litigation

Litigation Hold Letters: What are they, and what do I do when I receive one?

September 9, 2019 by Isaac J. Jean-Pierre, Esq.

Evidence is everything, and in today’s digital world, it takes multiple forms. Without it, parties to a dispute would have little to no way to support their claims, and, most importantly, it would be extremely difficult to discover the truth at the heart of a controversy, especially if the parties end up in court. For this reason, especially in the context of litigation, the preservation of evidence has become such an important topic of consideration for both individuals and businesses alike.

Because of the need to preserve evidence, the litigation hold letter has become a routine part of modern litigation.

A litigation hold letter (or litigation hold notice) is a writing that orders the recipient to segregate and retain certain documents and data that may be relevant to a threatened or pending litigation or an official investigation.[1] Generally, litigation hold letters are issued after the duty to preserve information has been triggered, and triggering events include, among others, the receipt of a cease-and-desist letter, a demand letter, a subpoena, or a complaint.

Once received, the recipient will quickly notice that such letters (or notices) contain information regarding a brief description of the dispute, specific directions not to destroy or modify specific records or information, a clear warning of the consequences associated with the destruction of evidence, and an explanation that the duty to preserve information will continue until further notice. Examples of items covered by a litigation hold letter include, but are not limited to, e-mails, text messages, handwritten notes, faxes, or voicemails exchanged between relevant parties to the dispute.

Once the litigation hold letter is received, the main objective is to ensure that the documents, records, and information related to the dispute are kept safe if needed in the future. Ensuring the protection of relevant evidence will allow the recipient of the litigation hold to avoid sanctions, such as legal claims or monetary penalties, that could have a detrimental impact on the recipient’s chances of resolving the dispute in a time and cost-effective manner.

For instance, upon receiving a litigation hold letter, individuals and companies alike are advised to suspend automatic e-mail deletion policies to ensure that any e-mails or attachments covered by the litigation hold letter are not inadvertently destroyed. If in doubt regarding the suspension of automatic e-mail or record deletion policies, consulting an Information Technology (IT) professional will prove invaluable.

However, the recipient’s responsibility to preserve documents, records, and information hardly ends once the relevant records and documents are set aside. Due to the fact that the scope of a dispute could change over time, the relevant documents that must be set aside will likely change. As a result, if a litigation hold letter has been received, it is wise to periodically ensure compliance with the litigation hold.

If counsel has not been retained when a litigation hold is received, a recipient of a litigation hold letter should consider consulting with an attorney to safely navigate all aspects of litigation, including the preservation of evidence. Depending on the facts and circumstances of a case, consulting with an attorney could possibly lead to settlement, potentially saving the recipient time and money.

Isaac J. Jean-Pierre is an attorney in MacElree Harvey’s Litigation Department in the West Chester office. Licensed to practice in Pennsylvania, Isaac focuses his practice in the areas of commercial litigation, trust & estate litigation, and banking and finance litigation.

To learn more about Isaac’s practice, contact him by phone at (610) 840-0273 or email at [email protected].

[1] LITIGATION-HOLD LETTER, Black’s Law Dictionary (11th ed. 2019).

What is Mediation?

August 22, 2019 by Timothy F. Rayne, Esq.

By Timothy F. Rayne, Esquire-

Mediation is a form of Alternative Dispute Resolution, which means another way of resolving a legal controversy, like a Personal Injury Case, without negotiating a direct settlement with the other side or having a Jury Trial in Court.

In Mediation, the parties agree to use a neutral person, usually a senior or retired litigation attorney or Judge, to evaluate a case and try to help the parties reach a voluntary negotiated resolution. Nobody is forced to settle and either party can end the Mediation process at any time. The Mediator’s job is not to decide the case, but instead to help bring the parties to a negotiated settlement agreement.

The Mediation Process

The following is the usual step-by-step Process:

Pick a Mediator – The parties need to choose someone who they both trust and respect.
Educate the Mediator – Each party submits detailed descriptions of the case to the Mediator including documents and evidence that are important to the case.
Attend the Mediation – The Mediation itself is usually a day or half-day and takes place at the Mediator’s office, one of the lawyers’ offices or some other neutral location. The lawyers and clients are present and, in a Personal Injury case, a representative of the insurance company is either present or available by phone with authority to negotiate a settlement.
Joint Session – The Mediation begins with a Joint Session where the Mediator explains the Process. Often during the session, the lawyers will give Opening Remarks about the case.
Separate Sessions – After the Joint Session, the parties are sent to separate rooms and the Mediator travels between the two rooms discussing the merits of the case and working on negotiating a settlement.
Mediation Ending – A Mediation ends one of two ways, with a settlement or with one or both sides deciding that there cannot be a resolution.
After the Mediation – It’s common for the Mediator to stay involved in unsettled cases after the date of the Mediation and to continue to work with the lawyers to attempt to guide them to a resolution.

The Benefits of Mediation

Saves time, stress and expense – Mediation can save litigation time, stress and expense. It provides the opportunity to try to settle the case before the parties spend the time, effort, emotion and expense of trying the case in court.
Mediation is a Final Resolution – Mediation ends the case. It avoids the delay involved in a trial and eliminates the possibility of an appeal because it’s a final resolution.
Get insight and opinions of an experienced expert – At the Mediation you will get the opinions and insight of the Mediator who is an experienced and wise lawyer. The Mediator can evaluate the probability of each side winning the case as well as the fair value of the case. Although both parties must be aware that the Mediator’s job is to settle the case so he/she is always working towards that end, the Mediator often provides valuable feedback on the strengths and weaknesses of the case. This can help to settle the case or help us make the case stronger if it has to be taken to trial.

If your Personal Injury case cannot be settled directly with the defense, it is often advisable to consider the mediation process before taking a case to trial. Unless it is clear that the case has a very low probability of settling, the benefits of mediation are usually worth the time, effort and cost.

Tim Rayne is a Personal Injury Lawyer with the Pennsylvania law firm MacElree Harvey. Tim has law offices in Kennett Square and West Chester Pennsylvania. For over 25 years, Tim has been helping injured victims of accidents receive fair compensation from insurance companies. To learn more about Tim’s practice, visit timraynelaw.com.

To schedule your free consultation, call (610) 840-0124, or email [email protected].

Interpreting the First Amendment in the Social Media Age

July 18, 2019 by Tiffany M. Shrenk, Esq.

By David Srinivasan, Law Clerk and Tiffany M. Shrenk, Esquire-

Gone are the days of President Roosevelt’s fireside chats; we now have mediums, like Twitter and Facebook, to hear from our leaders, both domestic and international. Since the turn of the century, technologies—and social media platforms, in particular—have changed the landscape of American society and how we interact with one another. In outpacing the development of the laws governing them, social media’s meteoric rise has presented new challenges for the courts to resolve. Although the framers of the Constitution did not have hashtags and character limits in mind when crafting the Bill of Rights, the First Amendment’s implications on Twitter, and other virtual spaces like it, represent a few of the recent challenges facing the courts.

Recently, the Second Circuit further defined the contours of the First Amendment in the social media age. On Tuesday, July 9, 2019, the federal appeals court in Manhattan—in addressing the question of whether President Trump may block users on his personal twitter account—issued a narrow, 29-page ruling. Judge Barrington D. Parker, writing for the unanimous three-judge panel, explained that “[t]he First Amendment does not permit a public official who utilizes a social media account for all manner of official purposes to exclude persons from an otherwise-open dialogue because they expressed views which the official disagrees.” Although the account in question was President Trump’s personal account, the Court noted that “[b]ecause the President . . . acts in an official capacity when he tweets, we conclude that he acts in the same capacity when he blocks those who disagree with him.”

This ruling, concluding that President Trump engaged in “unconstitutional viewpoint discrimination,” upholds the Southern District of New York’s prior 75-page decision. Although this is the most recent development in the lawsuit filed by the Knight First Amendment Institute at Columbia University on behalf of seven people blocked from the @realDonaldTrump account, it may not be the last. The Department of Justice may petition the Supreme Court to take up the issue in the next term and provide further guidance of what the First Amendment means in the social media age.

Tiffany M. Shrenk is an attorney in MacElree Harvey’s Delaware office. Licensed to practice law in Delaware and Pennsylvania, Tiffany represents clients in a wide range of civil litigation matters including, but not limited to, personal injury, trust and estate litigation, real estate litigation, as well as contractual disputes and consumer fraud.

To learn more about Tiffany’s practice, visit her website or contact her at (302) 654-4454 or [email protected].

Intermingling of Funds: Part 2 in The Proper Use of Legal Business Entities series

June 20, 2019 by Robert A. Burke, Esq.

By Robert A. Burke, Esquire-

In this article, we will address how the intermingling of funds will expose your personal assets and how to avoid this exposure.

Intermingling of Funds

The intermingling of funds among the entities must be “substantial.” [efn_note] Lumax, at 669 A.2d at 895 [/efn_note]

Transfers of money between entities is not, in and of itself, evidence of substantial intermingling of corporate and personal affairs. A company’s recording of transfers between entities is direct evidence that there was no intermingling of corporate and personal affairs and undercuts an alter ego theory.

The Courts recognize that the corporate veil will not be pierced in Pennsylvania absent specific and unusual circumstances. [efn_note] Lumax Industries, Inc., 669 A.2d at 895-96 [/efn_note] The Courts recognize the importance and “sanctity of the corporate structure in Pennsylvania.” [efn_note] Id. at 895 [/efn_note] Therefore, it is not enough for there to be a charge of inadvertent exchange of funds between the members of the limited liability company and the entity. Rather, the Plaintiff must meet its burden and show “substantial intermingling of corporate and personal affairs and use of the corporate form to perpetrate a fraud.” [efn_note] Id. at 895 (emphasis supplied) [/efn_note] ; [efn_note] see also Kaites v. Department of Environmental Resources, 529 A.2d 1148, 1151 (Pa. Cmwlth. 1987) [/efn_note]

Forming a Separate Legal Entity

The main purpose of forming a separate legal entity to operate a business is the protection of personal assets. It is imperative that you consult with your attorneys to assure the proper formation and use of the corporate form to protect your personal assets.

The commonality of ownership is not evidence that supports a piercing of the corporate veil. “Control through the ownership of shares does not fuse the corporations, even when the directors are common to each.” [efn_note] United States v. Best Foods, 524 U.S. 51, 69 (1998) [/efn_note] Common ownership and control is not evidence of piercing the corporate veil. It is the “general presumption” that “directors and officers holding positions with a parent and its subsidiary can and do ‘change hats’ to represent the two corporations separately, despite their common ownership.

Accordingly, the owners of the corporation provided capital by way of a loan to the corporation.

The Court reasoned as follows:

[Plaintiff argues that the corporation] was undercapitalized, as evidenced by its failure to pay income distributions, as well as its need to take out a mortgage on the property and to receive advanced funding from [the owners] to complete construction of the hotel. These facts are insufficient to support veil piercing: [the corporation’s] failure to pay income distributions is evidence not of undercapitalization, but of underperformance, and it is patently absurd to suggest that the need to borrow money – – especially at the beginning of a project – – proves, on its own, that a company is undercapitalized. Indeed, that conclusion would, presumably, expose nearly every company to the possibility of veil piercing. [efn_note] Id. at 12 (emphasis in original and emphasis added) [/efn_note]

The Court made much of the fact that the company filed tax returns, had officers, titled assets in its name and kept books and records were all indicia of adhering to corporate formalities. The Court rejected Plaintiff’s claim that transfers between the owners and the corporation were evidence of intermingling of funds. The Court opined that these transfers did not rise to the level of “substantial intermingling of corporate and personal affairs.” “To the contrary, the fact that these transfers were memorialized in the company’s’ records, rather than undocumented, undercuts an alter ego theory.” [efn_note] Id. at *13 [/efn_note]

As this is an exceptionally complicated area of the law, it is imperative that you consult with your attorneys to assure the proper formation and use of the corporate form in order to protect your personal assets. See Part 1 in the article series “How Your Personal Assets Can Be Exposed”.

Robert A. Burke is a partner in the law firm of MacElree Harvey, Ltd. He handles complex commercial and estate litigation matters.

To schedule a consultation, call (610) 840-0211 or email [email protected].

Transferring Guardianships: What you need to know.

June 11, 2019 by Isaac J. Jean-Pierre, Esq.

By Isaac J. Jean-Pierre, Esquire-

A guardian is often an individual appointed by a court to make key decisions regarding another person’s physical welfare and/or finances. In the context of guardianships, the person who is subject to the decision-making authority of a guardian is often referred to as an incapacitated person, and it is not uncommon that the guardian bears additional responsibilities in addition to promoting the welfare of the incapacitated person.

Depending on the circumstances of the guardian’s work or family situation, and depending on where the incapacitated person is physically located, it may be appropriate to consider what tools are available to a guardian who crosses state lines on a permanent basis after receiving a guardianship appointment in Pennsylvania.

The Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act (the “Act”),[1] which has been adopted in Pennsylvania, provides for the transfer of guardianship to and from the state in which the guardianship was originally provided. For the purposes of this article, we will assume that a guardian appointed in Pennsylvania has encountered a circumstance that requires the guardian to move to another state with the incapacitated person.

When a guardian appointed in Pennsylvania wishes to transfer their guardianship to another state, a petition must be filed with the local Orphans’ Court, seeking a transfer of the guardianship. After providing notice to the required parties, and a hearing, the Orphans’ Court in Pennsylvania will enter a provisional order directing the guardian to seek guardianship in the destination state. Under the Act, the Orphans’ Court must find that the: (1) incapacitated person is physically present in or is reasonably expected to move permanently to the other state; (2) an objection to the transfer has not been made; and (3) plans for care and services for the incapacitated person in the other state are reasonable and sufficient. After the court in the destination state confirms the guardianship transfer, the Orphans’ Court in Pennsylvania will issue a final order confirming the transfer to the destination state.

The total length of the guardianship transfer process will likely be dependent on various factors, but a guardian considering a transfer should consult with legal counsel to ensure as smooth of a transition as possible, especially where the facts of each circumstance could dictate a different result.

Isaac J. Jean-Pierre is an attorney in MacElree Harvey’s Litigation Department in the West Chester office. Licensed to practice in Pennsylvania, Isaac focuses his practice in the areas of commercial litigation, trust & estate litigation, and banking and finance litigation.

To learn more about Isaac’s practice, contact him by phone at (610) 840-0273 or email at [email protected].

[1] 20 Pa.C.S. § 5901, et seq.

What To Do When You Are Served With A Complaint

May 6, 2019 by Michael G. Louis, Esq.

By Michael G. Louis, Esquire-

The first thing to do after being served with a Complaint is to immediately send a copy of it to your attorney and if you don’t have one, hire one. Too often I talk to clients after they have allowed the party suing them to obtain a judgment against them.

Sometimes they do not respond because they were smart enough to form an LLC or limited partnership or corporation to insulate themselves from liability but did not realize that just because they did that does not protect them if the plaintiff that is suing them sues them individually in addition to the LLC or other entity they formed. They still have to raise the defense that they were doing business under the name of an LLC or whatever the formal entity was that they formed.

Another reason clients have given me for not defending the Complaint promptly is they see an arbitration date on the Complaint which was served upon them. What they don’t realize, but should if they read the Notice to Plead on the front of the Complaint, is that they are required to file an Answer or Preliminary Objections within twenty days of being served with the Complaint. If they don’t do that, then they have another ten days after receiving a ten-day default notice from the attorney for the plaintiff. If they still don’t file an Answer or Preliminary Objections to the Complaint within ten days of the date of the ten-day default notice, then the plaintiff can take a default judgment against them. The arbitration date only comes into play if they first respond to the complaint by filing an answer or preliminary objections promptly.

To avoid having a judgment entered against you even when you have a valid defense, contact your attorney or hire one as soon as you are served with a Complaint.

Michael’s personal practice supports the needs of businesses and homeowners in a changing economic environment. He has extensive experience in mortgage foreclosures, collections and loan workouts, general counsel work and real estate litigation. Michael has been with MacElree Harvey, Ltd. since 1980.

If you have any questions regarding a banking and finance litigation matter, contact Michael Louis at [email protected] or (610) 840-0228.

Litigation Hold Letters: What are they, and what do I do when I receive one?