Articles, Alerts & Perspectives

Pittsburgh, PA

Pretrial Practice & Discovery

American Bar Association Litigation Section

(by Jess Barnes)

Contractual provisions providing for dispute resolution via arbitration are fairly common. In fact, federal policy generally favors arbitration. However, your case still may find its way to litigation over a few typical issues that arise regarding the enforceability of arbitration provisions. Recently, the Toronto Raptors and New York Knicks hit not only the court but the courtroom. These professional basketball teams seek a decision from a New York federal district court on whether their intellectual-property dispute belongs before a judge or the NBA commissioner as arbitrator. In New York Knicks, LLC v. Maple Leaf Sports & Entertainment Ltd. d/b/a Toronto Raptors et al., Case No. 23-CV-7394 (JGLC) (S.D.N.Y 2023), the Toronto Raptors moved the court to compel the action to arbitration. The Raptors argued that both teams are parties to the National Basketball Association (NBA)’s constitution and by-laws. The Raptors explained that the NBA Constitution is a contract among the members of the NBA. Moreover, the NBA Constitution provides an arbitration provision that the NBA commissioner has exclusive jurisdiction over disputes involving two or more members of the NBA.

When reviewing this request to compel arbitration, the court must answer two questions: (1) is there a valid agreement to arbitrate, and (2) if so, whether a court or arbitrator should decide if the underlying dispute is arbitrable.

Here, both parties at minimum conceded that a valid agreement to arbitrate existed between the parties in the NBA Constitution. The Knicks, however, argued that this case, contemplating intellectual-property theft, did not fall within the arbitration provision.

Initially, the Knicks claimed that the court, and not the NBA commissioner, should determine whether the case is arbitrable, because the NBA Constitution itself does not explicitly provide the procedure for resolving questions of arbitrability. …

Pittsburgh, PA

Legal Intelligencer

(by Steve Silverman and Steve Antonelli)

For many employers, it is also performance review season that is often accompanied by announcements concerning employees’ compensation for next year. As a result, this time of year can sometimes cause employees to consider a change of scenery. Employers should therefore be prepared for the possibility that an employee will voluntarily resign their employment and move on to another opportunity.

With the Holiday Season in full swing, many of us are busier than normal. We have parties to attend, shopping to finish (or in my case, start and finish), and year-end goals to accomplish, in addition to our “regular” work duties. This is also the time of year that many employers begin to wrap up financial matters and plan for the coming year by preparing goals, budgets, forecasts, and strategic plans. For many employers, it is also performance review season which is often accompanied by announcements concerning employees’ compensation for next year. As a result, this time of year can sometimes cause employees to consider a change of scenery. Employers should therefore be prepared for the possibility that an employee will voluntarily resign their employment and move on to another opportunity. Accordingly, employers should consider the following checklist if and when an employee announces their resignation:

• Employers should compile an inventory of the departing employee’s contractual obligations. If a departing employee is bound, for instance, by an enforceable restrictive covenant, employers should assess the potential for harm in the event of a violation. While the ever-broadening attempts to limit the use of post-employment, non-competition agreements have been well documented in the past year, reasonable restrictive covenants remain enforceable in Pennsylvania.

…

Harrisburg, PA and Pittsburgh, PA

Law360

(by Stefanie Pitcavage Mekilo and Joseph Schaeffer)

On Nov. 22, the Pennsylvania Supreme Court issued its much-anticipated decision in Hangey v. Husqvarna Professional Products Inc. The majority opinion in Hangey claims to be a narrow one, providing clarification only regarding the standard for evaluating whether venue in any given Pennsylvania county is proper.[1]

That characterization is accurate so far as the legal principle goes: The court held as a matter of law that the percentage of a corporate defendant’s national revenue derived from a forum county alone is not sufficient to support a finding that the defendant does not “regularly conduct business” there for purposes of Pennsylvania’s venue rules.

But the court’s application of that principle to the facts before it — and its holding that the defendant’s de minimis sales in Philadelphia County were sufficient to establish proper venue there — has potential far-reaching consequences for corporate defendants sued in the commonwealth. Indeed, the plaintiffs’ lawyers in Hangey are already cheering the ruling as “one of if not the most impactful venue decisions in the last 20 years.”[2]

The facts of Hangey are uncomplicated. Ronald and Rosemary Hangey, residents of Wayne County, bought a Husqvarna-brand lawnmower from Trumbauer’s Lawn and Recreation Inc., in Bucks County.

Ronald Hangey suffered severe injuries when he was thrown off the lawnmower while operating it on his property in Wayne County. The Hangeys then sued Trumbauer’s, Husqvarna Professional Products Inc. and a handful of Husqvarna affiliates on various tort claims.

But rather than sue in Bucks County or Wayne County, the Hangeys sued in Philadelphia County — a venue with no connection to the underlying incident. …

Washington, DC

Smart Business

(By Sue Ostrowski featuring Ben Clapp)

When conducting corporate or real estate transactions, prospective buyers need to be aware of the environmental risks of the proposed acquisition, or they could find themselves on the hook for millions of dollars in remediation and compliance liabilities.

“Buyers need to work closely with an experienced environmental transactional attorney, sometimes in tandem with an environmental consultant, to ensure they are not acquiring environmental liabilities they didn’t intend to acquire,” says Ben Clapp, shareholder in the Environmental, Corporate and Commercial, and Energy and Natural Resources groups at Babst Calland. “Sellers also need to ensure they do not remain saddled with liabilities they didn’t intend to retain after a sale.”

Smart Business spoke with Clapp about the environmental diligence process in a sale and how to address environmental risks in contractual provisions.

What should potential buyers be aware of regarding environmental risk?

Purchasing a property without proper safeguards could put a buyer at risk of substantial liability should environmental contamination or compliance issues be discovered after purchase. Property owners are generally responsible for contamination, regardless of whether they caused it, including contamination that existed prior to taking ownership. Acquiring a business with undiscovered compliance issues can result in significant capital outlays for corrective actions and raises the possibility of becoming subject to enforcement actions and fines.

Environmental diligence is key to assessing the scope of environmental risk associated with a given transaction. However, the extent of diligence a buyer is permitted to perform can differ based on transaction structure and relative leverage of the parties.

How can buyers identify potential environmental issues?

A Phase I Environmental Site Assessment, performed by an environmental consultant, is often a good place to start. …

Pittsburgh, PA and Washington, DC

The Foundation Water Law Newsletter

(Lisa M. Bruderly, Mackenzie M. Moyer and Jessica Deyoe)

The Pennsylvania Department of Environmental Protection’s (PADEP) Policy Office presented at the September 21, 2023, Water Resources Advisory Committee (WRAC) meeting on PADEP’s proposed regulation setting notification requirements for unauthorized discharges to waters of the commonwealth under 25 Pa. Code ch. 91. See PowerPoint Presentation, PADEP, “Notification Requirements for Unauthorized Discharges to Waters of the Commonwealth—Draft Proposed Rulemaking” (Sept. 21, 2023). Currently, the Pennsylvania Clean Streams Law requires PADEP to “determine when a discharge constitutes pollution” and to “establish standards whereby and wherefrom it can be ascertained and determined whether any such discharge does or does not constitute pollution.” 35 Pa. Stat. § 691.1. According to PADEP, the proposed amendments to chapter 91 are intended to enable the Department to meet its statutory obligation and set straightforward requirements for the public, the regulated community, and PADEP.

Under Pennsylvania’s Clean Water Program, the location and characteristics of authorized discharges—discharges permitted under a National Pollutant Discharge Elimination Permit, for example—are known prior to discharge. Permits are designed to ensure that these discharges do not cause or contribute to pollution, but unauthorized discharges—spills, for example—are unknown and unplanned. Many site-specific factors could affect whether the unauthorized discharge will result in pollution. Thus, the responsible party makes the first determination as to whether a discharge will cause or contribute to pollution, then PADEP investigates and assesses whether the discharge did or did not constitute pollution. PADEP intends for the chapter 91 updates to provide clearer reporting guidance and more consistent reporting for unauthorized discharges.

The draft proposed amendments to 25 Pa. …

Pittsburgh, PA

Pretrial Practice & Discovery

American Bar Association Litigation Section

(By Joseph Schaeffer and Christina Manfredi McKinley)

Corporations choose where to incorporate and maintain a principal place of business for many reasons; regulatory climate, availability of resources and a trained labor force, and logistics are just a few common considerations. Another increasingly common consideration is litigation risk. All things being equal, for instance, most corporations will prefer to avoid incorporating or maintaining principal places of business in jurisdictions known for sizeable jury awards against corporate defendants. But what corporations might not realize is that their best-laid plans can be upset by executives’ remote-work arrangements.

In Evans v. Cardlytics, Inc., for example, two California-based plaintiffs filed suit against their former employer in a California state court. No. 8:23-cv-00606-JWH-KES (C.D. Cal. Nov. 7, 2023). The defendant removed the suit to the Central District of California on the basis of diversity jurisdiction, alleging that it was incorporated in Delaware and maintained its principal place of business in Georgia. The plaintiffs moved to remand, however, on the grounds that the defendants’ principal place of business was not in Georgia, where the defendant maintained its corporate offices, but rather in California, where several of defendants’ officers resided and worked remotely.

The Central District of California granted the remand motion. It found that four of the defendants’ seven officers were residents of California. And while the court was persuaded by the numerical majority of the defendant’s officers, even more so, the court was particularly persuaded by the roles filled by those four officers: chief executive officer, chief operating officer, chief technology officer, and chief product officer. Comparing a corporation’s principal place of business to its “brain,” the court likened the CEO and COO to its “prefrontal cortex and hippocampus, i.e. …

Pittsburgh, PA and Washington, DC

PIOGA Press

(By Sean McGovern and Amanda Brosy)

Federal Action

Environmental Justice (EJ) efforts continue to expand as a programmatic priority for federal and state governing bodies. On April 21, 2023, President Joe Biden passed a new Executive Order on Revitalizing Our Nation’s Commitment to Environmental Justice for All (E.O. 14096) that builds upon a series of similar orders he signed over the last three years. E.O. 14096 specifically says the Biden administration will pursue a “whole-of-government” approach to EJ.

Accordingly, the Order directs each agency to make achieving EJ a part of its mission and, among other things, take proactive steps to address inequities in federal policies and practices. Notably, the Order also sets forth a new, broader definition of EJ than the EPA’s current definition, specifically including “Tribal affiliation” and “disability” within the list of protected groups. To advance EJ initiatives and coordinate the development of “policies, programs, and partnerships to achieve the policies” described in E.O. 14096, the Order establishes a new White House Office of EJ within the Council on Environmental Quality (CEQ). In addition, to “address the need for a coordinated federal strategy to identify and address gaps in science, data, and research” related to EJ, the Order directs the creation of an EJ Subcommittee of the National Science and Technology Council. This Subcommittee is tasked with preparing a Research Plan (updated biennially) to provide recommendations to the CEQ and federal agencies on data collection, research techniques, and public accessibility of information, with the goal of advancing EJ.

Following clear and consistent directives from President Biden, EJ funding has increased as a result of the 2022 Inflation Reduction Act (IRA). …

Pittsburgh, PA and Washington, DC

PIOGA Press

(By Kevin Garber and Jessica Deyoe)

On November 1, 2023, the Commonwealth Court of Pennsylvania held that the Pennsylvania Department of Environmental Protection’s CO2 Budget Trading Program Regulation is an unconstitutional tax, declared the rule to be void, and enjoined DEP from enforcing it. See Bowfin KeyCon Holdings, LLC et al v. Pennsylvania Department of Environmental Protection and Pennsylvania Environmental Quality Board (No. 247 M.D. 2022). The Regulation would have linked Pennsylvania’s cap-and-trade program to the Regional Greenhouse Gas Initiative (RGGI), which is the regional, market-based cap-and-trade program designed to reduce carbon dioxide emissions from fossil-fuel-fired electric power generators with a capacity of 25 megawatts or greater that send more than 10 percent of their annual gross generation to the electric grid.

The Court reaffirmed its earlier July 8, 2022 opinion in which it preliminarily enjoined the Regulation as an unconstitutional tax. In this November 1 decision on the merits, the Court held that the Regulation constitutes a tax imposed by DEP in violation of the Pennsylvania Constitution.

Undisputed facts of record established that only 6 percent of RGGI auction proceeds are necessary to cover the cost of administering the program and that the annual revenue anticipated from RGGI would be three times greater than the total amount allocated to DEP from the General Fund in a single year. The Court found that the money to be generated by Pennsylvania’s participation in RGGI would be “grossly disproportionate” to the costs of overseeing participation in the program and DEP’s annual needs. Relying on the Pennsylvania Supreme Court’s opinion in Flynn v. Horst, 51 A.2d 54, 60 (Pa. 1947), which found that

[n]o principle is more firmly established in the law of Pennsylvania than the principle that a revenue tax cannot be constitutionally imposed upon a business under the guise of a police regulation, and that if the amount of a ‘license fee’ is grossly disproportionate to the sum required to pay the cost of the due regulation of the business the ‘license fee’ act will be struck down,

the Commonwealth Court concluded that Pennsylvania’s participation in RGGI “may only be achieved through legislation duly enacted by the Pennsylvania General Assembly, and not merely through the Rulemaking promulgated by DEP and EQB. …

Pittsburgh, PA

(By Daniel Bates featuring Donald C. Bluedorn II)

Some things never change.

And that’s a good thing, according to Donald C. Bluedorn, II, managing shareholder of Pittsburgh law firm Babst Calland, who has devoted most of his career at the firm to championing a business model and culture that, he said, have fostered long-term, sustainable growth since the firm’s inception in 1986.

That business model and culture, Bluedorn said, are what attracted him to the firm in the first place as a young lawyer, only a year after Babst Calland was established. He also credits this with fueling the firm’s growth across five office locations, including Pittsburgh, Washington, D.C., Charleston, W.Va., State College, Pa., and Harrisburg, Pa., along with several remote “outpost” offices. Such growth also has made Babst Calland one of Pittsburgh’s top law firms.

“When I came to Babst Calland from another larger firm, there were two things that really impressed me and made me want to become part of Babst Calland,” Bluedorn said. “One was there was a lot of flexibility and a lot of ability to control your own destiny as a lawyer and become what you want to be – an opportunity to practice law, manage clients, and gain a lot of hands-on experience, and that really appealed to me as a young lawyer.”

The second factor, he continued, was – and still is – the firm’s culture. “I loved the culture. People were treated with mutual respect, and everyone worked together. And although we’ve grown in size and we’ve added lawyers and practice areas, I think those two attributes of the firm have really stayed the same. They’re part of what define us and are part of what we work to make sure we maintain because this is what differentiates us and makes us so successful in the marketplace.”

He added: “It allows us to retain and attract really sophisticated talent. …

The American Oil and Gas Reporter

(By Del Torkelson)

Featuring a Briefing from U.S. Senator John Barrasso

In “The 2023 Babst Calland Report—Legal & Regulatory Perspectives for the Energy Industry,” which offers updates on top legal and public policy matters confronting the country’s oil and natural gas industry, U.S. Senator John Barrasso, R-Wy., stresses the importance of permitting reform. The law firm’s annual report also explores several other major topics, including climate policy and ESG matters, as well as trends in litigation,

“The U.S. energy sector remains as dynamic as ever as Babst Calland offers its 13th annual perspective on the challenges and opportunities facing all parts of the energy value chain,” the report opens. “This year, U.S. natural gas production and demand is expected to reach record highs. Natural gas production has doubled since 2006 and increasing demand has turned the United States into a leading global natural gas producer. Investments in liquified natural gas infrastructure continue as the United States becomes the top LNG exporter in the world.”

Principles For Reform

Barrasso’s briefing appears in a short video introduced by Babst Calland attorneys A.A. Moore Capito, a shareholder in the Charleston, W.V., office, and Jim Curry, managing shareholder in the Washington office. They also close the video by reflecting on the senator’s remarks.

Barrasso opens by lamenting the extent to which the Biden administration’s energy policies have frustrated U.S. production of traditional energy sources.

When Barrasso began his Senate tenure in 2007, he recounts, the United States imported 29% of its energy, but by 2019, U.S. producers had transformed the country into a net energy exporter. Although growing domestic production has boosted the U.S. …