Best Best & Krieger News Feed

Best in Law: Know 'What-Ifs' of Every Transaction

16 May 2016 00:00:00 -0800

By D. Brian Reider

A standard part of the pre-flight instructions on every airline is the directive to “look around and identify the nearest exit.” That is good advice, because it allows you to be prepared if things do not go according to plan. Did you know that it also happens to be great legal advice?

I represent clients on a broad variety of matters, including real estate purchases and sales, leases, contracts, the purchase or sale of businesses, loans, incorporations, the formation of limited liability companies and partnerships, and many others. In every type of transaction, when I meet with my client, and we start talking about the deal, one of my first questions is: do you know where the exits are?

What I mean by this is “have you thought about the end of the deal, or how you might have to get out before the deal is over?” Some of my clients have thought this through, and have a ready answer. Many others, however, seem to have never considered the question before, and don’t have a clear and ready answer.

There are a lot of reasons for this, including our natural excitement about setting off on a new venture, and growing our business. Who wants to think about the bad stuff at such an exhilarating point? To those clients, I am sure I sound like the attorney version of Debbie Downer – always finding the dark cloud inside the silver lining!

For those clients, I try to explain why it is so critical to consider the “what ifs” of every transaction. What if the business does not perform as expected? What if your partner, who seems so wonderful, turns out to be impossible to deal with? Even the question of “what if the contract ends” is important to consider – how does everything get wound up properly.

Take, for example, a new technology contract in which you are having a company process your data. Does it address what would happen if the vendor can’t perform as promised? More importantly, does it allow you to get out of the contract without a penalty and does it address how such a transition to a new vendor would occur?

Even if everything goes right, what happens at the end of the contract – how do you reacquire your data and migrate it to a different provider? Think of the contract as a long hallway pointing to the exit at the end of the term – does the hallway also need other exit doors just in case along the way and if so, where should they be and how should they operate?

Or suppose you have a successful business which you think would really take off if you were to partner with another business that has also been successful. Everyone on both sides is optimistic that the business plans, the culture and all other pieces will come together well and that the resulting merged enterprise would be a dominant force in the market. But what if the fit is not as good as hoped? What if the cultures clash and instead of growing, the resulting business declines? How can you get out before it is too late?

There is no one single answer to these questions, which are always specific to the deal. But there are always ways to ask the questions that should be raised.

First, with the help of your attorney, walk through the proposed business arrangement and ask the key “what ifs.” “What if” the performance does not match the pro forma projections? “What if” what appears be a great business fit is not? “What if” the project finishes and needs to be wound up in the most efficient way possible? “What if” the lease ends and you have to vacate the premises – how much time do you need to make sure you can smoothly move to another location?

Your attorney is trained to look at just these kinds of questions, and to draft documents that can, if not totally resolve them, at least create a road map of what to do should an issue arise. The time to consider these questions is before anything gets signed and becomes binding. A small amount of planning in advance is very likely to avoid huge (and expensive) problems down the road.

* This article first appeared in The Press-Enterprise on May 15, 2016. Republished with permission.

BEST IN LAW: Employers need to heed Obamacare Reporting Rules

22 Mar 2015 00:00:00 -0800

BY ISABEL SAFIE

Compliance with reporting obligations is always important for any employer, but the employer reporting requirements under the Affordable Care Act pack a significant penalty that makes compliance particularly important.

In fact, employers could be subject to penalties of up to $100 per return and $200 per employee for failing to timely file the required returns or furnish specified statements to employees.

Thus employers, whether private or governmental, will need to ensure that they have systems in place to collect certain data pertaining to health coverage provided in 2015 and later that will need to be reported to the IRS beginning in 2016.

The reports provide the IRS with information used to determine if employers are subject to penalties under the “play-or-pay” rule or whether individuals are subject to penalties under the individual mandate.

The reporting procedures will be similar to those used in connection with the W-2 Form used to report annual wages. Consistent with the requirements, Form 1095-B or 1095-C will need to be prepared for each employee covered by the reporting obligations and filed with the IRS using a transmittal Form 1094-B or 1094-C.

Certain small employers will need to use the “B series” forms to report minimum essential coverage, while the “C series” forms will be used by employers subject to the play-or-pay rule to provide the IRS with information to determine whether penalties are applicable.

Minimum Essential Coverage (Forms 1094-B and 1095-B)

Generally, “minimum essential coverage” includes an insured plan or coverage offered in the small or large group market or a self-insured group health plan. The good news for most small employers, generally those that are not subject to the play-or-pay rule, is that they will not be required to submit any of the returns discussed here. This is because the obligation to report data connected to minimum essential coverage falls on the insurance carrier rather than the employer, unless the coverage is provided on a self-insured basis.

Small employers that provide minimum essential coverage on a self-insured basis will be required to use the B-series forms to report certain employee information, including names, addresses and other key information.

In contrast, the insurance carrier is responsible for reporting insurance coverage provided by small employers on an insured basis. Thus, employers providing minimum essential coverage through an insurance carrier that assumes the risk of providing health coverage for insured events will have no filing obligation. Most small employers provide minimum essential coverage on an insured basis and, therefore, will not be subject to this filing requirement.

Reporting by Applicable Large Employers (Forms 1094-C and 1095-C)

All applicable large employers will be required to make an annual report to the IRS with respect to each full-time employee. The returns must contain various items of information including:

Whether the employer offers coverage to the employee
The employee’s share of the cost for self-only coverage
Number of full-time employees for each month
Name, address and Social Security number of each full-time employee

Applicable large employers with 50 to 99 full-time and full-time equivalent employees are required to file annual returns even if they are eligible for transition relief and exempt from the play-or-pay rule until 2016.

Filing Deadlines

Statements must be furnished to employees on or before Jan. 31 of the filing year. Copies of the information return filed with the IRS can be used for this purpose. The returns must be filed with the IRS on or before Feb. 28, or March 31 if filing electronically.

The information reporting requirements are lengthy and complex. Although reporting will not occur until early 2016, it is important for employers that will be responsible for these reporting obligations to take proactive action in 2015 to facilitate the reporting obligation. Therefore, it is important for employers to do the following:

Review and understand the reporting requirements.
Obtain copies of the reporting forms and identify the information that will need to be gathered and reported.
Identify the employees for whom reports will need to be submitted.
Designate a responsible person to gather the necessary information.
Calendar applicable deadlines to ensure that statements and returns are submitted timely.

*This article first appeared in The Press-Enterprise on March 22, 2015. Republished with permission.

Charitable Hospital Organizations and the Affordable Care Act

06 Mar 2015 00:00:00 -0800

The IRS has issued final regulations providing guidance on certain complex requirements imposed on charitable hospital organizations added by the Patient Protection and Affordable Care Act of 2010. Specifically, the Regulations clarify the types of entities subject to the requirements, the consequences for failing to satisfy the requirements and certain reporting obligations. Importantly, charitable hospital organizations must satisfy these requirements to retain tax-exempt status under Section 501(c)(3) of the Internal Revenue Code .

Among other items, the Act provides that charitable hospital organizations are required to:

Conduct a community health needs assessment, and adopt an implementation strategy to satisfy the community health needs identified in the CHNA at least once every three years;
Establish a written financial assistance policy and a written policy related to care for emergency medical conditions; and
Make reasonable efforts to determine whether an individual is eligible for assistance under a FAP before engaging in extraordinary collection actions.

An entity is subject to the requirements to the extent it is treated as a “hospital organization.” The Regulations define a “hospital organization” as an organization recognized (or seeking to be recognized) as tax-exempt under Section 501(c)(3) operating one or more facilities that are required to be licensed, registered or similarly recognized as a hospital.

The Regulations clarify that, subject to certain exceptions, a charitable hospital organization that fails to comply with the CHNA requirements for a taxable year will be subject to a $50,000 excise tax. However, the tax may not apply if the error is minor, and either inadvertent or due to reasonable cause, and is corrected. Lastly, the Regulations provide that the IRS will consider all of the relevant facts and circumstances in determining whether to revoke a charitable hospital organization’s tax-exempt status.

The Regulations generally apply to tax years beginning after Dec. 29, 2015. For tax years beginning on or before then, organizations may generally rely on a reasonable, good faith interpretation of the requirements. The full text of the Regulations may be accessed here.

The requirements described in this legal alert are detailed and complex. Please contact one of the attorney authors of this legal alert listed at right in the Tax group, or your BB&K attorney, for additional information and analysis regarding the requirements applicable to charitable hospital organizations.

Disclaimer: BB&K legal alerts are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information in this communiqué.

Peregrine Semiconductor Sale Draws a Crowd of Lawyers

19 Sep 2014 00:00:00 -0800

When San Diego-based Peregrine Semiconductor Corp. announced its decision to sell the company for a 63 percent premium above its market value, at least eight law firms announced investigations into the chip maker’s business the same day, alleging its shareholders were getting short-changed on the offer price.

Those eight “first responders” were followed by at least 10 more announcements of investigations in the next few days from law firms that said the $12.50 per share offer from Japan’s Murata Manufacturing Co. was too low.

One firm, Tripp Levy PLLC of New York, said its investigation concerned whether Peregrine’s board breached its fiduciary duties by failing to shop the company to other possible buyers, or whether there were possible conflicts of interest on the part of senior management or directors. Murata makes up about 70 percent of Peregrine’s revenue, and is a minority shareholder.

A call to Tripp Levy seeking additional details wasn’t returned, nor were calls to several other national law firms looking for shareholder redress on the proposed sale.

The reaction by the firms specializing in shareholder litigation is expected by companies and nearly automatic these days, said industry observers.

...

Patrick Monroe, a corporate attorney at Best Best & Krieger in San Diego, said the many law firms investigations are all geared to finding willing shareholders to join their cause.

“Essentially what all these law firms are doing is competing to get the most shareholders,” Monroe said. If they achieve that, they can be certified as the class counsel for the shareholders, and stand to gain a big cut of any monetary settlement that’s negotiated, he said.

Click here to read the entire article published on Sept. 19, 2014 in the San Diego Business Journal (subscription required).

New Laws Affecting Businesses in California

26 Nov 2013 00:00:00 -0800

During the 2013 legislative session, Gov. Brown signed into law new legislation affecting California businesses, most of which will go into effect in less than six weeks. For more information on any of the new laws below, click on the title to view the full legal alert or article and contact the attorney author or your BB&K attorney.

AB 44 - Assembly Bill 44 Requires Submission of Subcontractors' License Numbers in Public Construction Bids
Public Agencies Must Modify Bid Forms to Require Subcontractor LicenseNumber
Effective July 1, 2014

AB 227 - Amendment to Prop 65 Provides Businesses a Grace Period
Assembly Bill 227 Aims to Reduce Frivolous Lawsuits and Excessive Penalties
AB 227 was effective immediately

AB 440 – Local Agencies Empowered to Order the Cleanup of Contaminated Properties
Assembly Bill 440 Provides Agencies Immunity from Liability For Cleanup Efforts
Effective January 1, 2014

AB 556 and AB 218 – Two New California Laws Will Affect Hiring and Fair Employment Practices
Assembly Bill 556 Impacts All Employers; Assembly Bill 218 Impacts Public Employers Only
AB 556 is effective January 1, 2014
AB 218 does not impact businesses

SB 7 – Controversial New Law Conditions State Funding on Charter City Compliance With State Prevailing Wage Law for Locally Funded Projects
Senate Bill 7 Could Face Legal Challenges
Effective January 1, 2015, unless the contract was advertised for bid prior to that date

SB 323 - New Law Will Change the Way Limited Liability Companies Form and Operate
The California Revised Uniform Limited Liability Company Act Will Impact Existing and Future Businesses
Effective January 1, 2014

SB 594 – New California Law Further Restricts Nonprofit Organizations From Engaging in Campaign Activity
Restricted Resources Include Cash, Office Supplies and Other Property Received From Local Agencies
Effective January 1, 2014

BB&K Hires Three Attorneys for Business and Labor Practices

22 Feb 2011 00:00:00 -0800

For Immediate Release: Feb. 22, 2011
Media Contact: Jennifer Bowles • 951.826.8480 • jennifer.bowles@BBKlaw.com

RIVERSIDE, Calif. _ Two business attorneys and a labor litigator have joined Best Best & Krieger LLP in two of the law firm's eight offices in California, the firm announced Tuesday.

The attorneys are:

• Nancy A. Park, an of counsel attorney who is part of the firm’s business services group as well as the municipal law and redevelopment practice. Based in Sacramento, Park’s practice focuses on real estate transactions and finance, and includes real estate leasing, acquisitions, finance, development and joint ventures. She represents both private and public real estate entities, lenders and borrowers.

Previously, Park was the chief executive officer of The Evergreen Co., a Northern California developer of retail and office projects where she handled financial, legal, administrative and joint venture matters

"I wanted to get back to my passion, which is the law, and Best Best & Krieger was a great fit for the kind of work I like to do," Park said.

Prior to the Evergreen Co., Park was in private practice with McDonough Holland & Allen for six years. In September, 19 attorneys from McDonough joined BB&K's Sacramento office as their firm wound down operations.

Park is heavily involved in the Sacramento community as a volunteer for Girl Scouts and Boy Scouts and as a youth soccer coach. She is a member of the Sacramento Chapter of Commercial Real Estate Women, having previously served as the chapter's president. Park graduated from the University of the Pacific, McGeorge School of Law in Sacramento.

• Lowell M. Zeta, an associate in the business services group in Riverside, where his practice focuses on commercial and environmental litigation for private businesses and public agencies. Before joining BB&K, Zeta worked at AlvaradoSmith, APC in Orange County, where he successfully secured multiple million dollar judgments on behalf of clients, including in excess of $2 million against a national construction and development firm.

Zeta graduated from Creighton University School of Law in Omaha, Nebraska in 2008At Creighton, he authored an article recommending improvements to state health care systems by removing anti-competitive barriers. The article, published in the Creighton Law Review, has been cited as an authority in the District Court for the Eastern District of Washington and the United States Court of Appeals for the Ninth Circuit.

• Elizabeth A. James, an associate in the labor and employment law practice in Riverside. Primarily a litigator, James represents private and public sector employers in various employment-related claims, including discrimination, wrongful termination, the California Fair Employment and Housing Act, Americans with Disabilities Act, and Title VII of the Civil Rights Act, which prohibits most workplace harassment and discrimination.

James received her law degree from the University of California, Hastings College of the Law in 2010. During law school, she was a summer associate at BB&K, served as an extern for Orange County Superior Court Judge Jamoa A. Moberly and was named student of the year for Moot Court in 2010.

Eight BB&K Attorneys Honored by Their Peers as 2011 "Best Lawyers in America"

07 Dec 2010 00:00:00 -0800

Eight Best Best & Krieger LLP attorneys have been recognized by their peers as being among the nation’s most respected lawyers in the 2011 edition of “The Best Lawyers in America”® for expertise ranging from corporate and energy law to municipal and water law.

Joseph E. Coomes, Jr. has been recognized in the areas of land use and zoning, and municipal law. His practice concentrates on redevelopment, land use and planning law, including military base closure and reuse. He represents a number of public agencies and major developers in complex land use matters and negotiation of development agreements.

Arthur L. Littleworth is named in the water, natural resources, environmental and energy law categories. He is one of the nation’s preeminent water law attorneys and was appointed by the United States Supreme Court as special master of a long-running water rights case between Kansas and Colorado over the Arkansas River.

Michelle Ouellette is listed for environmental, energy and natural resources law. She is known for her expertise in federal and state endangered species laws, the California Environmental Quality Act and environmental issues related to renewable energy development.

Edward J. Quinn, Jr. has been recognized in the areas of land use and zoning, and municipal law. He specializes in land use and redevelopment law. In addition to representing private developers, cities and agencies throughout Northern California, he has assisted numerous Asian and European clients with regard to real estate and plant and equipment investments in the United States.

George M. Reyes is named in the corporate law category. He specializes in mergers and acquisitions, and business transactions. Reyes provides general and special counsel services to private businesses ranging from start-ups to well-established industries, such as steel, medical, hospital, printing and insurance.

Harriet Steiner is listed for municipal law. Her practice focuses on public law, representing cities, special districts and joint powers agencies as city attorney, general counsel and special counsel. Her areas of specialty include land use, environmental law, telecommunications and cable television franchising, wastewater and municipal water, and public financing.

Roderick E. Walston has been recognized in the areas of water, natural resources and environmental law. Having previously served as the acting solicitor for the U.S. Interior Department and a former California deputy attorney general, he has been involved in some of the state’s most pressing natural resources cases, particularly at the appellate level. Walston has argued several times before the U.S. Supreme Court. In addition, he was general counsel for Metropolitan Water District of Southern California.

Gregory K. Wilkinson is named in the water, natural resources, environmental and energy law categories. He works on key cases in California involving water, the state’s most precious resource. He successfully argued before the United States Supreme Court in Bennett v. Spear, 520 U.S. 154 (1997), a case involving endangered species and an irrigation project that straddles the California/Oregon border.

Published biennially since 1983, The Best Lawyers in America is one of the oldest and most respected peer-review publications in the legal profession. Its 2011 list includes 39,766 attorneys in 80 practice areas, covering all 50 states and the District of Columbia. Inclusion on the list is based on more than 3.1 million detailed evaluations of lawyers by other lawyers.

BB&K Attorneys Write About The Benefits of Small Business Jobs Act

17 Nov 2010 00:00:00 -0800

By George M. Reyes and Allison M. De Tal

For those who are in the position to take advantage of the provisions in the Small Business Jobs Act of 2010, the act contains some real tax benefits. Some of the best examples of this are the expensing and depreciation provisions.

Further, though the economy may be fairly uncertain, the act contains provisions to incentivize the start up of businesses. This is evidenced by the increased loan amounts, the increased exclusion for certain "qualified small business stock" gains, and the increased deduction for start-up expenditures. However, this is all based on whether those business owners in the Inland region are in the financial position to take advantage of these benefits.

Click here to read the entire story.