Kuchler Polk Weiner, LLC congratulates Freightliner on 75 years of innovation.

Kuchler Polk Weiner, LLC congratulates Freightliner on 75 years of innovation.

 

Janika Polk, Lee Ziffer and Deb Kuchler recently ran into Dale Earnhardt, Jr. at Hendrick Motorsports where Freightliner is prominent. We’re reminded of how important it is as outside counsel to learn the client’s business.

What’s important to each client?

What keeps a client awake at night?

How does the business run?

That’s why, on our own time and on our own nickel, we:

  • Visit the client’s operation;

  • Climb on and drive a tractor;

  • Pick up a power tool and disassemble a brake drum;

  • Swing on a personnel basket onto an oil rig;

  • Don a Tyvek suit, hard hat, goggles, ear protectors and steel-toed boots for an inspection of a chemical plant or refinery;

  • Dive into the science underlying a product liability case;

  • Learn the lingo of deepwater drilling;

  • Know how to get to the port side from starboard on a client’s vessel; and

  • Understand the sensitivities involved in the client’s environmental stewardship issues.

We are 100% in it with our clients.  When they have skin in the game, so do we.

Cleaning Up the Clean Water Act

Cleaning Up the Clean Water Act

By: Kristyn L. Lambert

On July 27, 2017, the Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers (the Corps) proposed the first of two rules designed to replace the controversial 2015 “Clean Water Rule” (the 2015 Rule),[1] which some argue broadened federal jurisdiction under the Clean Water Act (CWA).  This regulation is particularly important because it determines which areas are subject to the Corps’ permitting authority under the CWA.  This news comes after Louisiana state administrators asked the Trump administration to grant funding and ease the federal permitting requirements related to Louisiana’s coastal lands.

The Corps’ Clean Water Rule of 2015 purportedly sought to clarify the question of which wetlands fall under the jurisdiction of the CWA, and interpreted “waters of the United States” to include “all waters that require protection in order to restore and maintain the chemical, physical, or biological integrity of traditional navigable waters,” without requiring a continuous surface connection.[2]  After its adoption, critics of the 2015 Rule argued that this construction significantly expanded federal jurisdiction.

Pursuant to its terms, the CWA applies to “navigable” waters, defined by Section 1362(7) of the Act as “waters of the United States.”[3]  This definition caused confusion regarding which areas are subject to the CWA regulations.  Wetlands have been particularly difficult to classify under the CWA because the boundaries between navigable waterbodies and adjacent wetlands are often unclear.[4]  Enforcing agencies and the courts have struggled to determine where the navigable waters – and the jurisdiction of the CWA – ends, and where terra firma land begins.

The Corps, responsible for enforcing certain of the CWA’s permitting requirements, interpreted “waters of the United States” expansively.  This resulted in a number of legal challenges from multiple parties and states, including Louisiana.

For instance, in U.S. v. Riverside Bayview Homes, Inc., the United States Supreme Court upheld the Corps’ authority to interpret the CWA as applicable to wetlands adjacent to other covered water bodies, even though the Corps had historically construed the CWA to cover only waters navigable in fact.[5]

In Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, (SWANCC), the U.S. Supreme Court held that the Corps exceeded its authority under the CWA when it adopted a rule extending the definition of “navigable waters” to include intrastate waters used as habitat by migratory birds.[6]  That case did not involve wetlands specifically, but it discussed that the deciding factor in Riverside, supra, was the “significant nexus” between the wetlands and navigable waters at issue.[7]  While the opinion did not precisely address what constitutes a significant nexus, it did indicate that physical proximity and location are important considerations.[8]

More recently in Rapanos v. United States, the Supreme Court agreed that the “significant nexus test” should be applied to determine which wetlands fall within the CWA’s jurisdiction, but failed to reach a majority holding regarding how the test is applied.  According to the plurality opinion authored by late Justice Scalia, a significant nexus requires that the wetlands be adjacent to “a relatively permanent body of water connected to traditional interstate navigable waters; and second, that the wetland has a continuous surface connection with that water, making it difficult to determine where the water ends and the wetland begins.”[9]  According to the opinion, the scope of the definition of “waters of the United States” was determined by a wetland’s physical proximity to covered waters, “not ecological relationship thereto.”[10]  According to Justice Kennedy’s concurring opinion, the significant nexus is established if the wetlands “affect the chemical, physical, and biological integrity of other covered waters.”[11]  In Justice Kennedy’s view – if the wetlands have a substantial ecological impact on navigable waters, the significant nexus test is satisfied regardless of the wetlands’ physical proximity to the navigable waters.

In October 2015, the U. S. Court of Appeals for the Sixth Circuit stayed the Rule on the grounds that the 2015 Rule was “at odds with the Supreme Court’s ruling in Rapanos” and because the rulemaking process by which the 2015 Rule was adopted was “facially suspect.”[12]

In February 2017, President Trump issued an Executive Order instructing the EPA and Corps to issue new regulations that reflect Judge Scalia’s majority opinion in Rapanos to narrow CWA jurisdiction and reduce the area subject to federal permitting.  The rule proposed on July 27, 2017 essentially seeks to repeal the 2015 Rule and “re-codify” the prior regulations temporarily.  This will essentially maintain the status quo, as the prior regulations have been applied since the Sixth Circuit enjoined the 2015 Rule.  In a “second step,” the agencies intend to “conduct a substantive re-evaluation of the definition” to draft replacement regulations.

[1] Corps of Engineers’ regulatory definition of waters of the United States 33 C.F.R. § 328.3.

[2] Clean Water Rule: Definition of “Waters of the United States,” 80 FR 37054-01 (2015).

[3] 33 U.S.C.A. § 1362(7) (2014).

[4] See U.S. v. Riverside Bayview Homes, Inc., 474 U.S. 121 (1985); and Rapanos v. United States, 547 U.S. 715 (2006).

[5] U.S. v. Riverside Bayview Homes, Inc., 474 U.S. 121, 123 (1985).

[6] Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001).

[7] Id. at 167.

[8] Id. at 168.

[9] Rapanos v. United States, 547 U.S. 715, 742 (2006)(internal quotations omitted).

[10] Id. at 747.

[11] Id. at 780.

[12] In Re E.P.A., 803 F.3d 804, 807 (6th Cir. 2015).

The Enemy of Efficiency: Diminishing Marginal Returns

The Enemy of Efficiency: Diminishing Marginal Returns

By: Mark E. Best, Esq.

Clients want, expect, and are entitled to efficient handling of their cases.  The block-billing model of the past, which allowed for full-day time entries on “research” or “document review,” gave way to standard tenth-of-an-hour billing increments with verbose time entries designed to help clients determine whether they were getting their money’s worth.  And even this model is now showing its age, having to compete with fixed and alternative fee agreements designed to give more certainty to future litigation costs.  No matter the billing method, when the client is writing out that check, she wants to know she isn’t paying for unnecessary work.

Most defense firms create efficiencies using common methods like new technology (e.g., paperless work flow; video conferencing; electronic document review software), appropriately tiered staffing (e.g., delegation of simple tasks to clerks, paralegals and secretaries), and assessment of cases for early resolution through motion practice or settlement.  At Kuchler Polk Weiner, LLC, we take efficiency efforts one step further—out of the physical office and into our collective mindset.  One way we do this is by focusing on the archenemy of efficiency—the law of diminishing marginal returns (“DMR”).

This economic principle states that if one input in the production of a commodity is increased while all other inputs are held fixed, a point will eventually be reached at which additions of the input yield progressively smaller, or diminishing, increases in output.[1]  Put more simply, you can continually add more of a given resource to creation of a product but, at some point, it will become inefficient to do so.  The practice of law is not immune from the law of DMR.  There comes a point in every project or case when spending additional hours working on it yields an ever-decreasing return for the client—potentially even a negative return, which occurs when additional work input results only in increased costs to the client, without any benefit whatsoever.  So what does this look like in the real world?

In the first three hours an attorney spends constructing a brief, she may formulate an outline, read the latest case-on-point, and identify the key supporting exhibits.  That work is very productive and highly valuable to the client.  In the last hour of brief preparation, however, he may read and re-read the draft, ultimately deciding only to change the word “Firstly” to “First.”  Some would (rightly) argue that the last hour was quality-control work necessary to ensure top quality.  From an economic perspective, however, the last hour created “diminished” value for the client relative to the first three hours.  And yet, the client is charged for the last hour at full price.

We cannot fight the law of diminishing marginal returns, but we can maintain a higher level of efficiency by being mindful of it.  An efficient attorney should consider the following questions at each stage of work-product preparation:

 

  1. What is absolutely essential to this work product, and what is not?
  2. Have any essential parts of the work product already been created, such that I need not reinvent the wheel?
  3. Have I reached the point in the creative process where I am merely fine-tuning?
  4. Is the fine-tuning still creating good value for the client?

The goal of this mindfulness exercise is to create an automatic internal alarm system, pinpointing the moment when the return on investment of time begins to diminish.  Once the alarm bells go off, there should be a shift in mindset to “wrapping things up” and moving on to other, more productive tasks.  The benefit to the client’s bottom line does not go unnoticed and (bonus!) we tend to avoid those headaches that come from staring at the same words on the computer screen for hour after hour.

[1] https://www.britannica.com/topic/diminishing-returns

 

Always be Closing, Even on Day One of a New Maritime Case

Always be Closing, Even on Day One of a New Maritime Case

By: Mark E. Best, Esq.

Nothing jump-starts a legal mind like a brand new case.  As you read the Complaint for the first time, the former law student in you begins issue-spotting automatically and fires off a barrage of questions:

What’s the jurisdictional basis?  Is it a vessel?  Seaman or Longshoreman?  Are punitive damages available?

Not to be outdone, the seasoned litigator in you adds to the growing pile:

When are responsive pleadings due?  Who is opposing counsel?  Who’s the judge?  Didn’t we just handle a similar case?

Sometimes it seems hard to know where to begin.  But the answer is pretty simple—begin at the end.  There is nothing more valuable to defense clients than a quick win, and attorneys should strive to develop a reputation for ending litigation or delivering file closure before it’s expected. With rare exception, contractual indemnity is the fastest and least expensive way to get a new maritime file off of a client’s desk.  Here are steps we strive to complete on Day 1 of a new maritime case.

Identify Plaintiff’s Employer

First, we want to identify our target—the contractor who is going to cover every dime of our client’s expense.  Contracts for offshore work commonly require an employer to defend and indemnify those who are sued by its employees, so plaintiff’s employer is usually the first and best option.  In Jones Act cases, the employer will always be a named defendant and the employment relationship will be clear from the allegations in the Complaint.  In the event the employer is not identified in the Complaint, we pick up the phone and ask plaintiff’s counsel.  Our client’s time is money, and it should not be wasted waiting for formal discovery on non-controversial matters.

Get the Contracts

Next, we get the signed documents.  On the day a new file is assigned, we request copies of the relevant contracts and work orders between the client and plaintiff’s employer.  Our efficiency-focused maritime clients understand our goals and provide these contracts with the new case assignment, before we even have to ask.

Master service agreements and vessel charters can be quite complex and the risk allocation, indemnity, and insurance provisions are thoroughly and carefully reviewed.  We confirm that the contract language identifies the client as an indemnitee and that it contains specific language allowing the indemnitee to be indemnified for its own negligence.[1]  If our client did not contract with plaintiff’s employer, we request and examine its agreements with other named defendants in the suit.  Oftentimes, contractual indemnity and defense obligations “pass through” other entities and provide coverage to our clients.  By maintaining familiarity with our clients’ contract language, we can expedite the analysis.

Determine Enforceability

Once we’ve confirmed that our client is owed defense and indemnity pursuant to the contract terms, we need to ensure that those terms are enforceable under applicable law. Our seasoned maritime attorneys are well-versed in choice-of-law analysis, state anti-indemnification statutes and, importantly, the exceptions thereto.[2]

Follow Client/Contract Procedures

Assuming the contract terms are enforceable, we check the contract for dispute resolution and claim notification procedures.  We strive to recommend next steps to our clients in every status report and, in this situation, those steps must conform to contract requirements.

Some agreements require notices to be sent to particular individuals or office addresses.  Others allow the indemnitor to recover attorneys’ fees and costs if the indemnitee fails to employ alternative dispute resolution before filing a cross-claim or separate lawsuit for defense and indemnity.  We avoid pitfalls by being accustomed to the terrain and our clients rest assured that we will take no action on this issue without specific authorization.

Finally, we consider our client’s internal procedures and preferences.  Some companies’ legal departments require approval from their business units before a formal tender letter can be issued to a contractor.  Some clients wish to issue tender letters directly, while others prefer to present them on our firm letterhead.  Some clients prefer lengthy demand letters that attach the Complaint and all contract documents, along with a full legal analysis.  Such letters project strength because they imply that formal legal action is a mere “cut-n-paste” away.  Other clients see lengthy demand letters as giving away too much information, preferring instead simple demands merely attaching the Complaint and referencing a contract number.  We seek out our clients’ individual preferences to deliver precisely what they want, when they want it.

Send the Demand

The best practice is to send copies of the demand letter by certified mail or other trackable means to (1) the entity’s registered agent for service of process; (2) the notification addressee identified in the contract; and, (3) the entity’s counsel of record in the underlying litigation (if applicable).  This increases the likelihood of a prompt response, which can save our client time and money.

Our clients may not always remember opening a new case file with multi-million dollar exposure and a litigation budget of hundreds of thousands of dollars.  We only want them to remember how Kuchler Polk Weiner, LLC closed it, at little or no cost to the company, in a matter of weeks.

 

[1] Indemnification for an indemnitee’s own negligence must be “clearly and unequivocally expressed.” An indemnification of “any and all claims” standing alone is not sufficient to indemnify the indemnitee for its own negligence.  Seal Offshore, Inc. v. Am. Standard, Inc., 736 F.2d 1078, 1081 (5th Cir.1984) (citations omitted).

[2] The number of potential fact patterns, legal issues, pitfalls and outcomes of this analysis are too numerous to discuss in this space, and may be the subject of future posts.