Hunt & Associates, PC

Another Stab at Cargo Preference for the U.S. Merchant Marine

Charles Ford — Mon, 13 Mar 2017 18:47:04 +0000

There are approximately 50,000 merchant ships engaged in international trade, transporting every kind of cargo.[1] Fewer than 200 of those ships fly the American flag.[2] What is left of the U.S. merchant marine is heavily dependent on cargo preference laws; i.e., federal statutes which mandate that shippers transport certain cargos on U.S. flag vessels. For example, any military cargo shipped by sea must be carried in a U.S. flag ship. Other laws mandate that a certain percentage of government generated cargo, meaning cargos procured, furnished or financed by the United States Government, be transported on privately owned U.S. flag commercial vessels.

A proposal is now underway in Congress to expand the cargo preference laws to require that up to thirty percent (30%) of liquefied natural gas exports from this country be carried on U.S. flag vessels. As the article points out, the U.S. is expected to be a net exporter of LNG by 2020, but there are currently no U.S. flag carriers to handle such cargo.

Predictably, the American maritime trade unions are entirely in support of this job producing proposal. It remains to be seen how much support those unions can muster on Capitol Hill for this legislation. The last effort to dramatically increase the cargo preference laws was in the early 1970s when Congress considered legislation which would have mandated that thirty percent of oil imports into American ports arrive via U.S. flag tankers. The legislation actually passed both houses of Congress, but the bill was vetoed by then President Ford.

Given President Trump’s stated objective to bring back American jobs, it will be interesting to see if this bill will “float” and, if so, whether the President will sign it.

[1] According to the International Chamber of Shipping

[2] According to the U.S. Maritime Administration

Guardianships in Oregon: What Reforms are Needed?

Charles Ford — Wed, 08 Mar 2017 19:13:40 +0000

The Oregon legislature is considering making changes to guardianship proceedings which would include uniform policies throughout the state with respect to court appointed visitors. The visitor occupies an important place in a guardianship proceeding. The visitor’s job is to interview and evaluate the respondent (i.e., the person who is alleged to be in need of a guardian) and then report back to the court with a recommendation whether or not to appoint a guardian. Judges frequently rely on the visitor’s recommendations in making that critical decision.

Senate Bill 503, currently under consideration by the legislature, would require mandatory training and certain minimum qualifications of anyone serving as a visitor in a protective proceeding in Oregon.

Civil liberties advocates would argue that the heightened requirements in SB 503 are needed to protect a respondent’s due process rights. Without such additional protections, the argument goes, a respondent is at risk of losing a substantial degree of personal autonomy by having a guardianship imposed when it isn’t necessary.

A number of experienced Oregon practitioners, however, question whether the increased safeguards and attendant costs are needed or even wise. Insofar as due process is concerned, the ultimate decision to appoint a guardian is made by the court, not by the visitor. Plus, both the respondent and other interested persons (friends, family members, physicians, etc.) have the opportunity to come to court and challenge the necessity for the guardianship.

Practitioners also worry that, given the lack of available visitors in a number of Oregon counties at present, the changes contemplated by SB 503 will result in a further decline in the number of available visitors. And, the expense in implementing the proposed changes may create a situation where those who have need of an appointed guardian for an incapacitated family member will be unable to afford the cost of a visitor and avoid the process entirely for that reason.

It will be interesting to see which of the competing viewpoints wins out this legislative session.

Who Runs the Shop – Things Public Officials Can’t Say About Public Employees

Lawrence Hunt — Tue, 07 Mar 2017 17:51:37 +0000

The Oregon Supreme Court has just ruled that a City Council or other government body can be punished for committing an unfair labor practice if one of its members criticizes the public employee unions to which the city’s employees belong.

In AFSCME Council 75 v. City of Lebanon, 360 Or 809 (2017) the Court held that the City could be sanctioned for an unfair labor practice if one member of the Council, in a letter to the editor of the local paper explicitly sent as a private citizen and not as a city council member, made any statement that “. . . city employees would have reasonably believed that she acted on behalf of the city in urging those employees to decertify the union.”

Elected public officials are supposedly responsible for management of the tax revenues received by the government entities they run. A significant portion of those revenues in Oregon are spent on the incomes and benefits of public employees who work or worked for state and local government entities. In fact, the relationship between government and government employees has become a significant and persistent issue of discussion. Many blame the burden of paying the wages and benefits of both past and present public employees for the projected revenue shortfall in the state and many local government budgets.

A public official’s thoughts concerning public employees’ unions would logically be an issue of great interest to the voting public. It would also seem as though the First Amendment prohibition against limiting speech would most aptly prevent a court from punishing the speech of elected public officials about issues of public importance. Apparently, the public employees who sit on the Oregon Supreme Court think differently.

Have You Had Anything to Drink Tonight? – Ask Me No Questions and I’ll Tell You No Lies

Eliot Thompson — Mon, 06 Mar 2017 19:39:50 +0000

Pulled over by the police, watching the flashing red and blue lights in your rear view mirror, you look for your license, registration and proof of insurance. You roll your window down and the officer asks if you’ve been drinking.

What should you say?

The truth of course. Always the truth. Especially if the truth is that you haven’t been drinking.

But what if you have been drinking?

Before you answer, you might want to consider why they’re asking.

They’re asking you because they believe they already know the answer. They smell the odor of an unknown alcoholic beverage or notice your bloodshot eyes or your slurred speech or the vomit on your lapel and the fact that you’re not wearing pants.

In short, they are asking you to confirm their suspicions and so provide evidence, in your own words, for your future criminal prosecution.

So, as you struggle to remember where your pants might be, think about whether you wish to have a police officer as your closest confidante and remember that you do not need to answer every question you are asked.

Executor of Estate Found Personally Liable to IRS for Decedent’s Unpaid Taxes

Charles Ford — Mon, 27 Feb 2017 18:20:26 +0000

Benjamin Franklin once observed “in this world, nothing can be said to be certain, except death and taxes.” For those who doubt Franklin’s sagacity in that regard, consider the recent case of Marci McNicol. A federal court found her personally liable to the Internal Revenue Services to the tune of $125,000.00 with respect to taxes owed by her late husband. Here’s what happened.

On his death, in addition to their four minor children, McNicol’s husband left her with an unpaid tax bill of $340,000.00. Because the unpaid taxes were more than the value of the estate’s assets, the estate was insolvent. In such circumstances, federal law[1] gives priority to the government’s claims against the estate. In other words, when the decedent’s estate isn’t sufficient to pay all debts, Uncle Sam gets paid first. Ms. McNicol ignored the government’s priority claim. Instead, after being appointed the personal representative of her husband’s estate and already knowing of the unpaid tax bill, she proceeded to disburse the estate’s assets to others she apparently considered more entitled, herself included. Bad move. Eventually, the IRS came calling and when it did, it escorted her all the way to the courthouse. There, the court ruled she was liable to the IRS for the entire unpaid tax bill in her capacity as personal representative. As an extra bonus, the court found her to be personally liable to the extent of the $125,000.00 in assets she had disbursed to herself.

Remember: The personal representative of an estate owes a fiduciary duty not only to the decedent’s heirs, but also to the creditors of the estate. The consequences of ignoring that duty can be oh so painful. Don’t just take our word on it, ask Ms. McNicol.

[1] 31 U.S. Code Section 3713(a)(1)(B).

Cover Your Tail – Protecting Against Personal Liability of LLC Members After the Company Dies

Lawrence Hunt — Thu, 23 Feb 2017 19:10:25 +0000

One of the principal benefits of a limited liability company is the insulation it provides its members against personal liability for company debts. It is, however, possible to lose that protection against personal liability. One situation where the members and managers can expose themselves to personal liability for company debts is when the company is dissolved and the members assume responsibility for paying the company’s remaining debts, winding up its affairs and distributing the company’s remaining assets among the members.

Under both Oregon and Washington law, LLC members can incur personal liability to third parties if they improperly wind up their company’s affairs. Statutes in both states articulate specific steps an LLC can take on dissolution to limit the liability of the company to those with known and unknown claims against the company. ORS 63.641; ORS 63.644; and, RCW 25.15.301.

The members remain potentially liable to their company’s unknown claimants for up to five years following dissolution to the extent the company has distributed all of its assets among the members and thus no longer able to satisfy any claim. While each member’s liability is limited to the value of the distribution they each received on dissolution, the potential for such liability can create an unnecessary cloud of uncertainty which can generally be dispelled with a tail policy of insurance for the company to protect against such possible unknown claims.

Some Laws Require Discrimination

Lawrence Hunt — Wed, 22 Feb 2017 19:08:51 +0000

It’s often assumed that all civil rights laws forbid discrimination which the law considers somehow wrongful or “invidious” while ignoring the fact that many “civil rights laws” actually require discrimination. McDonald’s assumed that it complied with the Americans with Disabilities Act (“ADA”) by serving only customers in cars at the drive through window at its late-night outlets because it was not wrongfully discriminating against disabled customers who couldn’t drive. Thus, McDonald’s claimed that it complied with the ADA by refusing to discriminate in favor of potential customers who were blind and couldn’t access its drive through windows and obtain service.

A U.S. District Court in Illinois told McDonald’s it was wrong, noting that it does require businesses to discriminate in favor of disabled patrons so that they are not denied access to the same services which are provided to customers who are not disabled. Because the plaintiff in the case was blind and could not drive through McDonald’s drive through window, the plaintiff was entitled to accommodation which would enable him to obtain service from those facilities which were otherwise only accessible to customers in cars.

Oaths and Oath Breaking

Charles Ford — Tue, 21 Feb 2017 00:37:56 +0000

“When a man takes an oath, he’s holding his own self in his own hands like water, and if he opens his fingers then, he needn’t hope to find himself again.”

Paul Scofield, as Sir Thomas More, in A Man for All Seasons (1966)

Once upon a time, an oath taken by a public official meant something, consequences notwithstanding, as dramatized in the Hollywood classic movie of more than 50 years ago, A Man for All Seasons. The movie depicts the courage of Sir Thomas More who took the taking of an oath a serious matter. More is denounced as a traitor to King Henry VIII and eventually executed when he refuses to recite an oath he knows to be false. Sir Thomas believes the oath itself to reflect the very essence of his character.

These days, the oaths uttered by our public servants upon assuming their office would seem to be of much lesser import. Case in point, consider Governor Kate Brown’s recent executive order in which she declared that it is official policy in Oregon not to enforce laws which she had earlier sworn an oath to support. The governor’s order declares that there will be no state expenditure of money, equipment or personnel for enforcement of federal immigration laws. See the full text of the Governor’s Order here.

That our immigration laws may be in need of change is a subject of legitimate debate. It is an entirely different matter, however, for a public official who has sworn to uphold the law to declare some laws are not, in her estimation, worthy of enforcement. [1] Assuming the governor recognizes that immigration laws enacted by the U.S. Congress are the law of the land, how then does she square her executive order with her earlier oath to support such laws?

Perhaps the governor’s executive order is nothing more than an exercise in political grandstanding. Still, the governor’s edict reflects a considered disregard for the laws she has sworn to uphold and a cavalier dismissal of the oath she has taken.

[1] Oregon Constitution, Article XV, Section 3 provides, “Every person elected or appointed to any office under this Constitution, shall, before entering on the duties thereof, take an oath or affirmation to support the Constitution of the United States…”

What Happens When Dad Gives Your Inheritance to His New Girlfriend?

Charles Ford — Wed, 15 Feb 2017 00:20:32 +0000

Most folks will acknowledge that an adult of sound mind is free to give his money and property to whomever he pleases, both during his lifetime and after death, as directed by his estate plan. Such an acknowledgement, however, is subject to qualification, particularly when the soundness of the giver’s mind is called into question. This can arise in a variety of scenarios, often when the giver makes someone new the object of his affections and bounty. Consider, for example, what can happen when Dad, after making promises to bequeath his estate to his children and/or grandchildren, suddenly finds himself a new companion.

What often unfolds next is Dad’s children begin voicing concerns about the new companion’s interest (think, avarice) for “Dad’s money”. The children, understandably protective of Dad’s economic well-being, become apprehensive as to the possible evaporation of their respective shares of Dad’s estate. If Dad should change his will and alter his long-standing estate plan in favor of someone new, we have the makings of a nasty legal drama, replete with charges of undue influence. But just how does a court determine the existence of undue influence? At what point does Dad’s legitimate right to change his mind regarding the disposition of what is rightfully his to begin with become the legitimate object of legal scrutiny?

As one court noted, every will is the product of some kind of influence.[1] The distinction in a dispute involving allegations of undue influence is whether, in our example, Dad’s new girlfriend exercised her influence to the point that his last will and testament was more the expression of her will than his. Briefly stated, a court examines allegations of undue influence by looking at whether the influencer (i.e., Dad’s girlfriend) gained an unfair advantage over Dad’s estate by means which reasonable people would regard as improper. In this regard, the court will first inquire as to the existence of a confidential relationship between the testator (the giver) and the alleged influencer. In our example, we can assume Dad and his girlfriend shared a confidential relationship.

Assuming the existence of a confidential relationship, a court will then look for evidence as to the existence of one or more suspicious circumstances. [2] The following circumstances will signal a court that Dad’s new will may well have been the product of undue influence:

Dad’s girlfriend participated in the preparation of his new will or in the destruction of his prior will;

Dad did not have the benefit of independent advice in the preparation of his new will;

The new will was executed in secrecy or haste;

The will reflects a change in Dad’s attitude toward others;

The new will effected a change in Dad’s plan of disposing of his property;

Dad’s new dispositive plan was such that reasonable people would regard it as unjust; and,

Dad was susceptible to influence.

How the above factors are considered and how much weight each factor may be given by a court will vary from case to case. Cases involving allegations of undue influence are highly fact specific. The above example is offered as a guide and hopefully will serve as a basic roadmap in looking at issues of undue influence when a family member changes his or her estate plan to favor a new companion.

[1] In re Kelly’s Estate, 150 Or 617 (1935).

[2] In re Estate of Reddaway, 214 Or 410 (1958).

Mandated Exceptions to Confidentiality Provisions in Employee Agreements; The Government’s Campaign to Promote the Snitch

Lawrence Hunt — Thu, 09 Feb 2017 18:28:22 +0000

Employers often insist that their employees sign written agreements promising not to disclose confidential information concerning their employer to anyone during and following their employment. Of course such agreements frustrate governmental agencies which want to encourage employees to complain to them.

Thus, federal agencies are now invalidating and refusing to recognize employee confidentiality agreements which do not explicitly acknowledge and alert the employee of their right to file a charge or complaint against the employer with government agencies. In fact, it appears impermissible to contractually require an employee whose severance agreement contains a confidentiality provision to return whatever amounts they received in payment on termination if they breach their confidentiality agreement and collect a reward for complaining about their former employer’s business practices.

The Department of Labor new Policy Guidance states the extent to which OSHA will not approve of such provisions. The SEC recently settled a cease and desist action against an employer for the use of what it claimed was an impermissibly broad confidentiality provision. The SEC Cease and Desist Order imposed a $265,000.00 fine and remedial sanctions, including a specific contractual provision to be used by the employer in each employee confidentiality agreement.

The specific contractual language in the SEC Order should be used in all employee agreements which contain confidentiality provisions.