OSHA Withdraws Home Workplace Rules, Extends Comment Time for Proposed Ergonomic Standards Facing a business community furious over its proposal to hold employers liable for the workplace safety of employees who work at home offices, including 20 million or more telecommuters, OSHA withdrew its proposal, and in testimony prepared for a Senate committee hearing, advised that it will not inspect home offices, after all. Assistant Labor Secretary Charles Jeffress said the agency does not expect employers to inspect home offices, either, and will not hold them liable for home office accidents. However, OSHA will enforce safety regulations for other kinds of home workplaces, especially involving hazardous materials or equipment, or piecework done at home for manufacturers. OSHA has also extended its public comment period regarding its proposed new Ergonomic Standards. A hearing scheduled for April 11, 2000, in Chicago will go ahead as planned.
Directors & Officers Insurance Pays for "Pure Heart, but Empty Head" Although the manager of Plaintiff's trust department invested in highly speculative securities, and Plaintiff bank suffered losses as a result, Plaintiff was entitled to coverage under its directors and officers liability policy. The appeals court found that the record amply supported the District Court's finding that the manager of the trust department had a "pure heart, but empty head," and therefore, the bad-faith exclusion to coverage under the policy did not apply. Citizens First National Bank of Princeton v. Cincinnati Ins. Co., Nos. 98-3534 et al. Cons. (1/14/00). Appeal, N.D. Ill., E. Div. Aff'd and vac'd in part and rem'd.
Case of 1st Impression: Administrative Order Issued by State Environmental Agency Is Not A "Suit" Triggering Insurer's Duty to Defend. Contrary to previous rulings around the country granting insurance coverage for EPA actions under typical Comprehensive General Liability insurance policies, today's case reports a troublesome reversal. Applying California law, the Illinois Appellate Court had previously ruled that the issuance of an Administrative Order by a state Environmental Protection Agency triggered the insurer's duty to defend the action brought by the EPA against the Plaintiff business. However, in a case of 1st impression, the California Supreme Court subsequently ruled that no duty to defend exists, since the order was not a "suit" under the terms of the policy. Following the ruling of the California Court, Illinois denied coverage to the business. W.C. Richards Co., Inc., v. Hartford Accident and Indemnity Co., No. 1-99-1014, 1st Dist., Cook Co., Aff'd (12-30-99).
Farmland Conversion of Wetlands Results in Loss of Farm Subsidies. Farm subsidies in the amount of $92,703 were lost by the farmer in an action brought under the Food Security Act, 16 USC §3801, because of his conversion of wetlands on farm property. Although the Defendant claimed that he was only a renter with no control over the wetlands, and that the wetlands were converted by his father and not by him, the record disclosed that the Defendant had repeatedly listed himself and not his father, as the operator of the farm on benefit forms, and that he also failed to provide any evidence showing opposition to his father's alleged conversion of wetlands. U.S. v. Dierckman, No. 98-4131 (1/11/00). Appeal, S.D. Ind., New Albany Div. Aff'd.
New Network Solutions Dispute Policy Effective January 1, 2000 Effective January 1, 2000, Network Solutions, Inc., formerly the exclusive Registrar of Internet Domain Names, has adopted a new Uniform Domain Name Dispute Resolution Policy. Under the new Policy, neutral and accredited dispute resolution service providers will resolve disputes. In addition, some of the differences between the new policy and the old one are: a) domain names formerly placed on "hold" will be released; b) the new Policy applies to all state and common law trademarks, as well as to nationally registered trademarks, and applicants are responsible for ensuring that their chosen domain names do not infringe on any other names or marks; c) Complainants may include any domain name that is confusingly similar to their trademark - as well as identical to their trademark.
Intellectual Property: Use of "1st Choice of Doctors" Does Not Require Majority; Survey Results Cannot Be Used to Define Terms Plaintiff was not entitled to a preliminary injunction under the Lanham Act, 15 USC §1125 (a)(1), in its action seeking to prevent defendant from using "1st Choice of Doctors" phrase on label of its baby formula. Majority support not required to be "first." Phrase was not misleading where level of preference for defendant's product was high, and difference in support between defendant's product and any other similar products was substantial. Also, Plaintiff's survey results cannot be used to define terms. Mead Johnson & Co. v. Abbott Laboratories, No. 99-2215 (1/5/00). Appeal, S.D. Ind., Evansville Div. Rev'd.
Stock Options May Increase Overtime Pay, or No Good Deed Goes Untaxed Under another controversial Department of Labor proposal, employee stock options given to workers who are eligible for overtime pay may have to be included in the calculation of that employee's overtime pay, according to the another Department of Labor Advisory. If not amended or withdrawn, the advisory would make stock option programs for non-professional workers more expensive and complex for employers, or non-existent for employees. Washington Post.
State Sues Online Pharmacies for Failure to Obtain State License Joining only a few other states, Kansas, Missouri and Michigan, Illinois Attorney General has sued several online pharmacies under the state's consumer protection laws. The lawsuits charge the defendants with violating Illinois' Consumer Fraud & Deceptive Business Practices Act, the Illinois Medical Practice Act, and the Illinois Pharmacy Practice Act, by, among other things, practicing medicine without a license. In a typical case, a consumer logs on, agrees to a "Waiver of Liability," answers limited medical questions, chooses a dosage level and number of pills desired, and then the consumer's credit card is charged for the medication plus a $75 "consultation fee."
Good News for Businesses: Insurers May Limit Total Payout For AIDS-Related Insurance Claims to Amount Less Than For Other Conditions Without comment, the U.S. Supreme Court let stand a decision of the Seventh Circuit Court of Appeals permitting Mutual of Omaha to set a $25,000 lifetime coverage limit for AIDS claims, but a $1 million limit for other conditions. Plaintiffs had contended that the practice was discriminatory under the Americans with Disabilities Act. John Doe and Richard Smith, ,vs. Mutual of Omaha Insurance Company, No. 98-4112 (June 2, 1999)
S Corp's Canceled Debt is Income, But Does Not Offset Loss Carryforwards. "Discharge of indebtedness" (equivalently, "cancellation of debt") income that is excluded from gross income under 26U.S.C. sec. 108(a) does not pass through to a shareholder of a subchapter S corporation, and therefore does not increase the shareholder's basis, so as to permit him to offset loss carryforwards. Witzel v. Commissioner of Internal Revenue, No. 99-2482 (1/18/00), Appeal, U.S. Tax Court, Aff'd.