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Oregon’s “Gangapreneurs”

Acker + Associates P.C. Newsletter

 Pot Leaf

OREGON’S “GANJAPRENEURS”

This November, Oregon voters passed Measure 91. The act permits recreational use of marijuana under Oregon law. Beginning on July 1, 2015, adults aged 21 or older may privately grow, possess, and use limited amounts of the plant and derived products.

The law also opens the door to future retail sales of marijuana at licensed shops. As with alcohol, the Oregon Liquor Control Commission (OLCC) is charged with regulating the industry. The OLCC’s public rulemaking process will establish comprehensive regulations to deal with issues involving sales to minors, advertising, product safety, and business licensing.

The OLCC will begin accepting license applications no later than January 4, 2016. Marijuana-related businesses will be categorized as Producers, Processors, Wholesalers, and Retailers, each with its own set of rules. Licenses will cost $1,000 per year. A single licensee may hold multiple licenses and license types.

Business opportunities abound for not just the retail sale of marijuana but for ancillary products and services. Commercial greenhouse pot production can require heating and cooling systems, carbon dioxide injections, grow lights, air ventilation and filtration, and hydroponic or irrigation systems. The product itself must be properly harvested, packaged, labeled, stored, and shipped.

The marijuana industry will undoubtedly mirror goods and services found in the alcohol industry. The new law allows the sale of marijuana paraphernalia, such as pot-growing kits. Colorado and Washington, which both legalized marijuana in 2012, have already seen businesses offering marijuana “tastings” and tours.

Federal law continues to list marijuana as a Schedule I controlled substance–a category that includes the “most dangerous drugs” like heroin. This fact adds substantial risk to marijuana-related business as most operations likely violate or cannot benefit from federal laws.

Under the Obama administration, the feds have informally stated that prosecuting businesses that are complying with strong state regulatory systems is not a priority. However, a shift to the right in politics could cast a haze over such policy.

Measure 91 creates numerous opportunities for budding “ganjapreneurs.” Please contact Acker + Associates for any legal assistance.

Bicycle-Riding Ebola Zombie Nurses?

Acker + Associates P.C. Newsletter

BICYCLE-RIDING EBOLA ZOMBIE NURSES?

Ebola Law 101

10/24–Nurse Kaci Hickox returned to the United States from treating Ebola patients in Sierra Leone. Upon her arrival in New Jersey, she registered a temperature of 101. (Later her temperature was determined to be the normal 98.6.) Pursuant to New Jersey policy, Ms. Hickox was quarantined in a tent for the weekend.

10/27–Ms. Hickox was transported to her home in Maine (via two black SUVs with tinted windows).

10/30–Ms. Hickox went on a bicycle ride with her boyfriend and met with reporters, violating Maine’s quarantine policy.

10/30–A Maine judge signed a “temporary order” limiting Hickox’s movement.

Ms. Hickox claims that she has experienced no symptoms and that Maine’s policy is not medically or legally sound. (Her boyfriend claims that the government has “messed with the wrong redhead.”)

Does the government have the legal muscle to keep Ms. Hickox at home…and off her bike?

The federal government doesn’t mind her bicycle riding. Current CDC guidelines for healthcare workers only require self-monitoring and avoiding public transportation, as long as one remains symptom free. (See Ebola: The Power to Isolate for an analysis of the legal authority for federally mandated quarantines.)

However, Maine officials consider Ms. Hickox’s activities as violating its 21-day home quarantine for Ebola health workers returning from West Africa. Maine courts may interpret Maine law differently.

According to Maine law, a court may order confinement when needed to avoid a clear and immediate public health threat. Since Ms. Hickox is not showing any symptoms, and health authorities have indicated that Ebola is not contagious unless one is experiencing symptoms, the clear and immediate public health threat may prove a difficult standard to meet.

What about Oregon? Oregon law has a similar standard–clear and convincing evidence that confinement is necessary to prevent a serious risk to the health and safety of others. Confinement may occur before a court hearing, upon the determination that probable cause exists to believe that the individual requires immediate detention to avoid a clear and immediate danger to others.

Whether or not a court upholds Maine’s attempt to quarantine Ms. Hickox, she may create serious legal ramifications for herself in the event she did infect another with Ebola. At a minimum, her refusal to comply with the state quarantine policy may help another establish a civil negligence claim against her.

Regardless of whether you think of Ms. Hickox as a crusader, an egocentric, or a fiery red-head, we should all thank her. With Halloween upon us, she has provided a great costume idea–a bicycle-riding Ebola zombie nurse.

Happy Halloween!

EBOLA: The Power to Isolate

Acker + Associates P.C. Newsletter

EBOLA:

THE POWER TO ISOLATE

Thomas Eric Duncan, the first patient diagnosed with Ebola in the United States has died in isolation at a Dallas hospital.  Mr. Duncan’s female companion, his 13-year-old son, and two others are currently quarantined in a four-bedroom home on a remote property.  They are prohibited from leaving under the threat of prosecution.

The White House has announced that additional screening will begin at five U.S. airports for travelers arriving from West Africa.  Such screening will include taking the temperatures of travelers.

In Spain, the first woman known to contract Ebola outside of West Africa, is quarantined in a hospital, as is her husband.  Their dog, Excalibur, was euthanized as a precaution despite protests from the owners and animal rights groups.

Does the U.S. government have the power to isolate and quarantine individuals it suspects of having Ebola?  What about the constitutional protections of due process, freedom from search and seizure, and freedom of assembly?

The Supreme Court has interpreted the Commerce Clause of the U.S. Constitution (Art. I, Sec. 8, Cl. 3) as providing power for the government to isolate and quarantine, regardless of other constitutional protections.  The legislature has codified broad power to enable the Secretary of State to prevent the introduction, transmission, and spread of communicable diseases in the United States.

Ebola can only be spread through blood or bodily fluids.  It is not airborne.  Containment should be achievable in societies with the necessary resources and coordination.  For instance, Nigeria, the most populous country in Africa, recently reported that it has contained the spread of the disease with its “contact tracing” system.

What happens if Ebola mutates and becomes airborne or another, more contagious disease appears?  What if the populace is simply led to believe that such a superbug exists?  With the power to quarantine and isolate, we could find ourselves living in a police state.  Maybe certain science fiction movies are not so far from our future reality.

Oregon Court Slams on Brake for “Independent Contractors”

Acker + Associates P.C. Newsletter

OREGON COURT SLAMS ON BRAKE

FOR “INDEPENDENT CONTRACTORS”

Avoiding employment issues by hiring independent contractors instead of employees?  Careful.

Last week the Oregon Court of Appeals ruled that, for the assessment of unemployment insurance tax, Broadway Cab’s drivers are employees.

Broadway Cab argued that its drivers are independent contractors and that it merely provides administrative services (such as dispatch, billing, and marketing).  The Court found that Broadway Cab’s drivers did not (1) maintain a separate work location, (2) routinely engage in advertising and marketing, or (3) have the authority to hire and fire others.

While the Court entertained Broadway Cab’s argument that driver-owned vehicles constitute work locations, the Court concluded that they are not separate from Broadway.  The Court noted Broadway requires its name on the vehicles, dictates vehicle color, and controls where inactive vehicles must park.

The Court found that the use of business cards by some drivers does not constitute routine advertising and marketing.  Also, the Court indicated that drivers must have the authority to hire and fire other drivers–as opposed to mechanics, CPAs, and other professionals.

The fact that drivers are paid directly by riders and pay a fixed weekly amount to Broadway Cab, regardless of what they make from riders, did not sway the Court.

On a national level, McDonald’s also recently found itself on the losing end of an employee versus independent contractor analysis.  The National Labor Relations Board (the federal agency with power to remedy unfair labor practices of private sector employers) announced on July 29, 2014 that the parent company can be held liable for the labor practices of its franchisees.  In other words, the NLRB supersized McDonald’s liability to include potential employment claims of franchisee employees.

[On a personal note, Oregon Appellate Judge Erica Hadlock, who wrote the opinion in Broadway Cab LLC v. Employment Department, was a classmate of mine at Cornell Law School and a colleague at a local law firm. -R.A.]

Aspiring Lawyers Sue for Stress from July Bar Exam

Acker + Associates P.C. Newsletter

ASPIRING LAWYERS SUE FOR STRESS

FROM JULY BAR EXAM

Question:  What happens when you mix budding attorneys, stress, and software glitches?

Those taking the Oregon bar examination last month were permitted to use laptops if they purchased software from ExamSoft Worldwide Inc.  The software essentially turns off all other features of the computer (such as the ability to access the Internet) and only allows the test takers to access authorized materials.  The answers, which could not be changed after the test period ended, were supposed to be uploaded before midnight of the day of the test.

After the first day of the bar exam (the essay portion), the software would not permit many of the test takers to upload their essays.  Eventually, the software appeared to function properly but only after test takers tried frantically for hours to use it.  Many claim the glitch prevented them from resting and preparing for the second day of the test–the dreaded multistate, multiple-choice portion.

ExamSoft refused requests for refunds.  The test takers sued for breach of contract, violations of various consumer protection laws, and unjust enrichment.

Generally, one cannot recover for emotional distress or speculative damages under the asserted claims. While results of the test have not yet been published, failing to pass the test and related ramifications constitute speculative damages. In other words, any recovery will likely be limited to the cost of the software, approximately $150 per user–more than the filing fee for the lawsuit.

Free Range Hybrid Electric Corporations

Acker + Associates P.C. Newsletter

FREE RANGE
HYBRID ELECTRIC
CORPORATIONS

Traditionally, corporations are structured to maximize profit for their stockholders. As of this year, Oregon recognizes a new classification for corporations and LLCs that seek to accomplish something further–the Oregon benefit company.

The 2010 case of Ebay v. Newmark et al. illustrates the need for this new entity. The founders of craigslist, Craig Newmark and James Buckmaster, attempted to install a “rights plan” to allegedly protect its community-minded corporate culture. The Delaware Court rejected the plan and stated that the corporate form is not an appropriate vehicle for philanthropic ends and that the craigslist directors must act “to promote the value of the corporation for the benefit of its stockholders.”

The Oregon benefit company provides such a form for pursuing a “positive impact on society and the environment.”

Just like you considered before buying that Prius–what are the costs and benefits?

While the state does not impose any costs for the designation, it does have requirements that may result in some costs. The company must include a statement in its Articles about its status as an Oregon benefit company. The company must adopt a third-party standard. Third-party standards organizations (such as B Lab) provide such standards and audits, for a fee. Also, the company must prepare an annual benefit report and post it on the company’s website.

As for the benefits of this designation, the company is authorized to pursue its stated public benefit purpose–as opposed to just generating profits. In addition, such a designation could help attract customers and clients that share the same goals.

World Cup Update

U.S. advances out of the “group of death” behind Germany!–as we predicted in the 6/12 Legal Bits.

The World Cup continues to provide drama on and off the pitch. Ghana is out but not before the players convinced the Ghana president to send $3 million on a plane for their promised bonuses.

Luis “Cannibal” Suarez was handed a nine-game FIFA suspension for biting Italy’s Chiellini. Chiellini is not an Italian dish but a defender. This was Suarez’s third bite–not in preschool but in a FIFA soccer match. Vampire conspiracy? The referee that refused to card Suarez not only resembles but actually has the nickname “Dracula.”

Oregon’s Unique Coastal Property

Acker + Associates P.C. Newsletter
Oregon Coast

OREGON’S UNIQUE COASTAL PROPERTY

    …and World Cup Soccer

If you take a summer stroll at the Oregon coast, as long as no natural barriers interfere, you could walk forever. Only Oregon can boast that all of its beaches are public.

On July 6, 1967, Governor Tom McCall signed the “Beach Bill” which declares public ownership of land along the Oregon coast from the water up to 16 vertical feet from the low tide mark. In addition, public easements are recognized for all beach areas up to the line of vegetation.

At the time, not everyone was pleased with public ownership, especially those that lost their private property rights. Before the Beach Bill, the state claimed ownership of all beaches as a public highway. Cannon Beach motel owner William Hay objected. He fenced off some of the dry sand area above the high tide line. Perhaps recognizing the weakness of the public highway argument, the state responded with the Beach Bill.

Speaking of beaches, how about those beaches in Brazil…and the World Cup? (OK, that was a weak segue to soccer.) Remember, U.S. plays Portugal at 3 p.m. on Sunday.

Not watching?! 46% of the entire world population watched at least one game of the last World Cup. For the U.S. v Ghana match last Monday, the country of Ghana had to ration electricity so that everyone could watch the game.

Despite Altidore’s absence (hamstring), I stand by my prediction in the last Legal Bits–U.S. will advance from the “group of death.”

The Business of Soccer

Acker + Associates P.C. Newsletter

THE BUSINESS OF SOCCER

    IN SOCCER CITY U.S.A.

First an update on NBA v Sterling: Sterling refused to sign the agreement to sell the Clippers and has instructed his attorneys to proceed with his lawsuit against the NBA. Perhaps he read the last Legal Bits. (See NBA v Sterling Part 2.) Enough, let’s switch to soccer…

While the World Cup began today in Brazil, the soccer frenzy is continuing here in Portland (aka Soccer City, USA). Savvy local businesses are cashing in on it.

Earlier this year, Providence Health & Services reached an agreement with the Timbers for naming rights, switching Jeld-Wen Field to Providence Park. (And you were wondering why your health insurance premiums are so high.) The Timbers refuse to disclose the amount paid.

The city, which owns the park, is not entitled to any proceeds from the naming rights agreement, and still owes the Timbers $13 million due to its prior agreement. Apparently, Merritt Paulson was a better negotiator than our city representatives.

Nike and Adidas, both with their U.S. headquarters here, are engaged in an all-out war for dominance in the local soccer market. The Timbers are sponsored by Adidas and the Thorns by Nike.

This Nike/Adidas rivalry is especially noticeable with youth soccer. My eleven-year-old recently switched from an Adidas-sponsored team to a Nike-sponsored team. He was previously prohibited from wearing or using Nike products (except cleats), at risk of a fine. Now, he is only permitted to wear/use Nike apparel. Eat your vegetables and wear the right label before kicking that ball!

Clients have seen the value of pairing their products and services with the Portland Timbers. The New Old Lompoc created the Kick Axe Pale Ale as the “unofficial beer of the Timbers Army,” with part of the proceeds donated to the Timbers Army. Lucky Labrador has a No Pity Pale Ale, named for the Timbers’ chant/slogan “No pity in the Rose City.” And for pest control, Pest Solutions is the official pest control company for the Portland Timbers.

New clients have come to us with new ideas to take advantage of the soccer craze, from the development of a soccer complex, consisting of soccer facilities and local businesses, to the introduction of the sport of soccer tennis.

Please contact us with any of your soccer-related legal needs. And, not that we provide anything other than legal advice…the U.S. will make it past the “group of death,” behind Germany, and will fall to the Netherlands in the second round.

NBA v. STERLING (Part 2)

Acker + Associates P.C. Newsletter NBA v. Sterling - deflated ball

NBA v. STERLING

PART 2: WHY STERLING COULD HAVE WON

A flurry of activity followed the Legal Bits of a week ago (Part 1), including Sterling filing a $1 billion lawsuit against the NBA. Today, Sterling announced that he will agree to sell the Clippers to Ballmer.

Although never to be adjudicated, the question remains as to whether the NBA had the legal authority to fine Sterling $2.5 million and force him to sell the Clippers. Answer: No.

The $2.5 million fine was excessive. The NBA’s Constitution and By-Laws provide that an owner that makes a statement having an effect “prejudicial or detrimental to the best interests of basketball” or the NBA shall be liable for a fine not exceeding $1 million (not the $2.5 million imposed by Stern). Other provisions allow fines but do not apply, such as a $2.5 million fine if a team fails to appear in a scheduled game.

Sterling could not have been forced to sell the Clippers. While an owner can be forced to sell upon a 3/4 vote of the other owners, such a vote is only to be held upon (1) a “willful violation” of an agreement, or (2) the failure to fulfill contractual obligations in such a way as to affect the NBA adversely.

Sterling’s racist comments were taped by his ex-mistress, some without his consent. These facts do not support a claim that he was willfully or purposely violating any provision. Sure, the NBA could argue that his comments affected it adversely due to loss of sponsorship. However, Sterling’s actions do not violate any provision of the NBA’s Constitution and By-Laws.

Even if the NBA could point to contractual provisions substantiating its sanctions, a court may not enforce them. Generally, most courts draw a distinction between liquidated damage provisions and penalties. Liquidated damage provisions constitute a reasonable forecast of the harm a party would incur, as of the time of entering the contract. If a court were to determine that the sanctions did not constitute liquidated damages, they would be deemed a penalty and not enforceable.

Other events, such as the dispute over Sterling’s mental competency, make this saga more complicated that a contract dispute. Ultimately, the agreement to sell the Clippers to Ballmer is likely a win for everyone.

NBA v. STERLING

Acker + Associates P.C. Newsletter NBA v. Sterling - deflated ball

NBA v. STERLING

THE SEVEN-GAME SERIES

Play-By-Play

•  Sterling’s mistress releases audio of his racist rant.

•  NBA (Commissioner Silver) bans Sterling for life, fines him $2.5 million, and claims he will try to force Sterling to sell Clippers.

•  Sterling “apologizes” on Anderson Cooper, but actually blasts Magic Johnson.

•  NBA formally charges Sterling, setting up hearing for June 3, 2014.

•  Sterling’s wife reports she agreed to sell Clippers to Steve Balmer, former Microsoft CEO, for $2 billion.  Sterling’s attorney responds his client will not sell.

Game Analysis

So far, the NBA has the momentum.  However, if Sterling decides to play defense, the NBA is unlikely to be able to dribble around Sterling’s legal arguments.  Sterling’s comments are deplorable, but the NBA’s attempt to contort contractual terms to sanction him is a weak game plan.

This will be a competitive series.  With the players threatening to strike and the rookie Commissioner Silver wanting to appear resolute, the NBA is unlikely to back down.  While Sterling indicated on Anderson Cooper that he does not intend to fight the NBA, financial reasons suggest he will bring his game.

Complying with the NBA’s demands would cost Sterling far more than the $2.5 million penalty.  Sterling purchased the Clippers in 1981 for $12.5 million. Former Microsoft executive Steve Balmer is reportedly under contract to buy the Clippers for $2 billion.  If the sale goes through, Sterling could face a capital gains tax hit of over $395 million.

A late game three-pointer may end the entire series.  If Sterling is declared incompetent or otherwise passes the ball to his wife, the NBA is likely to approve of the sale to Balmer.