Monday, February 28, 2011

Court Reviews Whether Employee’s Termination was For Cause and Whether Employee was Entitled to Severance Pay

DEAN G. HAFEMAN v. PROTEIN DISCOVERY, INC., A TENNESSEE CORPORATION (Tenn. Ct. App. February 28, 2011)

This is a breach of employment contract action filed by Dean G. Hafemen ("the Employee") against Protein Discovery, Inc., a Tennessee corporation ("the Employer" or "the Company") after the Employer terminated the Employee's employment before the expiration of the term of his "Amended and Restated Employment Agreement" ("the Agreement").

The complaint alleges that the Employee is entitled to certain severance benefits provided for in the Agreement for any termination that does not qualify as a "Termination For Cause" as defined in the Agreement. After a bench trial, the court found that the termination was for cause and entered judgment in favor of the Employer. The Employee appeals. We reverse.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/hafemand_022811.pdf

Sunday, February 27, 2011

Businesses Shift Strategy in Hiring Lawyers

The recession has brought changes to the business of law as companies try to find ways to lower fees and enter into less costly billing arrangements. Industry experts say some of these strategies include using junior associates at a lower billing rate, engaging different lawyers for specific issues, and paying by the hour rather than by retainer. In a New York Times article reprinted in the Memphis Commercial Appeal, business consultants and law firm managers offer their insights for making legal services affordable for small businesses.

Read the story here: http://www.commercialappeal.com/news/2011/feb/13/strategies-shift-in-hiring-lawyers/

Friday, February 25, 2011

Court Reviews an Interlocutory Appeal Regarding Class Certification

DONALD J. ROBERTS IRA, ET AL. v. PHILLIP H. MCNEILL, SR., ET AL. (Tenn. Ct. App. February 23, 2011)

This is an interlocutory appeal from a class certification. The named plaintiffs, former owners of preferred stock in Equity Inns, Inc., filed a class action against the company's former directors. Their amended complaint asserted breaches of the fiduciary duties allegedly owed to the preferred shareholders during the negotiation and approval of a merger. The trial court granted the plaintiffs' motion for class certification with respect to "[a]ll holders of Equity Inns preferred stock as of June 21, 2007." We vacate and remand for further consideration.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/robertsd_022311.pdf

Thursday, February 24, 2011

New 8(a) Regulations Limit Joint Ventures, Allow Higher Income

SBA has overhauled rules governing the 8(a) program, imposing new restrictions on joint ventures and raising limits on a business owner’s annual income and wealth. The final rule, published in the Feb. 11 Federal Register, is the first rewrite of 8(a) regulations in more than 10 years. It becomes effective March 14.

In a joint venture between an 8(a) firm and a non-8(a) partner, the 8(a) firm will be required to do at least 40% of the work done by the joint venture. Since the JV is required to perform at least 50% of the work on a contract, that means the 8(a) partner must perform at least 20% of the total contract. The current rule requires only that the 8(a) firm do a “significant portion” of the work. The non-8(a) partner may not take a second bite of the apple by serving as a subcontractor to the joint venture. The 8(a) partner in the JV must receive profits commensurate with the amount of work it performs.

SBA has indicated that the new JV rules were a response to suspicions that Alaska Native Corporations were passing through virtually all work to a large partner. Legislation is pending in Congress to restrict the size of sole source contracts awarded to Alaska Native and tribally owned 8(a) firms. Alaska Native Corporations and tribally owned companies will be required to report how their 8(a) contracts benefited their communities.

The Alaska firms have argued that their payments to impoverished Native people justify their special procurement preferences, but congressional investigators found that some Alaska companies paid only a few hundred dollars in dividends to Native shareholders. The owner of a company entering the 8(a) program will not be considered economically disadvantaged if his annual income exceeds $250,000, averaged over a three-year period. To remain eligible for the program, the owner’s annual income may not exceed $350,000. An individual may rebut a finding that he is not economically disadvantaged by showing that the high income was the result of an unusual event, such as an inheritance. Since the 8(a) owner usually must be the highest paid employee, SBA said the higher income limits will allow 8(a) firms to pay competitive salaries to other top-level executives. An owner will not be considered economically disadvantaged if his assets exceed $4 million at the time of application for the 8(a) program.

Complete article available with subscription to Set-Aside Alert

Thursday, February 17, 2011

Haslam Unveils First Legislative Agenda

Gov. Bill Haslam unveiled his first legislative agenda today. Among its provisions, the proposal would limit damages in civil suits against businesses as part of an effort to attract more companies to Tennessee.

Under the plan, non-economic damages would be capped at $750,000. Tony Thompson, a lobbyist for the Tennessee Association for Justice, responded saying the group is not convinced that civil damages are a problem in Tennessee or are keeping businesses from moving into the state.

http://www.knoxnews.com/news/2011/feb/17/haslam-unveil-legislative-package-thursday/?partner=newsletter_headlines