Nebraska Supreme Court Addresses Evidentiary Standards for Approving Average Weekly Wages in Workers’ Compensation Court

One of the issues evaluated by the Nebraska Supreme Court in the recent case of Bortolotti v. Universal Terrazzo and Tile Company, 304 Neb. 219, 933 N.W.2d 851 (Neb. 2019), was what evidence is necessary for a Plaintiff to prove applicable average weekly wages for an owner/operator of a business. In Bortolotti, the Plaintiff was the sole stockholder and president of Universal Terrazzo and Tile Company (Universal), a subchapter S corporation. The Plaintiff had been an installer of terrazzo tile and fabricator and installer of granite for over 30 years before becoming the sole stockholder and president in 2011. The injury at issue occurred in June 2013 and the Plaintiff’s operative petition for workers’ compensation benefits alleged weekly earnings of $3,625 at the time of the injury, but Universal and their compensation insurance provider denied the allegation. At trial the Plaintiff offered one page from his 2013 tax return noting that the employer was an S corporation, and his earnings for the year were $3,950. The compensation court did not believe the Plaintiff’s earnings were so low as president of the company. The evidence at trial also discussed the total gross income of the corporation, but offered no evidence regarding what business expense deductions were taken by the Plaintiff from business earnings. Thus, the compensation court was unable to verify if business expenses had been properly deducted from the company’s gross earnings or the Plaintiff’s testimony that his weekly draw from the corporation was $3,625. Ultimately, compensation court determined that the Plaintiff sustained a compensable injury, but had difficulty in determining the Plaintiff’s average weekly wage due to a lack of exhibits, and instead held the Plaintiff’s average weekly wage was $1,399.95, entitling him only to a statutory maximum compensation rate of $728 per week.

The Supreme Court affirmed the Court of Appeals’ determination that there was not sufficient evidence to support the high average weekly wage and that the only competent evidence in the record supported the Court of Appeals’ determination of an average weekly wage of $49, the minimum weekly income benefit provided by statute based on the 2013 earnings of $3,950. The Supreme Court held that net profits or net income of an S corporation do not necessarily qualify as “wages” under the Nebraska Workers’ Compensation Act, as the statute requires focus on the “money rate at which the service rendered is recompensed,” not payments received solely because of a recipient’s status as a shareholder.

As the Supreme Court notes, the burden was on the Plaintiff, the president and sole shareholder of the S corporation to provide evidence differentiating his wages as a corporate employee from his profits as a corporate shareholder. The co-mingling of ownership and employment burdens the party seeking workers compensation to provide sufficient evidence of what their total income is. Bortolotti demonstrates that simply indicating the total revenue of a company will not be sufficient evidence for computing an average weekly wage.

VW Contributor: Ryan Coufal
© 2019 Vandenack Weaver LLC
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Protesting Property Tax Valuations: Key Dates and Deadlines to Keep in Mind for 2020

Tis the season for holiday joy and cheer, but with all the hustle and bustle of November and December comes the new year and the start to tax and property valuation season. Don’t let this tax season “fly by” when it comes to knowing your rights to protest property valuations, and more importantly don’t miss the important deadline dates for when you can protest. So as you enter this busy time of year and count down the days to the end of the year and the start of 2020, please keep in mind the key dates and deadlines for protesting your property tax valuation.

• January 1, 2020: Under Nebraska Statute all real property subject to taxation shall be assessed as of January 1 at 12:01 a.m. and used as a basis of taxation until the next assessment unless the property is destroyed.
• January 15, 2020: If own real property in a county with a population of at least one hundred and fifty thousand (>150,000) inhabitants according to the most recent census, the County Assessor is required to provided you notice of a preliminary valuation of your real property by January 15th of each year. Notice will either be mailed directly to you or published on the County or County Assessor’s website.
• March 19, 2020: If you own real property in a county with a population less than one hundred and fifty thousand (<150,000) inhabitants according to the most recent census, the County Assessor is required to complete the valuation assessment for your real property by March 19 of each year.
• March 25, 2020: If you own real property in a county with a population of at least one hundred and fifty thousand (<150,000) inhabitants according to the most recent census, the County Assessor is required to complete the valuation assessment for your real property by March 25 of each year.

Immediately upon completion of the valuation assessments, the County Assessor must publish in a newspaper of general circulation in the county that an assessment roll is complete and that notices of valuation changes have been mailed and identify the final date for filing valuation protests.

• June 1, 2020: Under Nebraska Statute the County Assessor is required to notify the owner of record as of May 20, 2020, of every item of real property which has been assessed at a value different than the previous year. Such notice shall be given by first-class mail addressed to the owner’s last known address, and the notice will identify the item of real property, state the old and new valuation, the date of convening of the county board of equalization, and the dates for filing a protest.
• June 1, 2020: Property Tax Valuation Assessment Protests can start being filed with the County Board of Equalization. Such protests regarding personal property must be signed and filed on or before June 30, 2020.
• June 1, 2020: Property Tax Valuation Assessment Protests may start being heard by the County Board of Equalization or an appointed referee. Such hearings can be held up to July 25, 2020 unless the county has a population of at least one hundred and fifty thousand (>150,000) inhabitants according to the most recent census, then the county may extend the deadline of hearings to August 10, 2020.
• June 6, 2020: The County Assessor must annually post in their office, and as designated by the county board, mail to a newspaper of general circulation and to licensed broadcast media in the county the assessment ratios as found in his or her county as determined by the Tax Equalization and Review Commission.
• June 30, 2020: This is the deadline to sign and file a Property Tax Valuation Assessment Protest. This is a hard deadline, protests mailed via U.S. mail must be postmarked by this date.
• July 25, 2020: This is the last day hearings may be heard by the County Board of Equalization or an appointed referee, unless the county has a population of at least one hundred and fifty thousand (>150,000) inhabitants according to the most recent census and extended the deadline of hearings to August 10, 2020.
• August 2, 2020: The County Board of Equalization are required to notify owners of the results of their protests by this date, unless the county has a population of at least one hundred and fifty thousand (>150,000) inhabitants according to the most recent census, then the county has until August 18, 2020 to notify owners of the results.
• August 10, 2020: This is the last date the County Board of Equalization can conduct protest hearings if the county has a population of at least one hundred and fifty thousand (>150,000) inhabitants according to the most recent census and elected to extend the deadline.
• August 18, 2020: If the County Board of Equalization hearings were extended to August 10, 2020, this is the date the Board is required to notify owners of the results of their protest.
• August 24, 2020: This is the deadline to appeal any action taken by the County Board of Equalization to the Tax Equalization and Review Commission if the deadline date to send you the results of your protest was August 2, 2020.
• September 10, 2020: This is the deadline to appeal any action taken by the County Board of Equalization to the Tax Equalization and Review Commission if the deadline date to send you the results of your protest was August 24, 2020.

The dates provided above are the deadlines provided by Nebraska Statute. Different counties may have different procedures and processes for the protest’s hearings, and it is important to know those process requirements as well.

Attorneys at Vandenack Weaver can assist you at any step of the protest process and help identify why the county’s valuation is wrong and help you, the property owner, save money on property taxes for the upcoming tax year.

VW Contributor: Ryan Coufal
© 2019 Vandenack Weaver LLC
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Copyright Infringement: Will Congress Make it Easier to Obtain a Remedy?

On October 22, 2019, the United States House of Representatives passed H.R. 2426, The Copyright Alternative in Small-Claims Enforcement Act of 2019. The intent of the legislation is to make it easier for copyright owners to seek enforcement of their rights in situations where the overall damages to the copyright owner are minimal. Essentially, the Copyright Office would create a Copyright Claims Board that would adjudicate infringement claims with damages under $30,000.

The rationale behind the legislation is that cost is a significant impediment to a copyright holder bringing a claim against someone infringing on their work. To bring a claim, as recently determined by the United States Supreme Court, the underlying work must be registered with the United States Copyright Office, which takes time and includes certain expenses. Once registered, the copyright owner can only seek a remedy in federal court, since that is the exclusive jurisdiction for a copyright infringement claim. This process is expensive and, although attorney’s fees can be recovered pursuant to section 505 of the Copyright Act, the United States Supreme Court has also recently limited the scope of recovery. The end result is that many copyright owners are unable to seek a remedy.

This legislation passed with near unanimous support in the United States House of Representatives and moves to the United States Senate for consideration. Should this legislation ultimately become law, it will likely have a significant impact on how copyright owners protect their intellectual property.

VW Contributor: Alex B. Rainville
© 2019 Vandenack Weaver LLC
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Continue to Scrape Away! Microsoft’s LinkedIn Ordered to Lift Ban on Third Party Access to Public Profile Data

In the closely followed hiQ Labs, Inc. v. LinkedIn case, the Ninth Circuit affirmed the district court’s decision holding that hiQ, a data analytics company, is entitled to a preliminary injunction forbidding LinkedIn from denying hiQ access to publicly available LinkedIn member profiles. hiQ had been scraping data and building products from LinkedIn public profiles. LinkedIn argued that hiQ was in violation of LinkedIn’s user agreement as well as California law and federal law, including the Computer Fraud and Abuse Act (CFAA) and sent hiQ a cease-and-desist letter.

Similarly, back in 2018, a district court in Washington D.C. ruled that using automated tools to access publicly available information on the open web is not a crime, even when a website bans automated access in its terms of service. The case, Sandvig v. Sessions, narrowly interpreted the CFAA. This federal law makes it illegal to access a computer connected to the Internet “without authorization,” but neglects to specify what “authorization” means. In pertinent part, the court reasoned that:

“Scraping is merely a technological advance that makes information collection easier; it is not meaningfully different from using a tape recorded instead of taking written notes, or using the panorama function on a smartphone instead of taking a series of photos from different positions. And, as already discussed, the information plaintiffs seek is located in a public forum.”

The Ninth Circuit decision and reasoning is in line with Sandvig. However, the court was clear not to outlaw a website owner from pursuing any recourse against wholesale appropriation of its public content. Rather, the court articulated a public policy concern if companies like LinkedIn can use sole discretion to determine who can collect and use data when that company does not own the data which they make publicly available to viewers. Read in this way, the court is mitigating the opportunity for LinkedIn to gain a monopoly on public information of the site’s 500 million member profiles.

Many view hiQ Labs, Inc. v. LinkedIn as a victory for the open source web. The internet is a critical space for researchers, journalists, businesses, and individuals who require meaningful access to collect and analyze public information. Specifically, businesses use web scraping bots to relentlessly pursue data which might help grow their business by monitoring competitor pricing. Web scraping is also integral for predictive analysis, where businesses can study and understand products and associated consumer behavior to assess their costs and benefits. Thus, web scraping provides significant business value to a multitude of companies across various sectors.

LinkedIn could appeal the 9th Circuit’s decision to the U.S. Supreme Court. Until then, data miners, researchers, and other third parties can continue to use any public online data not owned or password protected by a website owner.

VW Contributor: Skylar Young
© 2019 Vandenack Weaver LLC
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The CCPA is Here to Stay; Now What?

The California Consumer Privacy Act (“CCPA”), signed into law in 2018, will become effective on January 1, 2020. Many organizations hoped that the California legislature would narrow the scope of the CCPA prior to its effective date, but the legislature adjourned without taking action to narrow its scope. For businesses, this means that preparations should be underway to comply with the CCPA before the California Attorney General has statutory authority to enforce the law on July 1, 2020.

The initial step for a business to develop a CCPA compliance program is to understand what personal information it collects and determine what it does with this personal information. Similarly, the business should review its policies and procedures regarding its collection and processing of this personal information, then conduct a gap analysis between its written procedures, actual procedures, and the CCPA. Understandably, this gap analysis will be challenging, given that the California Attorney General is expected to promulgate regulations under the CCPA this fall and several potential amendments are awaiting the California Governor’s signature. However, the substance of the CCPA should remain the same and actions should be taken to prepare.

For businesses outside of California, much like the GDPR, the CCPA is designed to be extra-territorial. This means that businesses outside of California that conduct business within the state, or with residents of the state, need to take steps to comply with the CCPA, or at least mitigate its risks. The time for a business to prepare for the CCPA is now, even though the law itself will continue to evolve.

VW Contributor: Alex Rainville
© 2019 Vandenack Weaver LLC
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CBD Sellers Beware: FTC Issues Warnings on CBD Marketing Practices

By Ryan Coufal

On September 10th, 2019 the Federal Trade Commission (“FTC”) sent warning letters to three companies that sell oils, tinctures, capsules, “gummies,” and creams which contain cannabidiol (“CBD”), a chemical compound derived from the cannabis plant.  While the FTC did not identify the companies publicly, the letters warn that it is illegal to advertise a product that can prevent, treat, or cure human disease without reliable scientific evidence to support such claims. 

The companies’ websites claim that CBD products “’work like magic’ to relieve ‘even the most agonizing pain,’” are a “miracle pain remedy,” and are highly effective at treating “the root cause of most major degenerative diseases.”  The websites then promote that CBD treats a whole host of diseases including: cancer, Alzheimer’s disease, multiple sclerosis (MS), fibromyalgia, cigarette addiction, colitis, autism, anorexia, bipolar disorder, post-traumatic stress disorder, schizophrenia, anxiety, depression, Lou Gehrig’s Disease (ALS), stroke, Parkinson’s disease, epilepsy, brain injuries, diabetes, Crohn’s disease, psoriasis, AIDS, arthritis, and heart disease, with one of the websites even stating the treatment is “clinically proven.” 

In its letters the FTC instructs the companies to review all claims made about their products, including consumer testimonials, to ensure such claims are supported by competent and reliable scientific evidence.  Making such unsubstantiated claims can be in direct violation of sections of the FTC Act, 15 U.S.C. §§ 45(a) and 52, which regulate advertising.  Additionally, such claims can violate the Federal Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. § 321(g)(1)(B) which is regulate by the U.S. Food and Drug Administration (FDA).  On March 28, 2019 the FTC and FDA jointly sent similar warnings to three different CBD companies about their marketing practices, with the FDA taking the stance that such marketing practices are evidence that CBD products are intended to be used as drugs, which require extensive testing and FDA approval before marketing the products in such a manner.  Making a claim that CBD is a drug that can cure disease when it has not been approved by the FDA could create the potential for violation of the FDCA.

The FTC gave the latest three companies fifteen (15) days to notify the agency of the specific actions they have taken to correct the agency’s concerns.  Companies that sell CBD products should take note of the marketing practices the FTC and FDA are regulating and review all claims made about their CBD products and ensure they are backed by reliable and competent scientific evidence, and ensure they are not marketing CBD products as drugs under the FDCA.

© 2019 Vandenack Weaver LLC
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Foreign-Domiciled Applicants; Why the Change at the Trademark Office?

By Alex Rainville

In a long anticipated decision, starting on August 3, 2019, foreign domiciled trademark applicants, registrants, and parties must be represented by a US licensed attorney in front of the United States Patent and Trademark Office (“USPTO”). This means that any foreign-domiciled person or business wishing to seek trademark registration with the USPTO must appoint a US licensed attorney to file and prosecute the trademark registration application. This may appear like an unnecessary burden, but it is part of fixing overarching administrative problems.

The USPTO is actively trying to modernize and streamline the trademark registration application process, to ensure timely review of applications and increase efficiency to final outcomes. One of the challenges to this process has been a large number of foreign-domiciled applicants submitting inaccurate, and often times fraudulent, materials. By way of example, a common problem with these applications is the specimens are either failing to meet the required standards or are outright fraudulent. This increases the time required for the USPTO to examine and process applications, resulting in an inefficient registration process for all applicants. By using a US licensed attorney, the USPTO expects that the applications will be more accurate and eliminate much of fraud, ultimately increasing efficiency.

For businesses wishing to protect its intellectual property, even those based in the US, it is a good idea to hire a trademark attorney. For example, the attorney will be able to guide you on what can be protected under the Lanham Act and the common law, and the best avenue to obtain registration or, more generally, protection for your intellectual property. They will also ensure you and your business are not defrauded by the multitude of USPTO imposters, and will know how to file complaints regarding these imposters with the Federal Trade Commission, for the Department of Justice to prosecute. Although this change of policy at the USPTO may seem unfair to foreign-domiciled applicants, the change may ultimately benefit all the businesses relying on the USPTO to protect its brand and intellectual property.

© 2019 Vandenack Weaver LLC
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Will the United States Enact a Federal Law on Privacy?

By Alex Rainville

With corporate giants like Amazon, IBM, Citigroup, and 48 others pushing for federal legislation on privacy, will the United States Congress act? In a letter to Congress, dated September 10, 2019, these corporate giants are pushing for a “comprehensive consumer data privacy law” that will stabilize the myriad of state rules.

In the absence of federal legislation, individual states have taken the responsibility for legislating consumer privacy and data security standards. In fact, Alabama was the last to enact such a law, and that law has been in effect since June 1, 2018. However, most individuals are unaware of their rights and, importantly, most businesses are unsure of how, or are simply unable, to comply with many of the state laws. Even the much-publicized California Consumer Privacy Act (“CCPA”) remains a challenge for businesses to comply with, and many businesses remain unaware that they are subject to this rules even though they reside outside of California.

This push for federal privacy legislation comes on the heels of the European Union enacting and implementing the General Data Protection Regulation, which ushered in an unprecedented level of privacy measures for European Union Data Subjects and regulatory burdens for data controllers and processors. Will the US Congress follow suit and implement a federal data privacy law? Only time will tell, but businesses should be prepared to comply with each state rule, as enforcement and fines for failure to comply have started to hit US companies of all size.

© 2019 Vandeanck Weaver LLC
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Why Consider a Wrap Plan related to your Employee Benefits?

A Wrap Plan is a single welfare benefit plan that combines employee health and welfare benefit plans into one plan. A Wrap Plan can save employers time, filing costs, and ease compliance with reporting and disclosure rules.

The Employee Retirement Income Security Act (ERISA) provides an employer with the option to offer different types of welfare benefit to its employees:

  • Medical, surgical, or hospital care or benefits, or
  • Benefits in the event of sickness, accident, disability, death or unemployment, or
  • Vacation benefits, or
  • Apprenticeship or other training programs, or
  • Day care centers, or
  • Scholarship funds, or
  • Prepaid legal services

ERISA requires welfare benefit plan to be codified in a written plan document, to include the following content:

  • Benefits and eligibility, and
  • Funding of benefits, and
  • Procedures for allocating and delegating plan responsibilities, and
  • Plan amendment and termination procedures, and
  • Designation of named fiduciary, and
  • Required provisions for group health plans, such as HIPPA compliance.

Employers must also provide employees with a Summary Plan Description (SPD) alerting them about their eligibility to participate in the plan.  Many employee welfare benefit plans are provided through insurance, and the companies providing coverage will have documents relating to the plans.  However, those documents are typically drafted to comply only with applicable insurance laws without being ERISA-compliant.

A Wrap Plan bundles the ERISA health and welfare benefits and includes all required disclosures. Rather than amending multiple documents after a new law is passed that affects a plan, an employer can make a single change to the Wrap Plan. Additionally, if an employer has plans that have 100 or more participants or are otherwise subject to the filing requirements to file Form 5500, a Wrap Plan also makes this administrative filing easier too. Rather than filing a separate Form 5500 for each health and welfare pan, a Wrap Plan allows the employer to file a single Form 5500 for all benefits covered by the Wrap Plan.

A Wrap Plan is an effective ERISA compliance strategy that allows employers to reduce the amount of time and cost involved in administering various health and welfare benefit plans.

© 2019 Vandenack Weaver LLC

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Circuit Split on Data Breach Litigation

On March 25th, 2019, the Supreme Court denied review of a case involving individuals whose personal information held in a database was breached by hackers. Specifically, the issue was whether the parties requesting review had Article III “standing” to sue due to the database breach.

Standing is the authority of a court to hear a case. For the court to exercise such authority, the court will only hear cases based on events that cause actual injuries or create real threats of imminent harm to individuals who brought the case. The D.C. Circuit Court in its ruling of June 21st, 2019 deepened the split among contradicting circuit rulings. The D.C. Circuit Court ruled the petitioning party had standing to bring the case due to the breach of 21.5 million social security numbers, birth dates, and residency details of former, current, and prospective employees. The court held that, the plaintiff’s fear of facing a substantial risk of future identity theft met the burden to establish standing.

While the Sixth, Seventh, and Ninth circuits have similarly concluded that a heightened risk of identity theft is sufficient for individuals to possess standing to sue; the Second, Third, Fourth, and Eighth Circuits have ruled in the opposite direction. Distinct facts from this  latest data breach case include the nature of the defendant being a federal government agency and the alleged identity of the hacker being a foreign government entity where the breach was executed for purposes other than identity theft. Nonetheless, the D.C. Circuit Court found the federal government agency liable as well as Office of Personnel Management’s (OPMs) third-party vendor, despite the contract between the two parties. The Supreme Court may need to review and rule on this crucial issue in the near future given the current split of authority.

© 2019 Vandenack Weaver LLC

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