Kang Haggerty News

Legal Intelligencer: How RICO Plays a Role in the World of Harvey Weinstein and #MeToo

January 25, 2018 | Edward T. Kang

In the January 25, 2018 edition of The Legal Intelligencer, Edward Kang, Managing Member of Kang Haggerty, writes on How RICO Plays a Role in the World of Harvey Weinstein and #MeToo.

Overcoming Obstacles

Who in civil litigation does not love a good RICO claim? Its boundaries are seemingly endless, and in the case of Harvey Weinstein—perhaps one of the most vilified defendants on the planet right now—there is the possibility of catastrophic implications, as if being the face of an entire movement (#MeToo) is not bad enough.

Civil claims under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Sections 1961-1968 (RICO Act), are highly desirable for plaintiffs and their attorneys because, if successful, they provide for treble damages, plus attorney fees and costs of litigation. Very few plaintiffs succeed on a RICO claim, however, so the decision to file one should not be made lightly. Many plaintiffs fail during the pleadings stage, and their claims are dismissed under Rule 12(b)(6). For defendants, like Weinstein, the possible implications of RICO can be disastrous. This potential implication is why defendants of civil RICO claims are eager to settle if the claim survives a motion to dismiss and shows a strong likelihood of surviving a motion for summary judgment. For example, in 2016, Trump University did just that—it settled a civil RICO suit for $25 million, which paled compared to its potential exposure of $170 million.

Background

The RICO Act was passed in 1970 as part of the Organized Crime Control Act of 1970 to combat large organized crime operations led by the American Mafia and their growing infiltration of legitimate businesses and organizations. Although the RICO Act was drafted to bring down gangsters, it is certainly not limited to that purpose and has evolved into a mechanism to confront business fraud and corruption over the last half-century. This is evidenced by the recent high-profile civil RICO lawsuit filed against Harvey Weinstein.

Kovalsky Appointed to Federal Court Committee and State Civil Litigation Section Liaison Roles

January 18, 2018 | Kang Haggerty LLC

Kang Haggerty Associate Kandis Kovalsky was recently appointed to two Young Lawyer Division (YLD) leadership positions within the Pennsylvania Bar Association (PBA) and the Philadelphia Bar Association. She will serve as the liaison between the Federal Courts Committee and the YLD of the Philadelphia Bar, and as liaison between the YLD and State Civil Litigation sections of the PBA.
In her capacity as liaison to these committees, Kovalsky will attend governing counsels, participate in events, and interact with leadership of these committees within the statewide and city bar associations. She is expected to serve in an important two-way communications role in keeping young lawyers informed of important work in the Federal Courts and statewide civil litigation issues, and providing the committee with insight as to concerns of young attorneys in Philadelphia and Pennsylvania.

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Legal Intelligencer: A Primer on International Chamber of Commerce Arbitration for Litigators

January 5, 2018 | Edward T. Kang

In the January 5, 2018 edition of The Legal Intelligencer, Edward Kang, Managing Member of Kang Haggerty, writes A Primer on International Chamber of Commerce Arbitration for Litigators.

Arbitration, whether compulsory or voluntary, is commonplace these days as a less expensive and more efficient resolution to litigation than trial. Litigators in Pennsylvania are familiar with the Court of Common Pleas Compulsory Arbitration Program for cases with an amount in controversy of $50,000 or less. For cases with a larger amount in controversy, parties will often agree to arbitrate with a company offering a private arbitrator, such as AAA, JAMS and ADR Options.

In cases involving international disputes, the arbitration venues commonly found in contract include, the London Court of International Arbitration (LCIA), Hong Kong International Arbitration Centre (HKIAC), Swiss Chamber’s Arbitration Institution (SCAI), Singapore International Arbitration Centre (SIAC), German Institution of Arbitration (DIS), Stockholm Chamber of Commerce (SCC), Vienna International Arbitration Center (VIAC), International Centre for Settlement of Investment Disputes (ICSID), and the International Court of Arbitration for the International Chamber of Commerce (ICC).

The number of international arbitrations has been increasing due largely to the growing number of courts in foreign countries recognizing and enforcing foreign arbitral awards. An ICC arbitral award, for instance, can now be enforced in China, where its courts refused to recognize and enforce foreign arbitral awards against its citizens on many occasions. It is becoming increasingly likely for practitioners to face a dispute over a contract providing for arbitration before one of these international forums. This is true even with smaller cases involving an amount in controversy under $50,000.

Kandis Kovalsky Joins Kang Haggerty

December 4, 2017 | Kang Haggerty LLC

Philadelphia, PA (December 4, 2017): Kang Haggerty LLC, a business litigation boutique with offices in Philadelphia, PA and Cherry Hill, NJ, is pleased to announce that Kandis L. Kovalsky has joined the firm as an associate.

Kandis earned her J.D. from the Washington University in St. Louis School of Law. She graduated with a B.A. from the University of Delaware. Prior to joining Kang Haggerty, she was an associate at Weir & Partners in Philadelphia.

A native of Newtown Square, PA, Kandis is an accomplished business lawyer representing both corporate and individual clients in a broad range of complex commercial litigation matters. She is admitted to the practice of law in Pennsylvania and New Jersey.

Legal Intelligencer: What Rights Do I Have as a Limited Partner Against a General Partner?

November 15, 2017 | Edward T. Kang

ETK-full-body-200x300-1 In the November 9, 2017 edition of The Legal Intelligencer, Edward T. Kang, managing member of the firm, writes on limited partnerships and the rights afforded to the limited partners when the general partner deviates from its duty of care.

Limited partnerships offer an attractive option over the general partnership form–namely, the benefits of a partnership arrangement, but with limited liability like that enjoyed by the owners of a corporation or limited liability company. With that limited liability, however, also comes limited input into the management and operation of the company. The general partner(s) manage the company, while limited partners typically have no right to manage or otherwise direct the affairs of the partnership. That means, absent a specific agreement between the partners and the partnership, a limited partner is treated like a shareholder of a public corporation–that is, a limited partner’s right is limited to voting and distribution and must trust that the general partner will manage and operate the partnership in the best interest of the partnership.

But what rights do limited partners have, especially when the general partner deviates from its duty of care or duty of loyalty owed to the partnership? Does a limited partner have the right to bring a direct action against another partner or the partnership itself? In a corporation setting, typically, a corporate officer/director owes fiduciary duties not to shareholders/owners, but to the entity itself. And if a dispute occurs with officers or directors, a shareholder must usually file a derivative action on behalf of the company to address a breach of fiduciary duty by its officers and directors.

Legal Intelligencer: Could Lawyers Be Held Liable to Nonclients for Negligence in Pa.?

November 6, 2017 | Edward T. Kang

ETK-2017-Head-Shot-200x300-1 In the November 2, 2017 edition of The Legal Intelligencer, Edward T. Kang, managing member of the firm, writes on the liability attorneys face in regards to nonclients.

In Pennsylvania, traditionally, if lawyers or other professionals, such as accountants, performed their professional duties negligently, they could only be held liable to those with whom they were in direct contractual privity—in other words, their clients. Others who may have suffered damage because of that negligence—for example, a party to a transaction relying on the other party’s lawyer’s faulty opinion letter, or a bank relying on an opinion letter prepared by a borrower’s lawyer while extending credit to the borrower—would be without a claim in tort.

In much of the country, however, courts will extend the liability of professionals to cover nonclient third parties injured by the negligence of professionals in certain situations. This liability is typically found under a theory of negligent misrepresentation, adopted from Section 522 of the Restatement (Second) of Torts. Section 522(1) provides: “One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.”

Legal Intelligencer: Through the Language Barrier: Examining a Witness Through Interpreters

October 23, 2017 | Edward T. Kang

In the October 19, 2017 edition of The Legal Intelligencer, Edward T. Kang, managing member of the firm, writes on the significant impact interpreters can have on a case.

The jury was thoroughly confused when a witness testified through an interpreter that he paid hundreds of thousands of dollars for a ladder in a construction case I tried a few years ago. What reasonable person would pay hundreds of thousands of dollars for a ladder? The “ladder,” however, was really a staircase—a distinction that was obviously important to the case. The delineation between interpreting and translating—in other words, between explaining the meaning and translating words verbatim—is vital when it comes to the use of interpreters during witness examinations.

The American legal system is wrought with a specialized lexicon and complexities that do not exist in the English language. Though an interpreter is not allowed to explain the legal procedure or give advice to a witness, they are your conduit to the witness and the mouthpiece of the witness for the judge or jury. An interpreter has the power, whether consciously or unknowingly, to skew the words of the witness as they choose your words. One question or answer, rephrased improperly, can completely change the outcome of a case.

Real Estate Buyer Beware of Bulk Sales – Or You’ll be Paying for It

October 12, 2017 | Kang Haggerty LLC

What is a bulk sale clearance certificate, and how is a bulk sale clearance certificate related to a Pennsylvania real estate transaction? In Pennsylvania, a bulk sale clearance certificate must be obtained in all transactions involving the sale of fifty-one or more percent of the assets of a business, including real estate. Because it is common for property owners to create single purpose entities to own the real estate, bulk sale clearance certificates are required in many real estate transactions, since the real estate represents the sole asset (i.e., 100%) of the assets owned by such SPE. A bulk sale clearance certificate from the Pennsylvania Department of Revenue verifies that a particular entity satisfied all tax obligations due to the Commonwealth of Pennsylvania, including taxes, interest, penalties, fees, charges and any other liabilities up to and including the date of transfer.

Moreover, under 69 P.S. § 529, every corporation, joint-stock association, limited partnership or company organized under the Commonwealth of Pennsylvania or any other state that engages in business in the Commonwealth of Pennsylvania which sells in bulk fifty-one percent or more of any stock of goods, wares or merchandise of any kind, fixtures, machinery, equipment, buildings, or real estate, shall give the Department of Revenue ten days’ notice of the sale, prior to the completion of the transfer of such property.

To provide proper notice and comport with Pennsylvania law, the seller must file form REV-181, the Application for Tax Clearance Certificate, with the Pennsylvania Department of Revenue and the Pennsylvania Department of Labor and Industry ten days before the closing of the sale. A copy of the agreement of sale and preliminary settlement statement should be included with the Application for Tax Clearance Certificate. (Note, however, that the Department of Revenue often requests re-submission post-closing so that all closing information and interim tax returns through the date of closing may be submitted). In addition, all such entities must file all state tax reports with the Department of Revenue to the date of the proposed closing on the transfer of property and pay all taxes and unemployment compensation contributions due to the Commonwealth of Pennsylvania through the date of closing. If all state tax reports have been filed and if all state taxes and unemployment compensation contributions are paid up to the date of the proposed transfer, the State issues a clearance certificate to the seller, which is then provided to the buyer.

Pre-Act 170 Pennsylvania Limited Partnerships Not Protected by Implied Covenant of Good Faith and Fair Dealing

September 5, 2017 | Kang Haggerty LLC

In an opinion handed down on August 22^ndof this year, the Pennsylvania Supreme Court held that, unlike other contracts formed under Pennsylvania law, limited partnership agreements formed under the pre-Act 170 version of the Pennsylvania Revised Uniform Limited Partnership Act, do not contain the implied covenant of good faith and fair dealing.

The Pennsylvania legislature amended the state’s Revised Uniform Limited Partnership Act in late 2016 as a provision of Act 170, which altered the formation and operation of corporations, limited liability companies, limited partnerships, and other business forms. As part of its revisions to the PRULPA, Act 170 provided that a limited partnership agreement could not change or do away with the contractual obligation of both limited and general partners to discharge their duties under the agreement in accordance with the contractual obligation of good faith and fair dealing.

The case, Hanaway v. The Parkesburg Group, LP, involved a dispute among members of a limited partnership (Parkesburg) that had been formed to invest in and develop several parcels of real estate. The plaintiffs, who were among Parkesburg’s limited partners, sued the corporation’s general partner, alleging that he sold Parkesburg’s assets to a new partnership he had formed, so that the new partnership could develop the real estate in question without the plaintiffs.

Gregory H. Mathews Named to 2018 Best Lawyers in America List

August 31, 2017 | Kang Haggerty LLC

Gregory H. Mathews, Esquire Kang Haggerty LLC is pleased to announce that Gregory H. Mathews, Of Counsel, has been selected for inclusion in the 2018 edition of The Best Lawyers in America one of the most respected peer-review publications in the profession.

Mathews is named to the list for his distinguished contributions to the practice area of commercial litigation. Commercial litigation involves any type of dispute that can arise in the business context, including breach of contract cases, SEC and NASD claims, class actions, business torts, civil RICO claims, breach of fiduciary duty allegations, and shareholder issues. Successful commercial litigators, such as Mathews, are able to assess the merits of a dispute and scale either a prosecution or defense that fits the legal and business needs of their clients.

Best Lawyers was founded in 1983 and is published in 70 countries and all 50 states. Its methodology employs a sophisticated, conscientious, rational, and transparent survey process designed to elicit meaningful and substantive evaluations of the quality of legal services. The 24th edition of The Best Lawyers in America highlights the top 5% of practicing attorneys in the United States, based on more than 7.4 million evaluations, recognizing attorneys in 140 practice areas.

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