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Federal Judge Rejects Requests to Throw Out Verdict Against Lakewood Police Officers Over Jurors’ Alleged Ulterior Motives

Posted Wednesday, January 24, 2018 by McKean J. Evans

U.S. Federal District Judge Barbara Rothstein recently upheld a $15.1 million jury verdict against the city of Lakewood and three Lakewood police officers over the 2013 killing of an unarmed man. In her 69-page order, Judge Rothstein repeatedly criticized the attorneys representing Lakewood and the officers for suggesting the jury’s verdict was improperly motivated by fear of racial backlash.

Lakewood police officers fatally shot Leonard Thomas in 2013 during a domestic dispute. In upholding the jury’s verdict, Judge Rothstein found the evidence supported the jury’s conclusion that the Lakewood officers acted outrageously and with malice. The judge observed that every step the officers took during the incident made it more likely that Thomas would die. Among other things, Judge Rothstein noted the evidence showed the police overreacted to a minor domestic squabble by sending a full SWAT team and hostage negotiator. Despite the hostage negotiator’s apparent resolution of the dispute, the officers fatally shot Thomas.

Lakewood’s attorneys asked Judge Rothstein to throw out the jury’s verdict. They argued that the jury was improperly influenced by community perceptions about police officers’ excessive use of force against African Americans. Lakewood’s attorney argued the jury only found in Thomas’ favor because they were afraid to tell people in their communities that they exonerated white police officers who shot an unarmed African American man.

Judge Rothstein rejected the claim the jury’s verdict was improper, finding there was no evidence the jury found Lakewood and the officers liable merely to protect the jurors’ individual reputations. The judge noted that argument was particularly unpersuasive because the attorneys representing Lakewood and the officers had successfully argued against showing prospective jurors a video about unconscious bias.

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Case Law Update – Court Rules School Buses are Not “Automobiles” Under State Farm Insurance Policy Fine Print

Posted Thursday, January 18, 2018 by McKean J. Evans

On January 9, 2018, Washington’s Court of Appeals issued a ruling that significantly limits policyholders’ coverage under many automobile insurance policies. In Koren v. State Farm Fire and Casualty Company, Case No. 34723-1-III, the court interpreted State Farm’s insurance policy as excluding coverage for injuries Mrs. Koren’s son sustained in a school bus crash.

Mrs. Koren’s State Farm policy covered harm “caused by an automobile accident.” After Ms. Koren’s son was injured in a school bus crash, Mrs. Koren submitted a claim under her State Farm policy. State Farm denied coverage, claiming school busses are not “automobiles” under State Farm’s policy.

The Court of Appeals agreed with State Farm. State Farm had added to its policy a limited definition of “automobile,” which meant, under the policy, only automobiles “designed for carrying ten passengers or less.” Mrs. Koren relied on existing Washington Supreme Court precedent holding that the term “automobile accident” in an insurance policy may be broader than the definition of the individual term “automobile.” The court rejected this argument, noting that Washington’s insurance statutes had a similar definition of “automobile” to State Farm’s.

Most policyholders would likely be surprised to learn a school bus or Port Authority bus is not an “automobile” covered under their insurance policy. Perhaps recognizing this, the court noted Mrs. Koren’s “concerns must be raised with the legislature.” Unless and until the legislature acts or the Washington Supreme Court reverses this ruling, policyholders should carefully review the terms and fine print of their policies to make sure their coverage comports with their own understanding.

If you have questions regarding an automobile or other insurance policy, contact Pivotal Law Group attorney McKean J. Evans for a free consultation.

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Can a Marijuana Business Get Bankruptcy Relief?

Posted Wednesday, January 10, 2018 by Kim Sandher

Marijuana is regulated as a dangerous drug by Congress. The U.S. Supreme Court recognizes that the federal prohibition takes precedence over any state law that says otherwise. The United States Trustee Program (USTP) has to respect this. Thus, the answer to whether a marijuana business can file bankruptcy here in Washington and get relief should be an easy “no.”

There are two principles the USTP relies on in its role of “regulator” of the bankruptcy system when it moves to dismiss a Chapter 11 or 13 case:

1. The bankruptcy system may not be used as an instrument to commission of a crime – reorganization plans that allow or require continued illegal activity may not be confirmed; and

2. The bankruptcy trustees and other estate fiduciaries shouldn’t be made to administer assets if doing so means they would violate federal criminal law. Thus, the answer seems to be that a marijuana business cannot get bankruptcy relief in Chapter 11 or 13 because that would mean that the trustee is supervising and running a federally illegal business. However, there are cases with potential grey areas where the trustee isn’t doing this. For example:

  1. What if the trustee doesn’t have to sell marijuana, but it’s still marijuana-derived property that the trustee is selling? For example, products used to grow the marijuana.

  2. What if the debtor isn’t actually a participant in the marijuana business, but leases out his building to a marijuana dispensary? Or is simply an investor? The income is still related to marijuana.
    These too seem to give the same answer though. The Controlled Substances Act (CSA) doesn’t distinguish between the seller and grower of marijuana, nor does it distinguish “downstream” participants like the business owner that leases his building to the marijuana growth operation. The CSA actually prohibits knowingly renting, managing, or using property “for the purpose of manufacturing, distributing, or using any controlled substance.” It also makes it a crime to sell, or offer to sell any drug paraphernalia, which includes “equipment, product, or material of any kind which is primarily intended or designed for use” in manufacturing a controlled substance. It further provides for a fine against anyone that “derives profits or proceeds from an offense of the Controlled Substances Act.” Therefore, not only would a trustee who sells marijuana violate the law, so would a trustee that liquidates fertilizer or other equipment used to grow marijuana, as well as a trustee that collects rent from a marijuana business tenant or profits from a marijuana investment.

What about the Ponzi scheme cases or the ones with other criminal activities? How come they get relief?

Big cases like In re Enron Corp. and In re Bernard L. Madoff Investment Securities LLC deal with the aftermath of fraud. Typically, the individual offenders have already been removed from the business. The other difference is that they don’t deal with property similar to that described in the Controlled Substances Act, where mere possession of it is a federal crime. Nor did either of these cases involve a proposed Chapter 11 or Chapter 13 plan where the feasibility of the plan depended on the continued profits of an illegal enterprise. In a marijuana case, the illegal activity is continuing through the bankruptcy administration and bankruptcy relief might actually further the illegal business.

Conclusion: The USTP enforces the legislative judgment of Congress. Since Congress had determined marijuana businesses illegal, these businesses are illegal for bankruptcy purposes too and likely cannot be granted bankruptcy relief.

Kim Sandher will be hosting a free bankruptcy education seminar on January 27, 2018 from 3-5pm at the Youngstown Cultural Arts Center in Seattle. For more information or to RSVP please email Andreka Jasek.

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What is ERISA and How Does It Affect Your Rights?

Posted Monday, January 8, 2018 by McKean J. Evans

If you have health plan or similar insurance through your employer, you may encounter the term “ERISA” in the context of your benefits. The upshot is ERISA is a federal law that regulates most employer-provided benefit plans, like health insurance, disability coverage or life insurance.

ERISA can be complex, but it also gives participants important rights, especially if participants dispute their benefit plan’s decision about coverage or benefits.

1. What is ERISA? Does ERISA Apply to My Benefits or Insurance?
ERISA is short for the Employee Retirement Income Security Act. ERISA is a federal law passed in 1974 that establishes minimum standards for employee benefit plans. ERISA was the result of the pension reform movement that gained momentum after the infamous 1963 Studebaker corporation shut-down in which nearly ten thousand workers suddenly lost their pension benefits.

Congress enacted ERISA to protect employees participating in employer-provided benefit plans. ERISA requires benefit plans to disclose important information to participants, establishes minimum standards for benefit plans, and allows participants to bring suit in federal court if their rights are violated.

There are some important exceptions, but the general rule is ERISA applies to most employer-provided benefit plans. That means if you receive benefits such as health, disability or life insurance through your employer, ERISA likely applies. ERISA can apply even if your employer contracts with a separate insurance company or other entity to provide benefits, so even if your plan documents identify an insurer other than your employer, ERISA may still apply.

2. What Are My Rights Under ERISA?
Among other things, ERISA provides participants two important rights. First, ERISA plan participants have the right to receive information about the benefits plan. For instance, ERISA requires that the administrator of a benefits plan provide employees with the documents describing the plan’s terms, such as a Summary Plan Description, insurance policies and similar documents, upon the participant’s written request. ERISA also requires plans to provide participants with information the plan relies on in deciding claims for benefits (e.g., deciding whether a health plan will pay for certain treatment). This is important if a participant disputes an ERISA plan’s benefits decision and wants to challenge it; for instance, a plan denying coverage for medical treatment because the plan’s doctor concludes the treatment is unnecessary would have to provide a copy of that doctor’s report.

Second, ERISA gives plan participants the right to sue in federal court. Plan participants can bring a lawsuit to either establish their right to benefits under an ERISA plan (e.g., to establish that their health plan covers certain treatment or that they are covered under a disability plan). Participants can also bring suit alleging that the people administering the plan breached their fiduciary duties or breached federal regulations requiring fair claims handling for ERISA plans. Importantly, plan participants who are successful in an ERISA lawsuit can recover attorneys’ fees, because Congress wanted to give plan participants easy access to lawyers to help vindicate their rights.

3. How Does ERISA Limit My Rights?
ERISA imposes important deadlines and other requirements with which participants must comply in order to protect their rights. One important rule is that participants must notify benefit plans of claims within certain deadlines, and must challenge to adverse benefit decisions (e.g., a benefit plan’s refusal to cover treatment or pay disability benefits) within certain deadlines. Failing to meet these deadlines can mean losing your right to challenge a plan’s incorrect decision to deny coverage. ERISA also requires participants who dispute a benefits plan’s decision to use the plan’s appeal process before filing suit in court. An important rule is that, generally, only information submitted as part of the appeal can be used as evidence in any later lawsuit. That means that participants who want to challenge their benefit plan’s decisions must be certain they follow the plan’s appeal procedures in order to protect their rights.

4. Where Can I Learn More?
If you have questions about your benefits under an ERISA plan, you may find it helpful to contact the administrator of your benefits plan and request the Summary Plan Description and other plan documents. Pursuant to ERISA, 29 USC § 1132, plan administrators must, upon request, provide participants with the plan documents within 30 days of a request.

If you have questions about ERISA generally, a potential resource is the U.S. Department of Labor’s Employee Benefits Security Administration, which has authority over ERISA plans. EBSA has an ERISA Frequently Asked Questions page here.

If you have questions about your legal rights under an ERISA benefits plan or a non-ERISA insurance policy, contact Pivotal Law Group attorney McKean J. Evans for a free consultation.

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Marijuana Retail License Rules Clarified, Confirms LLC’s Owner’s Spouse’s Homicide Conviction Precludes Marijuana License

Posted Wednesday, December 27, 2017 by McKean J. Evans

The Washington Supreme Court recently clarified the rules governing who may obtain a marijuana retail license. In Libby Haines-Marchel, et al. v. Washington State Liquor & Cannabis Board, the Supreme Court ruled that the Washington State Liquor and Cannabis Board (“WSLCB”) correctly denied a marijuana retail license requested by an LLC because one member’s spouse had prior criminal history. This case underscores the importance of careful compliance with the detailed WSLCB rules for marijuana retailers.

The WSLCB has discretion to grant or deny applications for marijuana licenses. When an entity applies for a marijuana license, all members of the entity must be qualified to obtain a license. The WSLCB may consider an applicant’s criminal history in deciding whether to grant the license. An applicant’s criminal convictions contribute “points,” and eight or more points disqualify an applicant from obtaining a marijuana license. Among other things, a felony conviction is 12 points.
In 2013, Rock Island Chronics LLC (“Rock Island”) applied with the WSLCB for a retail marijuana license. Rock Island’s application identified Libby Haines-Marchel as the sole owner of the company. The application also identified Haines-Marchel’s spouse as Brock Marchel.

Months after Rock Island submitted its application, Rock Island disclosed to the WSLCB that Brock Marchel was currently incarcerated on a 44 ½ year sentence for homicide. Libby Haines-Marchel provided WSLCB with Brock Marchel’s affidavit in which he gave up his ownership rights in Rock Island.

WSLCB denied Rock Island’s license, and Rock Island appealed. In court, Rock Island argued WSLCB’s denial of the license based on Rock Island’s owner’s spouse’s homicide conviction violated Libby Haines-Marchel’s fundamental right to marry and unconstitutionally deprived her of property.

After thoroughly reviewing Washington’s marijuana laws and retail license requirements, the Supreme Court sided with WSLCB and upheld the denial of Rock Island’s license. The court noted that not every state regulation incidentally relating to marriage impacts the fundamental right to marry, and found that denial of Rock Island’s license did not infringe on Libby Haines-Marchel’s right to marry because Washington has a legitimate interest in making sure that owners of marijuana retail companies are not disqualified by criminal history. The Court also found that Brock Marchel’s affidavit purportedly giving up his interest in Rock Island was legally ineffective because it was not a binding contract. Finally, the court ruled the denial of the license did not unconstitutionally deprive Libby Haines-Marchel of property because she had no property interest in the license – WSLCB had discretion whether to grant the license or not.

If you have questions regarding compliance with Washington’s marijuana retail laws, contact Pivotal Law Group attorney McKean J. Evans for a free consultation.

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