Seasons Greetings from Erickson | Sederstrom
Nebraska voters approved a ballot measure in November to increase the minimum wage in steps each January 1 from 2023 through 2026. On January 1, 2023, the minimum wage will increase from its current $9.00 per hour to $10.50 per hour. Employers must be aware of this change and must comply with it in paying their employees.
The minimum wage for Nebraska employees will increase according to the following schedule:
January 1, 2023, will increase to $10.50 per hour
January 1, 2024, will increase to $12.00 per hour
January 1, 2025, will increase to $13.50 per hour
January 1, 2026, will increase to $15.00 per hour
This increase in Nebraska’s minimum wage standards follows a trend among many states throughout the country of raising their minimums. Moving forward, Nebraska’s minimum wage will be tied to the consumer price index, or CPI, which measures the average change over time in prices paid by urban consumers for consumer goods and services, influencing inflation.
There are minimal exceptions to the minimum wage, and compliance with wage laws can get complicated. Given penalties and liability risks for non-compliance, it is vitally important that employers understand these laws and have clear policies to meet them. Bonnie Boryca and E|S’s employment attorneys are well-versed in these laws and happy to assist in compliance reviews for employers in Nebraska. Bonnie can be reached at 402-397-2200 or boryca@eslaw.com.
Attorney Bonnie Boryca breaks down what is included in a severance agreement and what you should know before you sign on the dotted line.
Topics discussed include
What is a Severance Agreement?
What Are the typical key parts of a Severance Agreement?
Can I receive more money?
Do I need a lawyer to review it?
Erickson | Sederstrom partner Matthew D. Quandt recently attended TIDA’s 30th Annual Seminar in Orlando, FL. The Trucking Industry Defense Association (TIDA) is a nonprofit association that is devoted to sharing knowledge and resources for defense of the trucking industry and committed to reducing the cost of claims and lawsuits.
Erickson | Sederstrom is pleased to announce that attorneys Joseph C. Byam and Joseph C. Byam II, from the law firm of Byam & Hoarty, have joined the firm.
“Erickson | Sederstrom is a long-standing Nebraska firm that has attorneys who specialize in numerous practice areas. The merger will allow us to provide our clients with the depth of these practice areas, and the experience and expertise of the attorneys who practice in these areas. We think it is a great fit and are excited to get started,” says Joseph C. Byam II.
Joseph C. Byam will serve as Of Counsel to the firm, and continue to assist clients in estate planning, probate, and general business and corporate matters.
Joseph C. Byam II will join the firm as an Associate working in the areas of estate planning. His practice includes preparing estate plans, trust administration, probate of estates, and issues related to both federal and state inheritance tax. He also advises clients in corporate or company formations.
Erickson | Sederstrom welcomes the addition of attorneys Joseph C. Byam and Joseph C. Byam II to their team.
Matthew Quandt and Matt Reilly of Erickson | Sederstrom
Erickson | Sederstrom is proud to announce Matt Quandt and Matt Reilly were recognized by Best Lawyers® in America 2023. They were both selected by their peers and included in the Best Lawyers: Ones to Watch in America™ 2023. These awards are recognitions given to attorneys who are earlier in their careers for outstanding professional excellence in private practice in America. Matt Quandt was selected for his work in Personal Injury Litigation - Defendants. His practice concentrates on trucking accidents, including wrongful death and personal injury; he represents some of the biggest motor carriers and insurers in the nation. Matt Reilly was selected for his work in Personal Injury Litigation – Defendants and Construction. The two main focuses of Mr. Reilly’s practice are in representing contractors across Iowa and Nebraska in construction disputes and in defending complex and severe personal injury claims.
In June of 2022, the Nebraska Supreme Court found it was without jurisdiction over an appeal because a district court’s order for mediation and further determination is not considered a final judgment. Tegra Corp. v. Boeshart, 311 Neb. 783 (2022). The decision stemmed from a dispute over what authority a committee has under Neb. Rev. Stat. § 21-168, which governs special litigation committees for corporations, and whether that authority was analyzed with regard to Neb. Rev. Stat. § 25-1902, which defines a final order.
Patrick Boeshart is the president and sole manager of Lite-Form Technologies, LLC, based in Sioux City, Nebraska. Tegra, 311 Neb. 783 at 787. His wife, Sandra, is the office manager and bookkeeper. Id. Boeshart Management Company is an Iowa LLC owned by Patrick and Sandra. Id. Pat Boeshart Construction is an Iowa LLC that is wholly owned by Patrick. Id. Tegra Corporation is an Iowa corporation in Sioux City, Iowa, and is a minority shareholder of Lite-Form. Id.
Tegra, individually and on-behalf of Lite-Form, filed a complaint against the Boeshart’s alleging breach of fiduciary duty, misappropriation and waste of corporate assets, unjust enrichment, and conversion. Id at 788. Based on Tegra’s claims and pursuant to Neb. Rev. Stat. § 21-168, the manager-defendants appointed Cody Carse to the special litigation committee for the corporation. Tegra, 311 Neb. 783 at 788. Carse determined that it was in Lite-Form’s best interests to settle. A term of settlement included disclosing certain issues to the LLC members and conducting a majority vote on how the issues should be resolved. Id at 792.
When the District Court reviewed the committee’s report, it found the committee acted with enough disinterested independence and good faith, but that its recommendations went beyond the authority of a committee under Neb. Rev. Stat. § 21-168. Tegra, 311 Neb. 783 at 794. The District Court ordered the parties to attempt mediation and report back. Id. Tegra appealed the order and the defendants cross-appealed. Id.
The Supreme Court selected this case to address the scope of final judgments under Neb. Rev. Stat. § 25-1911 and how they apply to the Court’s jurisdiction. First, the Court determined that to be appealable, the order in question must satisfy the requirements of Neb. Rev. Stat. § 25-1902 and when applicable, Neb. Rev. Stat. § 25-1315(1). Id at 796. Under § 25-1315, an express determination by the court about lack of reason for delay in making a final judgment must exist which would be “fatal to [the Court’s] jurisdiction over the appeal.” Id at 798. The Court found there was no express determination here. Further, the Court found the order was not final under § 25-1902. Id.
To determine if the order to mediate was final under § 25-1902, the Court analyzed whether a derivative action is a “special proceeding” that “affected a substantial right.” Id. A special proceeding includes every special statutory remedy that is not in itself an action. While the plea may be connected with an action through application of the proceeding, it is not the integral part of an action. Id at 799. Prior to Tegra, the Court had not addressed if a derivative action was a special proceeding. The Court stated they “will no longer reason that a proceeding is special by the sole virtue of being governed by statutes outside of chapter 25.” Id at 802.
Ultimately, the Court concluded derivative actions are not special proceedings, but an equitable proceeding a member asserts on behalf of the LLC. Id at 802. While a derivative action requires the extra steps of making a demand of other members to enforce the right and requires the complaint to state a demand or state the action is futile, the derivative action is an action nonetheless. Id. The derivative action is a proceeding in a court by which one party prosecutes another for enforcement. It is still possible that orders under § 21-168 are made during a special proceeding, but this is because a special proceeding may be “connected with” an action; not because it, in itself, is an action. Id at 803. Whether a special proceeding is connected with an action or is an action depends on whether the proceedings under § 21-168 are an integral part of the main derivative action or just one of the many steps taken to commence the action. Id.
The four options available to a committee under § 21-168 are: (1) the action continue under the control of the minority-member plaintiff who brought it, (2) the action continue under the control of the committee, (3) the action be settled on terms approved by the committee, and (4) the action be dismissed. Id at 806. After analyzing the four options, the Court determined any proceedings under § 21-168 are just a step in the underlying derivative action and not itself an action. Therefore, orders made pursuant to § 21-168 are not made during a special proceeding. Id at 807.
The Court also held an order under § 21-168 does not impact a substantial right. Id. A substantial right is “an essential legal right...[that is] affected if an order affects the subject matter of the litigation, such as by diminishing a claim or defense that was available to an appellant before the order from which an appeal is taken.” Id at 807. Determining whether an order is substantial depends on if it affects, with finality, the rights of the parties in the subject matter. Id at 810. The Court held that enforcing special litigation committee determinations lead to final judgments, but their effect as independent orders is limited in duration and any delay in their enforcement does not affect any substantial right. Id.
Both parties in this suit attempted to argue the Court’s order of mediation exceeded its authority, but the Supreme Court found it did not affect a substantial right because any alternative dispute resolution is voluntarily entered into. Id at 811.
Ultimately, the Court found the order of the lower court was not a final order because there was not a “special proceeding” that “affected a substantial right.” This means reviewing courts’ rulings issued about a corporate committee decision under § 21-168 are not part of special proceedings for purposes of the final order doctrine. Id at 812.
The Nebraska Supreme Court continues to clarify and update its stance on final orders for purposes of appeals. Erickson | Sederstrom’s litigation attorneys are well-versed in this law and happy to review any appeal issues for clients in the region as lead counsel, for out-of-state attorneys as local counsel, or for Nebraska attorneys needing expert appellate co-counsel for their clients’ matters.
** This article was researched and primarily written by E|S law clerk Amelia Rens. Amelia is starting her third year at Creighton University School of Law and will join E|S as an associate attorney in the fall of 2023 after becoming licensed. We look forward to it! **
As retailers continue to enter the Delta-8 THC market in Nebraska, much uncertainty remains regarding how long the unrestricted sale of Delta-8 THC products will continue in this state. Since we published our last article on Delta-8 THC in October 2021, several additional states have taken steps to ban or regulate Delta-8 THC products. This includes South Dakota, which recently passed a bill making it illegal for persons under 21 to buy Delta-8 THC products.
As we have previously discussed, Delta-8 THC provides a similar, but milder euphoric effect compared to the more common Delta-9 THC (which is abundant in commercially produced medical and recreational cannabis). However, Delta-8 THC does not occur naturally in high concentrations in cannabis plants and must be extracted from CBD oil using a chemical synthetization process. Delta-8 THC became legal in Nebraska through a loophole in the Nebraska Hemp Farming Act, which made hemp products legal in Nebraska as long as they had a Delta-9 THC concentration of not more than 0.3 % on a dry weight basis.
Since we published our last article on Delta-8 THC, we are not aware of any potential legislation that would impact Delta-8 THC sales in Nebraska nor has the Nebraska Attorney General issued any statement or opinion regarding its legality (as he was requested to do by Governor Ricketts). However, there has been other activity that does not bode well for Nebraska Delta-8 THC retailers. For example:
CBD Oracle, a website that reviews hemp-derived products including CBD as well as Delta-8 THC products, sent 51 different Delta-8 THC products to FESA Labs, a licensed testing company in Santa Ana, California, to see if potency levels and other metrics printed on the products’ labels were accurate. The results of these tests determined that (i) 76% of tested products contained Delta-9 THC at greater than the 0.3% limit set by the 2018 Farm Bill, making them federally illegal (and illegal in Nebraska) and (ii) 77% of products tested had less Delta-8 THC than advertised, on average containing 15% less than the advertised amount. The inaccurate labeling and the inconsistent (and illegal) THC levels contained in Delta-8 products have been a reason many opponents have used to push for restrictions on their sale.
The Food and Drug Administration has issued safety warnings regarding Delta-8 THC products based on the unregulated nature of the production process. Some manufacturers may use potentially unsafe household chemicals to make Delta-8 THC through the chemical synthesis process needed to extract it. Final Delta-8 THC product may therefore have potentially harmful by-products and contaminants due to the chemicals used in the process, and there is uncertainty with respect to other potential contaminants that may be present or produced depending on the composition of the starting raw material. In addition, manufacturing of Delta-8 THC products may occur in uncontrolled or unsanitary settings, which may lead to the presence of unsafe contaminants or other potentially harmful substances.
The Attorney General for the State of Kansas issued an opinion in December 2021 which stated that Delta-8 THC is illegal under Kansas law. While such opinion does not constitute binding law in Kansas, it has led to raids on certain Kansas Delta-8 retailers and County Attorneys pursuing charges against such retailers.
For now, Nebraska retailers appear safe, but that could change at any time. Retailers are urged to move cautiously and limit any large-scale investments in a Delta-8 THC business until the future landscape becomes clearer. If you have any questions about Delta-8 THC or other cannabis issues, attorneys at Erickson | Sederstrom can assist you. Attorneys Shay Garvin or Andrew Collins can be reached (402) 397-2200.
In May 2022, the Supreme Court of the United States (“SCOTUS”) unanimously held that an arbitration contract is to be treated “just as the court would any other [contract].” Morgan v. Sundance, Inc., 596 U.S. ___ at 6 (2022). The decision resolves a circuit split among appellate courts and vacates an Eight Circuit holding that the treatment of arbitration clauses require a bespoke procedural rule not present in the review of other contracts.
Robyn Morgan previously worked for Sundance, Inc. at a Taco Bell franchise in Osceola, Iowa. As a part of Sundance’s application for employment, Morgan submitted to an arbitration clause that would shift a dispute from the courtroom to confidential binding arbitration. Id. at 2.
Morgan sued Sundance in federal court for violating the Fair Labor Standards Act, including nonpayment of overtime wages. Id. She asserted that Sundance would take hours worked from one week and shift them to a different week to avoid paying overtime wages. Id. In response, Sundance did not assert its right to arbitration initially, and proceeded “as if no arbitration agreement existed.” Id. Sundance pursued dismissal of Morgan’s complaint and was denied. Sundance then filed an answer to Morgan’s complaint. In its answer, Sundance asserted many affirmative defenses (fourteen, to be exact), but arbitration was absent from the list. Morgan and Sundance eventually met for mediation and were unable to come to an agreement. Id.
Approximately eight months after Morgan filed suit (and only after an unsuccessful mediation), Sundance requested to compel arbitration as agreed to in Morgan’s original application for employment. Morgan opposed, suggesting Sundance waived its right to arbitration by proceeding with the litigation in the manner and for the length of time it did. Id.
Lower courts applied Eight Circuit precedent that a party waives a contractual right to arbitration if it knew of the right, acted inconsistently with the right, and the inconsistency prejudiced the other party. Erdman Co. v. Phoenix Land & Acquisition, LLC, 650 F.3d 1115, 1117 (CA8 2011). The District Court found prejudice against Morgan before the Court of Appeals disagreed and reversed, landing Morgan in arbitration. Morgan, 596 U.S. ___ at 3.
SCOTUS granted certiorari specifically to address a circuit split and reject the requirement that waiver of an arbitration clause requires a showing of prejudice. Id. at 4. Noting that outside of arbitration, when a federal court discusses the presence or absence of waiver, there is no requirement that the waiver cause prejudice to the other party. Id. at 5. The Court discussed the history and introduction of the requirement, originally by the Second Circuit in 1968, and suggested federal policy favors arbitration. Further, if the opposing party is not prejudiced, courts should permit the reintroduction of arbitration. Id. at 6.
SCOTUS took issue with the added requirement to show prejudice and likened the requirement to an additional procedural rule, not present in other contracts. Id. Further, the Court read the Federal Arbitration Act as clearly stating no additional or custom procedural rules should be created to either favor or disfavor arbitration as a method of resolution. Id. at 7. For this reason, the requirement to show prejudice when assessing if arbitration has been waived should not be necessary.
With the rejection and vacating of the Eight Circuit’s judgment, SCOTUS sent the case back for review of Sundance’s conduct and whether the conduct is a waiver of the arbitration clause. Id.
The holding impacts simple strategic sequencing principles of pretrial procedure. Specifically, to lean on a valid and binding arbitration agreement as a type of fallback or “wait-and-see” option while exploring alternative procedural remedies now comes with increased risk. Arbitration as an option should likely be acknowledged as present, even acted upon, if a party wishes to not risk their conduct presenting as a waiver of an existing contractual right to arbitration.
Steve Lydick, E|S law clerk, assisted in preparing this article.
If you have questions about arbitration clauses in employment contracts, contact Heather Veik or any of the E|S employment attorneys at 402-397-2200.
An important part of estate planning is preparing for the recovery of any Medicaid assistance, especially if you or your spouse are over age 55 and have received any Medicaid benefits.
Medicaid is a federal and state partnership that helps people with limited resources and income pay for health and long-term care costs. People over age 55 usually receive Medicaid funding for nursing facility services, home and community-based services, and related hospital and prescription drug services.
There is a common misconception that once a person has exhausted their personal financial resources in paying for the cost of their health and long-term care, then Medicaid funding will continue paying for care at no cost to the person. While it is true that Medicaid will begin covering certain health expenses once a person meets asset and resource requirements, Medicaid funding is more of a loan, not a cost-free grant of funding.
Because certain assets, such as a house, are disregarded when determining whether a person qualifies for Medicaid, federal and Nebraska law requires the Nebraska Department of Health and Human Services (DHHS) to recover any Medicaid expenses. The debt of Medicaid expenses arises during the recipient's lifetime; however, DHHS only seeks recovery after the recipient's death or the death of the recipient’s spouse. The outstanding debt is recovered from the former Medicaid recipient’s estate through a process known as Medicaid Estate Recovery.
If a Medicaid recipient was 55 years of age or older, then their assets after death are subject to Medicaid Estate Recovery. Like with most rules, there are exceptions. First, DHHS cannot recover costs of Medicaid assistance provided to a recipient under the age of 55 unless the recipient permanently resided in a medical institution. Second, DHHS cannot recover costs if the deceased recipient is survived by a spouse, a child under 21, or a dependent regardless of age who is blind or permanently disabled.
After a Medicaid recipient passes away, DHHS works with families, attorneys, and courts to recover funds for the Nebraska Medicaid Program. In Nebraska, DHHS acts as a creditor with a claim against the assets or estate of a decedent; however, DHHS usually does not place liens on specific property for purposes of Medicaid Estate Recovery. While a former Medicaid recipient’s assets and estate are subject to recovery, the recipient’s heirs may seek an exemption or reduction if recovery would create a hardship.
Planning for Medicaid Estate Recovery is critical if you or your spouse are over the age of 55 and have received any Medicaid benefits. If you have any questions about Medicaid Estate Recovery and how it may impact your estate plan, please reach out to any of the highly knowledgeable and experienced estate planning attorneys at Erickson | Sederstrom at (402) 397-2200.
In Becher v. Becher, a recent Nebraska Supreme Court opinion, the Court outlined the general rule for judgment interest and explained when courts may award judgment interest. 311 Neb. 1 (2022). In sum, courts hearing equitable claims—which are claims seeking something other than money damages—may award or withhold interest as the court deems reasonable and just, except where a party is entitled to interest “as a matter of right.” Id. at 16. This raises the question: when is interest recoverable “as a matter of right,” and at what rate?
Under Nebraska law, interest is generally recoverable “as a matter of right” in loan default and breach of contract claims.
Loan default claims: recoverable interest is usually outlined in the loan agreement. A party may contract to borrow or loan money at any rate of interest not exceeding 16% per year. Neb. Rev. Stat. § 45-101.03. This limitation does not apply to loans to a corporation, partnership, LLC, or trust (or to a person or entity guaranteeing a loan to the same), or loans in excess of $25,000 payable to a single creditor. A “fallback” interest rate of 6% per year applies where no interest rate is mentioned in the loan or contract. § 45-102.
Breach of contract claims: interest is divided into two categories: Pre-judgment interest and post-judgment interest.
Pre-judgment interest accrues from the time a party breaches the contract until the date judgment is entered. There are “three ways to recover pre-judgment interest, and none is preferred.” Pre-judgment interest may be recovered on (a) liquidated claims, (b) unliquidated claims, and (c) liquidated or unliquidated breach of contract or quasi-contract claims. Weyh v. Gottsch, 303 Neb. 280, 314 (2019).
Liquidated claims—where there is no dispute as to the amount owed—interest is recoverable at the post-judgment interest rate set forth in § 45-103 (explained below). § 45-103.02(2).
Unliquidated claims—interest is recoverable if four conditions are met: (1) a written offer must be made and mailed to defendant to allow judgment on the terms stated in the offer; (2) the offer must be made no less than ten (10) days prior to trial; (3) a copy of the offer and return receipt must be filed with the clerk of court where the action is pending; and (4) the offer is not accepted prior to trial or within thirty (30) days of the date the offer was made, whichever occurs first. Neb. Rev. Stat. § 45-014. When all four conditions are met, pre-judgment interest may be recovered at the post-judgment interest rate outlined in § 45-103 (explained below).
Here’s the real kicker: Interest on liquidated or unliquidated breach of contract or quasi-contract claims is recoverable at a rate of 12% per year if the claim is (1) a claim on any instrument in writing (like a contract); (2) to settle an account from the date the balance is undisputed (when the breaching party agrees they owe the amount); (3) on unjust enrichment claims; or (4) on money owed and unreasonably withheld. § 45-014.
Post-judgment interest: Effective January 20, 2022, the statutory judgment interest rate in Nebraska is 2.223% per annum. As the name implies, post-judgment interest begins to accrue from the date judgment is entered and continues until the judgment amount, plus accrued interest, is paid in full. This rate is adjusted regularly by the Nebraska State Court Administrator to be “two percentage points above the bond investment yield” for 26-week United States Treasury Bills. § 45-103.
The Eighth Circuit Court of Appeals recently held there was no failure to accommodate when an employee did not state that a requested change was connected to a medical condition. In Powley v. Rail Crew Xpress, LLC, 25 F.4th 610 (8th Cir. 2022), the plaintiff, Leah Powley (“Powley”), was hired in July 2015 as a driver for the defendant, Rail Crew Xpress, LLC (“RCX”), a transportation company that contracts with railroads to transport their crews. Within three years of her hiring, Powley requested six accommodations for various medical and familial reasons. With each request, she submitted a doctor’s note identifying potential disabilities, including headaches and back pain, along with doctor-recommended restrictions. RCX granted each requested accommodation. During this time, RCX even promoted Powley to the position of part-time dispatcher, referred to within the company as a “starter.” In this position Powley scheduled and coordinated drivers to move crews from one location to another.
After holding the position of starter for approximately 3 months, during which time RCX granted Powley multiple accommodations per doctor’s notes, Powley asked to return to her driver position informing one of her supervisors that the noise level in the office was interfering with her ability to perform her duties. She informed another supervisor that the noise gave her a headache. She also submitted a doctor’s note that stated only, “Patient may work 12 ½ hours per day. Must have 11 hrs between shifts.” 25 F.4th at 612. The company rejected the request, citing a policy that once an employee is promoted to a starter they cannot return to a driver position.
Thereafter, Powley reported to work and was upset that a dry-erase board tracking drivers and vehicles had been moved to a location that made it difficult for her to write on. She asked the other dispatchers to rearrange the space and when they told her to talk to a superior, she announced “I’m done. I have to leave.” 25 F.4th 612. The next day she emailed RCX stating she was unable to work as a starter because the office noise interfered with her ability to perform her duties. She also reiterated her frustration with the dry-erase board placement and again asked to return as a driver. Significantly, she did not mention back pain or headaches in the e-mail. RCX treated this as a resignation.
Powley sued RCX alleging that it failed to accommodate her disabilities and retaliated against her for requesting an accommodation in violation of the Americans with Disabilities Act (“ADA”) and Nebraska Fair Employment Practices Act. RCX moved for summary judgment (dismissal without a trial) and the trial court granted that motion, dismissing Powley’s claims. She appealed the ruling to the Eighth Circuit. The Eighth Circuit affirmed the dismissal, holding that Powley had not actually sought a reasonable accommodation for an alleged disability under the ADA.
The Eighth Circuit observed that under the ADA the initial burden to request an accommodation is on the employee. While the request does not need to be in writing and there are no necessary “magic words,” the employee must make it clear that he/she wants assistance for a disability. The Eighth Circuit stated, “where there is no conceivable request for an accommodation, there is no failure to accommodate.” 613 F.4th at 613. The Eighth Circuit found that Powley did not satisfy the burden for a failure to accommodate claim. In its opinion, the Eighth Circuit noted that Powley sought and received numerous reasonable accommodations for her back pain, observing that each of those requests were accompanied by a doctor’s note or some indication that the request was due to back pain. Her last request, however, neither attached a doctor’s note nor connected her request with back pain. Therefore, she did not show that request was based on an alleged disability.
This case illustrates the importance of the rationale an employee provides for a requested accommodation and documentation supporting such request. When the employee was able to provide a doctor’s note with the request for accommodation, the employer granted the accommodation. When she did not provide a doctor’s note or connect the request for accommodation to a medical condition that potentially qualified as a disability, the employer had no duty to provide an accommodation. Although it did not directly impact the decision, the employer’s history of providing accommodations when properly connected to potential disabilities likely helped the employer’s position on the disputed issue. Therefore, employers should carefully review requests to ensure they are for disabilities or alleged disabilities and treat such requests accordingly. If you have questions about when an employee must be accommodated for a condition, Heather Veik and E|S employment attorneys can be reached at 402-397-2200.
The recent decision by the United States District Court for the Southern District of New York in In re Purdue Pharma LP, 635 B.R. 26 (S.D.N.Y. 2021) highlighted a significant unsettled issue in bankruptcy law that will receive much more attention in the coming months and years. Purdue Pharma highlighted the question of whether a confirmed bankruptcy plan can release non-debtor third parties from liability related to the subject of the bankruptcy case. Ultimate resolution of this issue will have far-reaching consequences for creditors and for parties related to bankruptcy debtors, such as corporate officers or owners.
In Purdue Pharma, the debtor pursued bankruptcy due to substantial litigation regarding its product, OxyContin. Purdue Pharma proposed a bankruptcy plan that included a release from liability in existing and future opioid lawsuits for members of the Sackler family, who founded and managed the debtor. The proposed release would have been binding against future opioid lawsuit plaintiffs who were not involved in the bankruptcy, and against state attorneys general who opposed confirmation of the Purdue Pharma plan. The court concluded that the bankruptcy code did not authorize courts to confirm bankruptcy plans that include nonconsensual releases of third-parties. The court found that Congress expressly granted bankruptcy courts the authority to approve plans with nonconsensual third-party releases only in asbestos cases.
The third-party release issue highlighted in Purdue Pharma poses a significant challenge for large bankruptcy cases, typically under Chapter 11. Chapter 11 plans are custom-tailored to specific cases and are intended to allow the debtor to reorganize and emerge from bankruptcy and continue operating. Chapter 11 plans often include creative provisions, including contributions by non-debtor third parties in exchange for release and indemnification of these third parties.
Currently, federal courts across the country have split on whether the type of release at issue in Purdue Pharma is permitted by federal law. The issue is expected to eventually be addressed by the United States Supreme Court.
Because bankruptcy law regarding nonconsensual third-party releases is rapidly evolving, the rights of creditors and parties closely related to debtors may change significantly in the coming months and years.If you have questions regarding how a bankruptcy has affected your rights, Erickson|Sederstrom recommends consulting with counsel.Erickson|Sederstrom’s experienced litigation and bankruptcy attorneys can help work through these and other bankruptcy-related issues, including pursuit of creditor claims and defense of preference actions.
What is the difference between “possession” of drugs and “possession with intent to deliver” drugs? In Nebraska, it’s having one ounce of cocaine and “expert testimony” that one ounce is too much for personal use. Expert opinion of possession with intent to deliver can make a difference in punishment. Mere possession of cocaine in Nebraska is a Class IV felony, punishable by up to two years in prison and a $10,000 fine. Possession with intent to deliver carries a minimum penalty of three years imprisonment.
On April 1, 2022, the Nebraska Supreme Court affirmed the conviction of a western Nebraska attorney of one count of possession of a controlled substance, cocaine, with intent to distribute. Defendant was the Box Butte County Public Defender at the time of the offense, January 7, 2020. The court sentenced Defendant to the mandatory minimum sentence of three years imprisonment.
There was no evidence he had ever delivered or attempted to deliver a controlled substance to anyone in Scotts Bluff or anywhere else, according to his defense attorney at the time of sentencing. (Alliance Times-Herald, March 31, 2021). However, the charge of “possession with intent” does not require proof of delivery, but simply proof of intent. In this case proof of intent was largely based on circumstantial evidence including “expert testimony” by a Scotts Bluff police department investigator.
The Nebraska Supreme Court made it clear that “evidence of the quantity of a controlled substance possessed, combined with expert testimony that such quantity indicates an intent to deliver, can be sufficient for a jury to infer an intent to deliver.” State vs. Worthman, 311 Neb. 284, at 291 (2022). The lesson for potential defendants is this: There need not be proof that any amount of cocaine (and many other drugs) was ever distributed, delivered or sold. Circumstantial evidence that “a lot of cocaine” was possessed, “expert testimony” that such amount was more than enough for one user, can convict a defendant of possession with intent to deliver.
Although Nebraska does not currently have an estate tax, it does still impose an inheritance tax. The Nebraska inheritance tax applies to an individual who (1) dies a resident of Nebraska, or (2) regardless of residency, an individual who owns real property in Nebraska at the time of their death. The inheritance tax must be filed in and paid to the county in which the decedent resided or within the county in which his or her real property was located. The inheritance tax is due and payable within twelve (12) months of the decedent’s date of death, and failure to timely file and pay the requisite tax may result in interest and penalties.
The tax rate and applicable exemption amount varies based on the degree of kinship between the decedent and the respective beneficiary. Now for some good news. On February 17, 2022, Legislative Bill 310 was signed into law. The new law effectively reduces inheritance tax rates and increased inheritance tax exemptions for deaths occurring in 2023 and beyond.
Currently, spouses receive a full exemption from paying Nebraska inheritance taxes, and they will continue to be exempt under the new law. In addition, the inheritance tax will not apply to transfers to individuals twenty-one (21) years or younger, and there is no tax imposed upon property passing to an entity organized exclusively for religious, charitable, public, scientific, or educational purposes. Beyond that, the Nebraska inheritance tax is as follows:
Transfers to immediate family members other than the surviving spouse -- The tax rate on transfers to immediate relatives (e.g., children, grandchildren, siblings, parents, etc.) will remain 1%, however, the exemption amount will increase from $40,000 to $100,000, per beneficiary.
Transfers to more remote family members -- The tax rate on transfers to remote relatives (e.g. aunts, uncles, nieces, and nephews) will be reduced from 13% to 11%, and the exemption amount will increase from $15,000 to $40,000, per beneficiary.
Transfers to unrelated persons -- The tax rate on transfers to unrelated individuals will be reduced from 18% to 15% and the exemption amount will increase from $10,000 to $25,000, per beneficiary.
If you have questions regarding Nebraska inheritance taxes, the aforementioned updates, or are interested in reviewing your current estate plan in light of these changes, please reach out to any of the highly knowledgeable and experienced estate planning attorneys at Erickson & Sederstrom.
Once considered an endeavor reserved for the ultra-wealthy, buying an aircraft is actually a fairly common event. Whether you are interested in a Piper J3 Cub, a Gulfstream G650, or something in between, there are a many justifications for purchasing an aircraft, particularly in this economy.
Many purchasers cite a motivation to reinvest in their business, while proving an asset to depreciate. Others worry about growing inflation as a reason to lock in ownership in a tangible asset. Some point to the desire to travel privately in the age of COVID. Still other buyers see how travel by private aircraft saves significant time as compared to traditional travel on the airlines. Whatever the reasons might be, aircraft ownership is probably more accessible than you might imagine. Still, there are a lot of moving parts to work your way through before bringing that plane to its new home base.
Starting your search for the right aircraft likely begins with identifying your intended use. Is the aircraft going to be used for fly-ins and the ocasional $100 hamburger? Or will this be a method for you and/or your company to become more efficient while improving quality of life? Regardless of the reasons, there are some things you should know before making an offer on an aircraft.
In helping to identify the right plane for you or your company, you’ll need to know what the true cost of ownership is for any given candidate. Of course, this goes beyond the purchase price. There are fixed and variable costs to consider. These will include the actual cost of operation, usually calculated per flight hour. Will the costs of insurance for the aircraft and the flight crew be within reason? Is there a hangar available at the preferred airport? Will the costs of ownership be borne by an individual, a company or an owner group? What are the sales and use taxes that need to be considered? Will the aircraft be depreciated? Will financing be required? These are only a few of the factors a buyer should be considering.
After the intended use and potential costs have been evaluated, the next task is to identify an aircraft that can fit the buyer’s needs and within the estimated budget. With the very tight aircraft market we’re seeing at this time, it could be that you’ve found your chosen plane through an aircraft broker. Perhaps the candidate for acquisition was identified by word or mouth. Or, maybe, you found the aircraft on one of the many websites, advertising planes for sale. However you found the right aircraft, you’ll want to demonstrate some level of commitment to the seller, either through a letter of intent, a deposit with an escrow company, or both. Next comes the purchase agreement, followed by a test flight, and a pre-purchase inspection of the aircraft. Finally, if the aircraft is airworthy or brought up to specs during the inspection process, closing will be scheduled. In aircraft transactions, this can usually take place very soon after the inspections. For this reason, financing should already be in place so as not to hold things up.
While purchasing an aircraft can involve a lot of activity in a compressed period of time, the right team can make the transaction go smoothly. Selecting the right legal counsel to oversee that team, can take the pressure off of an otherwise involved transaction. If aircraft ownership is something you’ve dreamed of, give us a call and let’s see if we can get you airborne. Even if full ownership seems intimidating, we can discuss alternatives that might satisfy your goals without the same level of commitment.
Under Nebraska law, political subdivisions may not be sued without an express grant of power because they maintain sovereign immunity. The Nebraska Political Subdivisions Tort Claims Act (“PSTCA”) provides a limited waiver of sovereign immunity with respect to some types of tort claims against political subdivisions. Neb. Rev. Stat. § 13-901 et seq. One of the newest features of the PSTCA is that political subdivisions enjoy an immediate right to appeal when a request for immunity is denied by a trial court on summary judgment. The Nebraska Supreme Court was recently presented with an issue of first impression as to the limitations of that right to immediate appeal.
In Clark v. Sargent Irrigation Dist., 311 Neb. 123 (2022), the Nebraska Supreme Court analyzed whether a district court’s denial of a political subdivision’s pretrial motion was a final order under Neb. Rev. Stat. § 25-1902(1)(d). In Clark, an irrigation district employee prepared a mixture of herbicides and sprayed the mix on several trees along a canal, which damaged the crops of nearby landowners. The landowners filed suit in the District Court for Custer County, alleging that the district’s employee was negligent in preparing the herbicide. The irrigation district moved the district court for summary judgment, arguing that the employee’s actions of preparing the herbicide fell within the discretionary function exemption of the PSTCA. The exemption states that the performance or nonperformance of a discretionary function cannot be the basis of tort liability of the political subdivision under the PSTCA.
The district court denied the irrigation district’s motion, reasoning that the discretionary function exemption does not apply when a statute, regulation, or policy specifically describes a course of action. The irrigation district sought an interlocutory appeal on the district court’s Order denying its motion for summary judgment.
The Nebraska Supreme Court concluded that it had appellate jurisdiction to review the irrigation district’s assignment of error under § 25-1902(1)(d) because the motion at issue was based on the assertion of the district’s sovereign immunity, the denial of which does constitute an appealable order. Clark v. Sargent Irrigation Dist. stands for the proposition that a district court’s denial of a political subdivision’s motion for summary judgment asserting the PSTCA’s discretionary function exemption was a final appealable order under § 25-1902(1)(d).
E|S attorneys have vast experience and a deep understanding of the Nebraska Political Subdivision Torts Claim Act. Matt Reilly and E|S litigators can be reached at 402-397-2200.
Retaliation claims are among the most numerous types of employee claims processed through the Equal Employment Opportunity Commission and state EEO agencies. Central to these claims are whether an employee engaged in protected activity and how the employer responded to it. A recent Eighth Circuit case involving Nebraska law on retaliation is exemplary.
In Walker v. First Care Mgmt. Grp., LLC, the United States Court of Appeals for the Eighth Circuit held that employees’ conduct in response to a facility resident’s abuse upon another facility resident did not constitute protected conduct to support a retaliation claim under Nebraska law. 27 F.4th 600 (8th Cir. 2022).
Two caregivers employed by a retirement community witnessed a resident sexually assaulting other residents several times. Per company policy, employees had to report resident abuse immediately, by reporting any incident to a supervisor, completing an incident report, and making a note in the resident’s chart. The two employees claimed they reported observing the abuse, but on at least one occasion, they waited to make their report until day after the incident.
The Nebraska Department of Health and Human Services (“DHHS”) responded to an anonymous complaint about the resident’s abuse and made an unannounced site visit of the facility. Shortly after, a retirement community manager claimed she was unaware of the abuse that led DHHS to the facility. Several employees stated the manager must have been aware of the abuse because the employees reported such abuse. Upon completion of the visit and a staff meeting, the two caregiver employees were terminated.
The employees filed suit alleging, among other claims, unlawful retaliation after engaging in a protected activity. The retirement community moved in the District Court for summary judgment, which was granted, resulting in a judgment against the employees and dismissing their claims. The employees appealed.
On appeal, the Eighth Circuit considered whether the lower court erred in granting the retirement community’s motion for summary judgment. Under Nebraska law, an employer may not discriminate against an employee who opposed or refused to carry out any unlawful action of the employer. Neb. Rev. Stat. § 48-1114(1)(c). In other words, employees claiming retaliation must demonstrate that they opposed an unlawful practice of their employer.
The two employees alleged engaging in the following activities: the report made to DHHS, internal complaints to supervisors about the abuse, and confronting a manager about her alleged ignorance of their report of abuse. However, none of these acts were found to have opposed unlawful activity of the retirement community. Nor did they amount to acts of refusing to carry out an unlawful action. Thus, there was no protected activity on which to base a retaliation claim. Accordingly, the Eighth Circuit upheld the summary judgment because the employees’ conduct in response to the abuse of the facility resident did not constitute protected conduct under Nebraska law.
Obviously, the facts of the case suggest egregious acts of abuse. However, a retaliation claim is closely focused on the activities of employees and the response of the employer. Any time an issue arises, employers are cautioned to involve their attorneys at an early stage to avoid or minimize potential claims of retaliation and to appropriately respond to abuse, to complaints, or to protected activity of employees.
Thanks to Rob Toth, current law clerk and joining E|S as an associate attorney in the fall of 2022, for assistance in preparing this article.
Bonnie Boryca and E|S employment attorneys can be reached at 402-397-2200.
In Schmid v. Simmons, the Nebraska Supreme Court held that the common law “clean up” doctrine is still good law, discussed when a party is entitled to a jury trial on civil disputes, and clarified how a litigants may waive the right to jury trial on legal claims. 311 Neb. 48 (2022).
The Nebraska Constitution guarantees the right to trial by jury. However, on civil matters, which are generally disputes about money or other non-criminal matters, the state Constitution allows the Legislature to modify this right to allow juries less than 12 to decide matters in courts inferior to the District Courts, and, in such cases, the decision may be rendered by five-sixths majority of the jury. Neb. Const. art. I, § 6.
Litigants still have a right to seek a jury trial on legal claims—those involving disputes over specific real or personal property and money damages—but not on equitable claims, which may be tried “to the bench” without a jury. Whether a claim is legal or equitable rests upon the “main object” of the claim, which is shown by the issue the lawsuit seeks to resolve.
Under the “clean up” doctrine, a court may determine equitable issues and then “clean up” other legal issues in the case, even where a defendant asserts a legal claim as a defense or counterclaim. The purpose of this doctrine is to preserve judicial efficiency by allowing the same court to hear and determine all disputed issues in a single lawsuit.
Applied to the facts, the Court found proper the district court’s decision to resolve plaintiff’s equitable claims (quiet title, declaratory judgment, LLC accounting, and judicial dissolution) and then “clean up” defendant’s amended counterclaims seeking damages for breach of contract, a legal claim. Because the District Court retained jurisdiction to quiet title and determine rights of LLC members, and because the parties agreed the matter before the court was equitable, the District Court correctly applied the “clean up” to resolve any remaining legal claims all equitable claims were decided.
The Court further clarified the manner in which parties may waive the right to trial by jury on a breach of contract action, or with the court’s agreement in other actions, finding that waiver could be accomplished in three ways: (1) by consent of a party where the other party fails to appear, (2) by written consent delivered to the clerk of court, or (3) by oral consent in open court on the record. Neb. Rev. Stat. § 25-1126.
E|S attorneys are experts in civil trials, whether to a jury or to a judge, whether in equity or common law. Bonnie Boryca and E|S litigators can be reached at 402-397-2200.
Thanks to E|S law clerk Ross Serena for contributing to the above article.
