We are pleased to announce the latest addition to Finney Law Firm, attorney Diana L. Emerson.  Diana earned her Juris Doctor degree from the J. David Rosenberg College of Law at the University of Kentucky in the spring of 2022 and joined the Kentucky bar in the fall.  She joins our Labor and Employment Department headed by Stephen E. Imm.

Diana earned her bachelor’s degree in History and Social Science from Lindsey Wilson College and thereafter worked on Capital Hill as a Staff Assistant for a United States Representative of the Commonwealth of Kentucky.

In order to “Make a Difference” for our clients, we continuously invest in new talent and the addition of Diana is  significant and tangible part of that commitment.

 

The anonymity of beneficial ownership of corporate and LLC interests has been a “feature” of small business governance for time immemorial.

This has vexed federal, state and local regulators, as well as private litigants trying to get to the bottom of their ownership puzzle.  And it has been a source of comfort to owners who want — for whatever motivations — to remain anonymous.  As a result, there are limited circumstances in which states (Kentucky, for example) and cities (City of Cincinnati, for example) presently do require disclosure of ownership of LLCs and corporations that hold real property in their jurisdictions.

But, by and large, the beneficial ownership of closely-held corporations and LLCs is a “black hole” in terms of registration of the identities of owners of closely-held businesses and limited liability companies.

In a limited way, that anonymity comes to an end in one year according to a final federal rule issued in September:

  • As of January 1, 2024 the Corporate Transparency Act requires newly-formed LLCs and corporations to disclose information about their beneficial owners to the federal Financial Crimes Enforcement Network (FinCEN) within 30 days, and
  • Corporations and LLCs that existed prior to January 1, 2024 must make that same disclosure by January 1, 2025.

The reason for the new law, according to FinCEN, is “to crack down on illicit finance and enhance transparency…to stop criminal actors, including oligarchs, kleptocrats, drug traffickers, human traffickers, and those who would use anonymous shell companies to hide their illicit proceeds.”

FinCEN has also issued a proposed rule (to be finalized later this year) for sharing the information with other federal, state and local agencies.  From the proposed rule:

FinCEN’s proposal limits access to beneficial ownership information to Federal agencies engaged in national security, intelligence, or law enforcement activities; state, local, and Tribal law enforcement agencies with court authorization; financial institutions with customer due diligence requirements and regulators supervising them for compliance with such requirements; foreign law enforcement agencies, prosecutors, judges, and other agencies that meet specific criteria; and Treasury officers and employees under certain circumstances. FinCEN further proposes to subject each category of authorized recipients to security and confidentiality protocols that align with the scope of the access and use provisions.

In other words, the general public will not have access to beneficial ownership information filed with FinCEN, but it will be shared with state and local law enforcement as appropriate.

These rules will certainly call for the end of 100% anonymity for closely-held corporations and LLCs and a mandatory new federal filing requirement for each entity (presumably updated as ownership changes from time to time).  Whether it will change the way small businesses in America are substantively regulated is yet to be seen.

Please contact Eli Krafte-Jacobs (513.797.2853), Isaac Heintz (513.943-6654) or Casey Jones (513.943.5673) for more information on the Corporate Transparency Act and these new regulations or about your closely-held business issues generally.

Today brought to a Finney Law Firm client a judgment for $222,836.53 for trespass onto his residential property and the removal of a tree and a portion of a wooden fence.

It’s been a big week for the Finney Law Firm in many ways, closing out yet another record year for the law firm.  And today we got our second huge, years-in-the-works victory in one week.  The Cincinnati/Alarms Registration case (final entry linked here) was five years in the making and this new “tree” case took 39 months to bring to conclusion.

The win was significant for several reasons.  First, this was the last civil trial for Hamilton County, Ohio Common Pleas Judge Judge Robert Ruehlman, the longest-ever serving Judge on the Hamilton County Common Pleas bench.  He retires from the bench January 2, 2023.    Second, awards of punitive damages and attorneys fees are fairly uncommon (either cases settle or the requisite legal standard is not met for punitive damages).  But, the Judge ruled that such standard for proof of the case and an award of attorneys fees was met by Plaintiffs, and was met by “clear and convincing evidence.”

A copy of this “tree case” order is here.  Congratulations to our client, William Chapel, and to our team consisting of Christopher Finney, Julie Gugino, Jessica Gibson and Kimi Richards, along with our expert witnesses and A/V consultant (Kevin Lewis and Media Stew!) for a wonderfully executed case from intake and filing to trial and judgment.

Now on to collections!

 

A big win was had today in Court for two classes of Cincinnati taxpayers.

After more than four years of litigation — through Common Pleas Court, the Court of Appeals, an attempt for Ohio Supreme Court review and back — today Hamilton County Common Pleas Court Judge Wende Cross signed the Order Approving Class Action Settlement in the case of Andrew White et al. v. City of Cincinnati, Ohio, Hamilton County, Ohio Common Pleas Court Case No. A1804206 (known as the “Alarms Tax Case”).

Background

The Order established a common fund of $3,277,802.25 from illegal alarms registration fees  (NOTE: not false alarm fees) collected by the City of Cincinnati from 2014 to present.  That nearly $3.3 million fund is to pay refunds to those who paid the illegal tax and attorneys fees incurred in the litigation.  The litigation in this matter was led by Maurice Thompson of the 1851 Center for Constitutional Law.  Finney Law Firm and attorneys Christopher Finney and Julie Gugino served as co-counsel.

As we explain in more detail here, Judge Cross certified two classes to receive refunds (a) residential and (b) non-residential payors of the Cincinnati alarms tax.  The City charged residential alarm-system-owners $50 per year to register their systems and commercial owners $100 per year to register their systems.  Last fall, the 1st District Court of Appeals unanimously ruled the tax illegal under Ohio law and unconstitutional, overruling a trial Court ruling on the same subject.  In March of this year, the Ohio Supreme Court preserved that victory for Cincinnati property owners when it refused to accept discretionary review of the case.

Making a difference

“Making a difference” for our clients is the mission of Finney Law Firm and its capable attorneys.  In this case, we successfully enjoined the enforcement of the illegal tax and achieved more than seven years of refunds for payors.  The victory was won under both state law (the assessment was an illegal tax) and the U.S. Constitution (the tax was an infringement on free speech rights by preventing or making more difficult reporting of crimes to the police).

How to get your refund

If you were a Cincinnati alarm registration payor at any time from 2014 to today, you should already have received a postcard, email or voicemail about the refund.  If we have a current address for you (i.e., you received the postcard), you should be receiving a refund by by February 21, 2023.

If you have not gotten a mailed postcard, please make sure we have your name and current address (and the address for which the alarm tax was paid) (will post information shortly of where to write with this info).  Write to Info@OhioConstitution.Org with this information: your name, the payor’s name, your address, and the property for which the alarm registration fee was paid.

 

 

 

 

 

Mandatory arbitration of employment claims has become almost commonplace in recent decades. The courts have repeatedly upheld the enforceability of arbitration “agreements“ between employees and employers, even though employees typically don’t have any choice in signing them. They are normally given to employees at the time of hire, and employees must sign them in order to get the job and start work.

Lawyers who represent employees in discrimination, harassment, and other employment claims historically have disliked these agreements. They believe that employees often can expect better outcomes from a jury than from an arbitrator. Nevertheless, efforts to fight the enforceability of arbitration agreements have largely been unsuccessful.

With respect to sexual harassment claims, however, that changed this year when a new law went into effect, called the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.” The Act is a federal law that applies to all claims arising out of sexual misconduct, regardless of whether the claim is asserted under a federal or state statute, or under the common law. It gives employees who have sexual harassment or sexual assault claims the right to “opt out” of any mandatory arbitration agreements they may have signed during their employment with the employer they are suing.

This is important not only because it means employees can get their sexual harassment claims heard by a jury, but also because lawsuits are public proceedings, whereas arbitration proceedings are confidential and private. The public nature of litigation can provide employers with an added incentive to settle cases that could cause them embarrassment. It also means that data about lawsuits filed against individual employers, and how employers have handled such lawsuits, are available to the general public.

Some employees who have sexual harassment claims may also have other claims against the same employer that are not related to sexual misconduct. For instance the employee may also have a claim of race discrimination, breach of contract, or unpaid overtime. In this instance, the employee’s case may have to be heard in two different forums. The employee can file a lawsuit over the sexual harassment claim, because the Act says an employer can’t force arbitration of that claim. But the employee may still have to go to arbitration to pursue her other claims, in accordance with the arbitration agreement she signed.

Employees who have potential sexual harassment claims, and employers facing such claims, should definitely be aware that mandatory arbitration agreements are no longer enforceable with regard to such claims. This will dramatically change the landscape of litigation when it comes to these types of cases.

 

It’s easy to assume that, in order to file a lawsuit, you must necessarily know who you are suing and what you are suing for. This is only partially true.

It is actually not at all uncommon for a party to know that they have been wronged in some manner and know that they have viable legal claims as a result of that wrong, yet not know the identity of the party from whom to seek redress. When this situation arises, there are a couple of options.

Doe Defendants

Civ.R. 15(D) states:

“When the plaintiff does not know the name of a defendant, that defendant may be designated in a pleading or proceeding by any name and description. When the name is discovered, the pleading or proceeding must be amended accordingly. The plaintiff, in such case, must aver in the complaint the fact that he could not discover the name. The summons must contain the words ‘name unknown,’ and a copy thereof must be served personally upon the defendant.”

These unknown defendants will often be identified as “John Doe” or “Jane Doe.”

Petition for Pre-Suit Discovery

On the other hand, Ohio law provides with a process by which they can file a “Petition for Discovery,” which is filed like a complaint but, practically speaking, is more akin to a motion asking the court to order another party to produce certain documents or divulge certain information in response to an interrogatory.

The pre-suit discovery process is governed by R.C. 2317.48, which states:

When a person claiming to have a cause of action or a defense to an action commenced against him, without the discovery of a fact from the adverse party, is unable to file his complaint or answer, he may bring an action for discovery, setting forth in his complaint in the action for discovery the necessity and the grounds for the action, with any interrogatories relating to the subject matter of the discovery that are necessary to procure the discovery sought.

Ohio courts have clarified that “R.C. 2317.48 is available to obtain facts required for pleading, not to obtain evidence for purposes of proof.” Marsalis v. Wilson, 149 Ohio App. 3d 637, 642 (2d Dist. 2002). In other words, this is not a free pass for a party to determine whether he or she has a claim or weigh how strong it may be; it is a limited opportunity to ascertain facts that must be alleged in a proper pleading relative to a claim for which the party already has a good faith basis. In nearly every instance, the missing information being sought is the identity of a potential party.

Civ.R. 34(D) further governs this process with regard to requests for documentation. See generally Huge v. Ford Motor Co., 155 Ohio App. 3d 730 (2004). “R.C. 2317.48 and Civ.R. 34(D) work in tandem to govern discovery actions.” Id., at 734. In order to take advantage of this Rule, the party must first make reasonable efforts to obtain the discovery voluntarily. The petition must include:

(a) A statement of the subject matter of the petitioner’s potential cause of action and the petitioner’s interest in the potential cause of action;

(b) A statement of the efforts made by the petitioner to obtain voluntarily the information from the person from whom the discovery is sought;

(c) A statement or description of the information sought to be discovered with reasonable particularity;

(d) The names and addresses, if known, of any person the petitioner expects will be an adverse party in the potential action;

(e) A request that the court issue an order authorizing the petitioner to obtain the discovery.

Civ.R. 34(D)(1). The court will issue an order for the discovery if it finds:

(a) The discovery is necessary to ascertain the identity of a potential adverse party;

(b) The petitioner is otherwise unable to bring the contemplated action;

(c) The petitioner made reasonable efforts to obtain voluntarily the information from the person from whom the discovery is sought.

Civ.R. 34(D)(3). Note that, under Civ.R. 34(D), that the discovery is needed “to ascertain the identity of a potentially adverse party” is not just a practical effect but, rather, a requirement of the Rule.

Which is best?

If a party can reasonably identify and is merely missing the name of the adverse party or parties or believes they can obtain information from the unnamed parties via discovery once the action is filed, naming a “Doe Defendant” under Civ.R. 15(D) is likely the most efficient route. However, if additional information or documentation is necessary to even begin to identify the adverse party, an action for pre-suit discovery may be warranted.

Statute of Limitations Implications

One common misconception is that an action for pre-suit discovery under R.C. 2317.48 and/or Civ.R. 34(D) or, alternatively, naming a Doe Defendant somehow preserves or tolls the statute of limitations until the party can be identified and the ultimate action (or amended action) brought against them. This is not the case. In 2010, the Supreme Court of Ohio issued its decision in Erwin v. Bryan, holding that it could not, “through a court rule, alter the General Assembly’s policy preferences on matters of substantive law, and Civ.R. 15(D) therefore may not be construed to extend the statute of limitations beyond the time period established by the General Assembly.” 125 Ohio St. 3d 519, 525 (2010). “Civ.R. 15(D) does not authorize a claimant to designate defendants using fictitious names as placeholders in a complaint filed within the statute-of-limitations period and then identify, name, and personally serve those defendants after the limitations period has elapsed.” Id., at 526.

While Erwin does not make as explicit of a finding as to R.C. 2317.48 and/or Civ.R. 34(D), its inclusion of these rules in the same discussion, as well as the nature of such rules (contemplating an action exclusively for discovery and not naming the adverse party or parties, as they cannot be ascertained without the same) strongly suggests an identical result. Indeed, the statute of limitations is intended to encourage parties to be diligent in investigating their claims and, if the identity of an adverse party is in question, the spirit (and, likely, the letter) of the law would require such party to initiate a discovery action with sufficient time to obtain the discovery and then bring the ultimate action.

 

 

In pre-litigation and litigation, we frequently have clients who are understandably anxious to resolve their disputes.  They typically are concerned with the open-ended liability that can result from a claimed breach of real estate contract or a business deal gone bad — and the legal fees that inevitably will come from them.  And as a result of that unknown exposure, they want swift finality to the matter.  They are constantly on pins and needles to close this small chapter of their life.

A good settlement versus a quick settlement

Unfortunately, getting a good resolution frequently is inconsistent with the desire for a quick resolution.  Patience, many times, is a virtue that pays good dividends.  This does not mean we typically recommend litigation as a solution.  Litigation is lengthy, unpredictable and terribly expensive, and is accompanied by the same sense of unease until that long course to resolution.  But the other side can sense when you are anxious to put a dispute behind you — attorneys are especially good at dragging things out to achieve a more favorable resolution than the courts would provide to them precisely because of that desire of the opposing party for quick closure.  Showing that insistence on a quick and final settlement can drive up the cost of a resolution exponentially.  So, slow down.  Relax.

Why the anxiety?

The nature of our legal system is that we frequently need to give “lawyerly” answers to what seem to be simple questions:

  • Am I liable?
  • What is the extent of my financial exposure?

These vague answers are so because many times the answer from a review of the documents and a review of the correspondence and oral exchanges leave a conclusion unclear.  Many times — most times — clients don’t tell us the whole story.  Sometimes, we are wrong.  And even if we as attorneys can give a clear anticipated outcome and we are correct in our analysis, the Judge (or Arbitrator) may in the end not agree with us.

We read the documents and do our best to understand the facts, and conclude: “Your exposure should be limited to ‘X,'” but the Judge may later conclude it is “X” times 3.5.  And that is so because we can be wrong or the Judge can decide the case incorrectly (in our opinion).  Further, we conclude “the fees and expenses to get to that conclusion should be ‘Y,'” but opposing counsel and judges can make the odyssey much more expensive.

Perhaps my bedside manner makes clients uneasy because I do have and share “worst case scenario” war stories where liability and legal fees well exceed that which should reasonably be anticipated.  But for every one of those legal calamities, we have 20 or 40 cases that resolve quickly and fairly, if not inexpensively.

So, relax

I recently was consulted by a physician who had contracted to purchase a small investment property, and he had decided he contractually  agreed to pay too much and wanted to back out of the deal.  He was more or less crawling out of his skin to have resolution of the matter — and his total exposure if he was in fact found to be in breach of the contract was on the order of maybe $20,000.  And this was the worst case for him.

But he was anxious, and called me four or five times in a two-day period stressing about this “what if” and that “maybe” scenario.

I asked him: “You are a doctor.  What kind of doctor?”  He responded: “I am an oncologist.”  So I said: “OK, let me understand.  Every day you have to tell someone — and their family — that they or their loved one has cancer.  Is that right?”  He says: “Correct.”  And, I further inquired: “Yet you are stressed about a simple contract claim that might cost you $10,000 or $20,000 if you ultimately are sued, is that right?”  “That’s right,” he responds,  “But I see your point.”

Another case I have my client terminated a residential purchase contract because the strict terms of the financing contingency were not met — the bank had a higher interest rate and a higher down payment than the contingency contemplated. The buyer sent a contract termination letter and the seller responded with a rejection of that — but then just sat and sat and did not place the house back on the market — at least not right away.

I explained to the client that “these almost all work themselves out without litigation.”  Further, he has an appraisal of the property at the purchase price.  If that is the value that would be adopted by a court in litigation, then the seller has no damages anyway.  Further, if they refuse to place the home back on the market, the seller will have violated his duty to “mitigate his damages,” weakening the seller’s claim in court.

Still, the client and his wife are anxious, concerned about the many possible outcomes to the suit.  And we don’t as of this writing know exactly how it will turn out.

Conclusion 

No one has cancer.  No one lost an arm or an eye.  No one is going to die.  You are not going to end up in bankruptcy court as a result of this contract claim.  Be patient and allow the other side to work out their “mad” and realize the cost and time that litigation will take.  It will all be OK.  That does not mean fighting until the last breath and last dollar is the best strategy, but being somewhat patient as a settlement works its way out can be advisable.

The Americans with Disabilities Act and state law both require employers to provide reasonable accommodations to their employees, if they are necessary to allow the employees to perform the essential functions of their jobs. These accommodations can take many forms. They can involve supplying equipment, removing barriers, restructuring an employee’s job, modifying his or her schedule, etc.

What if an employee needs a leave of absence because of a disability? For instance, what if they need time off due to a flare up of their condition, or to recover from a disability-related surgery or treatment? This obviously requires the employee to be away from work entirely during the leave of absence. Does an employer have to provide this kind of accommodation, essentially allowing the employee to not work for a while, and then return him or her to the job they held previously?

The answer is “yes,“ as long as certain conditions are met. First, the amount of the leave requested be reasonable, and it cannot be indefinite. The employer is entitled to know approximately when the employee will be able to return. Second, if the leave of absence requested would impose an undue hardship on the employer, the employer does not have to provide it. So if the employer can show that doing without the employee for the period of time requested would do harm to the employer’s business, it may not be necessary in that circumstance for the employer to accommodate employee’s request for leave.

It is important to note that the employer does not have to provide paid leave in these situations, and can require the employee to pay for the cost of keeping their insurance in place while they are off.

Obviously, questions about whether a particular leave of absence is a “reasonable accommodation” can be tricky. Both employers and employees should get qualified legal representation when addressing these kinds of issues. Making mistakes in this arena can be very costly, and can result in significant damages if the wrong choice is made.

Friday, our founder Christopher Finney was featured on a panel presentation before the Cincinnati Bar Association on “Code Enforcement from the Municipal Perspective.”  The panel included Erica Faaborg, Deputy City Solicitor of Cincinnati, Kathy Ryan of Wood and Lamping, and Stacey Purcell of Legal Aid of Cincinnati.

The panel discussion covered a wide range of code enforcement and nuisance actions, many of which fall outside the scope of what Finney Law Firm typically would handle such as slum landlords without heat and tenant hoarding.

Our primary experience falls in two areas: (i) Chronic and acute health and building code violations, with the municipality typically seeking an injunction and a fine against the property owner and (ii) nuisance actions seeking either the forced closure of the nuisance business (usually either a motel or a liquor establishment) or the appointment of a receiver to manage, fix up and sell a property.

In both instances, in nearly every jurisdiction in question, the municipality is simply seeking compliance.  In most instances, they neither want your money nor control of your property. They want the nuisance conduct (underage drinking, violence, drug dealing, prostitution) stopped or the the property fixed up.  Period.

As three starting points, commonly I advise:

  • Maybe our client has a legitimate defense, the nuisance does not exist, is not as exaggerated as the municipality claims, or we have an over-zealous building inspector picking a fight with a single property owner. But (a) this usually can be worked out (as their objective typically is compliance, we universally find they are clear and reasonable when asked to be) and (b) the Judge who will hear the case lives in our community and typically wants zealous code enforcement — we all want to live in a nice community, right?  As to judicial matters, these are “police powers” enforcement and the Judge almost never wants to second guess the City in a code issue. It will be very hard to overcome the presumption that the City is being reasonable in its enforcement.
  • Even if the client is right, the risk of lost and cost of litigation pales in comparison to the cost of fixing up the property or abating the nuisance.
  • And, worst of all, if the City is victorious in seeking the appointment of a receiver for your property, it’s “game over” for the property owner in terms of preserving any value from — any equity in — the property.  Why? Because the lawyers and receiver take over the property, repair it at your expense, charge their professional fees to the project and pay themselves from the income and proceeds, and sell the property quickly for what they see as a fair price to a new operator.  You can kiss your years-developed, hard-earned equity goodbye.  In the case of liquor establishments, if you are ordered closed, your millions of dollars in capital to develop and promote an establishment are out the window if you are forcibly shut down.

As a result, we strongly recommend working with building officials toward a reasonable compromise for enforcement — it can end the dispute, it improves the property or its operation, and it makes our communities stronger.  More importantly, in in the long measure, it saves the client money by investing in his property or business rather than running up a huge — and likely non-productive — legal tab.

Having said all of this — and we do counsel compliance and cooperation — a business owner or property owner does not need to just “lay down” for expensive and over-the-top enforcement.  Our firm has fought and won amazing battles against State and local governments, all the way to the US Supreme Court.  We have successfully challenged entire legislative schemes, including pre-sale and pre-leasing inspections, which are a constitutional overreach, in multiple jurisdictions.  Our firm has made a name for itself fighting and winning against bad government actors.  Our tools include the US and State Constitutions, state statute, the State of Ohio taxpayer statutes against both cities and county commissions, Open Meetings laws, Public Records laws, and other statutory avenues.  But before launching into these battles, we want to make sure we are positioned to win and that the client appreciates the costs and risks for undertaking these fights.

Today’s New York Times has an instructive tale in insurance coverage in a high-profile U.S. Supreme Court case.  There, Harvard University is embroiled in expensive and protracted litigation over its affirmative action policies.

For such litigation, it had an initial $2.5 million deductible under its primary carrier, and then $25 million in primary coverage.  It however, failed to notify its “excess coverage” carrier, which provided an additional $15 million in coverage.  Because the litigation lasted so long and cost so much, that failure to timely notify the carrier — a policy requisite — it may have deprived itself of that needed $15 million in coverage.

The lesson, as quoted in the article, is, as to coverage: “you’ve got to provide notice early and often.”  Our position is: “When in doubt, notify.” (Clients are rightly concerned that notice causes increased rates and/or cancelation.  Our experience is different: If you are an overall responsible insured, even with occasional claims, even meritorious claims, it should not impact rates or coverages, or if so not greatly.)

The matter is pending in court, and in the hallowed halls at Harvard the question of whether someone is going to lose their job is open as well.

Our favorite Courts reporter — really focused on the US Supreme Court — Alan Liptak, brings us this report.