The Business Law Brief sm (December, 1999)
In a move business leaders say would impose too heavy a financial burden on business, the Labor Department's Occupational Safety & Health Administration (OSHA) has issued new rules requiring businesses to make changes to their workplaces to address workplace ergonomics. Reporting that repetitive motion injuries alone cost the economy $9 billion each year, OSHA contends it will cost employers, on average, only $150/year per employee to make the changes. The rules may go into effect following a lengthy comment period, including public hearings in Chicago in April, 2000. The proposed rules, now published online, can be found at http://gpo.lib.purdue.edu/bin/GPOAccess.cgi Choose "Federal Register, Vol. 64 (1999)" as the database to search, and type "ergonomics" in the search box.
Entire salary of CEO and owner was tax deductible under "indirect market test," which makes deductible as business expense under 26 USC §162(a)(1) higher salaries than are deductible under "7 factor test" used by Tax Court, which concluded that portion of salary was disguised as dividend. Indirect Market test is based on executive's efforts to increase expected rate of return of corporate assets to taxpayer, and justifies deductibility of higher salary. Exacto Spring Corp. v. Commissioner of Internal Revenue, No. 99-1011, (11/16/99). Appeal, U.S. Tax Court Rev'd. http://www.kentlaw.edu/7circuit/1999/nov/99-1011.html
In a case of first impression, the 7th Circuit has ruled that the proceeds from a settlement of a claim for lost corporate income, which taxpayer acquired as part of purchase of business, is taxed as ordinary income and not capital gain. Even though claim was a capital asset, proceeds in hands of seller would have been taxed as ordinary income. Nahey v. Commissioner of Internal Revenue, No. 99-1149 (11/17/99). Appeal, U.S. Tax Ct. Aff'd. http://www.kentlaw.edu/7circuit/1999/nov/99-1149.html
The Securities & Exchange Commission (SEC) has asked the Financial Accounting Standards Board (FASB) to tighten accounting rules which apply to Internet or "dot.com" companies. Among other things, the SEC contends that the dot.com companies regularly include in stated income such items as "free" services they provide customers, barter transactions in which they exchange advertising with another Internet company, and revenues for product sales for products merely distributed through their sites on behalf of other companies, for which they receive a distribution fee. Changes in the rules could lead to reductions in reported revenues for the Internet companies.
Even though Plaintiff delayed filing suit against Defendant for its encroachment onto Plaintiff's property in construction of store addition, trial court should not have entered Summary Judgment in favor of Defendant. Record revealed that Defendant knew of encroachment and Plaintiff's objection to it, but proceeded with construction anyway. Defense of laches will not prevail where, as here, Defendant assured Plaintiff he would be compensated for encroachment. Whitlock v. Hilander Foods, Inc., 2nd Dist., No. 2-98-1421 (10/29/99), Winnebago Co. Rev'd and remanded. http://www.state.il.us/court/1999/2981421.htm
Although they hadn't done it yet, and Defendants allegedly did not know it, Defendants' two major customers were about to sever their relationship with Defendant, but that fact was not disclosed on Defendant's offering prospectus. Such omission constitutes a material misrepresentation, and neither the safe harbor rules, nor the "bespeaks caution" doctrine protect Defendants from liability. Moreover, proof of Defendant's knowledge of such facts was not necessary, since even an innocent misrepresentation is actionable. Reversed and remanded. Olczyk vs. Cerion Technologies, Inc., . (November 19), No. 1-98-2019, 1st Dist. 5th Div. http://www.state.il.us/court/1999/1982019.htm
Meeting at the troubled World Trade Organization (WTO) meeting in Seattle, Washington, the European Union, Japan and others have agreed to back a comprehensive new round of global trade talks seeking to increase trade and abolish restrictions. They have drawn up a joint document which they hope will break a deadlock at the WTO conference, running from November 30, to December 3, 1999. Joining in the EU proposal are South Korea, Hungary, Switzerland and Turkey. Together, this group accounts for more than 30 percent of world exports of goods. And recently, the EU's executive body predicted that after its slow growth this year, it's economy will grow at the rate of at least 3% next year - faster than the United States' projected 2.1% growth rate.
Stating that Defendant's practice of stapling a receipt to the loan agreement, thereby covering the federally mandated disclosures on the loan agreement, might have violated the Truth in Lending Act (TILA) 15 USC Section 1601, the Federal District Court has reversed and remanded the dismissal of Plaintiff's action. Whether a violation existed is a question of fact which cannot be resolved by Federal Rule 12 (b) (6). However, Court's dismissal of portion of complaint alleging that defendant's statement that "Your post-dated check is security for this loan" violated TILA, was proper, since statement was inaccurate under Illinois law. Smith v. The Cash Store Management, Inc., No. 99-2472 (10/27/99). Appeal, .D. Ill., E. Div. Aff'd and rev'd in part. (Partial dissent filed.) http://www.kentlaw.edu/7circuit/1999/oct/99-2472.html
Where Plaintiff grain broker delayed more than 8 months in sending written confirmation of alleged oral contracts for delivery of grain, UCC's written confirmation exception to Statute of Frauds could not be invoked, and dismissal of action for contract damages was proper. However, court should have permitted grain broker to amend to plead alternative legal and factual theories for recovery on other grain contracts. Bureau Service Company v. King, No. 3-98-0497, 3d Dist., (11/17/99). Bureau Co. Aff'd in part, rev'd in part; remanded. When posted, the case will be at http://www.state.il.us/court/1999/3980497.htm
Legislative Checklist of important new legislation to come out of the 91st General Assembly has been posted on the Illinois State Bar Association website. Arranged by topic for easy search capability, the public act number and effective date for a particular Act appears after its summary. Cites for new Acts are also included. www.isba.org/Legislative/1999Checklist.html
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