that particular documents were destroyed because the company did not want them to become public in litigation.

The importance of a well-planned document retention policy is particularly important for litigation and risk management. When a business does not have notice that someone is anticipating filing a lawsuit against it, that business is unlikely to be sanctioned by a court for destroying records relevant to the would-be plaintiff’s claims – if the records are destroyed pursuant to a standardized, documented destruction process. Without a formal policy to point to, however, a business will have a difficult time explaining to the court why, for example, Former Employee A’s records were destroyed but Former Employee B’s records were not.

A document retention policy can also improve a company’s bottom line. For example, a formal policy is likely to provide a business with the comfort needed to finally throw away the 10-year-old records stored in a back office. The former “storage room” is now available for a revenue-generating employee or other business needs. Similarly, when the policy includes procedures for the systematic destruction of unimportant emails, the company will effectively increase its server capacity without making a capital expenditure, which satisfies both the CIO and the CFO at the same time. 

Creating a good document retention policy is rarely difficult or time consuming. The process usually requires one or two brief meetings between an attorney and a representative from a company’s accounting, operations, human resources, and information technology departments. A manager-level or similar employee with some tenure at the company is often a good choice to work with the attorney to identify the organization’s current document handling and storage procedures and to develop a formal retention policy that protects the company while not creating an administrative burden on current employees. Companies that have most or all of their operations in a central hub office can usually have a custom-made document retention policy within 30 days of starting of the process.

On May 29, 2007, the Supreme Court handed down Ledbetter v. Goodyear Tire & Rubber Col, Inc., – U.S. –, 127 S.Ct. 2162 (2007), a decision favorable to employers and enforcing the timeliness requirements under Title VII for bringing a claim for alleged discriminatory pay. The court ruled that an employer’s decision setting an employee’s pay or raise within an otherwise neutral pay structure was a “discrete act,” triggering the running of the limitations period under Title VII. The plaintiff argued unsuccessfully that the pay claim was always timely because the disparate pay continued and compounded throughout her employment.

The Supreme Court heard the case to address the question of the timeliness of pay claims, that is, whether each pay check was a new violation or whether the pay decision was the triggering factor. In finding the pay decision as the relevant, discrete employment action at issue so that the limitations period began with notice of that decision, the Supreme Court distinguished its decision in Bazemore v. Friday, 478 U.S. 385, 106 S.Ct. 3000, 92 L.Ed.2d 315 (1986) (per curiam), which involved a racially discriminatory pay system. The system at issue in Bazemore was created prior to Title VII but continued to be applied thereafter. The Court in Ledbetter explained that Bazemore stood for the “proposition that an employer violates Title VII and triggers a new EEOC charging period whenever the employer issues paychecks using a discriminatory pay structure,” and that “a new Title VII violation does not occur and a new charging period is not triggered when an employer issues paychecks pursuant to a system that is ‘facially nondiscriminatory and neutrally applied.’” 127 S.Ct. 2162, 2174 (U.S. 2007). In Ledbetter, there was no claim or evidence that a discriminatory pay system existed.

Yes, businesses are allowed to make campaign contributions in Louisiana. The limits vary depending upon the office being sought by the candidate to whom the business wishes to contribute. The limits (as of the date of this article) are set forth below. Individuals are subject to the same contribution limits.

The Limits:

$2,500 to a district office candidate committee per election

$1,000 to any other office candidate or candidate committee per election

Note: The primary and general elections are considered as two separate elections and are, thus, subject to separate limits.

So, what is a Major Office, District Office and Any Other Office?

A Major Office:

1.         offices elected statewide;

2.         Public Service Commissioner, Supreme Court Justice, Court of Appeal Judges, BESE, and district court judges elected parishwide in Orleans; and

3.         any office with an election district containing a population in excess of 250,000, including offices elected parishwide in Caddo, East Baton Rouge, Jefferson and Orleans.

A District Office:

1.         office of a member of the Louisiana Legislature;

2.         offices elected parish wide (except in Caddo, East Baton Rouge, Jefferson and Orleans);

3.         offices elected in more than one parish (unless the population exceeds 250,000);

4.         offices elected in a district with a population in excess of 35,000, but less than 250,000, including offices elected citywide in the cities of Alexandria, Baton Rouge, Bossier City, Kenner, Lafayette, Lake Charles, Marrero, Metairie, Monroe and Shreveport; and

5.         district court judgeships, family court, juvenile, and city court judgeships (unless the district has a population exceeding 250,000).

Any Other Office:

Offices not considered major or district.

NOTE: The term “business” is used generically, and includes any proprietorship, partnership, corporation, or other legal entity, whether owned wholly or partially by candidates (except Internal Revenue Code Subchapter S corporations wholly owned by the candidate).  Parent corporations and their subsidiaries are subject to a single limit.  A corporation is a parent if it owns over 50% of another corporation. 

For more information, visit the Louisiana Board of Ethics at http://www.ethics.state.la.us/laws/campfin.pdf

On March 23, 2007, the Louisiana First Circuit addressed the validity of an arbitration agreement in Lafleur v. Law Offices of Anthony G. Buzbee, 2007 WL 858859 (La. App. 1^st Cir. 2007). The opinion has not been released in permanent law reports and is still subject to revision or withdrawal.

The case arises out of a contract between Mr. Lafleur, a Louisiana resident, and his Texas attorneys, Jeffrey M. Stern and the firm of Stern, Miller, and Higdon. Mr. Lafleur retained the Stern defendants to pursue his maritime claim for personal injuries he sustained while traveling on a vessel in navigable waters off the coast of Louisiana. He executed an agreement with the Stern defendants which stated, "Any and all disputes, controversies, claims or demands arising out of or relating to this Agreement or any provisions hereof, the providing of services by the Stern defendants to Mr. Lafleur, or in any way relating to the relationship between the Stern defendants and Mr. Lafleur, whether in contract, tort or otherwise, at law or in equity, for damages or any other relief, made by or on behalf of Mr. Lafleur shall be resolved by binding arbitration pursuant to the Federal Arbitration Act in accordance with the Commercial Arbitration Rules then in effect with the American Arbitration Association." It also provided "the expense of any arbitration shall be a Case Advance pursuing the claims" and that "Mr. Lafleur understands and acknowledges that Mr. Lafleur is waiving all rights to a trial by jury or a judge."

The First Circuit affirmed that Louisiana law applied to the matter since it has the most significant relationship to the parties and subject matter. More importantly, the First Circuit agreed with the trial court’s determination that the arbitration clause was unduly burdensome. Although the Court recognized that under federal and state law the weight of the presumption in favor of arbitration is heavy, there was no error in the trial court’s conclusion that this provision was adhesionary due to the lack of mutuality and unconscionability. The contract attempted to solely bind Mr. Lafleur while allowing the attorneys to avail themselves of procedural and substantive law remedies. It also imposed the expense of any arbitration exclusively on Mr. Lafleur as a case advance repayable and reimbursable to the attorneys under paragraph 7 of the agreement regardless of the outcome of the arbitration proceedings.

The First Circuit concluded that it is unconscionable for an attorney to be allowed to draft a contract with an arbitration provision that unilaterally takes away the client’s right to a trial while allowing the attorney to pursue any and all remedies. The Court stated, "the lack of mutuality in the arbitration requirement, along with the obligation that the client alone is to bear the expense of the arbitration proceedings accentuated the burdensome and unconscionable elements in this arbitration provision that was drafted by the attorneys without any input from the client." The Court affirmed the trial court's judgment denying the Stern defendants' dilatory exception of prematurity and alternative motions to stay the proceedings and compel arbitration.