Kang Haggerty News

5 Ways to Transition Your Business to Next Generation

June 10, 2014 | Kang Haggerty LLC

1. Define your goals. What is your ultimate goal in transitioning your business? Do you plan on funding your retirement through this transition? Is it to leave a legacy? The reason behind your desire to transition will determine how you proceed.

2. Plan & Implement Your Strategies. Create a clear plan as you move forward with the transition. Always be sure you have this plan set before you start so you do not run into confusion while transitioning. Consider the following to include in your strategy as you prepare:

a. Financial. If your goal is towards retirement, how will you be funding it? What will be your compensation as you leave the company? Be sure you highlight financial issues clearly and consult with the appropriate experts to make sure these issues are handled well.

You Need to Make a Demand First Before Filing a Derivative Claim

June 6, 2014 | Kang Haggerty LLC

United States Court of Appeals for the Third Circuit. Robert FREEDMAN, Appellant v. Sumner M. REDSTONE; Philippe P. Dauman; Thomas E. Dooley; George S. Abrams; Alan C. Greenberg; Shari Redstone; Frederic V. Salerno; Blythe J. McGarvie; Charles E. Phillips, Jr.; William Schwartz; Robert K. Kraft; Viacom, Inc. No. 13–3372. Decided: May 30, 2014

The United States Court of Appeals for the Third Circuit affirmed the Delaware District Court’s July 16, 2013 decision by further solidifying the most basic requirements for filing a derivative and direct claim. The plaintiff, Robert Freedman, as a stockholder, failed to make a pre-suit demand to Viacom’s Board of Directors in his derivative claim. Also, the plaintiff failed to state a cause of action in his direct claim against the defendant. As such, the District Court dismissed the case, which the Third Circuit affirmed.

Court Gives Yelp Zero Stars

May 23, 2014 | Kang Haggerty LLC

Anonymous internet reviewers beware – particularly if what you post is harmful to a business’s reputation; and more importantly, untrue. The Virginia Supreme Court is currently considering a case that could have major implications with regard to unmasking the identity of anonymous internet reviewers who post false and defamatory comments about businesses.

In Yelp, Inc. v. Hadeed Carpet Cleaning, Inc., the Virginia Court of Appeals affirmed the trial court’s decision to enforce a subpoena directed to Yelp, Inc. (“Yelp”) that requested the identification of the authors of certain reviews that the plaintiff claimed were false and defamatory toward his carpet cleaning business.

Superior Court Clarifies Pennsylvania Law on Non-Compete Agreements

May 17, 2014 | Kang Haggerty LLC

On May 13, 2014, the Superior Court of Pennsylvania, in Socko v. Mid-Atlantic Systems, clarified the requirement of new consideration when an employer and employee enter into an employment agreement containing a non-competition restrictive covenant after commencement of employment. As an appellate decision, this new clarification leaves a lasting and binding effect on the trial courts.

When Mid-Atlantic hired Socko as a salesman in March 2007, Socko signed an employment agreement with a two-year covenant not to compete. He resigned in February 2009, but was rehired in June 2009 and signed a new employment agreement with a similar two-year covenant not to compete. Subsequently, he signed a third employment agreement on December 28, 2010 containing a two year non-compete covering eight named states, including Pennsylvania, and anywhere else that Mid-Atlantic did business. In January 2012, Socko resigned and took a position with a competitor basement waterproofing company located in Camp Hill, Pennsylvania. Mid-Atlantic wrote the new employer enclosing the third employment letter and threatening litigation. The new employer terminated Socko, who sued for declaratory judgment seeking a determination that the non-compete provision of the employment agreement was unenforceable for lack of sufficient consideration.

Follow the Bright-Line Road!

May 15, 2014 | Kang Haggerty LLC

In the Supreme Court of Pennsylvania

No. 76 MAP 2012

On Appeal from Superior Court 11/23/2011 Docket

Carl J. Barrick and Brenda L. Barrick v. Holy Spirit Hospital of the Sisters of Christian Charity Individually and d/b/a Holy Spirit Hospital, Sodexho Management, Inc., Sodexho Operations, LLC and Linda J. Lawrence

Affirming the en banc decision of the Superior Court, the Pennsylvania Supreme Court created a bright-line rule denying discovery of communications between attorneys and expert witnesses.

It is well known the attorney-client privilege afforded to attorney-client communications gives an attorney the ability to develop theories and legal strategies with the aid of information given to him from his client. Equally as important to the ability for an attorney to strategize includes communication between the attorney and an expert witness. Pa.R.C.P. 4003 provides clear directives on what is covered as “privileged” between an attorney and her clients and witness to ensure attorneys have every ability to strategize and devise legal strategies without fear of compromising confidential information or of exposure.

Much Ado about Non-Competes

May 9, 2014 | Kang Haggerty LLC

In energy, technology, healthcare and other key sectors of the economy, employers increasingly insist their employees agree to non-competes and other post employment restrictions. Yet when the employment relationship ends, the restrictive covenants are either ignored by both the employee and the employer or fought out in court with the outcome both uncertain and costly.

Employers have legitimate interests in protecting their confidential business information and key customer relationships developed at significant expense. Consequently, many employers require new employers to agree to contractual employment and post-employment restrictions on their activities and conduct. Such restrictive covenants may be a part of an employment agreement or set forth in a separate non-compete and non-disclosure agreement. New employees eager to start out on the right footing are inclined to sign whatever documents are presented to them in connection with the hiring process. Later, if the relationship ends questions arise as to the enforceability of the restrictions. Understanding the basic legal principles applicable to enforcement of restrictive covenants can help both parties.

Bad Sportsmanship? Class Action Filed Against NCAA for Student Compensation

May 2, 2014 | Kang Haggerty LLC

The question of whether student-athletes in college sports are adequately compensated for their services is a debate that has persisted for many years. It has recently become a particularly hot topic in light of a decision by the National Labor Relations Board that Northwestern University’s football players can unionize; as well as a study done by Drexel University and the National Collegiate Players Association that says that the average college football player is worth $178,000 per year, and the average college basketball player, $375,000 per year.
On one hand, student-athletes receive what otherwise would be expensive tuition, room, and board at no cost; other than the time they spend playing and training for a sport they presumably love. On the other hand, colleges – particularly colleges with juggernaut football and basketball programs – generate obscene amounts of money from these student-athletes’ services; which makes the tuition, room, and board the athletes receive look meager by comparison.

The Walls Come Tumbling Down: The Economic Loss Doctrine Uncovered

April 25, 2014 | Kang Haggerty LLC

The economic loss doctrine prevents a plaintiff from recovering purely economic losses via a tort action (i.e., a negligence claim) in the absence of personal injury or damage to “other property.” One court has described the economic loss doctrine as “prohibit[ing] plaintiffs from recovering in tort economic losses to which their entitlement flows only from a contract.” Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F.3d 604, 618 (3d Cir. 1995). In other words, a plaintiff should be limited to a contract claim “when loss of the benefit of a bargain is the plaintiff’s sole loss.” Id.

To illustrate, if a property owner hires a contractor to build a wall, which subsequently collapses due to the contractor’s negligence in constructing the wall, the property owner cannot sue the contractor for negligence. The property owner’s redress is confined to the terms of the contract. Given that the wall collapsed, it is likely that the contractor breached the contract with the property owner, who presumably bargained for a wall that should not collapse. Since nothing other than the wall was damaged, and no one was injured, however, the property owner’s relief is restricted to what was specifically bargained for – the wall. Thus, the property owner will only be able to recover the cost of the wall, or the cost of repairing the wall (i.e., he should only get what he bargained for: a wall).

No Application of Fair Market Credit by New Jersey Appellate Division

April 18, 2014 | Kang Haggerty LLC

The borrowing relationship of debtor and creditors is at the heart of the American economy, and therefore the subject of many lawsuits. In the case of Atlantic Stewardship Bank v. Puddingstone Funding, LLC, (2013 WL 5777539) the New Jersey’s Appellate Division held that the amount of the outstanding debt the defendants were required to re-pay should not have a “fair market value credit” applied to it.

Plaintiff Atlantic Stewardship Bank sought to collect on a $2.5 million note that matured on July 1, 2009 and it also alleged defendants had defaulted on their loan obligations by failing to make two monthly payments in June and July 2009. Defendants Puddingstone Funding, LLC, et al. rebutted by stating, among other things, that plaintiff had acted in bad faith by not allowing Puddingstone to liquidate collateral to satisfy the debt, reneged on a verbal agreement to lower the interest rate on the loan, and disseminated defendants’ private financial information. Continue reading ›

Pit Stop: Crashing into Bad Faith Practices as Insurer Neglects Insured

March 28, 2014 | Kang Haggerty LLC

Reversing the trial court’s order granting summary judgment in favor of the insurer in a declaratory judgment action brought by the insured, the Superior Court in Lanigan v. T.H.E. Insurance Company, No. 646 WDA 2013, (Pa. Super. March 14, 2014) held that the insurer breached its duty to defend the insured in a claim arising from an accident during a race.

On March 31, 2007, in a dramatic and fatal twist of events, Lanigan was racing at the Mercer Raceway Park in Mercer, Pennsylvania when his throttle stuck and he lost control of his car while turning. Crashing into the catch-fence near the pit, his car struck Steven Guthrie, Jr. and Samuel Ketcham, who were standing behind the fence. Mr. Guthrie died as a result of the injuries incurred, and Mr. Ketcham was seriously injured.

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