Trish Sifka—Senior Attorney

          It should be no surprise that a federal appellate court generally does not have jurisdiction to review immediate appeals of denials of motions for summary judgment. See Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546, 69 S. Ct. 1221, 93 L. Ed. 1528 (1949); Iko v. Shreve, 535 F.3d 225, 234 (4th Cir. 2008) (noting this exception to the rule that "interlocutory appeals are generally disallowed"). “But, under the collateral order doctrine, appellate jurisdiction extends to ‘a narrow class of decisions that do not terminate the litigation,' but are sufficiently important and collateral to the merits that they should 'nonetheless be treated as final.'" United States ex rel. Citynet, LLC v. Gianato, 962 F.3d 154, 158 (4th Cir. 2020) (“Gianato”) (citing Will v. Hallock, 546 U.S. 345, 347, 126 S. Ct. 952, 163 L. Ed. 2d 836 (2006) (quoting Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863, 867, 114 S. Ct. 1992, 128 L. Ed. 2d 842 (1994))).

ZONING:  Virginia Court of Appeals: A Rezoning Application for a Private Facility Need Not Substantially Accord with the Comprehensive Plan or the Factors Set Forth in Va. Code §§ 15.2-2283 and 15.2-2284

Lawletter Vol. 49 No. 2

Charlene Hicks—Senior Attorney

            In Hartley v. Board of Supervisors, 80 Va. App. 1, 897 S.E.2d 217 (2024), the Virginia Court of Appeals issued a published opinion that deliberately discounts the role that a locality’s comprehensive plan must play in the Board of Supervisors’ decision to approve a private rezoning application. The decision also requires a court to view with great leniency the Board’s rezoning decision in light of the requirements set forth in Virginia Code §§ 15.2-2283 and 15.2-2284. Hartley thus paves the way for localities to quite easily effectuate a substantial change in the character of a single parcel of private property from the surrounding neighborhood.

Lawletter Vol. 49 No. 2

Nadine Roddy—Senior Attorney

      May an employer ask an employee whether they are thinking about retiring sometime in the foreseeable future without running afoul of the Age Discrimination in Employment Act (ADEA)? Some federal courts of appeals have answered this question in the affirmative.

          In a recent Fourth Circuit case, Palmer v. Liberty University, Inc., Nos. 21-2390, 21-2434, 2023 U.S. App. LEXIS 18467 (4th Cir. June 30, 2023), a 79-year-old professor was notified by the university where she had taught studio art for over 30 years that her annual contract would not be renewed. Nearly all of the university’s faculty members were employed on an annual basis and served without tenure. Before informing the professor of the nonrenewal of her contract, the Dean and the Provost had privately decided to offer the option of retirement to the professor, but only if she brought up the subject herself. After receiving the nonrenewal notice, the professor “responded unfavorably” but she did not raise the issue of retirement. As a result, she was not offered that option, and she lost her employment upon the expiration of her contract. In the ensuing ADEA lawsuit, the district court entered summary judgment for the university.

Lawletter Vol. 49 No. 2

Amy G. Gore—Senior Attorney

            The attorney-client privilege has traditionally limited the disclosure of properly qualified communications between an attorney and a client who is seeking legal advice. The limits of the privilege were tested in a recent Illinois decision in MacDonald v. Wagenmaker, 2024 IL App (1st) 230089, ¶ 1. There, HBC, an evangelical Christian megachurch terminated its senior pastor and retained attorneys to investigate claims of financial misappropriations. The church instructed the attorneys to post a letter outlining the attorneys’ findings on the church website which referenced financial misappropriations by the senior pastor. The pastor brought suit against the attorneys alleging, inter alia, defamation, false light invasion of privacy, and civil conspiracy. During discovery, the pastor sought to subpoena communications between the attorneys, the church, and their accountants to which an attorney-client privilege was asserted. The pastor replied that the crime-fraud exception of the attorney-client privilege destroyed the protection from discovery. The trial court, relying on a passage in Radiac Abrasives, Inc. v. Diamond Technology, Inc., 177 Ill. App. 3d 628, 638 (1988), in which the Illinois Supreme Court indicated that crime-fraud exception could extend to other torts, examined the communications in camera and ruled for the pastor, finding that the attorneys were aware that the publication of the letter may amount to tortious conduct. The trial court’s ruling was reversed by the appellate court.

Lawletter Vol 49 No. 2

Anne Hemenway—Senior Attorney

            On March 15, 2024, the United States Supreme Court decided a pair of cases from Michigan and California on the issue of whether a public official violates the First Amendment by blocking individuals from the public official's personal social media page. In the Michigan case, Lindke v. Freed, 601 U.S. 187, 144 S. Ct. 756, 218 L. Ed. 2d 121 (2024), Kevin Lindke, a private citizen argued that James R. Freed, the unelected city manager of Port Huron, Michigan, violated his free speech rights when the unelected official blocked the complaining citizen from his personal Facebook page. In the California case, O'Connor-Ratcliff v. Garnier, 601 U.S. 205, 144 S. Ct. 717, 218 L. Ed. 2d 138 (2024), two elected school board members blocked from their social media pages the parents who criticized the board of trustees. In both cases, the blocked citizens were outraged that they were barred from the private internet sites.

The Lawletter Vol. 49 No. 1

Lee Dunham—Senior Attorney

             Closely related people or entities often make loans, including promissory notes, to each other without the formalities that usually accompany business transactions between strangers. Later—sometimes years later—such transfers can become problematic if the IRS seeks to treat the transfer as a distribution or gift for tax purposes. Is the parties’ failure to execute a promissory note contemporaneously with the loan fatal to treatment of the transaction as a loan? Can the parties retroactively document the loan with a newly executed promissory note?

          “The question of whether a taxpayer has entered into a bona fide creditor-debtor relationship pervades Federal tax litigation.” Dynamo Holdings Ltd. P'ship v. Comm’r, Nos. 2685-11, 8393-12, 2018 Tax Ct. Memo LEXIS 60, at *47 (May 7, 2018). For tax purposes, the answer turns on intent: “[t]he parties must have actually intended to establish a debtor-creditor relationship,” i.e., “at the time the advances were made there [must have been] ‘an unconditional obligation on the part of the transferee to repay the money, and an unconditional intention on the part of the transferor to secure repayment.’” Id. at *47–48, citing Calloway v. Comm’r, 135 T.C. 26, 37 (2010), Ellinger v. United States, 470 F.3d 1325, 1333 (11th Cir. 2006), and Haag v. Comm’r, 88 T.C. 604, 616 (1987), aff'd without published opinion, 855 F.2d 855 (8th Cir. 1988).

The Lawletter Vol. 49 No. 1

Paul Ferrer—Senior Attorney

                The Virginia Supreme Court’s July 2023 decision in Monroe v. Monroe, 889 S.E.2d 646 (Va. 2023), turned on the trial court’s lack of jurisdiction to enter a sanctions order more than 21 days after the trial court had entered its final order dismissing the case. See Va. S. Ct. R. 1:1. For corporate attorneys, however, the case is more notable for Justice Kelsey’s admirably lucid discussion of the nature of a shareholder-derivative action and the status of the plaintiff seeking to maintain such an action.

            Lisa Monroe and Joseph Monroe were the married co-owners of MEPCO Materials, Inc., with 51% and 49% ownership interests, respectively. A week after Joseph filed for divorce, he, as the sole director at that time, caused MEPCO to file a civil action against Lisa for conversion and breach of fiduciary duty, alleging that she had used MEPCO funds for personal use. The following year, Joseph resigned from his position. Because he could no longer speak directly for MEPCO, he sought to convert the action against Lisa—which alleged classic claims that devolved to the benefit of the corporation and both of its shareholders, and not just to Joseph individually—to a shareholder-derivative action, that is, “an equitable proceeding in which a shareholder asserts, on behalf of the corporation, a claim that belongs to the corporation rather than the shareholder.” Monroe, 889 S.E.2d at 650 (quoting Little v. Cooke, 274 Va. 697, 709, 652 S.E.2d 129, 136 (2007)). Under the Virginia Stock Corporation Act, however, a shareholder “shall not commence or maintain a derivative proceeding unless the shareholder,” among other things, “[f]airly and adequately represents the interests of the corporation in enforcing the right of the corporation.” Va. Code Ann. § 13.1-672.1(A)(3). Justice Kelsey referred to this as a “statutory standing requirement that the putative representative must satisfy from the beginning to the end of the derivative action.” Monroe, 889 S.E.2d at 650.

The Lawletter Vol. 49 No. 1

Cassidy Crockett—Senior Attorney

      Many lawyers believe that advising a cannabis business, or cannabusiness, is the same as advising any other business. However, there are several considerations to take into account before taking on these clients.

Legal Ethics

      Attorneys know that ABA Model Rule 1.2(d) forbids attorneys from counselling or assisting clients in criminal conduct. While many states have either modified this rule or issued opinions exempting cannabis businesses, some still consider it an ethics violation to work with these businesses. In 2021, the Georgia Supreme Court denied a motion by the state bar to amend this rule to allow attorneys to engage with the newly legalized low-THC medical cannabis program. In re Motion to Amend 2021-3 (Ga. June 21, 2021). As long as cannabis remains a federally illicit substance, the first step that any attorney looking to engage with a cannabusiness client should take is to check their state ethics rules before proceeding.

Regulatory Compliance

     Cannabis laws are changing very quickly across the country, but cannabis regulations change even faster. While in most states, new laws take effect on a specified date, regulations can take effect and change throughout the year. It may also be warranted in some cases to attend agency hearings as well if the attorney is engaged in the permitting process. It is imperative that attorneys working with the cannabis industry familiarize themselves with their state’s administrative process, relevant agencies, and the administrative code.

Lawletter No. 48 Vol. 4

TORTS:  Duty of Care by a Supplier of Tools or Chattels

Lee Dunham, Senior Attorney

      It is, unfortunately, fairly common for people to sustain injuries from using defective tools or equipment such as ladders or scaffolding with faulty latching mechanisms or broken or improperly modified power tools. In circumstances where the tool was supplied by a third party, the party supplying the tool or chattel is often the employer of the injured worker, and the injury occurs on property owned or controlled by the employer. In such circumstances, the claim is often governed by OSHA regulations or principles of premises liability. However, even where those principles do not apply, liability can arise as a result of negligently supplying a defective chattel. The rule as stated in the Restatement (Second) of Torts § 392 is as follows:

       Chattel Dangerous for Intended Use

     One who supplies to another . . . a chattel to be used for the supplier's business purposes is subject to liability to those for whose use the chattel is supplied . . . for physical harm caused by the use of the chattel in the manner for which and by person for whose use the chattel is supplied (a) if the supplier fails to exercise reasonable care to make the chattel safe for the use for which it is supplied, or (b) if he fails to exercise reasonable care to discover its dangerous condition or character, and to inform those whom he should expect to use it.

Lawletter No. 48 Vol. 4

ELECTION LAW:  Federal District Court Judge Orders Georgia Lawmakers to RedrawCongressional Map for the 2024 Election

Anne Hemenway, Senior Attorney

        On October 26, 2023, in three cases similar to the U.S. Supreme Court decision rejecting Alabama's congressional map, the Federal District Court for the Northern District of Georgia in Alpha Phi Alpha Fraternity, Inc. v. Brad Raffensperger, No. 1:21-CV-05337-SCJ, Pendergrass v. Brad Raffensperger, No. 1:21-CV-05339-SCJ, and Grant v. Brad Raffensperger, No. 1:22-CV-00122-SCJ, 2023 U.S. Dist. LEXIS 192080 (N.D. Ga. Oct. 26, 2023), wrote a consolidated 516-page Opinion and Memorandum of Decision also rejecting Georgia lawmakers' congressional maps. In a state where the recent population growth has been almost entirely made up of minority residents, the state's congressional and legislative maps presented to the court did not add more majority-Black districts. Accordingly, the federal court concluded that despite the fact that Black voters have more opportunities, "the political process is not equally open to Black voters." Further, the court concluded that the current U.S. congressional maps presented to the court dilute and diminish the Black population's voting power in the Atlanta area.