Washington, DC
Abigail M. Reecer recently joined Babst Calland as an associate in the Energy and Natural Resources Group and Pipeline and HazMat Safety Practice. Ms. Reecer represents client in pipeline safety matters before the Pipeline and Hazardous Materials Safety Administration (PHMSA), state agencies, and federal courts.
Prior to joining Babst Calland, Ms. Reecer was an associate with Hollingsworth LLP. He is a 2021 graduate of Georgetown University Law Center.
Pittsburgh, PA
Employment Alert
(By Jenn Malik)
Employers and plan sponsors: December 31, 2023 is the deadline for submission of the inaugural Section 201 Gag Clause Prohibition Compliance Attestation (Attestation) to the Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments). The federal government passed the Consolidated Appropriations Act in 2020 (CAA) with the goal of improving price and quality transparency in healthcare. Specifically, Section 201 of the CAA prohibits employers/plan sponsors from entering into contractual arrangements that contain “gag clauses”, i.e. contractual provisions that would prevent a plan from accessing provider cost and quality information for plan participants. To ensure compliance, Section 201 requires that plans submit an annual attestation that the plan did not enter any agreements that contain gag clauses. This requirement applies to ERISA plans, non-federal governmental plans, church plans, grandfathered group health plans, and plans sold on the health insurance marketplace.
The Attestation can be completed online on CMS’s website either by the plan, on its own behalf, or a third party – typically, a TPA or health insurer. Submissions require an authentication code generated by the federal government to access the webform where the attestation can be made which is available here: https://hios.cms.gov/HIOS-GCPCA-UI.
The individual submitting the Attestation (Submitter), whether it be an authorized representative of the plan or a third-party, should be prepared to provide the following information to complete the Attestation:
Thereafter, plans must file an Attestation annually by December 31. …
Pittsburgh, PA and Washington, DC
The Foundation Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman and Matthew C. Wood)
In August 2023, the University of Pittsburgh School of Public Health and the Pennsylvania Department of Health (DOH) released three “observational epidemiological” studies presenting findings of potential health impacts from human exposure to unconventional natural gas development (UNGD) activities. The studies, which were conducted in eight counties in southwestern Pennsylvania, excluding the City of Pittsburgh, focused on three specific health issues: (1) asthma, (2) birth outcomes, and (3) certain childhood cancers.
In the Asthma Study, researchers reviewed medical treatment for asthma (categorized by severity), as well as how close the patient lived to UNGD activities (considering the number of wells, production volume, and the phase of well development, i.e., preparation, drilling, hydraulic fracturing, and production). The study found no relationship between asthma exacerbations and proximity to wells during the well pad preparation, drilling, or hydraulic fracturing phases, but found an increase during the production phase. The increases were fairly consistent in the lower, moderate, and higher exposure groups and therefore, the expected dose/response relationship (i.e., more asthma exacerbations with more exposure) was not found. See Univ. of Pittsburgh Sch. of Pub. Health, “Hydraulic Fracturing Epidemiology Research Studies: Asthma Outcomes” (July 31, 2023); DOH, “PA Health and Environment Study: Asthma” (Aug. 15, 2023).
For the Birth Outcomes Study, researchers reviewed birth records and the distance mothers lived from UNGD activities and other industrial activities. Researchers for the Birth Outcomes Study considered the number of wells, production volume, and the phase of well development, in addition to potential exposure from certain facilities, i.e., impoundment ponds, facilities accepting oil and gas waste, compressor stations, Superfund sites, and industrial sites with a toxic release inventory. …
Harrisburg, PA and Charleston, WV
Legal Intelligencer
(by Casey Coyle, Stefanie Mekilo and Austin Rogers)
1995 was a watershed year. Michael Jordan returned to the NBA after a two-year hiatus, Brad Pitt was named Sexiest Man Alive by People magazine, and the world met Buzz Lightyear for the first time. Today, Buzz remains a constant fixture in pop culture, thanks largely to his signature catchphrase: “To Infinity and . . . Beyond!” Indeed, Buzz himself may use that phrase to describe the Pennsylvania Supreme Court’s recent decision in Bert Co. v. Turk, 298 A.3d 44 (Pa. 2023), which calls into question the presumptive constitutional limit for punitive damages awards.
Background
In 2017, four employees with non-solicitation agreements left their employment with The Bert Company d/b/a Northwest Insurance Services and joined First National Insurance Agency, LLC. They moved as part of what is known in business parlance as a “lift-out,” a practice in which a group of employees from one company are hired by a competitor. Northwest filed suit and obtained a preliminary injunction enforcing the agreements. At the ensuing trial, the jury exonerated three employees from any liability and exonerated the corporate defendants on two claims. While they found the remaining employee and corporate defendants liable on other claims, the jury only awarded Northwest $250,000 of the roughly $4 million in compensatory damages sought; the award was joint and several. However, the jury awarded Northwest $2.8 million in punitive damages—representing an 11.2:1 ratio of punitive-to-compensatory damages on a per-judgment basis.
Appellants challenged the punitive damages award as unconstitutional. Under U.S. Supreme Court precedent, courts must consider three guideposts when determining if a punitive damages award comports with the Due Process Clause of the Fourteenth Amendment to the U.S. …
Pittsburgh, PA and Washington, DC
Environmental Alert
(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, Charleston, WV and Washington, DC
Babst Calland has been recognized in the 2024 edition of Best Law Firms®, ranked by Best Lawyers®, nationally in 8 practice areas and regionally in 31 practice areas:
Pittsburgh, PA and Washington, DC
The Foundation Mineral and Energy Law Newsletter
Pennsylvania – Mining
(Joseph K. Reinhart, Sean M. McGovern, Gina F. Buchman and Christina M. Puhnaty)
On November 1, 2023, the Commonwealth Court of Pennsylvania held that the Pennsylvania Department of Environmental Protection’s (PADEP) CO2 Budget Trading Program Regulation (RGGI Rule) is an unconstitutional tax, declared the rule to be void, and enjoined PADEP from enforcing it. See Bowfin KeyCon Holdings, LLC v. PADEP, No. 247 M.D. 2022, 2023 WL 7171547 (Pa. Commw. Ct. Nov. 1, 2023).
After a lengthy rulemaking process, the RGGI Rule was published in the Pennsylvania Bulletin. See 52 Pa. Bull. 2471 (Apr. 23, 2022). The RGGI Rule 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% of their annual gross generation to the electric grid.
Two days after the RGGI Rule was published, a group of stakeholders filed a petition for review of the rule and an application for preliminary injunction in the commonwealth court. The court held a hearing on the preliminary injunction on May 10 and 11, 2022, and in a July 8, 2022, opinion, the court preliminarily enjoined the regulation as an unconstitutional tax.
In its November 1 decision on the merits, the court reaffirmed its earlier July 8, 2022, opinion, holding that the RGGI Rule constitutes a tax imposed by PADEP in violation of the Pennsylvania Constitution. …
Harrisburg, PA
Babst Calland today announced the opening of its office in Harrisburg, Pa., and the addition of two experienced litigation attorneys, Michael Libuser and Stefanie Pitcavage Mekilo.
Led by Shareholder Casey Alan Coyle, who joined the firm in August 2022, the Harrisburg office provides legal counsel for local, regional, and national businesses, industry sectors, and trade associations with focused practices in litigation, energy and natural resources, environmental, and legislative and regulatory affairs, among others.
The Harrisburg team of attorneys offers deep litigation experience in matters pending before state and federal appellate courts, with a particular emphasis on appeals before the Pennsylvania Supreme Court. They also represent clients in disputes pending before the U.S. District Court for the Middle District of Pennsylvania and state trial courts throughout Central Pennsylvania and matters brought before the Pennsylvania Commonwealth Court as part of its original jurisdiction.
“It is an exciting time for Michael and Stefanie to join Babst Calland and open a new office in Harrisburg,” said Mr. Coyle. “The Harrisburg office is uniquely poised to offer its clients the best of both worlds—pairing the service and pricing of a litigation boutique with the deep-bench expertise and resources of a law firm with more than 35 years of experience serving clients ranging from Fortune 100 companies to small and mid-sized businesses nationwide.”
Mr. Libuser represents clients in state and federal trial and appellate courts, with a particular emphasis on cases before the United States District Court for the Middle District of Pennsylvania. He served as a law clerk to the Honorable Yvette Kane, Senior United States District Judge for the Middle District of Pennsylvania, where he drafted opinions for the Third and Ninth Circuit Courts of Appeals and handled a wide range of district court matters involving complex civil litigation, commercial contracts, administrative law, trade secrets, and various statutory claims. …
Pittsburgh, PA
Pretrial Practice & Discovery
American Bar Association Litigation Section
(by Joseph Schaeffer)
Whether attorneys have encountered an inadvertently produced privileged document in their own practice, it is a common enough occurrence that the procedure is well established: Suspend further review, sequester the document, and notify opposing counsel. What is not well-established is what attorneys should do when they encounter inadvertently produced non-privileged documents. A New York trial court recently dealt with this situation in a case of first impression.
In Pursuit Credit Special Opportunity Fund, L.P. v. Krunchcash, LLC et al., No. 615070/2022 (N.Y. Sup. Ct. Oct. 4, 2023), the plaintiff’s financial consultant had responded to a subpoena from the defendants by producing multiple emails with a Dropbox link in the message body. As the defendants discovered early in their review, the Dropbox link not only was “live,” it provided access to a bevy of the plaintiff’s sensitive internal files—including folders named “Legal,” “Tax,” and “Financial.” Rather than immediately notify plaintiff’s counsel, though, the defendants reviewed the Dropbox (with the exception of the “Legal” folder) and sent the plaintiff a letter about a week later that referenced the internal documents as part of a demand for voluntary dismissal of the litigation. The plaintiff responded by moving the trial court to order the defendants to show cause why they should not be sanctioned for accessing the Dropbox files.
The trial court granted the plaintiff’s motion and entered a sanction against the defendants of nearly $156,000, representing the plaintiff’s costs in bringing the motion. Though acknowledging the absence of directly applicable authority, the trial court found guidance in Rule 4.4 of the New York Rules of Professional Conduct. …
Pittsburgh, PA
Pretrial Practice & Discovery
American Bar Association Litigation Section
(by Andy DeGory)
The process of researching and identifying an expert witness can be a daunting task in a complex commercial litigation setting. However, securing the appropriate expert tailored to your needs can be a critical component of a successful litigation strategy. While there is no exact formula for expert witness selection, the following pointers can help lead your team towards the right witness and a favorable outcome:
Charleston, WV and Pittsburgh, PA
Litigation Alert
(By Kip Power and Joseph Schaeffer)
Recently, the Court of Appeals of North Carolina confirmed that limited liability companies (LLCs) formed in other states must obtain a certificate of authority to transact business in North Carolina to prosecute lawsuits in the state’s Superior Court. JDG Environmental, LLC v. BJ & Associates, Inc., et al., Appeal No. COA21-692 (N.C. App. Oct. 17, 2023) (click here for the opinion). As addressed in an Alert released earlier this year, the issue raised in JDG Environmental involves yet another gloss on the question of how state business registration may be mandated and the implications for foreign LLCs and other foreign entities of registering to conduct business in other states. (See “Where Can a Corporation Be Sued for, Well, Anything? (An Evolving Test),” August 2023 Litigation Alert, click here.)
The Court of Appeals decision addressed a civil action filed in North Carolina Superior Court by JDG Environmental, LLC (JDG), an Oklahoma LLC, against BJ & Associates, Inc. (BJ), a general contractor that engaged JDG to perform cleanup work in a residential community in Newport, North Carolina, damaged by Hurricane Florence. During oral arguments on JDG’s motion for summary judgment, counsel for BJ made a cross-motion for summary judgment against JDG on the grounds that it had failed to comply with N.C. Gen. Stat.§ 57D-7-02. That statute provides that “no foreign LLC transacting business in this State without permission obtained through a certificate of authority may maintain any proceeding in any court of this State unless the foreign LLC has obtained a certificate of authority prior to trial.” (A similar statute (N.C. …
Pittsburgh, PA
Smart Business
(By Adam Burroughs featuring Michael Fink)
A company’s capitalization table, simply put, details who has what ownership within a company. That’s straightforward when the company has a single owner. But as other equityholders are introduced, it can become much more complicated.
While an accurate cap table is crucial for determining who gets paid what when a company is sold, it’s also important every day of the company’s life.
“Companies should start dealing with their cap table from day one and will need to stay on top of it throughout the entire life of the enterprise,” says Michael E. Fink, a shareholder at Babst Calland. “An orderly, up-to-date cap table is central to well-informed business decisions.”
Smart Business spoke with Fink about the role of the cap table and how failing to accurately maintain it can be costly.
How are cap tables used?
Cap tables are critical when a company seeks new investment, such as via a private placement of preferred stock. That’s because every investor — both new ones as well as current investors, who typically need to approve new investment — needs to know its position on the cap table post-investment and what impact a contemplated investment would have on its position.
As companies get new funding and prior owners see their positions diluted, a cap table tracks who has how much equity and what type. Introducing multiple equity series often imposes multiple voting thresholds, so the cap table allows management and stakeholders to see what sort of voting blocs serve to approve any corporate action. Such actions can range from mundane to fundamental, such as approving a merger or replacing somebody on the board of directors. …
Pittsburgh, PA and Washington, DC
Environmental Alert
(By Jean Mosites and Ben Clapp)
Pennsylvania Department of Environmental Protection (PA DEP) Secretary Rich Negrin submitted his resignation on October 26. Negrin’s resignation is effective December 9, 2023, and he will be taking a medical leave of absence until his resignation becomes effective. Former Executive Deputy Secretary Jessica Shirley will serve as Interim Active Secretary, effective immediately. Prior to serving as Executive Deputy Secretary, Shirly held the position of PA DEP Policy Director.
Babst Calland will continue to track these developments and provide further updates as additional information becomes available. If you have any questions regarding this change of leadership at PA DEP, please contact Jean Mosites at (412) 394-6468 or jmosites@babstcalland.com, or Ben Clapp at (202) 853-3488 or bclapp@babstcalland.com.
Pittsburgh, PA
Legal Intelligencer
(by Blaine Lucas and Anna Hosack)
A frequent, if folksy, recitation of the purpose behind zoning and land use restrictions is to prevent problems caused by the “pig in the parlor instead of the barnyard.” In other words zoning regulations recognize sometimes a nuisance can be caused by putting the right thing in the wrong place. Therefore, zoning ordinances attempt to keep more “offensive uses” away from more sensitive uses. However, prohibiting a use on paper is one thing, ensuring ordinance compliance is another. The Commonwealth Court in Township of Cranberry v. Randy J. Spencer, Nos. 568, 569, and 570-CD-2022 (Pa. Cmwlth. Aug. 30, 2023) (Spencer II)[1] recently considered one municipality’s decades long battle over operation of a junkyard in violation of its zoning ordinance. A review of the history of this case provides the opportunity to consider the pros and cons of different enforcement options available to municipalities when faced with ongoing violations.
In Spencer, the owner of six parcels located in Cranberry Township, Butler County had been storing a multitude of junk vehicles (117 cars, 11 box trailers, 7 motorhomes, and 8 travel trailers) on his properties in violation of the Township zoning ordinance. The Township had been trying for over a quarter century to induce the property owner to remove the junk vehicles, and he had even paid fines related to the same in the past – yet he never removed the vehicles. In 2019, as authorized by Section 616.1 of the Pennsylvania Municipalities Planning Code, 53 P.S. §616.1 (“MPC”) the Township served five “enforcement notices” (referred to herein as “notices of violation” or “NOVs”) against five of the properties for the unlawful operation of a junk yard in the Township’s A-1 Conservation District. …
Washington, DC
Former transportation executive and veteran regulatory and environmental attorney, James C. Chen, has joined Babst Calland as a Shareholder in the Emerging Technologies practice in the law firm’s growing Washington, D.C. office.
Mr. Chen brings his deep experience in strategic planning and managing legal, policy and regulatory affairs for public and private companies with a focus on emerging technologies in the transportation sector, particularly electrification and sustainable energy.
“A revolution is occurring in the transportation and energy industries – from how we generate and store energy to power various modes of transportation to how those modes are operated with autonomous and artificial intelligence systems to the way we source, process and recycle the minerals needed to enable those modes,” said Mr. Chen. “Moreover, the challenge facing this revolution is not just figuring out how to best power new transportation technology, it’s also about how to best operate the factories that manufacture them.”
For the past decade, in his executive leadership roles for several new transportation technology companies, Mr. Chen was instrumental in the commercialization of modern electric vehicles and the way they are distributed and sold. Most recently, he was Vice President of Public Policy & Chief Regulatory Counsel for Rivian Automotive, LLC and previously, was Vice President of Regulatory Affairs & Deputy General Counsel at Tesla, Inc.
“We are delighted that Jim Chen is now a part of our firm and our Washington, D.C. office,” said Babst Calland Managing Shareholder Donald C. Bluedorn II. “Jim is a great person, and he has an outstanding reputation and track record as a leader in the electric transportation and sustainable energy space. His industry experience and focused approach to providing strategic and creative solutions utilizing new technologies will be a tremendous resource for our clients.”
In addition to managing his own private practice, Mr. …