Lululemon Product Defect

Lululemon Athletica Inc. LLC recently announced a product recall for its long black yoga pants, which turned see-through when wearers bent over. Lululemon CEO Christine Day claims the only way to detect the defect is to have the customer put the pants on and bend over.[1] Apparently, some stores were taking this advice from their CEO much too literally – stores throughout the country have reportedly been requiring customers to bend over so they can verify that the pants they’re trying to return are in fact defective.[2] However, New Yorkers can rest assured that a rep from Lululemon’s Union Square location insists that customers can bring in the pants for a full refund or exchange “no questions asked” and no bending over required.[3]

In addition to creating some embarrassing PR for the company, the see-through pants are also having an economic impact. The recall affected 17% of all the women's pants sold in Lululemon's stores.[4] The company’s shares have declined 15% this year as of last Thursday.[5] 

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[1] According to Bloomberg article available here: http://www.bloomberg.com/news/2013-03-21/lululemon-forecast-trails-estimates-on-pulled-transparent-pants.html.

[2] According to Shine from Yahoo article available here: http://shine.yahoo.com/fashion/-lulu-lemon-says--women-do-not-have-to-bend-over-203021965.html.

[3] According to Shine from Yahoo article.

[4] According to MSN Money article available here: http://money.msn.com/now/post.aspx?post=32011859-199b-4ee1-9a84-3f817a42cad0.

[5] According to MSN Money article. 

Tips for Startups and Small Businesses

Pantano & Gupta has a soft spot for startups and small businesses and has been serving the needs of these beloved clients since the firm’s inception. So, in honor of our startup and small business friends, we are outlining common issues you may encounter as a new venture. Most times, legal mishaps occur simply because no one consulted an attorney. We hope that none of you will face these legal problems. With the right legal assistance, you won’t.

If It Happened to Them, It Can Happen to You…

Cautionary Horror Story. This story told by Nevada-based Bongiovi Law Firm highlights the importance of creating agreements to manage cofounder disputes.[1] Jack and Bill formed a two-member LLC and decided to hire this Nevada firm to help them with preliminary legal work. Upon retaining Jack and Bill, the firm promptly asked them to see the operating agreement governing their LLC. Jack responded that they had obtained a generic operating agreement when they formed the LLC and that was their only governing document. This, understandably, troubled their new lawyers. Every few days for the next couple of months, the firm attempted to obtain the generic operating agreement to update it to fit the needs of Jack and Bill’s LLC – Jack and Bill were too concerned running the business to find the document they thought they’d never need. One day, the firm received a call from Jack in a panic – Bill was angry and leaving the company. The firm’s first piece of advice was to remove Bill as a signer on the business bank accounts. Jack went to the bank only to find that Bill was at another branch at the same time…withdrawing $21,000 from the company’s checking account. Because Bill was still a signer on the account, the bank could not refuse to give him the money and because the generic operating agreement did not restrict an LLC member’s ability to withdraw money from the company bank account, Bill didn’t breach any agreement by doing so. Jack’s only recourse at this point was to “file a lawsuit against Bill, hope he wins, and then hope he can collect the money.” You can avoid situations like this if you plan for the horrible.

Plan for The Horrible

Operating Agreements. I know, you’re excited to start your own company. In fact, you can’t wait and really don’t care to think about any of the logistics before you do. But, part of planning for the horrible is planning for the unpleasant possibility that your cofounder may not always be the friend or business partner you expected him or her to be.[2] It is an awkward situation to work with cofounders to plan for your potential “falling out” – but, it’s worth it. To protect yourself and your business, it is important that you create agreements during formation that clearly outline what will happen if you or your cofounder decide to leave. These agreements should include terms concerning who gets what when a cofounder leaves the company and importantly – when money can be withdrawn from any bank accounts. It’s a horrible situation to have a cofounder leave the business; it’s an even worse situation not to have a plan when that happens.

Don’t Mix Business and Personal Money. One thing that every small business or startup wants to avoid is called “piercing of the corporate veil.”[3] Small companies often choose to form as a corporation or limited liability company (LLC) to shield shareholders, officers, and directors of the company from personal liability for business debts and obligations. However, in situations where it seems that the corporation is simply an alter ego for the persons running it, that shield or “veil” can be pierced making those persons liable for the debts and obligations of the business. The fastest way to lose the corporate shield is by mixing business and personal funds.[4] DO NOT put business funds into your personal accounts or use them to cover personal expenses and vice versa. Open business bank accounts and credit cards and never use them for personal activities! EVER!

Put It In Writing. When a third party is important to your business model, make sure to enter into a signed, written contract with that party.[5] As Jeff Yelton noted in his article on small business pitfalls, verbal contracts “sealed with a handshake” are no longer sufficient to create a binding obligation.[6]  Although verbal contracts may be legally sound, they are hard to prove and too easily altered. If you find a supplier, client, or other business partner who offers to create a valuable relationship – have that relationship recorded in a signed written contract. Include the most important terms of that third party’s obligations. That way, if the third party later decides they no longer want to perform their end of the deal, you have a solid claim for breach of contract evidenced by a signed, written agreement.

Protect Your Intellectual Property Rights and Don’t Violate Others’

Protect First, Use Later. Intellectual property protection is not something you should think about after you design a valuable creative project, brand logo, or useful invention.[7]  Rather, there are preemptive types of protection in almost every area of intellectual property that allow you to protect first and use later. For example, to protect a logo you can file an “intent-to-use” trademark application based on a bona fide intention to use that logo in the future.[8] In order to quickly protect an invention or procedure used by your business, you can file a “provisional” patent application that requires much less information and a much lower fee than a full patent application. Then, you can take the time to determine your invention’s commercial potential before filing the full application and investing the full fee amount, which you must usually do within one year of filing of the provisional application.[9] Remember also that copyright protection attaches to your creative image, song, or video upon creation, so that you can register your copyright as soon as the creative project is completed as long as it is in a fixed, tangible medium of expression.[10]

Affordable Protection Does Exist. Startups and small business often believe it is too costly and time-consuming to protect their intellectual property. While that may be true for certain types of intellectual property, such as patents, there are other forms of protection that are much more affordable. If you want to protect your brand, product design, or product packaging, you can file trademark applications for protection of all three. Trademark and copyright protection are much cheaper[11] than patent protection and may be sufficient depending on the type of business and the subject matter you’re seeking to protect.  

License Others’ Intellectual Property. The internet provides a plethora of images, sounds, and videos that you may want to use in promoting your business. However, just because something can be downloaded online does not mean your company has the right to use it. In fact, often times you don’t. Make sure that you have the license to use any photographs, clipart, songs, sound clips or movies that you use on your company brochure, business card, or website. Otherwise, you may find yourself being sued for a hefty sum after several years of seemingly minor, but lengthy infringement. 

Avoid Employment Lawsuits.

Have an Employee Termination Procedure and Follow It. There will likely be a time in the life of your company that you have to terminate an employee. It is important to have a termination procedure in place before you need to fire someone.[12] It is also important to follow that termination procedure. If you do, you will have strong evidence in your favor against an argument that the employee was terminated for the wrong reasons. Point to the wrongdoings of the employee, as documented according to your disciplinary and termination procedure, and you have a defense. This relates to another important tip for employment issues – keep a paper trail – meaning document EVERYTHING so that an employee attempting to fudge the real facts of his or her termination cannot get away with it.[13]

Maintain an Internet and Security Policy. There are several reasons why you need an internet policy and a security policy for your new business.[14] An internet policy that specifically outlines acceptable online activities on company computers can help keep employees productive and minimize the potential for sexual harassment or other liability-creating behavior facilitated by company technology. A security policy that delineates which employees can access confidential information and trade secrets, how company files can be transferred to third parties, and who has the authority to access client lists will prevent leakage of valuable company information. These policies can be included in an employee handbook or drafted as separate agreements.

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[1] http://bongiovilaw.com/2011/06/small-business-horror-story-1-shady-partner-generic-operating-agreement-disaster/.

[2] Mark Britton, Ten Legal Pitfalls Startups Should Avoid, Fox News (July 12, 2011), http://smallbusiness.foxbusiness.com/legal-hr/2011/07/12/ten-legal-pitfalls-startups-should-avoid/ (last visited on March 7, 2013).

[3] Glencap, How to Avoid Piercing the Corporate Veil and Maintain Personal Asset Protection for Your LLC, http://glencap.hubpages.com/hub/avoidpiercingthecorpveil (last visited on March 7, 2013).

[4] Suzanne Kearns, 5 Small Business Legal Nightmares – and How to Avoid Them (Jan. 24, 2012), http://blog.intuit.com/money/5-small-business-legal-nightmares-—-and-how-to-avoid-them/ (last visited March 7, 2013); See also Mark Britton, Ten Legal Pitfalls Startups Should Avoid.

[5] Mark Britton, Ten Legal Pitfalls Startups Should Avoid; See also Suzanne Kearns, 5 Small Business Legal Nightmares – and How to Avoid Them; See also Eight Common Legal Mistakes That Startup Businesses Make, http://www.thesmallbusinessplaybook.com/common-legal-mistakes-startup-businesses-make/ (last visited on March 7, 2013).

[6] Jeff Yelton, 5 Common Legal Pitfalls and How to Avoid Them (Sept. 5, 2011),  http://www.varsguide.com/5-common-legal-pitfalls-and-how-to-avoid-them/ (last visited March 7, 2013). 

[7] Register it, use it, and defend it – in that order. Barbara Findlay Schenck, Register, Protect and Defend (Jan. 3, 2011), http://www.entrepreneur.com/article/217800 (last visited on March 7, 2013).

[8] See 15 USC 1051(b).

[9] See 35 USC 111(b); Provisional Application for Patent, http://www.uspto.gov/patents/resources/types/provapp.jsp; Provisionsal Application Brochure, http://www.uspto.gov/patents/resources/types/provisional_app.pdf.

[10] See 17 USC 102(a).

[11] While the basic fees for both somewhere between $300 and $400, there is much more preparation work required for filing a patent that will result in greater attorneys’ fees. See USPTO Website, http://www.uspto.gov/web/offices/ac/qs/ope/fee031913.htm (for patent and trademark filing fees).

[12] Dana Schultz, Top Ten Legal Mistakes of Startup and Early Stage Companies, LawPivot Blawg (Oct. 11, 2011), http://blog.lawpivot.com/2011/10/top-ten-legal-mistakes-of-startup-and-early%C2%ADstage-companies/ (last visited on March 4, 2013).

[13] Even when you win an employment case, it can be a long and drawn-out process. Emails documenting each step of the termination process will make this process easier. See Adriana Gardella, Settling Is Not the Only Way to Resolve an Employee Lawsuit, NY Times (Feb. 20, 2013), http://www.nytimes.com/2013/02/21/business/smallbusiness/tips-for-s…iness-owners-to-avoid-employee-lawsuits.html?ref=smallbusiness&_r=0 (last visited on March 7, 2013).

[14] Minara El-Rahman, Current Legal Issues for Small Business Owners (Jan. 25, 2010), http://blogs.findlaw.com/free_enterprise/2010/01/current-legal-issues-for-small-business-owners.html (last visited on March 7, 2013); See also Karen E Klein, Four Legal Pitfalls Loom in 2010, Businessweek (Jan. 12, 2010), http://www.businessweek.com/smallbiz/content/jan2010/sb20100111_618606.htm (last visted on Mar. 7, 2013).

Volcker Rule Conformance Period Clarified

On April 19, 2012, the Federal Reserve Board announced its approval of a statement clarifying that an entity covered by section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the so-called “Volcker Rule,” has the entire two-year period provided by the statute to fully conform its activities and investments, unless the Board extends the conformance period. In general, the Volcker Rule requires banking entities to conform their activities and investments to the prohibitions and restrictions included in the statute on proprietary trading activities and on hedge fund and private equity fund activities and investments.

Section 619 required the Board to adopt rules governing the conformance periods for activities and investments restricted by that section, which the Board did on February 9, 2011. However, the Board has since then received a number of requests for clarification of the manner in which this conformance period would apply and how the prohibitions will be enforced. The Board is issuing this statement to address this question.

The Board’s conformance rule grants entities covered by the Volcker Rule a period of two years after the statutory effective date, which would be until July 21, 2014, to fully conform their activities and investments to the requirements of section 619 of the Dodd-Frank Act and any implementing rules adopted in final under that section, unless that period is extended by the Board.

The Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and the Commodity Futures Trading Commission (the “agencies”) plan to administer their oversight of banking entities under their respective jurisdictions in accordance with the Board’s conformance rule. The agencies have invited public comment on a proposal to implement the Volcker rule, but have not adopted a final rule.

 Source:  --> http://www.cftc.gov/PressRoom/PressReleases/pr6238-12

Study Shows Chapter 7 Debtors Represented by an Attorney Are “Almost Ten Times More Likely to Receive a Discharge” of their Debts

In my work as a bankruptcy attorney, I attend Chapter 7 “341 hearings” with my clients. That’s the typically routine and fairly short meeting with the bankruptcy trustee that everyone filing bankruptcy attends  a month or so after their petition is filed. Because these are public meetings, I can observe the people who file bankruptcy without an attorney, and there are many cases that prove how dangerous it is to file a Chapter 7 bankruptcy without an attorney. The question of whether hiring an attorney is really necessary or even helpful is discussed in a book that was recently published, Broke: How Debt Bankrupts the Middle Class. In the compilation of scholarly articles, one of the chapters focuses on “pro se” filers (those without attorneys). The author, Asst. Professor Angela K. Littwin of the University of Texas School of Law, analyzed data from the Consumer Bankruptcy Project, “the leading [ongoing] national study of consumer bankruptcy for nearly 30 years.” She concluded, “that pro se filers were significantly more likely to have their cases dismissed than their represented counterparts.”

In another closely related study from last year, Prof. Littwin concluded that “17.6 percent of unrepresented debtors had their cases dismissed or converted” to Chapter 13, [while] only 1.9 percent of debtors with lawyers met this fate.”  Even after controlling for other factors such as “education, race and ethnicity, income, age, homeownership, prior bankruptcy, whether the debtor had any nonminimal unencumbered assets at the time of the filing,” “represented debtors were almost ten times more likely to receive a discharge than their pro se counterparts.” In her carefully understated and scholarly appropriate way, Prof. Littwin concluded that “there may always be additional unobservable factors for which I cannot control… [b]ut this analysis suggests that filing pro se dramatically escalates the chance that a Chapter 7 bankruptcy will not provide a person with debt relief.”

Update on Cap-Subject H-1B Petitions

The USCIS has just informed the AILA that 22,323 cap-subject H-1B petitions have been received as of April 4, 2012. Approximately 25% of these cases are for U.S. advanced degrees.  Based on this announcement, approximately 17,000 of the 65,000 “regular” H-1B cap-subject petitions have been filed and 5,500 “Masters” H-1B cap-subject petitions. Last year, the USCIS reported that 17,400 Regular H-1B Cap-subject numbers had been used through June 29, 2011. It took about 4 and one-half months for the remaining 47,600 “regular” H-1B slots to be filled. If this year’s pace were to equal last year’s pace, that would mean that the H-1B numbers would be exhausted by mid-August. However, this year’s demand seems certain to be greater than that. Last year 15,000 “regular” H-1B cap-subject H-1Bs were filed in the final month (November 2011). If the November 2011 demand is a reasonable metric for usage projection, this year’s H-1B cap would be reached approximately June 1, 2012.

Healthcare Legislation In Supreme Court Today

Today, the Supreme Court convened for the second of three days to hear arguments on the healthcare legislation signed into law by President Obama two years ago. The court is set to determine the extent of congressional power. At the heart of the controversy is the individual mandate, which requires individuals to purchase health insurance by 2014.

No past Supreme Court decisions are completely on point, leaving many observers to speculate about how the ideologically divided justices will decide the limits of congressional power to address society's raising health insurance costs. Today’s legal arguments will focus on the extent of Congress’s power granted to it by the Constitution. The two specific powers at issue in the case, are set out in Article I, Section 8, concern the regulation of interstate commerce and the imposition of taxes.  

            

THE ARGUMENTS

U.S. Solicitor General Donald Verrilli, the Obama administration's top lawyer at the court, will argue that the individual mandate flows naturally from Congress' authority to regulate commerce. He notes congress’ long-standing authority to regulate the insurance field. In his brief to the justices, Verrilli said the law addressed an existing problem in the healthcare market brought on by the uninsured consuming healthcare they cannot afford. He said unaffordable health insurance annually leads to $43 billion in uncompensated healthcare, much of which is passed on to people with insurance. The administration estimates that such "cost-shifting" adds $1,000 a year to a family's insurance policy. The Obama administration frames the issue as such: may Congress decide, in fashioning a comprehensive response to a national crisis in the health care market, to regulate how people pay for the health care they will almost inevitably need?

            
The challengers, including 26 of the 50 states and a small-business trade group, contend Congress exceeded its authority to regulate commerce with that so-called individual mandate. At the heart of the legal controversy is the mandate that most people obtain health insurance by 2014 or pay a tax penalty. Representing the 26 states is Washington lawyer Paul Clement, formerly a solicitor general under George Bush. He relies upon a slippery slope argument. Clement deems the mandate "unprecedented" and said it could lead to limitless intervention by Congress in people's lives. He frames the legal issue as one of individual liberty. May the federal government, he asks, compel individuals not engaged in commerce to buy a product from private companies?

           

 SOURCES

1. Adam Liptak, Hard Questions From Justices Over Insurance Mandate, N.Y. Times, March 27, 2012, at http://www.nytimes.com/2012/03/28/us/hard-questions-from-conservative-justices-over-insurance-mandate.html?_r=1&hp.

2. Editorial, Getting to the Merits, N.Y. Times, March 27, 2012, at A26

3. Joan Biskupic and James Vicini, Supreme Court Divided Over Obama Healthcare Law, Reuters U.S. Edition (March 27, 2012), http://www.reuters.com/article/2012/03/27/us-usa-healthcare-court-idUSBRE82L1CJ20120327.

4. Robert Reich, Health Care Jujitsu, Huffington Post (March 27, 2012), http://www.huffingtonpost.com/robert-reich/single-payer-health-care_b_1381382.html.

5. Lee Ross, Swing Justice Poses Tough Questions on Obamacare at Supreme Court Hearing, Fox News (March 27, 2012), http://www.foxnews.com/politics/2012/03/27/swing-justice-poses-tough-questions-on-obamacare-at-supreme-court-hearing/.

Legislation to Eliminate New York and Delaware’s monopoly on Corporate Bankruptcy

Legislation to eliminate New York and Delaware’s monopoly on Corporate Bankruptcy was introduced in 2001 when Enron filed for bankruptcy in New York, the state of its incorporation instead of its hometown in Houston, Texas, where its principle place of business was located. Much like the 50% of corporate Chapter 11 cases filed in Delaware and New York combined, the two states reap economic benefits for the legal community.  Bloomberg reports that Delaware derives about $100 billion from its Bankruptcy docket alone.  70 percent of the largest 200 coroporations who filed for Bankruptcy since 2005 did so in New York and Delaware. 

Currently, federal law allows companies to file in either the state of their principle place of business or in the state of their incorporation.  For tax consequences, a majority of businesses are incorporated in New York and Delaware despite their lack of nexus to the states.  This encourages businesses to engage in forum shopping, selecting the state to file for Bankruptcy in the state which provides them with the most benefits including state exemptions.  Additionally, filing in New York and Delaware also creates an inefficient use of resources: flying company representatives out to appear in court, disparity in costs of litigation, and greater Court fees etc…

Legislation was at a standstill in 2001 and again in 2005 as a strong opponent of the law was Vice President Joe Biden who was at the time chaired the Senate Judiciary Committee.  Currently, the legislation has been re introduced by U.S. House Judiciary Chairman, Lamar Smith R-Texas in July 2011 in the Bankruptcy Venue Reform Act of 2011. 

See “Playing on the Home Court” Curriden, Mark. ABA Journal, March 2012.

Maximizing Tax Refunds in a Chapter 13 Bankruptcy Case

While Chapter 13 gives you more flexibility about what you can do with your current income tax refund, Chapter 13 does impact your future years’ refunds. If one files for Chapter 7 bankruptcy after the beginning of the year, and you’re still due a tax refund on the year that just passed, the trustee is going to be interested in that refund. It’s your money that the government is simply holding for you until you claim it, even if you haven’t yet filed your tax return, or don’t even know the amount of the refund.  Whatever the amount, it’s still considered your asset—you just haven’t yet claimed it or calculated the amount by filing the tax return. So unless that refund fits within an exemption, or is small enough to not be worth the trustee’s trouble, the trustee is going to get that refund.

In a Chapter 7 case, non-exempt assets simply go to the trustee to be distributed to creditors according to a very rigid formula.  By contrast, In Chapter 13, you may be able to use that refund in two very beneficial ways.

First, you may be able to get permission to use the refund, or a part of it, for a necessary, one-time expense. A standard example is a critical vehicle repair needed to be able to commute to work. The expense usually needs to be an extraordinary one, over and beyond what would be included in your standard monthly budget.

Second, to the extent that you are required to pay the refund over to the trustee, in a Chapter 13 case you usually have somewhat greater control over where that money will go. Your attorney might be able to explicitly earmark, through a specific provision in your Chapter 13 plan, where the trustee pay some or all of that refund. More likely, in certain cases, with careful wording of your plan, your attorney may be able to nudge that money in a particular direction that may be more favorable to you. For example, a vehicle that you need to keep could be paid off faster than otherwise, thus taking away from that creditor any grounds for objecting.    

One positive aspect of Chapter 7 is that it’s heavily focused on what assets you have a right to as of the moment your case is filed. Chapter 13, however, is by its nature also interested in your future income, and in many instances, future tax refunds are considered future income. Thus, your Chapter 13 plan has to account for the tax refunds that you would be receiving during the years that you are in the case. In general, this means that you must turn over your tax refunds to the trustee to be paid out according to the terms of your plan.

If you usually receive large tax refunds, your withholdings could be adjusted so that you can put that money to use for your regular living expenses. This is particularly helpful if your budget is tight. Doing so would reduce the size of the refunds going to the trustee, thereby minimizing this problem.

• In some situations, you may be allowed to use that year’s tax refund for a new special expense, such as or a new vehicle repair.
•  Even if the refunds go to the trustee during the course of your case, sometimes the extra funds being put towards your Chapter 13 plan finishes the case faster, in other cases it may result in important creditors being paid more quickly, and sometimes the refunds may enable you to pay off the plan within the mandatory maximum deadline.

If you’re still paying off your plan, remember to send your case trustee a copy of your tax returns along with any refunds that may be due in April. Neglecting to do so may jeopardize your bankruptcy. Consult an experienced Bankruptcy attorney for proper instructions if you haven’t already done so.

The Obama administration will begin to shut down a controversial program that deputized local police officers to act as immigration agents

WASHINGTON – The Obama administration will begin to shut down a controversial program that deputized local police officers to act as immigration agents. Immigration and Customs Enforcement (ICE) officials trained local officers around the country to act as their agencies' immigration officers, whereby working either in jails or in the field, officers can check the immigration status of suspects and place immigration related holds on them. The program, known as 287(g), reached its peak under President George W. Bush, when 60 local agencies signed contracts with ICE to implement it. But that trend slowed significantly under President Obama, as only eight agencies have signed up since he took office, and none since August 2010. In their new proposed budget for the upcoming year, Department of Homeland Security (DHS) officials say they will not sign new contracts for 287(g) officers working in the field, resulting in an estimated savings of $17 million. In its budget request, DHS officials instead will focus on expanding Secure Communities, a program that checks the fingerprints of all people booked into local jails against federal immigration databases, whereby the followup work in such cases, if required, is done by ICE agents, rather than local police. 

Source: http://www.examiner.com/border-and-immigration-in-los-angeles/dhs-cutting-287-g-to-favor-secure-communities

US Consulate in Mumbai to process visa applications of South Indians form Jan 9, 2012 onwards

The newly designed complex brings in all the US Government offices in the city to one location. The workload of processing US visa applications have now become centralized in Mumbai. South Indians will have to send in their visa applications to Mumbai, and not to Chennai. With President Barack Obama signing an Executive Order to boost tourism in the US from emerging countries like India and China, American Embassys recently annouced that streamlining of the visa application process will be its priority. "We want to make it easier for travelers to apply for a  visa to visit the United States," James Herman, Minister-Counselor for Consular Affairs in New Dehli, said, adding that over the last five years, the US mission increased staffing by over sixty percent and opened two new consulates in Hyderabad (in 2009) and Mumbai (in 2011). Noting the importance of Indian travelers to the US, Herman said Indians represent the highest volume of work visa travelers to his country and the second highest number of foreign students there. He said 2011 was a record year for H1B work visas—over 68,000 processed by Consular Team India alone and"we continue to support the people-to-people ties which define the growing partnership between our nations."

Source: http://news.brunei.fm/2012/01/21/india-getting-visa-to-us-to-be-made-easier/

How New Yorker Homeowners Are Impacted by the $26 Billion Settlement Signed by the NY Attorney General

The long-awaited joint federal-state settlement with the major banks for their alleged fraudulent documentation and processing of mortgages and foreclosures was announced on Thursday, February 9. Will it help you, and if so, how?

1. Who is included in this settlement?

• The five big banks are currently signed on: Bank of America, Wells Fargo, J.P. Morgan Chase, Ally Financial and Citigroup.  Only mortgages owned and held by them are directly affected.  Negotiations continue with nine other mortgage servicers, which if successful could bring the total amount of money involved to $30 billion.
• 49 states joined in the settlement; only Oklahoma did not. New York was the last to sign on because Attorney General, Eric Schneiderman, wanted to ensure that his office could continue their investigation into fraudulent/criminal mortgage practices.
• Mortgages held by Fannie Mae and Freddie Mac—consisting of the majority of U.S. mortgages—are NOT covered. This maybe upsetting to some, but not surprising. The U.S. Congress may be the most realistic avenue for holding them accountable for betting against homeowner mortgages.

2. What does this settlement resolve and what is open for further negotiation and litigation? In other words, what liabilities are the banks escaping from for their $26 billion?

• The claims against the banks that are released in this settlement are limited to mortgage servicing and foreclosure claims. Claims for a variety of other alleged wrongdoing are not covered and so remain open to being pursued by the federal and state regulators, investors, and homeowners. Claims related to the securitization of mortgage-backed securities are NOT covered, and those against or involving MERS (Mortgage Electronic Registration Systems).
• Individuals’ rights to bring their own lawsuits or to be part of a class action against any banks for any claims are not affected by this settlement. This could be very important for New York homeowners, because this State has ample legislation and case law encouraging homeowners to defend against foreclosure as individuals.
• The settlement does not limit any potential criminal liability for individuals or financial institutions, and provides no immunity from prosecution.

3. How does the settlement help you if your mortgage is held by one of these five banks?

• If you need a mortgage loan modification, these servicers will be required to offer principal reductions, for first and second mortgages, to a value of up to $17 billion. This is where the bulk of the settlement funds are earmarked.
• If you’re current on your mortgage but your home is worth less than the mortgage, $3 billion of the settlement is to provide refinancing relief.
• If your home has already been foreclosed, $1.5 billion will be paid out by the banks as a penalty against them–around  $2,000 per homeowner–without you needing to show any damages or releasing any claims against the bank.

4. Where do you go for more information and to find out whether you will be helped in any of these ways?

• Go to the new settlement website for current and upcoming information about it:

http://www.nationalmortgagesettlement.com

Understanding Electronic Signatures and Online Contracts

One of the developing area of contract law are Electronic contracts and electronic signatures. Many people are surprised to learn that these are just as legal and enforceable as paper contracts due to Federal legislation enacted in 2000, known as the Electronic Signatures in Global and International Commerce Act (ESGICA)

This 2000 legislation is great news for companies that conduct business online, particularly companies that provide financial, insurance, and household services to consumers. The law also benefits B2Bs (business-to-business websites) who need enforceable agreements for ordering supplies and services. This law also helps small businesses conduct business entirely online.

What Are Electronic Contracts:

This is agreement created and "signed" online without any paper being involved. For example, you write a contract on your computer and email it to a business associate, and the business associate emails it back with an electronic signature indicating acceptance. One form of electronic contract is a "Click to Agree" contract, this type of contract is usually used when downloaded software is involved: The user clicks an "I Agree" button on a page containing the terms of the software license before the transaction can be completed.

On electronic contracts, people use several types of signature,  these include typing the signer's name into the signature area, pasting in a scanned version of the signer's signature, clicking an "I Accept" button, or using cryptographic "scrambling" technology.

Even if electronic contracts have been involved at some point, there is always the option of switching to paper contracts if doing so becomes more desirable.

Even though electronic signatures are now widely accepted there are still some areas where people CANNOT use electronic signatures in order to prevent possible abuse. These include:
1. documents relating to adoption, divorce, and other family law matters
2. wills, codicils, and testamentary trusts
3. notices of cancellation or termination of utility services
4. court orders, notices, and other court documents such as pleadings or motions
5. notices of default, repossession, foreclosure, or eviction
6. notices of cancellation or termination of health or life insurance benefits
7. product recall notices affecting health or safety, and
8. documents required by law to accompany the transportation of hazardous materials.

They Don't Teach Networking in Law School...

Our firm has joined an international networking program called Business Network International.  Each locality has different Chapters.  We are a part of Chapter 24- The Grand Central Chapter.  The idea is interesting- the Chapter is comprised of only one professional from each field. 

Each meeting every member stands up and gives a 60-second commercial about their business: What the business is, what sets them apart from the competition and who an ideal referral is.  Then, in front of everyone each member has to get up again and announce a referral that they are giving or a testimonial for another member’s services.  The purpose of the meeting is to exchange business.  Many of the members are successful because of their membership in BNI.  Our chapter meets every Wednesday morning from 7am-8:30am.  The monthly fee is $100.  Attendance is mandatory.  It is basically forced networking, and because you pay a fee, you are more inclined to go and get the most out of the group. 

BNI also requires that members meet one on one outside of the group meetings, and a training which explains how to get the most of your experience and also how to become a valuable resource to your chapter.  Believe me, I am not someone who enjoys getting up early and networking in general, but this has really helped my outlook on business, improved my public speaking and one-on-one business conversation and has become another mode of advertising for our firm.

Last night I attended the 3-hour training.  BNI was founded by Dr. Ivan Misner who teaches and is an expert in network.  I came out of the seminar with some helpful networking pointers I thought I would share.

1)      Always have your business card readily available to hand out.  If you have a referral relationship with anyone else, have their card on you as well.  You never know when you will bump into someone who could use your services.

2)      Start listening for people saying phrases like: “I don’t like…”, “I need…..”, “Do you know someone….”, “I am looking for…..”  These phrases are frequently followed with some service or good for which the person is in the market. 

3)      “Givers Gain”- Giving others business makes them want to return the favor.

4)      “Help me help you”- Let people know who exactly you are looking for as a referral.  You can use names of companies, specific types of people.  Avoid generalities like: “I’m looking for anyone in a small business…”  Small businesses actually comprise 350 employees or less so most people work in small business.

- Sapna Gupta, Pantano & Gupta

At A Crossroads in Patent and Fashion Law, Color Is Debated...

A judge was recently asked whether or not a company had a right to a single color. The center of the case involved Louboutin, the famous high-end designer whose red soled heels have thrived under a patent that had been issued to them. However, a recent look at the patent itself by the court questioned whether Louboutin's red soles are essential in the function of the product.

The court deemed that they are not, citing that the red soles are nothing more than ‘expressive, ornamental, and aesthetic…’ The court came to this decision after comparing other cases that involve color: Owens-Corning’s pink fiberglass insulation, and John Deere’s green tractors and equipment. Whereas Owens-Cornings use of the color pink has no other use than to distinguish itself from its’ competitors, John Deere’s use of the color green is little more than functional, and doesn’t necessarily serve to distinguish the brand from others.

Much like John Deere’s use of color, Louboutin’s use of the color red serve the same purpose: an essential function and is an aesthetic decision, and can not be patented. “The [bottom] of a shoe…coated in a bright and unexpected color, the outsole becomes decorating, an object of beauty. To attract, to reference, to stand out, to blend in, to beautify, to endow with sex appeal-all comprise non-trademark functions of color in fashion."

This is an interesting and even entertaining case that highlights some of the nuances of patent law, and how it can be used and enforced. It also displays how patent law applies within a specific industry, and even an aspect of that industry (in this case, color.) Ultimately, the patent was deemed worthless, and even a mistake by the Patent and Trademark Office for granting the patent in the first place.  

http://newsandinsight.thomsonreuters.com/Legal/News/2011/08_-_August/Is_Louboutin_shoe_more_like_pink_fiberglass_or_green_tractor_/

What to Expect: Bankruptcy 341 Creditor’s Meeting

For inexperienced Bankruptcy attorneys representing a debtor, below is an introduction that may serve helpful before attending your first 341 Creditor’s meeting. 

The 341 Creditor’s Meeting is generally the only Court appearance in a Chapter 7 Liquidation Bankruptcy case and is the first hearing of two hearings in a Chapter 13 Reorganization Bankruptcy case.  The second and most importation court appearance in Chapter 13 is the Confirmation Hearing (see What to Expect: Chapter 13 Bankruptcy Confirmation Hearing). 

The 341 meeting in New York is held in a conference room in the Court.  The purpose of the meeting is for the Trustee to investigate the Debtor’s financial status.  Creditors are invited but rarely appear.  The hearing is mostly a conversation between the Trustee and the Debtor, and is a very informal setting.   

What to Bring: Aside from anything that the Trustee’s office has specifically requested from you, always make sure that you have printed the entire Bankruptcy filing.  The Trustee will go through and refer to specifics, and it is always good to have a copy of front of you to which you and your debtor may refer.  Also, if you have not already provided the signed filing, past 2 years tax returns, Credit Counseling certificate, pay stubs from the 60 days prior to filing, to the Trustee’s office, have a copy of the same available to hand to the Trustee. 

**Make sure your Debtor has her/his Social Security Card and government-issued, Picture ID. 

If you are lucky, posted outside of the Courtroom will be a list of the scheduled cases giving you an idea of the order in which your case will be called.  The Trustee will be sitting at a table in the front of the conference room.  We like to go a little early and listen to the previous cases to determine the common questions the Trustee asks each Debtor. 

When your case is called you sit across from the Trustee to the left of your debtor.  The Trustee will ask the Debtor to swear under oath and then ask you to note your appearance.  You should then say “[Your Name] attorney for the debtor, admitted to the [name of District].”  The Trustee will then proceed by asking your debtor a series of questions based on the filing and especially the schedules. 

Common topics covered by most Trustees in the aforementioned districts:

1) If there is any real property or cars

2) Monthly income and job-related questions

3) One Trustee always asks what has put the debtor in this financial situation.  A common answer is “Living above my means”

4) Factors surrounding residency of the debtor

5) Monthly expenses as per the schedule

You may interject if necessary to correct a discrepancy.  If the Trustee notes that there are errors or inconsistencies in the filing, assure the Trustee that you will amend the filing to reflect the correct information.  Unless there is something seriously wrong with the filing, or if the Trustee finds that the Debtor’s filings are inconsistent wit the reality of the Debtor’s situation, the meeting should be quick and painless.  After the meeting, you may follow up with Trustee’s office if necessary.  The Trustee will then make a determination to recommend discharge or dismissal some months later.

     

Bankruptcy ECF filing tips:

If your client need’s to file immediately and are not in the position to complete all required paperwork (this is common if there is a pending foreclosure sale) then you may do the “skeleton filing” either ECF (preferred by the Court) or in-person the.  The filing must include the following: Petition (Official Form B1), The Declaration of the Debtor (Official Form B1D) for which you will also need the debtor to attest to the fact that he/she has completed Credit Counseling Course (can be done online, usually about 1 hour, we use Greenpath at greenpath.com); the Creditor’s Matrix (List of Creditors)- if done ECF must be filed under separate area called Creditor Maintenance, and the Statement of Social Security Number (only if filed in person).  **Note: If filing in person, the forms must be signed by the debtor.  If ECF, then signature lines should include electronic signature: “/s/ Name.”

In general, when filing ECF:

1) If you are not having all of the forms signed and scanned in, you must include electronic signatures where appropriate.  “/s/ [Name]” signifies an electronic signature. 

2) Format of all documents except for the List of Creditors must be in PDF or some picture format.  The List of Creditors must be in txt format.  I have used Wordpad and Notepad to generate the filename.txt. 

3) The first line of List of Creditor’s must only have the Debtor’s name as filed and case number if available.

4) Redaction: On all forms filed ECF, you must redact all but the last four digits of a debtor’s Social Security Number.   

5) I have not tried this yet: The hearing schedule, “calendar” is based on the time of filing.  The earlier you file, the earlier you are scheduled.  It may be worth it to wait until midnight and file for the next day in order to ensure that you are not waiting at the Court for hours. 

6) Filing Amendments will sometimes cost more money depending on what is being amended.  If you have more than one amendment for which extra costs are necessary, you may, if the Court allows, scan all amendments as one PDF and upload as one document.  

**Note: The above information is based on our experience in Southern and Eastern District Bankruptcy of Courts in New York.  If you are not appearing in these Districts, then this may not apply.  

What is a Traverse Hearing?  In New York, a traverse hearing is held in Civil cases, when a party alleges improper service.  At the hearing, the burden lies on the moving party to present evidence as to proper service which may then be rebutted by the party alleging improper service. 

In civil litigation, the traverse hearing may be waived by the parties, which will result in a granting of a motion to vacate.