JULY 1983 by Arkansas Bar Association

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TO: Subscribers and Librarians This issue of The Arkansas Lawyer is correctly numbered and dated, Le., Vol. 17, No.3, July 1983. The January 1983 issue should be Vol. 17, NO.1. The next issue is incorrectly dated as of July instead of April; and should be Vol. 17, No.2. Any inconvenience caused in this connection is regretted. -Editor

July 1983 Vol. 17, No. 3

(§Ie

Arkansas Lawyer SPECIAL FEATURES Cover Story: "Revolution 1"-4th of July Theme

121

The Environmental Crisis of Hazardous Waste ......•........ Gregory l. Benik 100 Juvenile Law in Arkansas .......•....... Edward Ward 106

THE OFFICIAL PUBLICATION OF THE ARKANSAS BAR ASSOCIATION

The Exclusionary Rule "Be Damned" .....•....... William French Smith 112 Second Injury Law III

W. W. Bassett, Jr. 122

The Tax Equity and Fiscal .......... Joseph M. Erwin 130 Responsibility Act of 1982 Paul J. Nicholson 118

Annual Meeting OFFICERS

J. l. (Jim) Shaver, Jr., President Dennis Shackleford, President-Elect Annabelle Clinton, Secretary-Treasurer Richard F. Hatfield, Council Chairman EXECUTIVE COUNCIL

Fioyd Thomas, Jr. Norwood Phillips W. Kelvin Wyrick Charles Carpenter Robert M. Cearley Kaye S. Oberlag D. Mac Glover Marcia Mcivor Robert Hornberger Tommy Womack Julian Fogleman James A. McLarty EX·OFFICIO

J. L. (Jim) Shaver, Jr. Dennis Shackleford James D. Cypert Annabelle Clinton Frank C. Elean, II Richard F. Hatfield EDITOR

C. E. Ransick

ASSOCIATE EDITOR Carol Utley

REGULAR FEATURES President's Report J. L. (Jim) Shaver, Jr. Juris Dictum Robert L. Lowery Law School News In Memoriam Executive Council Notes ...•......... Annabelle Clinton Service Directory C. E. Ransick Addenda AICLE News Claibourne W. Patty, Jr. The Arkansas Bar Foundation Randall W. Ishmael Lawyers' Mart . Young Lawyers' Update Frank C. Elcan, II Legal Economics Methods and Means Bernard Stern in Oyez . . . .. Carol Utley

98 134 110 138 116 IBC 140 120 99 137 135 126 128 136

The Arkansas Lawyer (USPS 546-040) is published quarterly by the Arkansas Bar Association, 400 West Markham, Little Rock, Arkansas 72201. Second class postage paid at Little Rock, Arkansas. Subscription price to non-members of the Arkansas Bar Association $6.00 per year and to members $3.00 per year included in annual dues. Any opinion expressed herein is that of the author, and not necessarily that of the Arkansas Bar Association, The Arkansas Lawyer, or the Editorial Committee. Contributions 10 The Arkansas Lawyer are welcome and should be sent in two copies to the Arkansas Bar Center, 400 West Markham, Little Rock, Arkansas 72201. All inquiries regarding advertising should be sent to The Arkansas Lawyer above address.

july 1983/Arkansas Lawyer/97

PRESIDENT'S REPORT by J. L. (JIM) SHAVER, JR.

I have mixed feelings of pride and relief as the end of my tenure as Association President draws near"pride" in the knowledge that the Arkansas Bar Association not only is a leader in the Southern Conference of Bar Associations, but also is nationally recognized as a fine organization"relief", perhaps "regret" would be the better expression, in passing on the baton of leadership, Any Past President will tell you that the Annual Meeting is the culmination of the Bar year. A successful and attractive program is a "must". Accordingly, it was a great relief that Walter R. Niblock either "volunteered" or was "drafted" to be our Annual Meeting Chairman. Walter's concept of an integrated program-"Anatomy of The Tort Trial"-reaches the activity of our total membership. He has backed his idea with recruiting of seven nationally renowned legal experts in the trial practice field. I want to take this opportunity to publicize our Annual Meeting program, June 8-11, at the Arlington. We will not only have the great professional program, but also an interesting social one. The opening technical session on

98/Arkansas Lawyer/July 1983

Thursday morning, June 9th, will feature Michael Colley on "Psychology of The Trial"; Jeffrey Smith on "Standards of Care for The Trial"; and David Shrager on "Preparation for The Trial". Colley, an ATLA Past-President, Shrager, the ATLA PresidentElect, and Smith, the top authority on standards of care, will lead the attendees in the initial phase. They will also serve as the panel of experts for the Young Lawyers Section afternoon program on Thursday-all are invited to this question-and-answer period. Friday's sessions are just "tops". JUdge Woods will cover "Judicial Attitudes Toward The Trial". Robert Cartwright-also an ATLA Past-President-will cover "Tactics at The Trial". Edward McGinn-the "Belli" expert-will discuss "Structured Settlements". All this on Friday morning. (We still do not ken whether Belli himself will attend our meeting.) Then on Friday afternoon, we have Windle Turley, noted lecturer and author, on "Use of Video Presentations During The Trial" and on "Product Liability Cases". And what a program-socially II We look forward to seeing you all at the President's Reception on Wednesday evening-a convivial beginning for the

Annual Meeting. The President-Elect's Reception, honoring Dennis and Jane Shackleford, will open Friday evening's festivities, to be followed by the Hawaiian Luau and Dance. The Annual Dance, under YLS auspices, will feature the "Big Band Sound" on Thursday night. There will be a special Ladies' Program, plus sports for all. We are indebted to John Selig for the "Legal Run Around," Hugh Harrison for the men's golf tourney, and Glenn Jones for the tennis play. Finally, don't forget the many other meetings, especially the House of Delegates' Meeting on Saturday morning. Plan to attend the meetings of interest. In writing the finis to the Bar year, I would like to acknowledge the work of the House of Delegates, the Council, and all the Committees/Sections. It is not possible here to recognize the great number of individuals, who have contributed so much during the Bar year. Their efforts have been most helpful. Bonnie and I are most appreciative for having had the opportunity to represent the members of the Arkansas Bar Association during this year. We will always cherish our experiences. Aloha!

f-...

ARKANSAS BAR fOUNDA TION by: Randall W. Ishmael

In the April 1978 issue of The Arkansas Lawyer, then Chairman John Gill had printed the Foundation's financial status as of December 3D, 1977. I believe that it is good practice periodically to furnish the Association's membership with this information. There follows the Interim Statement for F- Y 1982路83 at February 28, 1983. CURRENT ASSETSCASH-GHECKING Operating Account Trust Account CASH-SAVINGS Operating Account Trust Account INVESTMENTS-oPERATING U.S. Treasury Notes Money Market "CD" Bonds INVESTMENTS-TRUST Money Market "CD" U.S. Treasury Notes Bonds TOTAL OPERATING ACCT. TOTAL TRUST ACCT. "R&R" ESCROW ACCOUNTSavings Bonds Money Market "CD" FIXED ASSETSFurnishings & Equip. Less Accum. Depr. Building Less Accum. Depr. Building & Equipment Land & Improvements TOTALS OTHER ASSETSUtility Deposit Unamortized Bond Premium Investment Management Ace!. CURRENT L1ABILITIESACCOUNTS PAYABLE SCHOLARSHIPSMisc. Scholarships LONG TERM L1ABILITIESBUilding Mortgage Prepaid Lease Income Repair & Reserve-Escrow Ace!. Investments-"R&R" Ace!. Deferred Compensation Acc!. MEMBERS' EQUITYBalance at 31 January Adjustment-Members' Equity Receipts in excess of disbursements TOTAL LIABILITIES & MEMBERS' EQUITY

OPERATING ACCOUNT $

2,658.73

TRUST ACCOUNT $

$ 3,176.55

5,835.28

$102,851.49

$ 129,272.32

26,420.83 $ $

24,875.00 9,662.92

34,537.92 $ 20,000.00 124,263.47 274,519.09

418,782.56

63.617.48 $524,810.60

35,570.45 29,757.50 98,480.95

65,327.95 $ 89,649.20

8,831.75

1,319,998.04 $1,418,478.99 174,337.91 $1.592,816.90

241,743.71 331,392.91 $331,392.91 $

10.00 338.11 7,713.32 TOTAL

1,078,254.33 1,087,086.08 174,337.91 $1,261,423.99

$ 8,061.43 $1,923,241.45 $

15,108.43

$ 131,470.93 $750,576.86 86,300.00 35,570.45 29,757.50 7,713.32 $862,471.13 ( 20.00) 4,292.83

$ 909,918.13

$ 866,743.96 $1,923,241.45 ..

......

July 1983/Arkansas Lawyer/99

The Environmental Crisis Of Hazardous WasteSuperfund, A Congressional Response by Gregory L. Benik (Editor's Note: This timely article is reprinted with permission of the author and the Rhode Island Bar Association. The article first appeared in the Rhode Island Bar Journal, January 1983. The Author, Gregory L. Benik, is Chairman of the Rhode Island Bar Association Committee on Environmental Law; and is a partner in the Providence Law Firm of Hinckley & Allen.)

Recent events have dramatically emphasized the consequences of past reckless hazardous waste disposal practices. At Love Canal in Niagara Falls boarded·up houses offer mute testimony to the tragic disruption of the health and lives of the residents near that abandoned hdzardous waste

burial site.' Near Louisville, Kentucky there is a seven acre dump, known as

the Valley of the Drums, where 17,000 drums were found littered around the site, many of them oozing their toxic

contents onto the ground and into a nearby river' At the Picillo pig farm in Coventry, Rhode Island, at least 20,000 barrels laid buried until Sep· tember 30, 1977, when a shattering explosion and resulting fifty·foot names lead to their discovery.' These and similar stories have fos· tered a growing public realization of the staggering task the nation faces in

hazardous industrial chemical wastes a year.' It is estimated that Rhode Island's approximately 200 generators of hazardous waste produce over 6 million gallons of hazardous waste annually.' EPA believes that 90'\, of such

the hazardous substance release will be sued for recoupment of monies expended out of the Fund. Within the broad contours, CERCLA establishes specific procedures regarding response authority, abatement actions, liability, and the filing of

wastes has been disposed of improp-

claims.

erly' Improper disposal ranges from perfectly legal practices until recently to unlawful and reckless conduct. Nearly half of all hazardous wastes have been placed in unlined surface impoundments. About 30"~ is buried

RESPONSE AUTHORITY authority is found in §104 of CER· CLA.12 Under this section, the Presi·

with other nonhazardous waste in

action and response measures l4

ordinary landfills or stored above ground in drums or barrels. Ten per· cent has been incinerated in an uncon·

trolled fashion without any measures to prevent harmful air emissions. The

remainder has been disposed of indis· criminately and dangerously - such as midnight dumping along rural road·

overcomilly this environmental crisis

sides or into sewers and creeks. 9 The

and have acted as a catalyst for further regulatory efforts to control hazardous wastes. Perhaps the most

lotal national bill to clean up these unsafe hazardous waste disposal sites could reach $60 billion." Responding to this multibillion dollar dilemma, the 96th Congress, in the closing hours of the session, enacted CERCLA, commonly referred to as the Superfund statute. Designed to "get on immediately with the business of cleaning up the thousands of hazardous waste sites which dot this country,"" CERCLA creates several regulatory approaches to hazardous waste management. Central to the legislative program is the creation of a $1.6 billion Hazardous Substances Response Fund (the "Fund"), financed jointly by the petroleum and chemical industries and the federal government over five years. Through use of the Fund CERCLA authorizes the federal

ambitiOUS legislative response to the

problem came in 1980 when Congress enacted the Comprehensive Environ· mental Response, Compensation, and Liability Act of 1980 ("CERCLA").' This article will review the key provi· sions of CERCLA and discuss some of the major Questions surrounding its implementation.

Production of hazardous waste has mushroomed over the years. In 1977, EPA estimated that the volume gener· ~ted exceeded 35 millinn tons with a future annual growth rate of 3%.s More

recent figures suggest that the United States produces 57 million tons of

·Gregory L &nlk, a porlner WIth the law firm

0/ HInck

ley & Allen, recf'ltJed h,s low df>gree from Case Western Reserve UnllNfsrly m 1973 Mr Bemlc IS Ihe ChaIrman of Ihe Rhode Island Bar ASSOCIatIOn Com millet> on Enurronrnentol Low

l00/Arkansas Lawyer/July 1983

government to commence administrative cleanup of hazardous waste sites where there is an actual or threatened release of hazardous substances. Pri-

vate parties statutorily responsible for

The federal government's response

dent 13 is empowered to arrange (or

pollution removal and other remedial necessary to protect the public health or welfare or the environment whenever: - any hazardous substance is

released or there is a substantial threat of such a release into the environment; or

- there is a release or substantial threat of release into the environ· m~nt of any pollutant or contaminant which may present an immi·

nent or substantial danger to the public health Or welfare ... " However, there are several signifi-

cant restraints on federal cleanup authority under §104. First, cleanup activity cannot be undertaken by fed· eral authorities unless the government

determines that removal and remedial action will not be done by the owner or operator of the site from which the release or threat of release emanates

or by any other party responsible for such release or threat." To satisfy this requirement, EPA has adopted a procedure whereby it sends so·called "notice letters" requesting allegedly liable parties to take voluntarily pres· cribed remedial action at the site, as

an alternative to further federal action. These notice letters are issued without administrative hearings or findings of

fact and there is no procedure for administratively challenging the basis for the issuance of the demand letter

or the scope of the remedial action requested. Since EPA's next move would be to initiate response measures, the recip-

ient of a notice letter faces a quandry. If the recipient rejects or delays EPA's settlement offer the government itself will undertake cleanup and sue the responsible party for reimbursement. Waiting patiently for the government to act may significantly increase the ultimate liability. On the other hand, a settling party has no assurance that its liability for further reimbursement is extinguished if a settlement is reached.

"assure all future maintenance of the

These unresolved questions surround-

removal and remedial actions" and

ing CERCLA make response to notice letters a complicated task." Second, §104 mandates that reme· dial action be conducted consistent with the National Contingency Plan (NCP)." The current NCP, developed under §311(c) of the Clean Water Act," is designed to provide a coordinated response to oil and hazardous substance spills.'" Section 105 of CERCLA requires the President to amend the existing NCP "to reflect and effectuate the responsibilities and powers created by lCERCLAl" by establishing "procedures and stand· ards for responding to releases of hazardous substances, pollutants, and contaminants. .. ."21 Specific matters

that the NCP include methods for determining the "appropriate extent of

remedial action>""

ABATEMENT ACTION Section 106 of CERCLA proVides additional legal authority to initiate

continued response is necessary to

abatement actions and to issue administrative orders in imminent hazard

prevent an emergency, the federal government is limited to a $1 million

government may commence an

expenditure for a given site. However I

abatement action when "there may be

additional expenditures beyond the $1 million limit are authorized if the state

an imminent and substantial endan-

government enters into a cooperative agreement whereby il agrees to

or the environment because of an

cases. Under this section the federal

germent to the public health or welfare actual or threatened release of a hazardous substance. "~I Any judicial relief fashioned by the courts in continued on page 102

CRAWFORD & COMPANY HEALTH AND REHABILITATION SERVICES PROFESSIONAL SERVICES TO TH E LEGAL PROFESSION IN TH E FOLLOWING AREAS: Liability;

Evaluation of re-employment potential after partial or total permanent disability

Liability:

Evaluation of Residual Employability including Labor Market Information

must be addressed in the revised plan. Of critical importance to actual cleanup operations are the requirements

underwrite 10 percent of the costs of

Picillo Farm site; the Davis Liquid Chemical Waste Disposal site; and the Western Sand and Gravel site." Section 104 also includes a limit on the costs that can be incurred at a site. Unless the President finds that

removal, remedy, and other measures

authorized by [CERCLAI," as well as for evaluating the "relative cost" of such remedies." Furthermore, the revisions must include a means of "assuring that remedial action measures are cost effective over the

period of potential exposure ... ," and they establish criteria for deter· mining priorities among different sites requiring remedial actiol1. 11

The statutory deadline for finalizing the revised NCP was the beginning of June 1981." EPA proposed initial revi· sions on March 12, 1982," and pro· mulgated the revised NCP on July 16, 1982." The revised plan cannot take effect until Congress has had at least sixty calendar days of continuous ses-

sion from the date of promulgation in which to review the plan" However, on October 21,1981, EPA issued an "interim priority list" of what it called the 115 worst hazardous waste sites in the United States and targeted the locations for cleanup activities. Three Rhode Island sites are on the list: the

Workers' Compensation:

Evaluation of Residual Employability, Medical Coordination, Development of Individualized Rehabilitation Programs, Direct Job Placement

Comprehensive Vocational Evaluations for. Divorce Cases, Social Secu rity Disability Cases, Long Term Disability Cases, Auto No-Fault Cases QUALIFIED AS EXPERT WITNESS IN ARKANSAS AND OTHER JURISDICTIONS

1501 North University, Suite 764 Little Rock, Arkansas 72207 (501) 666-0304 July 1983/Arkansas Lawyer/101

, , , Hazardous Waste-, , "

the chemical wastes resulting from its

continued from page 101

operations on slle.

response 10 such actions must be

chemical wastes are carcinogens and

based upon the "eqUities of the case" and thp "public interest."" In addition, EPA is authorized to ,ssue "such

migrated into groundwater used as a water supply for nearby communitips,

orders as may be necessary to protect

public health and welfare and the envIronment. '. Q

There are a number of unresolved issues regarding the nature of the EPA's authority under § 106. At the threshold IS the question of what con· stitutes an "immment and substantial

endangerment." SlIlce § 106 is but one of several immment hazard provisions

that Congress has IIlcluded in envir onmentallegislation, gUidance as to the scope of the ",mminent and sub· stantial endangerment" standard can

be found in judicial interpretation of these analogou::a ::.Iatutory provisions.

In United Slates v Vertac Chemical Corp.," the court held that the imminent hazard standard had been met under both §7003 of RCRA and §504 of the Clean Water Act where the migration of dioxin· contaminated waste into surface and ground waler presented "a reasonable

medical concern over the public health."" The Vertac court relied heavily upon Reserve Mining Co. v EPA,'" where the Eighth Circuit held that the Clean Water Act's standard of "endangering the health or welfare of persons"J7 includes potential as well as actual harm Similarly, court inler-

pretation of comparable provisions of the Clean Air Act'" indicates that "endanger means something less than actual harm"" Therefore, it appears that the "imminent and substantial endanger-

ment" test focuses on the risk of harm, not the harm itself. Actual injury need not be shown and the standard is met if the risk is imminent. A hazard is imminent if there is a "substantial likelihood that serious harm will be expe· rienced" if preventive action is not taken.';' Moreover.

It IS

arguable that

the immlllency threshold 's directly related to the magl1ltude of the risk. The s,milant,es between RCRA's imminent hazard provision and

§ l06(a) of CERCLA were explicitly recogl1lzed in Uniled Slates v Reilly Tar and Chemical Corp." For fifty· five years defendant, Reilly Tar and Chemical Corp., operated a plant where it refined coal tar into creosote

oil and treated wood products with creosote and other preservatives. Our·

ing this period defendant disposed of 102/Arkansas Lawyer/July 1983

Alleging that many of defendant's toxic" and that those wastes had the federal government brought an action under both §7003 of RCRA and § 100(a) of CERCLA. The defendant moved to dismiss the complaint on the ground that the facts alleged did not constitute the sort of "disastrous emergency situation" required to invoke Ihe immll1ent hazard provisions

of RCRA and CERCLA. The court rejected defendant's argument and held that the facts alleged by the government were suffi· cient to establish an imminent and

substantial hazard to health or the environment. In doing so, the court

reaffirmed that if the risk of harm, not the harm IIself, IS ,mminent the stand· ard has been met. The court further observed that the harm is substantial where there is: (1) a subSlantlallikehhood ihal contaminants capable of causmg adverse health effects will be mgested by consumers If prevenllve action 15 not taken; (2) a substantial slallsllcal probabllllY that disease WIll result from the presence of contarm nants In dnnkll1g water; or (3) the Ihreat of subslantlal or serious harm (such as exposure 10 carcll10genlC agents or olher hazardous contaIl1lnants), II

Judicial decisions interpreting §7003

of RCRA are also instructive in deter· milling the possible retroactive appli-

calion of § 106. Cases have uniformly held that §7003 confers jurisdiction over acts of d,sposal which preceded the enactment of RCRA in 1976." For example.

111

United States v Price,

the court observed that §7003 does not pUlllsh past wrongdoing or impose

habtlity for IIlJunes IIlflicted by past acts. Ralher. the sec lion IS directed at the current existence of a hazardous condItIon. Therefore, the court saw "no retroactivity problem with the sta·

tute.'" SlIlce §)06 actIons would also

application of § 106. First, the case law indicates that the remedy available under §7003 is narrow. '" That section does not authorize full·scale cleanup of hazardous sites. To the contrary, EPA is limited to lIl)unctive relief necessary to abate the Immll1ent

hazard. A SImilar IIlterpretation of § 106 of CERCLA should obtain. Indeed, the existence of the broad cleanup mea· sures authorized by §104 lends further support to the argument that Con· gress did not contemplate a major cleanup role for § 106. Moreover, the requirement that any relief fashioned under § 106 must be based upon the "equlI,es of the case" should provide additional hmltatlon on the scope of this section. Under established equita· ble prinCIples the Isuance of an injunction reqUires a "balancing of equities

and hardshIps....'" Among the "equities" b lancpd would, presuma·

bly, be the negligence, knowledge or involvement of the defendant in the conduct sought to be enjoined. Where it can be demonstrated that a defen· dant had no relationship to or knowl· edge of the complained·of conduct, injunctive relief is generally not war·

ranted." The adequacy of the legal remedy provided by §104 should also preclude equitable relief in many situations. In sum, there are a number of fac-

tors which should limit the scope and application of § 106. Section 106 abatement actions should be limited to emergency situations where there is a

grave and immediate risk of harm to health or the environment. Given the availability of §§ 104 and 107 CERCLA, § 106 should not be employed routinely as a tool for general cleanup of hazardous sites. Finally, strict liability under § 106 should not apply. Applica· tion of common law concepts of liabil· ity applied in injunction cases should limit responsibility only to situations where the defendant had some rela· tionship with, knowledge of, or control over the hazard presented by the slle. A narrow interpretation of the

scope of § 106 was recently adopted in United States v Wade." Wade

be dlreclPr! at current offensive conditions, II would appear that thIS section

involves an action brought by the fed-

would not be found to be imperm,ssi· bly retroacllve even though some of

eral government under §7003 of RCRA and § 106 of CERCLA against

the acts which caused the imminent

the owner of a hazardous waste site and six hazardous waste generators

cond,tIon preceded the enactment of CERCLA. While the above analysis implies that the federal government's author· ity under § 106 is rather broad, other

that used the Wade site. One of the generators, Gould, Inc., moved to dismiss on the ground that neither §7003 nor § 106 imposed liability on

considerations suggest a more limited

non-negligent past generators of

hazardous waste who have no present connection with the site. Stressing the government's authority to undertake

where the injury is indivisible; where

cleanup under §104 and then proceed against generators under §107,''' procedures which the government "astonishingly ignore[d]," the court found that neither the legislative history of CERCLA nor the plain language of §106 gave "any hint of an intent to confer liability on past

proportionate share of the harm.:); As a practical matter. unless the hazardous wastes at a given site are in

generators. "51

LIABILITY Perhaps the most far-reaching element of CERCLA is the liability scheme outlined in §107_"lntended to "assur[e] that those who caused chemical harm bear the cost of that ,"" § 107 makes the followharm ing parties liable for cleanup costs incurred by the government under

§104 of CERCLA: -

the current owner and operator of

the cleanup site; - the owner and operator of the cleanup site at the time of disposal of the hazardous substance; - any party that transported hazardous material to a disposal or treat·

ment facility of its own choosing; and - any party that arranged for the disposal or treatment of hazardous material at the site or for the transportation of such material to the site.>';

While §107 does not explicitly hold generators of hazardous waste liable, there is little doubt that the last category is intended to impose liability on at least some generators of hazardous waste. This repesents a significant departure from existing common law.

Under legislation originally considered by the Senate, responsible parties were to be held jointly, severally, and strictly liable for pollution-related damages.'>" However, specific references to joint

and several liability were eventually dropped and, as enacted, CERCLA does not expressly provide a means

the total injury can be reliably apportioned a defendant is liable only for its

a discrete, identifiable form it will be extremely difficult to apportion environmental damage accurately among

responsible parties_ If joint and several liability is imposed the likely targets will be those defendants with the financial resources to pay the cleanup

bill. In most instances this means that the generators will be targeted_ If CERCLA authorizes imposition of joint and several liability, a corollary question arises, whether a right to

contribution exists under CERCLA_ In

Thus, the third-party defense does not insulate a generator from liability for acts or omisions by waste transporters or treatment or disposal facili· ties with which the generalor con-

tracted, regardless of whether the haulers or facilities were negligent in

handling or disposing of the hazardous material. Only where the pollution is the result of vandals or Ihe action of third parties beyond the contractual arrangemenl will the defense be available. USES OF THE FUND Section 111 of CERCLA authorizes ,he Fund to be used for the following purposes: (I) payment of government response costs incurred under §104; (2) payment of response cos's

Northwest Airlines. Inc. v Trans· port Workers Union,:"j the Supreme

incurred by any other person under

Court observed that the right to contribution depends on "language of the statute itself, its legislation history, the underlying purpose and structure of the statutory scheme and the likelihood that Congress intended to

asserted and compensable but unsatis-

supersede or supplement existing

state remedies." Although the legislative history appears to support such a right, a definitive answer must come

from the courts. While CERCLA does not refer to "strict liability" as such, § 101(32)" defines "liable" or "liability" as the "standard of liability which obtains under §311 of the Federal Water Polution Control Act." Several cases have held that §311 creates strict liability. For example, in Burgess v M/V Tamano, the First Circuit stated that §311 of the Clean Water Act creates "[Iiabilityl without fault for the government's cleanup costs.

"t>!J

Thus,a responsible party may be liable for § 104 cleanup costs even though he disposed of wastes in accordance with

"state of the art" disposal practices that were fully legal at the time of disposal. Defenses to liability under §107 are Iimited_ CERCLA recognizes defenses based on acts of war or acts of God_"' In addillon, a defendant can avoid liability if 11 can be shown thai Ihe release or threat of release of hazard-

the NCP; (3) paymenl of claims fied under §311 of the Clean Water Act; and (4) payment for certain ot her purposes, including restoring, rehabilitating, replacing, or acquiring the

equivalent of damaged or destroyed natural resources, conducting epidemiological studies, and purchasing cleanup equipment. hl Significantly,

since both § 107 and § III explicitly allow recovery of response costs by "any other person," it would appear

'hat CERCLA authorizes a private right of action for damages if an individual acts consistently with the NCP. Thus parties may be able to engage in a broad range of pollution control and cleanup activities and recover the

costs from the Fund_ All claims against the Fund must first be asserted against the known par lies responsible for the hazardous substance release_ If the claim is not satisfied Within 60 days, the claimant has the option of initiating court action against the party or presenting the

claim to the Fund.'" If a claim is presented 'a the Fund, Ihe government must atlempt to arrange a settlement

between the claimant and the alleged polluter." If a settlement is not reached within 45 days, the government may either

for allocation of Jiability among defendants_ Nevertheless, EPA and the Justice Department have taken the position that CERCLA authorizes the imposition of joint and several Iiability__ The legislative history on the ques-

ous materials was caused solely by an

Independent third party and that the defendant exerCised due care with respect to that party and that hazard-

appeal to a board of arbitrators and the courts;' If the government makes

tion is conflicting. So However, it is

ous substance. However, this defense

arguable that Congress intended that liability of joint defendants be deter-

does not apply to agents or employees of the defendant or to those acting

fied with the amount, he may appeal directly to the courts'''' Once a claim

mined under traditional common law

under "a contractual relationship exist-

principles_ Under the common law, joint and several liability is imposed

Ing directly or indirectly with the defendant. "oJ

make an award or decline to make an award.l)t) If the government refuses to make an award, the claimant may

an award and the claimant is dissatis-

is paid, the government is subrogated

to the rights of the claimant and may continued on page 104 July 1983/Arkansas Lawyer/103

· .. Hazardous Waste-..., continued from page 103 maintain an action to seek recovery of claim payments in another proceeding.'" This should prevent depletion of

5.5 EPA J. No 2, at 12 (Feb 1979)

36.514 F 2d 492. Szq (8th C,r

6. Note, "Allocatl1lgthe Costs of Halardous Waste Disposal," 94 Harv, L Rev 584 (\981)

37.33 USC §116O(gHIJ

7. The Providence Journal, January 19. 1982. p

the Fund and assure that parties

8. S Rep. No % 848. 96th Con9; . 2d Sess 3 (l980)

responsible for environmental damage are ultimately held accountable for their conduct.

9. Canter, "Himudous Waste Disposal and the New State Sltmg Programs." 14 Nat Resources Law 421. 423 (1982)

CONCLUSION

Society's past toxic waste disposal practices have left a legacy of aban-

doned and inactive hazardous waste sites. The existence of these "ticking time bombs" presents the most diffi-

cult hazardous waste management issue facing the country_ CERCLA allempts to tackle the problem by

providing an administrative mechanism for identification and cleanup of these sites prior to liability ildjudicution.

Yet many questions regarding the scope and application of CERCLA remain unanswered_ How should liability for hazardous waste cleanup be allocated among past and present dis-

posers, landowners, generators, and transporters? Should strict liability apply in all cases or may equitable

defenses be asserted? How extensive may government cleanup operations be? Despite the sense of urgency which surrounded its passage - to cleanup "environmental hot spots without delay"70 - CERCLA's ambiguities and detailed procedures have partially frustrated attainment of this goal. However, EPA's stepped-up enforcement effort should serve to fill in the gaps that are the invariable result of hastily-drafted, compromise legislation. 1. Ah hough Love Canal served as 1he elaTion call lor regulatory reform. It was but one of four hazardous

waste dIsposal sites operated by Hooker ChemICals and PlastiCS Corp In the Niagara Falls area. In facl, onE' of Hooker's other sites, the 15 aCTe Hyde Park Landfill Site, was used as a dIsposal site for more than twO decades and

contams an estimated 80,000 tons of chemICal waste malenals and by products,

four Ilmeslhe volume of chemIcals dIsposed of al Love Canal. See, United Slates v

Hooker Chemicals and Plastics Corp., 17 Env'l Rep Cas. (BNA) 1808, 1810 (W.O.N.V 1982), T niling. "P"mslakmg Negotiation Leads to Lmdmark Cour! Order Appro"'lng Settlement Agreement In Hyde Park HClzardous Wasle Clel)n up Litigation," 12 EnvII. L Rep. 15013 (1982).

2. EPA analYSIS of soli and surface water m the dramage area Idenl1fied about 200 organic chemicals and 30 metals. Office of Water & Waste Water Management, U.S, Environmental Protechon Agency, Everybody's Problem: Hazardous Waste 2lSW·826)(198O). 3. Rhode Island Department of Environmental

Management, Hazardous Waste Newsletter, Vol. I, No.2, p. 3. See, Wood v Pieillo, R.I. , 443 A.2d 1244. 1245 (1982). 4. Pub. L. 96·510 (December II, 1980),42 U.S.C. §960J et seq. CERCLA IS also commonly referred to as Superfund.

104/Arkansas Lawyer/JUly 1983

10. Fisher, "The TOXIC WaSte Dump Problem and a

Suggested Insurance Program," 8 Best Coli Env Aff L Rev 421. 428 i 1980) II. 126 Cong Rec H 11787 (dady ed December 3.

1980) 12. 42 US C §9604 13. On August 14. 1981, PreSident Reagdn Signed Executive Order 12316 delegatl1lg the adml1llstratlve responslbllilies vested III the PreSident under CERCLA to a number of federal dgenCles, lI1cludrng EPA. the Coast Guard, the Defense Deparlment, and others 46 Fed Reg 42237lAug, 20. 1981) 14. CERCLA distinguishes lwlween hazardous waste "removal" and "remedlal action" Removal refers generally to cll"anup and short term relief § 101(23) Remed,al aCllons are thoM! that arc "consistent With permanent remedy taken Instead of or In addition to removal" §I01(24) "Response" rncludes both removdl and remedIal action §101(25) 15. CERCLA §l04iaHIl. 42 USC §9604 (a)(l) 16.ld. 17. For excellent diSCUSSIons of the options open to the reClpllwts of notice \etlers. see Wemberg and SqUIre. "How to Respond to 'Notlce Lel1ers' As a Potential Superfund Defendant," The National Law Journal, February 8.1982. at pp 26,27, and Mall. "AvailabIlity of JudiCial Rev\ew of Cleanup Demand Leiters Under the ComprehenSive Envi ronmental Response. Compensation and LiabIlity ACI of 1980:' 1 ChemK:al & RadlatlOll Waste Litigation Reporter 541 (1981) lB. CERCLA § 104(a)( 11.42 USC §9604(aH 1) 19.33 U.S.c. 1321(2) 20. See 40 C F R Part 1510 21. 42 U.S.c. §9605 22. CERCLA § 105(3). (2). 42 USC §9605(3). (2) 23. CERCLA § 105(7}. (8) 24. Section 105 of CERCLA orders the PreSIdent 10 revIse and republish the NCP "[wjlthln one hundred and eighty days aher the enactment of thiS Act"

19751~en

bane)

38.42 USC §75'ISkIO)(AJ 39. Ethyl Corp. v EPA. 541 F 2d l. 13 (D C Clr I (en banel, cert. denied. 426 U,S 941 (1976) 40. Environmental Defensl? Fund, Inc. v EPA. 465 F 2d 528. 540 lD C C,r 1972) 41. 12 Envll L Rep 20954 (D Mmn Aug 20. 1982) 42. The chemIcal wastes resulting from the refining of coaltM mtO creosote 011 mdude polynucle<lr ,tromatlc hydrOl..-ar;.bons WAHl and phenolic compounds Marw PAH compounds <He ammal carcmogens <lnd su~pected human carcinogens Phenolic comopounds are toXI~ Id. at 20955 43. Id. oIt 20956 44. See. e.g., United Stales v Price, 523 F Supp 1055 (0 N.J 1981); United Slales v Diamond Shamrock Corp., 17 Env't Rep Cas (BNA) 1329 (N D OhIO 1981); Uniled Slates v Solvents Recovery Service of New England, 496 F Supp. 1127 (D Conn 19801 45. United Slates v Price, supra. 523 F Supp at 1072 46. Id. at 1071 47. TVA v Hill. 437 US 153.193 (1978) 48. See Naughton 1st C,r 1979)

Bevilacqua, 60S F 2d 586. 589

49. United Stales v Wade, No 791426, Slip Op, (E D Pa Sept 7. 1982) 50. The Wade Court. In dicta, observed that "lslechon 107 clearly Includes generalors of hazardous wastE" among those potenl1ally liable 10 be sued for clean up costs mcurred under section 104 " Id. at 16 51. Id. at 18 52.42 USc. §%O7 53. S Rep No % 848 supra al 13 54.42 U.S C. §%07(a)(l) (4) ResponSible parties are responSible for n) al\ costs of remedial and removal actIon mcurred by federal and state government conSistent With the NCP; (2) any other response costs I1lcurred by any other person consistent WIth the NCP; and (3) damages for Injury, destruCIIOl), or loss of natural resources. 42 US C §9607(a)(4)(A) (C) 55. See S 1480 §4(a). 96th C~ng., 2d Sess. (1980) 56. See, e.g., 126 Cony Rec H 11.788 (ddlly ed. December 3, 1980) (Letlers from Alan A Parker. ASSIstant Attorney General for LeglslatlVe Affairs!; 126 Cong Rec. S 15.004 (dally ed Nov 24.1980) (statement of Sen Helms) 57. See Prosser. Handbook of the Law of Torts, §52, at 315 16 (4th ed 1971)

25.47 Fed. Reg. 10972 (March 12. 1982)

58. US. 101 S Cl 1571.1580 (1981)

26.47 Fed Reg 31 ISO iJuly 16, 1982).

59.42 U.S C. §9601(32)

27. CERCLA §305, The Enwonmental Defense Fund recently sued EPA to challenge the adequacy of the NCP. whK:h became effective on October I. 1982. Env'!, Rep. (BNA) Current Development. November 5. 1982. 2B. 12 Env'!. Rep. (BNA) 828 (Oct. 30.1981). On July 23, 1982, EPA added 45 addlhonal sites to thiS !1st Env't. Rep (NBA) Current Developments, July 30. 1982

60.564 F.2d %4, 982 tlst C,r 1977). cert. denied. 435 U.S. 941 (1978) See also U.S. v LeBeau' Bros. Towing Co., 621 F 2d 787 (5th C,r 1980); Stuart Transportation Company \I U.S.. 5% F 2d 609 (4th Clr 1979). But see United States v M/V Big Sam, 505 F supp. 1029 (E_D La 1981); Tug Ocean Prince, Inc. v United Slates. 584 Fed 1151 t2ndOr 1978) 61. CERCLA §107(b}( I) and (2). 42 U.S C. §9607(b)( 1) and (2)

29. CERCLA § 104(c)(I) & (3). 42 U.s.C §9604(c)( I) &

(31.

30. CERCLA § 106(a), 42 U S.C. §9606(a) 31. Id. 32.ld. 33. See, e.g., §7003 of the Resource Conservation and Recovery Act ("RCRA") 42 U.S.c. §6973; §303(a) of the Clean AIr Act of 1970, 42 USc. §7603(a) (Supp.IV. 1980); §504(a) of lhe Clean Water Act, 33 U.S.c. §1364(a); §1431 of the Safe Drinklllg Water Act, 42 U.S.C. §3OOI(a).

62. CERCLA §107(bj(3). 42 U.S C §9607(b)(3) 63.42 U S.C §961l(a)(I).(4) 64. CERCLA § 112\a), 42 USC §9612(a).

65. CERCLA §112(bH2HA). 42 USc. §%12(b)(2i\A)

66. CERCLA §112lb)(3), 42 U,S C. §9612(b)(3) 67. CERCLA §112(b)(4). 42 U.S C. §%12(b)(4).

68. CERCLA § 112(bH3), (4HG), 42 U.s.c. §9612(b)(31. (4)(G).

34.489 F. Supp. 870 (E.d. Ark. 1980).

69. CERCLA § 112(c)( 1). 42 U.s.C. §%12(c)( 1).

35.489 F. Supp. at 885.

70. 126Cong. Rec. HI1794 . . . . .

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Juvenile Law in Arkansas: A BRIEF GUIDE* by

Edward Ward

With the increased attention being focused by the media on the problem of child abuse, and the strain reportedly being brought upon families by difficult economic conditions, the general practitioner is more likely than ever to be called upon by distraught parents for representation in the Juvenile Courts of this State. This likelihood is probably increased by the ebb flow of Legal Services in Arkansas. Accordingly, this article has been prepared as a practical, generalized guide for the general practitioner. The article deals with those provisions covering abused juveniles, neglected juveniles, and juveniles in need of supervision, leaving juvenile delinquency for treatment elsewhere. The juvenile law of Arkansas has been fluid in the past several years, and the diligent practitioner is encouraged to consult his pocket part supplements. THE THREE ACTS The corpus of Arkansas' juvenile law is contained in the Arkansas Juvenile Code of 1975,' the Child Abuse and Neglect Reporting Act,' and the Juvenile in Need of Supervision Act of 1977.' The Arkansas Juvenile Code of 1975 is the broadest of the three by far, covering not only "Dependent/Neglected" juveniles and "Delinquent Juvenile(s)" as defined by that act,' but also "Juvenile(s) in Need

of Supervision." The definition of "Juvenile(s) in Need of Supervision" contained in that act' is broader than that contained in the Juvenile in Need of Supervision Act of 1977,' but the purpose of this latter act is very limited in scope, as will be explained later in this article. The Arkansas Juvenile Code of 1975, hereinafter referred to simply as the "Juvenile Code", provides that "Any juvenile within this State shall be considered a ward of this State, and may be subjected to the care, custody, control and jurisdiction of the juvenile court. "0 A "juvenile" is defined as "any person, whether married or single, who has not yet reached his 18th birthday. "0 "Jurisdiction over juvenile matters under (the Juvenile Code) is vested in the county courts of the several counties of this State."" As a practical matter, due to the definitional schemes employed, any matter of dependency/neglect or abuse arising under the Juvenile Code will also be treated as lying within the purview of the Child Abuse and Neglect Reporting Act, and vice versa. "When thus exercising jurisdiction, the county court shall be known as the juvenile court of the county in which it is located,"" and the county judge shall be the juvenile judge." The county judge may appoint a referee to serve as juvenile judge at the pleasure of the county judge." If he makes this appointment, the county judge is

bound by the decisions of the juvenile referee, and the orders and judgements of the referee are the decisions of the county jUdge."" The juvenile court's jurisdiction is original and exclusive.'s INITIATING JUVENILE COURT PROCEEDINGS A. Non Emergency Situations The clerk of the county court serves as the clerk of the juvenile court," and any adult may file a written petition with the clerk, setting forth the facts allegedly rendering the subject juvenile dependent/neglected or in need of supervision under the Juvenile Code." Again, an abused child is also a dependent/neglected child under the statutory definitional scheme of the acts being discussed. The petition must be verified," and resident defendants are to be notified by summons." A juvenile alleged to be in need of supervision is entitled to representation by counsel," and in certain circumstances this right cannot be waived. 21

B. Emergency Situations Where there is an imminent danger to a child's life or health, a law enforcement officer, designated city employee, or department of Social Services employee may take the child into protective custody." Likewise, a hospital or treating physician may keep custody of a child where not to do so would present an imminent danger to the child's life or health." Persons and institutions acting in good

DISPOSITION After adjudicating a juvenile to be dependent/neglected, abused, or in need of supervision, the court must next determine the best disposition to make of the juvenile and his family. The purpose of these proceedings is rehabilitative, not punitive." The Juvenile Code specifically provides

that no dependent/neglected juvenile shall be committed to any institution or facility used for the ,"imprisonment of delinquent juveniles... "33 The same proscription applies to the placement of juveniles in need of supervision." Indeed, the primary purpose of the Juvenile in Need of Supervision Act of 1977 is to insure against such punitive dispositions." It is the policy of the State of Arkansas that both juveniles and their families be rehabilitated "within the context of the juvenile's own home environment," if possible." If necessary, however, the court may remove the juvenile from the custody of his parents and place him with some person, agency, or institution." The court may order health care for the juvenile," and require the parents to make child support payments to the court-appointed custodian." Generally, the court may order evaluation and counseling or treatment "affecting the family"'路 of a juvenile in need of supervision. As to a dependent/neglected or abused juvenile the juvenile court may order counseling or treatment of the juvenile "and/or members of the juvenile's family... (where) such counseling or treatment is necessary to the family's proper care for the child ..... It is here, in this area of rehabilitative disposition just described, that Arkansas juvenile law's most obvious substantive deficiency exists. For nowhere in either the Arkansas Juvenile Code of 1975 or the Child abuse and Neglect Reporting Act is there reference to what is probably the greatest

Edward Ward graduated from the School of Law, University of Arkansas, Fayetteville in May 1978. He became a staff attorney for Arkansas Social Services in Pine Bluff in 1979, and transferred to the Texarkana office in

1981. His primary responsibility has been to represent the agency in Juvenile Court proceedings involving child abuse and neglect. He has been responsible for representing the agency in 20 of Arkansas' 75 counties.

faith in these circumstances are immune from any liability that might otherwise result from their actions," and their good faith is generally presumed." The juvenile court must be notified immediately." Where the court determines there is sufficient probable cause to believe that the juvenile is in immediate danger of harm or being removed from the state, the court is to issue an emergency ex parte order for the removal of the child from the custody of its parents, guardian, or custodian." A petition, verified by the person alleging the abuse or neglect, must be submitted to the court by the next business day following the issuance of the emergency ex parte order. 28 Following the issuance of the emergency order, the juvenile court shall hold an adjudication hearing within five business days, but this time may be extended upon the motion of any party for good cause shown." Notice shall be given by summons to resident defendants," and the defendants shall be immediately informed of the emergency order and their right to a hearing. 3 '

contributory factor in family violence: alcohol abuse. Dr. J. W, Fianzer, of the University of Arkansas' Graduate School of Social Work, characterizes findings of the high prevalence of alcohol abuse in family violence as "staggering."" The association between alcoholism and child abuse has been well documented, and Dr. Fianzer reports that clinical studies have indicated that as many as 65% of child abusers are also alcohol abusers." At the same time, however, those abuse situations which are caused or compounded by alcoholism are often easier to deal with, due to the fact that the drinking can be dealt with." Arkansas law as early as 1955 recognized alcoholism as an "illness subject to treatment and abatement," which treatment can help prevent broken homes." In addition, the Alcohol Abuse and Alcoholism Act declares that ..... alcohol abuse and alcoholism is a medical-social problem which can be reduced significantly... (by) treatment, and rehabilitation Thus, a primary contributor to child abuse, while ignored in the black letter of the Juvenile Law, has been recognized elsewhere in Arkansas law for nearly three decades as a treatable source of family disintegration. Of course, not all alcoholics are child abusers, and not all child abusers are alcoholics, Where a child is adjudged to have been abused, it should be determined whether the abusing parent is affected by alcoholism, and if so, whether the alcoholism caused the continued on page 108

July 1983/Arkansas Lawyer/107

Juvenile Law..., continued from page 107 misconduct. To paraphrase Dr. Flanzer, if causation if present and ignored, the child abuse will not

cease.· 7 The juvenile courts in Arkansas must make decisions which will have a great bearing, ultimately, upon whether dysfunctional family units will be made healthy and whole again, or will in time disintegrate. These courts should be given specific statutory guidelines for the detection and appropriate handling of those cases involving the greatest identified single source of child abuse. Regardless of the disposition made, whenever the court retains jurisdiction over any case in which it has found a juvenile to be dependent/neglected or abused, the court must review the case every six months." And, generally, an order removing a juvenile in need of supervision from his parents remains in effect for an indeterminate period of not more than two years." TERMINUS The majority of dependency/neglect and abuse cases should end with the juvenile never having been removed from the home." Where the child has been removed, he should be eventually returned, with a period of supervision. If this return is not possible, then attempts are made to place the child with relatives outside the home. Generally, when efforts at rehabilitation fail and no willing family members are available outside the home, the state will proceed to Probate Court for an ultimate termination of parental rights." FOOTNOTES 1. Ark. Slat. Ann. Sees. 45·401 et seq.

2. Ark. Stat. Ann. Sees. 42·807 et seq. 3. Ark. Stat. Ann. Sees. 45-601 et seq. 4. Ark. Stat. Ann. Secs. 45-403(4) (Repl.1977); 45-302(2) (Supp. 1981). 5. Ark. Stat. Ann. Sec. 45·403(3) (Repl. 1977). 6. Arl<. Stat. Ann. Sec. 45-603(3) (Repl. 1977).

13. Ark. Stat. Ann. Sec. 45-408 (Repl. 1977).

1981 ).

14. Ark. Stat. Ann. Sec. 45-408 (Repl. 1977).

37. Id.

15. Arl<. Slat. Ann. Sec. 45·440 (Repl. 1977).

38. Arl<. Stat. Ann. Sec. 45-432 (Repl. 1977).

16. Arl<. Slat. Ann. Sec. 45-405 (Repl. 1977).

39. Ark. Stat. Ann. Sec. 45-431 (Repl. 1977).

17. Arl<. Stat. Ann. Sec. 45·423 (Supp. 1981).

40. Arl<. Stat. Ann. Sec. 45-436(4) (c) (Supp. 1981).

18. Arl<. Stat. Ann. Sec. 45-424 (Repl. 1977). 19. Arl<. Slat. Ann. Sec. 45-425 (Supp. 1981).

41. Arl<. Stat. Ann. Sec. 45-436(5) (b) (Supp. 1981).

20. Arl<. Stat. Ann. Sec. 45-413 (Supp. 1981). 21. Id. 22. Arl<. Stat. Ann. Sec. 42-811 (Repl. 1977). 23. Id. 24. Arl<. Slat. Ann. Sec. 42-814 (Repl. 1977). 25. Id. 26. Ark. Stat. Ann. Sec. 42-811 (Repl. 1977). 27. Ark. Stat. Ann. Sec. 45·438(1) (Supp. 1981). 28. Ark.

Stat.

Ann.

Sec.

45-438(2)

(8)

(Supp.1981).

42. Flanzer, J. P. "Alcohol and Family ViQ· Ienca," Paper prepared for The Mid-American Institute on Violence In Families, 1978. 43. Ranzer. J. P. "Alcohol Abusing Parents And Their aa«ered Adolescents," Currents in Alcoholism, Vol. VII, p.530. 44. Flanzer, J. P. "Alcohol and Family VIOlence: Double Trouble," The Abusive Partner, ed. by Maria Roy, p.138. 45. Ark. Stat. Ann. Sec. 83·701 (Repl. 1976). 46. Arl<. Stat. Ann. Sec. 83-718 (Repl. 1976).

29. Ark. Slat. Ann. Sec. 45-438(2) (e) (Supp. 1981). 30. Ark. Stat. Ann. Sec. 45-438(2) (d) (Supp. 1981). 31. Id. 32. Ark. Stat. Ann. Sec. 45-406(b) (Supp. 1981).

47. Flanzer, J. P. "Alcohol Abuse And Family Violence," 1978. 48. Arl<. Stat. Ann. Sec. 45-436(5) (a) (Supp. 1981). 49. Ark. Slat. Ann. Sec. 45-436(4) (b) (Supp. 1981). 50. Ark. Stat. Ann. Sec. 45-406(b) (Supp. 1981 ).

33. Id. 34. Ark. Stat. Ann. Sec. 45·406 (Repl. 1977). 35. Arl<. Stat. Ann. Sec. 45-602 (Repl. 1977). 36. Ark. Slat. Ann. Sec. 45-406(b) (Supp.

51. Arl<. Stat. Ann. Sec. 56·126 (Supp. 1981), 51H27 (Supp. 1981). and 56-128 (Supp. 1981).

1-...

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7. Ark. Stal. Ann. Sec. 45·602 (Repl. 1977). 8. Ark. Slat. Ann. Sec. 45-404 (Repl. 1977). 9. Ark. Slat. Ann. Sec. 45-403(1) (Repl. 1977). 10. Ark. Stat. Ann. Sec. 45·405 (Repl. 1977). 11. See Ark. Stat. Ann. Sees. 45-403(4) (Repl. 1977) and 42·807 (Supp. 1981). 12. Arl<. Stat. Ann. Sec. 45·405 (Repl. 1977). 108/Arkansas Lawyer/July 1983

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.,.& LAW SCHOOL NEWS Dean J. W. Looney Assistant Dean Ellen Brantley

SCHOOL OF LAW, UNIVERSITYOFARKANSASATLITILE ROCK Faculty News A book by Dean Lawrence H. Averill, Estate Valuation Handbook, has recently been published by John Wiley. Associate Professor O. Fred Harris, Jr. has been appointed to the Executive Board of the Quapaw Area Council, Boy Scouts of America. Professor Harris spoke at the Sixth Annual Labor Law Seminar sponsored by the Labor Law Section of the Arkansas Bar and the Arkansas Institute for Continuing Legal Education. His topic was '"Survey of Recent Developments in Employment Discrimination: Title VII, 1981, and the Equal Pay Act.'" Assistant Professor Norman Stein has been appointed to the Board of the Arkansas Endowment for the Humanities by Governor Bill Clinton. Professor Stein will serve as a faculty member at the National Clinical Teachers Training Conference of the Association of American Law Schools at New Orleans, April 21-23. Associate Professor John Sheffey'S article entitled '"Securities Law Responsibilities of Issuers to Respond to Rumors and Other Publicity: Reexamination of a Continuing Problem'" was recently published in The Notre Dame Lawyer. Associate Dean Ellen Brantley spoke on The Legal Status of Women: A Historical View at Womens Studies classes at UALR March 9 and 14. Professor Glenn Pasvogel spoke to the North Pulaski Bar Association on February 4, on recent changes in bankruptcy law. Assistant Dean Clay Patty spoke to a class at McClellan High School on property law as part of

the Pulaski County Bar's Youth Awareness of Law program. Law School Hosts ABA Client Counseling Competition Ten teams representing law schools from Arizona, Arkansas, Colorado. Kansas, New Mexico, Oklahoma and Utah competed in the Regional Competition of the Client Counseling Competition sponsored by the Young Lawyers Division of the American Bar Association held at the UALR School of Law, March 4-5. The participants were entertained at a reception at the Arkansas Law Center on Fridayevening. The reception was sponsored by the Pulaski County Bar Association. Preliminary rounds were held Saturday morning, and the final round was held Saturday afternoon. The University of Denver won the competition. Bar Examiners Visit Law School Representatives of the Board of Bar Examiners met with law school students and faculty on Thursday, February 10. William Prewett, Judge Robert Dudley, Don Schnipper, and Kenneth Johnson discussed the bar examination and answered questions on its content, administration, and grading. Pre-Law Advisors Pre-Law Advisors and prospective law students from Arkansas undergraduate schools visited the School of Law on Friday, March 4. Sessions on Admissions, Law School Curriculum,

and Financial Aid were held for the prospective students and their advisors. The students also toured the school, attended a first year class, and met with faculty and students. Moot Court Finals The finals of the intramural moot court competition will be held on Thursday, April 7, in the South Courtroom of the Old Federal Building. The judges for the competition will be Justice Frank Holt of the Arkansas Supreme Court, Judge Tom Glaze of the Arkansas Court of Appeals, and United States District Judge William Overton. The finalists in the competition are, representing the petitioners, Samuel Ledbetter and Linda Oakley and, for the respondents, Brooks Gill and JoCarol Gill. Winners and runners-up of the competition will receive cash awards, and will be honored at a reception following the argument. Calling All Alumni Two events for alumni of UALR School of Law, including graduates of the Arkansas Law School and the Evening Division of the University of Arkansas, will be held this spring. First, an alumni party will be held at the home of Sheffield Nelson on the evening of April 29. At this gathering, a portrait of former dean Robert Walsh will be unveiled. The annual business meeting of the UALR Law School Association will be held on June 9, during the Annual Meeting of the Association at Hot Spnngs.

SCHOOL OF LAW, UNIVERSITY OF ARKANSAS, FAYETTEVILLE Faculty Activities Phil Norvell is serving as a member of the subcommittee on Oil and Gas for the Rocky Mountain Mineral Law Institute and is the School of Law's representative to the Eastern Mineral 110/Arkansas Lawyer/July 1983

Law Institute. He recently attended activities for these organizations in Houston and Knoxville. He also continues his service as eastern states editor of the Oil and Gas Reporter. He presented a program at the 37th

Annual Mississippi Law Institute on "Secondary Term Problems in Mississippi Lease Forms'" and was a speaker at the 22nd Annual Arkansas Natural Resources Law Institute. Richard Richards, whose textbook

"Cases and Materials on Employment Discrimination" was reieased earlier this academic year spoke on copyright law at the Southeastern University Printing and Duplicating Managers Conference and on recent developments in employment discrimination at the 6th Annual Labor Law Seminar co-sponsored by the Labor Law Section of the Arkansas Bar Association. George Skinner was a speaker at the S. W. Association of Law Libraries. He serves as chairman of the Location of Annual Meetings Committee and a member of the annual meeting arrangements committee. Assistant Librarians Roger Becker, Lou Becker and Maurice Pope also attended the SWALL annual meeting in Tulsa. Wylie Davis has continued to chair the National Conference of Bar Examiner's Committee on Contracts for the Multistate Bar Examination. He is teaching at Texas Tech School of Law during the 1983 summer session. Robert Laurence attended the AALS Workshop a Teaching Bankruptcy and the Federal Bar Association's Indian Law Conference where he spoke on the execution of judgments on Indian reservations. Robert A. Leflar's new casebook on Conflict of Laws was released early in 1983 and he has completed articles for the Arkansas Law Review and the law reviews at Pace, Mercer and Maryland. Neil Hamilton and Jake Looney has an article in a recent edition of the South Dakota Law Review entitled "Federal and State Regulation of Grain Warehouses and Grain Warehouse Bankruptcy" A second article by Hamilton and Looney (along with Chuck Culver, agricultural aide to Sen. Dale Bumpers) "Marketing Farm Products: The Farmer As Creditor and Related Problems of Bankruptcy" appeared in The Agricultural Law Journal. Moot Court Edward Corrigan and Jenniffer Horan, third year students, and members of the 1981 National Moot Court team, entered the 7th Annual Robert F. Wagner, Sr. Labor Law Moot Court Competition held at New York Law School in New York City. Annual Letourneau Award Second year student William David Hardin won second place in the national student competition of the American College of Legal Medicine for papers on medical-legal topics. The award was for his paper "The

Duty to Warn of Dangerous Propensities and Rules Involved in the Use of Prescription Drug Products Intended for Human Consumption: Where Is It And To Whom Is It Owed? The Legal Significance of Package Inserts." Client Counseling An interschool client counseling competition was held in early spring to select the school's team for the regional competition. Kitty Gay and Micki Harrington (and alternates Carol Goforth and Joy Durwood) placed second in the regional competition in Little Rock. The final round was won by the team from the University of Denver.

Law Review The law review membership has selected the following officers for 1983-84: Editor-in Chief Mike Bennett Managing Editor Kitty Gay Articles Editor Carol Goforth Student Writings Editors John Tull Billy Parker

Business Manager Symposium Editor Research Editor Citations Editor

Skip Henderson Melody Williams John Jewell Penny Smith

The following students have been accepted for full membership on the Arkansas Law Review: Mike Bennett Fayetteville, AR Jim Clark Bentonville, AR Kitty Gay Chelsea, OK Carol Goforth West Fork, AR Skip Henderson Conway, AR Robert Hornstein . Philadelphia, PA Joel Huggins Tuckerman, AR John Jewell Little Rock, AR Billy Parker .. Hughes Springs, TX John Tull Lonoke, AR Melody Williams Little Rock, AR Apprentices to the law review have also been selected and are to complete a casenote before full membership is granted. New apprentices are: Claudia Driver Hot Springs, AR Stephen Hough Fort Smith, AR Cynthia Jones Friendswood, TX Richard Massey North Little Rock, AR Jan Nielsen Van Buren, AR Gregory Stephens Conway, AR

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The Exclusionary Rule

"BE DAMNED" by The Honorable William French Smith ATTORNEY GENERAL OF THE UNITED STATES

A century ago, the railroad tycoon William H. Vanderbilt was asked whether he operated his railroads for the benefit of the pUblic and responded: "The public be damned!" In recent years, many citizens have wondered whether government's attitude toward fighting crime has become: Let the law-abiding public "be damned." Although government has regularly redoubled its efforts, it has been amazingly unsuccessful in halting even the growth of crime. When I entered office, nearly nine of ten Americans believed that the courts in their own areas failed to deal harshly enough with criminals-an increase of almost one-third since 1972. Nearly eight of ten Americans did not believe that our system of law enforcement worked to discourage people from committing crimes-an increase of almost fifty percent since 1967. To some extent, we have needlessly allowed our historic concern for the rights of the accused to overwhelm the even more historic first principle of government: Providing for the defense of society. More and more Americans recognize that an imbalance has arisen In the struggle between law and the lawless. Today, I want to speak in some detail about one weight that contributes to the imbalance, the exclusionary rule. Beginning in its 1914 decision in Weeks v. United States, the U.S. Supreme Court has declared that evidence obtained in violation of the fourth amendment to the Constitution is inadmissible in federal criminal prosecutions. The exclusionary rule is a judicially created rule of law. It 112/Arkansas Lawyer/JUly 1983

is not articulated in the fourth amendment itself, which reads instead: "The right of the people to be secure in their persons houses, papers, and effects, against unreasonable searches and seizures, shall not be violated." In fact, the exclusionary rule is not to be found anywhere In the Constitution, the Bill of Rights, or the federal criminal Code. It was also not inherited from English law. To this day, neither English law nor the law of any other civilized country requires the exclusion of such evidence. Although this court-created doctrine has been criticized from its inception, it has become a very significant feature of the federal criminal justice system. The states themselves were less convinced of the rule's value following its enunciation in the Weeks case. In the three decades following the Weeks decision, sixteen states adopted the rule-but thirty-one states refused. In 1949, the U.S. Supreme Court squarely confronted the decision of most states not to adopt the exclusionary rule. In Wolf v. Colorado, the Court held that the fourth amendment did apply to the states through the due process clause of the fourteenth amendment, but that the fourteenth amendment did not forbid state courts from admitting evidence obtained by an unreasonable search and seizure. Twelve years later, in Mapp v. Ohio, the Supreme Court changed its mind and held the exclusionary rule enforceable against state criminal prosecutions.

Since 1961, the exclusionary rule has been applicable to all state and federal criminal prosecutions-with the effect predicted by Justice Cardozo long ago: "The criminal is to go free because the constable has blundered." Indeed, the scope of applicability of the rule have been expanded by the courts in recent decades far beyond the more limited beginning in the Weeks case. As Harvard Professor James Q. Wilson summarized the situation more recently: " ...the cost of deterring improper police conduct does not generally. fallon the police. No officer Is punished when the exclusionary rule is invoked; rather the prosecutor's case is lost. . . If a guilty person goes free because improperly collected evidence that would have established his guilt Is excluded, then the victim of the crime, and society at large, bear the costs of the police error ... The exclusionary rule often operates as a kind of regressive tax that places the burden of attain ing some publ ic purpose on those least able to pay."

Clearly, the most disturbing feature of the exclusionary rule is that its invocation can result in the freeing of a demonstrably guilty criminal.

No matter how technical a mistake an officer makes---â&#x201A;Źven if he is acting in reasonable good faith, for example, by acquiring a warrant that Is only

subsequently held to be technically incorrect-an illegal search results in the exclusion of any evidence resulting from the search. There is no weighing by the court of the seriousness of the crime or the significance of the evidence. Even a good faith attempt by a law enforcement officer to ensure the legality of the search will not-if a technical flaw is uncovered-save the evidence of crime. What then are the arguments in favor of the exclusionary rule? As originally enunciated by the Supreme Court, the rationale for the exclusionary rule was twofold: to deter unlawful police conduct and to preserve judicial integrity by preventing courts from becoming "accomplices in the willful disobedience of a Constitution they are sworn to uphold." In recent year5, however, the Court has refused to cite the jUdicial integrity rationale. This is not surprising. After all, what good does it do to judicial integrity to enforce a court-made rule that requires the release of clearly guilty criminals on the most technical of grounds? In recent years, as in the 1960 case of Elkins v. United States, the Court has instead emphasized: "IThe] purpose [of the exclusionary rule] is to deter-to compel respect for the Constitutional guaranty in the only effectively available way-by removing the incentive to disregard it." Nevertheless, even as the Court has emphasized the deterrent rationale for the exclusionary rule, a substantial body of evidence has grown up questioning the efficacy of the rule in achieving its goal of deterrence. In 1970, Utah Supreme Court Justice Dallin Oaks-then a professor at the University of Chicago Law School-reported the results of his exhaustive study for the American Bar Foundation. He concluded: "Today, more than fifty years after ihe exclusionary rule was adopted for the federal courts and almost a decade after it was imposed upon the state courts, there is still no convincing evidence to verify the factual premise of deterrence upon which the

rule is based or to determine the limits of its effectiveness." As Chief Justice Burger himself has noted: "There is no empirical evidence to support the claim that the rule deters illegal conduct of law enforcement officials... rWle should be prepared to discontinue what the experience of over half a century has shown neither deters errant officers nor affords a remedy to the innocent victims of official misconduct."

The lack of empirical evidence in support of the exclusionary rule should come as no surprise.

As Justice Rehnquist has stated, the rule "unrealistically requires that policemen investigating serious crimes maKe no errors whatsoever." One of the greatest problems with the exclusionary rule is that it often places an impossible burden on police officers. The rule is invoked upon the most technical of violations-even when the officer could not have reasonably been expected to have done differently. The rule is applied in a fashion that requires of police officers a better understanding of what the law will be than is required of judges. And when the police officer fails to meet that impossible burden, society is made to suffer the release of a guilty criminal who would otherwise be behind bars. Simply put, the law of the fourth amendment is so uncertain and so constantly changing that police officers cannot realistically be expected to know what judges themselves do not yet know. Let me illustrate my point with several cases that have reached the United States Supreme Court in just the last two terms. In 1981, the United States Supreme Court decided the cases of New York v. Belton and Robbins v. California. The cases are remarkably similar factually. In both cases, police officers lawfully stopped a car, smelled burnt marijuana, discovered marijuana in the passenger compartment of the car, and lawfully arrested the occupants. Thereafter, in the Robbins case, an officer found

two packages wrapped in green opaque paper in the recessed rear compartment of the car, opened them without a warrant and found 30 pounds of marijuana. In the Belton case, an officer found a jacket in the passenger compartment, unzipped the pocket without a warrant, and found a quantity of cocaine. Both cases required a technical analysis of several complicated doctrines: the "automobile exception" cases concerning the validity of warrantless searches of cars and their contents; the doctrine of "search incident to arrest" defined by Chimel v. California; and the watershed case of United States v. Chadwick, in which the Court held that police must obtain a warrant to open a closed container in an automobile when its possessor has exhibited a "reasonable expectation of privacy" in it. In the two cases of Belton and Robbins, three justices held both searches legal. Three justices held both illegal. And three justices controlled the ultimate decision that Robbins was illegal and Belton legal. Even after Robbins and Belton, however, the law governing police conduct in similar searches remained uncertain. Justice Brennan observed in his dissent in Belton: "The Court does not give the police any 'bright line' answers to these questions. More important, because the Court's new rule abandons the justifications underlying Chimel, it offers no guidance to the police officer seeking to work out these answers for himself." To the same end, Justice Rehnquist dissented in Robbins and cited Justice Harlan's 1971 concurring opinion in Coolidge v. New Hampshire: "State and federal law enforcement officers and prosecutorial authorities must find quite intolerable the present state of uncertainty, which extends even to such an every day question as the circumstances under which police may enter a man's property to arrest him and seize a vehicle believed to have been used during the commission of a crime." continued on page 114 JUly 1983!Arkansas Lawyer!113

路 .. Exclusionary Rule. __, continued from page 113 It is not surprising that less than one year after these decisions the Supreme Court asked both sides to address whether Robbins should be reconsidered. In its 1982 decision in United States v. Ross, the Court reconsidered the holding in Robbins and reversed itself.

To understand fully what confronts a police officer who attempts in good faith to comply with the fourth amendment, one need only consider these three cases.

The search that the Supreme Court held illegal in the Robbins case had been found to be legal by the California courts. The search that the Supreme Court held to be legal in the Belton case had been found illegal by the New York Court of Appeals. The searches that the Supreme Court held lawful in the Ross case had been held unlawful by the D.C. Circuit en bane. Of the fourteen judges that considered Robbins seven found the search lawful, seven found it unlawful, and the Supreme Court held it unlawful. In Belton although eight judges considered the search unlawful, fourteen judges and the Supreme Court found the search lawful. In Ross, fifteen judges found at least one of the two searches unlawful, thirteen found at least one of the searches lawful, and the Supreme Court held both searches lawful. In just these three cases, there were thirty votes that at least one of the searches was unlawful, but thirty-four that at least one of the searches was lawful. In spite of this judicial disagreement, the Supreme Court would today apparently hold all of these searches lawful. Is it really any wonder that police officers attempting to observe the strictest requirements of the fourth amendment may sometimes guess wrong. With so much uncertainty, however, should society punish a wrong guess by letting a criminal go free? The deterrent purpose of the exclusionary rule is not served when courts apply it to situations in which appellate cases are unclear, con114/Arkansas Lawyer/July 1983

fused, or even contradictory. Yet courts do apply it in those circumstances. And police are confronted with the question of whether to conduct a warrantless search in the field when the circumstances they are facing are not covered by existing case law. Supporters of the exclusionary rule argue, however, that the rule does not have any significantly adverse effects on the criminal justice system. They claim that it is infrequently invoked and even less frequently applied. Proponents of the rule often rely upon a 1979 study by the General Accounting Office. According to that report, evidence was actually suppressed at trial in only 1.3 percent of federal criminal cases, and only four-tenths of one percent of declined cases were declined because of fourth amendment problems. That study is, however, exceedingly weak support for the exclusionary rule's continuation. First, the 1.3 percent is a percentage not of cases that reached trial but of all cases brought into less than half of the U.S. Attorneys' offices. It does not account for those cases that law enforcement agencies never formally presented to U.S. Attorneys' offices because of fourth amendment problems. The 1.3 percent is not a percentage of cases brought to court or to trial-which would be a larger and more significant figure for assessing the impact of the exclusionary rule on the courts. Indeed, the GAO study itself notes that thirty-three percent of the defendants who went to trial filed fourth amendment suppression motions. It also notes that more than fifty-five percent of all motions filed by defendants involved the fourth amendment-an amount two and one-third times greater than the next most numerous type of motion. And a careful reading of the GAO Report indicates that-in the very large U.S. Attorneys' offices, for exampletwenty percent, not 1.3 percent, of the defendants who went to trial and had hearings on their suppression motions actually succeeded in having evidence suppressed.

The burden of the exclusionary rule is similarly great at the appellate level.

As Judge Malcolm Wilkey has noted about his own U.S. Court of Appeals for the District of Columbia: "In the ... years 1979-81 we wrote opinions in 95 criminal cases, in 21 of which, or 22.1%, the question of excluding the evidence because of an alleged illegal search and seizure required analysis and decision." Just as the exclusionary rule places a tremendous burden on our courts, it consumes many of our scarce prosecutorial resources. The size of that burden can be assessed by a recent survey we conducted of our U.S. Attorneys throughout the country. They reported that modification of the exclusionary rule was the legislative change that would be of most help to them. In fact, nearly sixty percent of the U.S. Attorneys listed modification of the exclusionary rule as their first or second priority. The 1.3 percent figure also fails to account for the effect of fourth amendment concerns on the more than eighty-five percent of cases disposed of through plea bargains or decisions to discontinue prosecution. Such concerns often lead to the disposal of cases prior to a verdict at trial. The figure of four-tenths of one percent concerning cases declined primarily because of fourth amendment problems is similarly misleading. The GAO admits that it considered only felony cases. Yet, it is a general policy not to decline to prosecute felony cases when fourth amendment problems are unclear, as they usually are. Last, the GAO study focuses only upon U.S. Attorneys' offices. The exclusionary rule has an ever greater impact upon the states because that is where the overwhelming number of criminal cases are handled. Indeed, the empirical studies of state criminal systems have apparently shown a much higher percentage of successful suppression motions than the GAO study found in the federal system. For example, in a 1971 study of three branches of the Chicago Circuit Court, thirty percent of the defendants charged with gambling, narcotics, or concealed weapons offenses successfully moved to suppress evidence of their crimes.

The courts are overburdened in their attempts to dispense justice, and the exclusionary rule is a major cause of that burden and the resulting slowness and uncertainty in the course of justice. This much is then clear. The exclusionary rule does result in the release of guilty criminals. The exclusionary rule consumes a tremendous amount of our scarce judicial and prosecutorial resources-and contributes to the public perception of inefficient and ineffective justice.

In addition, other mechanisms now exist to deter violations of the fourth amendment by law enforcement officers.

As Justice Rehnquist observed three years ago, changes in the law since the Supreme Court's extension of the exclusionary rule to the states in 1961 have made "redress more easily available by a defendant whose constitutional rights have been violated." As Rehnquist notes, the Supreme Court's decision in Monroe v. Pape "gave a private cause of action for redress of constitutional violations by state officials. The subsequent developments in this area have ... expanded the reach of that [private cause of action]. Monell v. New York City Dept. of Social Services ... made not only the individual police officer who may have committed the wrong, and who may have been impecunious, but also the municipal corporation which employed him, equally liable under many circumstances. Bivens v. Six Unknown Fed. Narcotics Agents ... made individual agents of the Federal Bureau of Narcotics suable for damages resulting from violations of Fourth Amendment guarant(!es. In addition, many States have set up courts of claims or other procedures so that an individual can as a matter of state law obtain redress for a wrongful violation of a constitutional right through the state mechanism."

The availability of other means of deterring police misconduct and the deficiencies of the exclusionary rule provide substantial support for the proposition that the rule should either be abolished or modified.

has the power to act in this way. As the Supreme Court itself stated in Wolf v. Colorado:

In order to promote needed change as soon as possible, the Administration has at this time proposed only modification of the exclusionary rule_

It is time for Congress at least to modify this rule and to bring a new degree of reason to the federal criminal justice system. We have been handicapped in the fight against crime for too long by the most stringent form of the exclusionary rule.

Although the modifications we seek would have a positive effect on our criminal justice system, they are not revolutionary. We have not proposed abolition of the exclusionary rule. Our proposal would govern only federal courts. The proposed legislation would eliminate the rule-and its absurd consequence of releasing the guilty-<mly in those circumstances in which the rule could not possibly have its intended deterrent effects. Our legislative proposal would create a reasonable good faith exception to the exclusionary rule and would allow the admission of evidence whenever an officer either obtains a warrant or conducts a search or seizure without a warrant but with a reasonable, good faith belief that he was acting in accordance with the fourth amendment.

As the Attorney General's Task Force on Violent Crime-<:haired by former Attorney General Griffin Bell and Governor Jim Thompson of Illinois-<:onciuded in 1981: "In general, evidence should not be excluded from a criminal proceeding if it has been obtained by an officer acting in the reasonable, good faith belief that it was in conformity to the Fourth Amendment to the Constitution ... If this rule can be established, it will restore the confidence of the public and of law enforcement officers in the integrity of criminal proceedings and the value of constitutional guarantees."

This modification would avoid the release of criminals when an officer commits at most a technical violation that he reasonably could not be expected to have avoided. The effect of the rule on our criminal justice system-and the pUblic's perception of that system-is so substantial that I cannot understand why any reasonable person would oppose our modification. It would retain the putative deterrent value of the rule-if any exists-but would allow a greater number of guilty individuals to be sent where they clearly belong-to jailwhen no deterrent value could be served. As a result of the 1980 decision of the Fifth Circuit in United States v. Williams, the approach we are suggesting is already the law in the Fifth and Eleventh Circuits. It is now time for Congress to make this reasonable modification applicable in all federal courts. Clearly, Congress

"The Federal Exclusionary Rule is not a command of the fourth amendment but is a judicially created rule of evidence which Congress might negate."

As Justice White once observed, the exclusionary rule is "a senseless obstacle to aiming at the truth in many criminal trials." It is time to eliminate at least the most clearly senseless features of the exclusionary rule. The time for reasonable change has not only arrived. It is also long overdue. The modifications in the exclusionary rule that I have advanced today are one part of a comprehensive effort by this Administration to redress imbalance that has arisen in recent decades between the forces of law and the forces of lawlessness. Crime is out of control in America. In the last decade alone, violent crime jumped nearly sixty percent. Last year, one out of every three households in this country was victimized by some form of crime. The proposals we have made-like modification of the exclusionary rule-would, when added together, greatly strengthen the ability of government to protect the law abiding-without impairing our Constitutional liberties. ' - -

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July 1983/Arkansas Lawyer/lIS

EXECUTIVE COUNCIL NOTES By Annabelle Clinton Secretary-Treasurer

\....

Minutes Of The Arkansas Bar Association House Of Delegates Mid-Year Meeting January 15, 1983 On Saturday, January 15, 1983, the Arkansas Bar Association's House of Delegates gathered for its mid-year meeting. President Jim Shaver, Jr., in his President's report, noted that the Legal Services Corporation funding will be continued at the present level. Future recommendations for LSC include paying private attorneys for civil indigent cases. Former Arkansas Supreme Court Justice John Fogleman told the House that a project to provide Minimum Standards for the Administration of Criminal Justice is nearing completion. Part of the effort is to conduct workshops which will be funded by the Arkansas Bar Foundation. President Shaver announced the appointment of Walter Niblock as Chairman for the annual meeting to be held in Hot Springs June 8-11, 1983. The seminar will feature six well known panelists who will present the "Anatomy of a Tort Trial". Melvin Belli has been invited to speak at the seminar. The next item presented to the House was an update on the Arkansas Plan of Specialization. Under the Plan of Specialization, the Arkansas Supreme Court is to appoint a Commission on Specialization. Col. Ransick, Executive Director for the Arkansas Bar Association, told the House that the commission would be appointed in the near future. On December 13, 1982, a petition was submitted to the Supreme Court by the Association regarding interest on lawyers trust accounts. The plan would permit interest on nominal trust funds held for a short period of time to be used "for legal aid to the indigent in civil cases, to provide student loans 116/Arkansas Lawyer/July 1983

and scholarships, to improve the administration of justice and for other purposes as approved by the Court from time to time:' The Supreme Court by per curiam order set a deadline of March 1, 1983 for the filing of amicus briefs. The House approved a proposal to pay for the preparation and filing of a brief in the Supreme Court on this matter. Mr. Herschel Friday then gave a report on items to be addressed by the American Bar Association's House of Delegates Meeting in New Orieans in early February. He noted that shortly after the upcoming meeting the Model Rules of Professional Conduct should be approved. Under standards for criminal justice there is a proposal that the insanity plea be changed to one of no responsibility. Federal legislation in the area of product liability law is being hotly debated. The American Bar Association has endorsed gun control measures. Mr. Frank C. Elcan, II, Chairman of the Young Lawyers Section to the House of Delegates, presented a pro bono plan for representation of the low-income elderly in Arkansas. The House unanimously voted to approve the proposed plan. Mr. Elcan reviewed the Disaster Relief Plan which was activated in December. The Young Lawyers Section of the Arkansas Bar Association has historically offered aid to Arkansas citizens in times of natural catastrophic events. Mr. Elcan reported that the volunteer young lawyers worked well with the agency in collecting information to assist flood victims. Fifteen non-fee generating cases have been referred to the Young Lawyers Committee. On March 25 and 26, 1983 in Hot

Springs the Young Lawyers Section will host an American Bar Association Young Lawyers Division Affiliate Outreach Program. A team of directors from the Young Lawyers Division in the ABA will attend the meeting to train young lawyers from Mississippi, Tennessee, Louisiana, Oklahoma, Texas and Arkansas in public service techniques. Another highlight will be a trial practice seminar session from 9:00 a.m. to noon on Saturday, March 26. Mr. Frank Mackey, Jr., Chairman of the Committee on Professional Ethics & Grievances, will report to the House of Delegates at its annual meeting in June on the establishment of a procedure to give advisory ethics opinions. The American Bar Association presently provides such advisory opinions. Mr. Charles Carpenter, Chairman of the Committee on Judicial Council Liaison, reported that his committee is currently working with judges to increase compensation for lawyers who are appointed to represent criminal indigents. A report on bar discipline was presented to the House by Mr. John Gill and Mr. Ralph Claar. The proposed rules and petition to the Arkansas Supreme Court will be submitted to the House of Delegates at the annual meeting in June. Some of the highlights of the proposed rules are: Elimination of vague distinctions in discipline, use of the Arkansas Rules of Civil Procedure and the Uniform Rules of Evidence at disciplinary hearings, hearings before a committee on bar discipline instead of before circuit and chancery jUdges (an attorney is still entitled to de novo appeal to the Arkansas Supreme Court), private hearings unless the attorney requests

a public hearing, publication of discipline results and notification to clients, courts and other appropriate agencies, and provisions concerning surrender of license, display of license, temporary suspension upon conviction of a serious crime, and inactive status for attorneys that are physically or functionally disabled. The House moved to oppose any encroachment by the FTC into the Arkansas Supreme Court's jurisdiction over the regulation of the practice of law. The House considered a proposed constitutional amendment to provide four-year terms for constitutional officers. After presentation by Mr. John Clayton, Mr. Jim Rhodes moved that the House of Delegates approve a resolution to support the concept of four-year terms. The motion was duly passed. After considerable debate, the House voted to keep in its legislative package a bill that would create divisions of juvenile courts and chancery courts and also to include the following proposed constitutional amendment: The General Assembly is hereby empowered to create and establish Juvenile Courts, to define the jurisdiction of Juvenile Courts, and to include within the Juvenile Courts those matters relating to bastardy and apprenticeship of minors over which jurisdiction Is now vested in the County Courts.

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This amendment shall not supersede any valid statutory provisions establishing procedures for adjudication, disposition and review of juvenile cases, and such existent procedures shall continue in full force and affect until superseded by legislation enacted pursuant to this amendment. In other Legislative matters the House voted to approve amendments to the Model Timeshare Act which have been suggested by the Attorney General's Office. The House was informed that the amendments primarily strengthened consumer protection. It also voted to adopt HB-30, a provision

that would allow a one-year period for refiling after non-suit in product liability or medical malpractice actions. The House voted to oppose the following bills: HB-108 which sets dower and curtesy interests of one-half instead of one-third; and HB-139 which increases from $15,000 to $40,000 the value of a probate estate which may be distributed without appointment of a personal representative. The House concluded its business with postponing consideration of resolutions concerning bankruptcy judges until its annual meeting in June. The meeting was then adjourned.

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ANATOMY OF THE TORT T "THE EXPERTS WILL BE I

85TH ANNUAL MEETING JUNE 8-11, 1983 ARLINGTON HOTEL HOT SPRINGS, ARKANSAS ARKANSAS BAR ASSOCIATION 118/Arkansas Lawyer/July 1983

IAL ARKANSAS" -WALTER R. NIBLOCK CHAIRMAN ANNUAL MEETING

"Our Annual Meeting promises to be the very best-professionallyand socially. Plan to be with us. " J. L. (Jim) Shaver, Jr. Association President

J. L. (JIM) SHAVER. JR.

July 1983/Arkansas Lawyer/119

AICLE NEWS by Claibourne W. Patty, Jr. Executive Director Arkansas Institute of Continuing Legal Education

BANKING LAW RETURNS TO THE CLE LINEUP "BANKING LAW IN THE 80's-A SEMINAR FOR LAWYERS AND BANKERS, was presented February 18, 1983, at the Excelsior Hotel in Little Rock. The program, jointly sponsored with the Banking Law Committee of the Arkansas Bar Association, was chaired by Chris Barrier of Little Rock, and was enthusiastically received by 150 lawyers and bankers in attendance. The following topics were presented by combinations of lawyers, lawyer-bankers, and bankers in small panels: structure in transition-branching, holding companies and acquisitions with John Selig, Esq. as panel leader with Barnett Grace and James H. Penick, III as panelists; product development, ARMs, investor accounts and future prospects with H. Hall McAdams III as panel leader and Thomas A. Prince and Bobby Shepherd as panelists; learning to live with bankruptcy with Isaac A. Scott as panel leader with Jim Guy Tucker and James E. Smith, Jr. as panelists; and interest rate regulation-Amendment 60 with Jim Guy Tucker and Pat Koch as panelists. The luncheon speaker, Dr. Robert L. Qualls, Executive VicePresident of Worthen Bank and Trust Company and former director of the Department of Finance and Administration under the first administration of Governor Bill Clinton, spoke on the topic "Peering into the Future." The Banking Law Committee was prompted to cosponsor this program due to the substantial changes which have occurred in the banking industry not only in the areas of regulation of interest rates but also by considerations of branching and holding company activities, new types of accounts and the upsurge of individual and corporate bankruptcies. The theme of this pro120/Arkansas Lawyer/July 1983

gram as it was two years ago was "Lawyersl Bring Your Banker-Clients! Bankers: Bring Your Lawyers-and Tell Them What You Need to Know!!" This admonition was obviously taken seriously since those in attendance were about equally divided between lawyers and bankers. It is contemplated that the Banking Law Committee will seriously consider making this an annual program in the future due to the enthusiastic response received. 200 ATIEND 1983 FEDERAL CIVIL PRACTICE SEMINAR The Second Federal Civil Practice Seminar, cosponsored with the Arkansas Federal Practice Committees of the Eastern and Western Districts of Arkansas was presented March 17, 1983, at the Excelsior Hotel, Little Rock. The program, cochaired by Bill Wilson of Little Rock and LeRoy Autrey of Texarkana, focused on a more indepth and technical discussion than the previous seminar on the following topics: pretrial conference, pretrial procedure, motion practice by a panel consisting of Hon, Franklin Waters, Hon, Henry Woods, Jerry L. Canfield, Esq. and H. David Blair, Esq.; attorneys' fees by a panel consisting of Hon. Richard S, Arnold, Hon. William R, Overton, Terry R. Kirkpatrick, Esq. and Philip E. Kaplan, Esq.; lawyers' concern with federal court procedures and system by William R. Wilson, Jr., Esq. and Dennis L. Shackleford, Esq. with the response by Hon. Jay Smith Henley and Han, G. Thomas Eisele. As was the case of last year's seminar the highlight of this occasion was the afternoon panel with all federal judges in attendance participating. Judges Oren Harris, Elsijane Roy and George Howard gave a four or five minute opening on their views of the state of practice in their courts, since they had

/ not been able to participate during the morning session, and then the floor was open for questions from the lawyer participants on all topics pertaining to federal civil practice in Arkansas. Since this program was as well received as the previous seminar it is expected that a similar type of program will be held early in 1984. YLS "Racetrack Special" REPEATS AT HOT SPRINGS By popular demand the Young Lawyers Section has cosponsored the Second Annual Spring Trial Practice Seminar with an expanded two onehalf day sessions. Ninety-one registrants attended this program on March 25-26, 1983, at the Ramada Inn, Hot Springs, Arkansas. Harry Truman Moore, program chairman, divided the program into two sessions: on Friday morning there was a presentation by the American Bar Association/Young Lawyers Division Affiliate Outreach Project Visitation Team which also included a panel discussion on "Projects That Have Worked" in ABA/YLD districts 16, 17,20 and 22; and Saturday was devoted to the topic of "Presenting effective Opening Statements" with Fred C. Cornish, Esq. of Tulsa, Oklahoma, appearing for the plaintiff and J, Patrick Cremin, Esq, of Tulsa, Oklahoma, appearing for the defendant. There was also a "bonus" presentation on witness preparation techniques. The program adjourned at noon each day so that the participants could adjourn to the Oaklawn Racetrack highlighted by a special race on Friday afternoon which was designated the "American Bar Association-Young Lawyers Division" Race with a special trophy presentation being made by representatives of the ABA/YLD through the Oaklawn Jockey Club to the winning trainer and owner.

RECORD ATIENDANCE AT SIXTH ANNUAL LABOR LAW INSTITUTE The 1983 Labor Law Institute, jointly sponsored with the Labor Law Section of the Arkansas Bar Association, the National Labor Relations Board, the Industrial Research and Extension Center of UALR, and the American Arbitration Association, was conducted March 25-26, 1983, at DeGray Lodge, Arkadelphia. This year's institute, like those held previously, was conducted on a workshop format which has proved to be so successful in the past. The 141 registrants were equally distributed among attorneys specializing in various areas of labor law, personnel managers, and business agents and officers of local labor unions. The program concentrated on such diverse topics as analysis of current issues on comparable worth; LMSA and reporting requirements; development of the affirmative action plan-analyzing the work force and establishing an information system; recent developments in the Eighth Circuit Court of Appeals on labor and employment discrimination law; analysis of current topics under the NLRA; practical arbitration; privacy in the work place-lie detectors, searches, access to confidential information, Anti-Retaliation Laws; access to affirmative action plans and information-discovery and disclosure and survey of recent developments in employment discrimination. With the exception of the first topic on the Eighth Circuit Court of Appeals presented by the Hon. Richard S. Arnold, the remaining topics were presented in the format of a workshop with one or two Presentations-in-Chief presided over by a moderator with a response by one or two practicing attorneys, followed by questions and comments from those in attendance. The overall purpose of this institute, as presented by its cosponsors, is to expose registrants to all sides of the issues developed in the workshops and to not merely present a "promanagement", "prounion" or "proclaimant" bias.

Office-A Team approach, Annual Tax Awareness Institute, the Federal Court Orientation program cosponsored with the Arkansas Women Lawyers Association will have already been presented and will be reported on in a later article.

the Camelot on September 16, 1983. Please mark your calendars and further details will be mailed to you.

A second satellite TV program will be cosponsored with the Practicing Law Institute on June 28th at Conway, Arkansas, ETV stUdios concerning the topic "Doing Business with Troubled Companies". This program is designed to advise legal practitioners, house counsel, credit managers and accountants about the problems and pitfalls of doing business with the corporate candidate for Chapter 11 or the Chapter 11 debtor and how to avoid those pitfalls to the extent possible. This program is not designed for the bankruptcy specialist, but rather for the trade creditor or advisor to the trade creditor with occasional contacts with the bankruptcy system. The general topics will include the following: structuring pre petition credit transactions: pros and cons of participating in attempted out of court restructuring; considerations in filing an involuntary bankruptcy petition; use of extraordinary remedies to recover prepetition debt after filing; protecting rights with respect to the executory contract; extending credit to the debtor in possession; should you serve on the creditors committee?; litigating with the trustee or debtor in possession after Marathon and a review of individual creditor's rights in Chapter 11.

Cover Story. ..

Also by popular demand we are bringing back Robert Wilkins, the original author of the handbook "Drafting Wills and Trusts-A System Approach" who will be in Little Rock at

. .......

"REVOLUTION 1" "In Revolution 1 it was my desire to express the energy and courage it took for men to begin a struggle for freedom that still rages on through out the world. I tried to communicate the idea that even though these great men gave us a system of government that allows us to do battle for our rights without bloodshed the desire for liberty is so deeply embedded in the American character that if government tried to restrict our freedom there would be a Revolution 2." -Artist Lawrence Burchard

The art work is a watercolor/triptych from West '79/The Law-an exhibition of contemporary art reflecting aspects of law, sponsored by West PUblishing Company in cooperation with the Minnesota Museum of Art. We are indebted to the author and West Publishing Company for permission to use "Revolution 1" on the cover of the 1983 July issue of The Arkansas Lawyer. Artist Burchard lives in Los Angeles. He has received numerous art awards and has participated in many "one person" and "group" shows. ' "

HANDWRITING EXPERT Scientific examination of Handwritten, Typewritten, Printed, Altered, Obliterated. Charred and Office Copier Documents; Ink and Paper Analysis, Dating and other document related problems. Diplomate of the American Board of Forensic Document Examiners. Inc. Member of

the American Society of Questioned Document Examiners and the American Academy of Forensic Sciences.

ROBERT G. FOLEY, M.S. PROGRAMS IN PROGRESS By the time you receive this issue of The Arkansas Lawyer the programs on the topics of Automating the Law

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Qualified and Experienced Expert Witness in Federal, State, Municipal and Military Courts.

July 1983/Arkansas Lawyer/121

Second Injury Law,

OLD AND NEW Part 11/

SECOND INJURY LAW YET TO COME by W. W. Bassett, Jr.

(Editor's Note: This article is the final of the three-part series on Second Injury Law taken from the keynote speech by W. W. Bassett, Jr. of Fayetteville, during the 1982 Worker's Compensation Institute. Part I and Part /I appeared in the January 1983 and April 1983 issues of The Arkansas Lawyer, respectively.) This brings us then to the third and final phase of Second Injury Law, that being the Second Injury Law Yet To Come. I have characterized this part of the talk as the Second Injury Law Yet To Come because very few cases interpreting the 1979 or 1981 Amendment have yet reached the administrative process much less the Court of Appeals or Supreme Court. As we all know, the Legislature first enacted Act 253 of 1979 which applies only to all cases between January 1st, 1981 and March 1st, 1981. It appears to me that the language in the amendments reveal their avowed purpose. The first paragraph is introductory in nature only but gives us insight into the probable legislative intent of the framers of the Act. The significance of this Section is that it makes it clear that the purpose of the Fund is to protect not only the claimant but the employer as well. The Act specifically states the employee is to be fully protected with the fund paying the difference between the employer's liability and the balance of disability or impairment which results from all disabilities combined. The Statute points out that the worker is to be fully protected. 122/Arkansas Lawyer/July 1983

Another important factor about the introductory paragraph is that for the first time, there is a distinction between the words of art "disability" and "impairment". In the past, when the word "disability" was used by the Commission, the Courts or for that matter the Legislature, there always arose some confusion as to whether their use of this word was "all disabilities and conditions" or whether the declarant was really referring to "impairment" only. By use of the word "disability" or "impairment" throughout the entire text of the new law, the Framers of the Act seem to emphasize that the concepts of "disability" and "impairment" are separate and distinct and should be treated as such. You should also particularly note that latent conditions, not known to the employee or employer may not be considered previous disabilities or impairments which will trigger or give rise to a claim against the Fund. Now, keep in mind that the 1979 Act was in effect for approximately 60 days. Most probably, there were several hundred injuries occurring during this period of time and perhaps only a few will ultimately involve the application of the Second Injury Fund. In my opinion, the 1981 Act was an attempt by the Legislature to clear up some of the ambiguities that were raised between when the 1979 Act was first written and when it was to go into effect. The actual new, sweeping, revolutionary legislation was contained in the 1979 Act. All the 1981 Act did was merely "track" the 1979 Act with only minimal changes but, these changes were indeed significant. We

have already mentioned one such significant change and that is the use of the words "impairment" after the word disability. The significance of adding the word "impairment" is that this addition clearly limits the liability of a second employer to merely the impairment (not disability) as a result of the second injury. Let's say our Pal Harry had an injury in 1971 and received a 10% functional assessment and then had a second or subsequent injury in 1981 for which he received an additional permanent disability of 10%. Very simply, Harry's 1971 injury is added to his 1981 injury and he is determined to have a combined disability. However, the combination of these two disabilities (and after all this is the underlying reason for the Second Injury Concept at all) is in excess of what the functional or anatomical disability would be. Very simply, 10 and 10 equal 20 from an "impairment" or anatomical standpoint but 10 and 10 do not equal 20 from a "Disability" or a loss of earning capacity standpoint. Harry's permanent disability (not impairment now) could be, say, 80% to the body when loss of earning capacity is considered. Under the new Law, the employer at the time of the second injury pays only for the "anatomical impairment" as a result of that injury and the second injury fund pays for any increase in "disability". Under the 1979 Act, it was indeed unclear as to how much disability the second employer was obligated to pay. Again, the effect of the 1981 Amendment is substantial. Now I should add that under the old Law, Harry's claim was

governed by Sec. 81-1313(f){1) and since the new 1979 and 1981 Amendments to the Act seemingly did not repeal the existing case law which had developed under the old Law, but only supplemented the existing case law, there may be a conflict between the provisions of (1)(1), the old Law, and (i), the new Law. For what it's worth, I am proceeding on the premise that the new Law is applicable to (as the Statute seems to say) all cases of permanent disability or impairment when there has been previous disability or impairment. However, there are those who feel that new Section (i) applies only to scheduled cases or really that it is nothing more than an attempt to rewrite the old Section (f){ili). Like I said, I don't agree with that theory but there are those I respect who do so. Who knows at this time what will happen? I don't. If you remember "old" (f){1) applies to employees who receive a permanent injury after having previously sustained another permanent injury in the employ of the same employer. Friend Harry fits under old (f){1), but also fits under new (i). Old (f){1) indicates that Harry was to be paid for his healing period and permanent DISABILITY by extending the period and not by increasing the weekly amount. Harry then under old (f){1) would be paid only for the additional permanent DISABILITY and no additional money from The Second Injury Fund. Remember, he received a 10% functional or anatomical impairment as a result of a 1981 injury but he has an ultimate, overall disability of, let's say, 80%. Does Harry then receive only 10% from his employer for his functional or anatomical disability resulting from the 1981 injury per the new Law, (i), or does he receive the 80% figure which is his ultimate disability under the old Law (f){1)? Well, I don't know but I think that there may very well be a conflict at least as far as the Fund is concerned because quite frankly (f){1) was never repealed and there appears to be a conflict between this "old" Section and the "new" Section. Are there other conflicts other than this? I think so, and let's see what you think. What happens say if Harry's injuries as a result of the 1971 accident and the 1981 accident render him permanently and totally disabled even though each injury resulted in only 10% permanent impairment. That is, a 10% functional impairment in 1971

plus a 10% functional impairment in 1981 which of course combined totals 20%, but with proof of wage loss, Harry is permanently and totally disabled-(there's that word again!)and will never under the new Law (i) be gainfully employed. We know that the employer pays the 10% functional impairment and The Second Injury Fund pays the balance. The problem is what balance does the Second Injury Fund pay. The latest injury comes under the new Law and if he were injured on today's date, he would be entitled to a compensation rate of $154.00 per week. Harry comes within 81-1310(B) as a permanent and total disability claimant. This Section provides that maximum benefits shall be $154.00 for 450 weeks or $69,300.00. Thus, would Harry be limited in his award to only $69,300.00 or may he invade the disability bank fund after the $69,300.00 is paid to him? I don't know. The same 81-1310(b) provides that the maximum limitations of time and money do not apply in cases of permanent and total disability. Harry is permanently and totally disabled. I don't think that he has a $69,300.00 cap or a 450 week cap, although of course he does have a $154.00 per week maximum allowance. Under the new Amendments to the Act 811310(C){1){2), we again find an exception for the maximum amounts involved for claimants who receive permanent and total disability awards. The new maximum limitation is now $75,000.00 as opposed to the old maximum limitation of $50,000.00. The statute reads the first $75,000.00 of weekly benefits for death or permanent total disability shall be paid by "THE EMPLOYER OR HIS INSURANCE CARRIER...". After the payment of this $75,000.00, the Death and Permanent Total Disability Bank Fund "kicks" in and continues to pay the claimant for an indefinite period. However, my question is this: If there is a $75,000.00 cap to be paid by the employer or his insurance carrier, does this likewise apply to payments by The Second Injury Fund? Again, let's look at Harry's case. Harry of course in our example is permanently and totally disabled. He is drawing $154.00 a week and will for as long as he lives. The liability of the employer is not an issue. They merely pay the 10% functional impairment or 45 weeks at $154.00 and have no further financial obligation to the claimant. The employer then pays $6,830.00

($154.00 x 45 weeks = $6,830.00). Harry has $68,170.00 or 442.66 weeks ($68,170.00 divided by $154.00 = 442.66 weeks) before he maximizes his $75,000.00 lid. Now, if you add the number of weeks the employer pays to what the fund pays in round figures, you have 487 weeks before the claimant is paid the $75,000.00 cap. This sounds like a long time but if we assume that Harry was only 30 years old at the time of his last injury, then in a little over 9 years, he will be paid $75,000.00. Now, the significance of these figures comes to life when we try to figure out whether the Commission and the Courts will treat this situation as one of permanent and total disability or (as in Greer) one of disability "other than permanent and total". Obviously, if the case is treated as a disability "other than permanent and total" in Harry's case, old Harry will be limited to $69,300.00. If not, and he receives disability for as long as he lives from first his employer (remember 10%), The Second Injury Fund (the lid of $69,300.00) and thereafter from the Death and Permanent Disability Bank Fund for life or as long as he is totally and permanently disabled. We have a substantial difference in the amount that a particular claimant will be entitled to receive. I submit we are talking about serious money and that all of these points will be litigated and re-Iitigated. Please observe that for some reason, oversight or maybe on purpose, the Legislature did not change the $50,000.00 figure in Section 1 to reflect the increased lid of $75,000.00. When you are talking about substantive legislation, $25,000.00 makes one heck of a difference. The bottom line is that the creativity and room for change in the Statute is going to come and must come from the claimant's Bar plus whomever will be representing The Second Injury Fund. The employer and his insurance carrier basically won't care. The employer and the carrier will pay only the anatomical impairment that results from the second injury and go hence leaving the claimant to make his own way through life with the help of the Fund(s), so every1hing eise is going to have to be figured out by somebody other than the employer. I don't suggest the employer won't care because in most cases, he will. Still I submit it will largely be the burden of others to test and probe the meaning of the new law. . d on page 124 continue July 1983/Arkansas Lawyer/123

Second Injury Law..., continued from page 123 In summing up, you should carefully note that the first and primary difference between the 1979 Law and the 1981 Law is that under the former the employer pays for wage loss and under the latter he pays only for the functional impairment. The rule of law and the importance of the change is that for those cases arising after March 1st, 1981, the employer pays no more than the anatomical impairment resulting from the injury. If the claimant is to get any more dough, he must look somewhere other than to his employer. Reduced to the basics, the new 1981 Law does two things. First, it limits the liability of the employer to only that degree or percentage of anatomical impairment resulting from the injury which occurred in the employer's employment and, second, after the last employer's liability is determined, the Commission then determines the degree or percentage of the employee's disability attributable to all injuries or conditions which existed at the time of the last injury and then that degree or percentage which did exist before the last injury is added to the disability or impairment resulting from the combined disability and compensation for whatever that balance adds up to is paid by The Second Injury Fund. The new amendments also spawn additional questions, some of which are known, and others which are totally unforeseeable at the present time. For instance, Sec. 81-1347 of the Act, a brand new provision, itself contains enough legal fodder to boggle the mind as far as inducing future litigation. Ark. Stat. Ann. 81-1347 is entirely new legislation and is divided into two separate provisions. It provides that if at any time before July 1st, 1983, the balance in The Second Injury Fund is insufficient to fully compensate an injured worker such as Greer or Chrobak, then, quite simply, don't worry about it. The legal responsibility to pay "reverts" to that of "the employer in whose employ the employee sustained the injury which established the liability of The Second Injury Fund". As an example, in Greer's case it would be the Chicago Mill & Lumber Company and in Chrobak's case, the Harrison Furniture Company. Wait a minute Mr. Employer says, you 124/Arkansas Lawyer/July 1983

haven't given me anything here and you have in fact saddled me with contingent liability to pay for permanent and total disability despite what the new Law says. Not so says the Legislature because this "contingent liability or reverter responsibility" extends only to July 1, 1983. The final provision in Section 81-1347 is quite clear that in no event shall there be any responsibility on the part of the employer past July 1, 1983. If the responsibility for this contingent liability of the employer ends on July 1, 1983, who then will be responsible after July 1, 1983 if the Fund isn't solvent? Simple, the Legislature has said by providing that in the event of fund insolvency, any payment due a claimant will be "suspended until such time as The Second Injury Fund is capable of meeting its obligations". Let's pray that doesn't happen but I, for one, fear it. It doesn't take much intelligence to comprehend that if the legislature fails to adequately finance The Second Injury Fund, or if through decisions of the administrative process reinforced by the courts, The Second Injury Fund is substantially invaded, that serious problems for injured workers in Arkansas lie ahead. I am reliably informed by a representative of the Attorney General's Office who represents The Second Injury Fund that there are many, many cases that they are having to defend and that in fact by the middle of March of 1982, they had 82 cases and I submit "they ain't seen nothing yet!" How is the Second Injury Fund joined as a party? The Commission adopted Rule 24 on March 1st, 1982, to deal with the procedural steps to follow to add the Fund as a party and I urge you to carefully review this Rule. The new Law provides that any party desiring to bring in the Fund shall name the State Treasurer (the Custodian of the Fund) as a party respondent by notifying The Second Injury Fund Administrator as well as the Attorney General and all other interesting parties no later than 20 days before the date of the first hearing on the merits. The notice should be in writing by certified or registered mail. If any question remains as to who should actually notify The Second Injury Fund Administrator, et ai, I personally think that the far better procedure is to simply request the Administrative Law Judge in writing to notify The Second Injury Fund, and direct and order that it be joined in the claim as a third-party or co-re-

spondent. The function of the Law Judge in this situation is somewhat similar to civil proceedings in Circuit Court when the Judge grants a motion and signs an order allowing a thirdparty cross-complaint against a 3rd party who is or may be liable in part or in whole to the plaintiff (claimant) for his cause of action or claim. This section also provides that if The Second Injury Fund is not given timely notice and there is adjournment or postponement of a hearing, the party at fault may be required to bear costs and attorney fees. I suggest that if this occurs, the party may also very well invoke the wrath of the Administrative Law Judge as well as all opposing counsel and parties and that this may actually be the "real cost" of failing to give notice. The Commission and its Judges may well be found to have substantial discretion as to whether in a given case the hearing should be postponed or whether the party or parties have waived their right to have the Fund joined as a co-respondent by failing to give timely notice. Obviously, it remains to be seen if a party can actually waive the joining or application of the Fund. Frankly, I see no real reason why a reviewing court in the proper case would not find that there has been waiver, when with the exercise of due care and diligence, the party could have given timely notice and had the fund joined, but failed to do so. Once again, let me remind you that what I have to say today consists of the thoughts, ideas, impressions and what-have-you of many persons directly involved, one way or the other, with Workers Compensation Laws and Cases in Arkansas. Our opinions may be right; they may be wrong. Time will tell. But that really isn't important, at least to me. My sale purpose in agreeing to talk was to throw out some ideas, which might in turn, persuade you to read the New Law yourself and arrive at your own independent opinions. If this talk has helped do that, then perhaps it was worth it. EPILOGUE This article was originally prepared as a speech for the 1982 Workers' Compensation Institute of the Arkansas Bar Association. SUbsequently, it was substantially revised and edited prior to publication. SUbsequent to that time, and at this writing, the author is unaware of any appellate decisions in either the Court

of Appeals or the Supreme Court involving significant Second Injury Fund issues. However, there have been several opinions of Law Judges and the Full Commission which are worthy of note. They are: (1) Robert Stiers V. J. C. Penney Company, Second Injury Fund Et AI, WCC Nos. 0009335 and 0113513. This was a decision by Law Judge Tolley of the Springdale Division of the Commission. Primarily the issue is whether the Law Judge erred in allowing wage loss disability for a scheduled injury in a Second Injury Fund case which involved a prior injury to the body as a whole and secondarily, whether the Fund was properly made a party to the proceedings pursuant to Rule 24 of the Rules of the Commission. At this writing, this case is on appeal to the Full Commission; (2) Henry E. Isbell V. Arkansas Highway & Transportation Dept., Et AI, WCC No. 0100836. This case involves an opinion by Law Judge Greenbaum who held that the burden of joining the Second Injury Fund was on the employer. This case, too, is presently on appeal to the Full Commission; (3) Harry Scott V. Arkansas Transit Company, Et AI, WCC No. 0105281. This case was decided by Law Judge Tolley. The Judge held that the claimant and the insurance carrier had the right to joint petition a claim pursuant to Sec. 19(1) of the Act and at the same time reserve the claimant's right to proceed against the Second Injury Fund at a later or subsequent date. Likewise, the case involves substantive provisions of Ark. Stats. Ann. 81-1313(i) (Act 290 of 1981) pertaining to the amount of liability attributable to the Fund in that particular factual situation. This case is presently on appeal to the Full Commission and will probably go beyond that; (4) Bill Crace V. Dillard's Department Stores, Inc., Et AI, WCC No. 0105609. This isadecis ion of the Full Commission which was not appealed to the Arkansas Court of Appeals. In this case, the Commission held that the pre-existing disability

giving rise to Second Injury Fund liability must have been a "disability in the compensation sense" prior to the last injury; (5) Danny Stalnaker V. Window Installers Service, Inc., Et AI, WCC No. 0103961. This is also a decision of the Full Commission which is final since it was not appealed to the Arkansas Court of Appeals. The Commission held that the Second Injury Fund was not responsible for vocational rehabilitation.

Practitioners are urged to make their own independent investigation and evaluation of these decisions and others which may be of record by the time this epilogue is published. Again, the author gratefully acknowledges the help and assistance of the Members of the Commission, its Law Judges, David S. Mitchell of the Attorney General's Office, and Zan Davis of the Whetstone Firm without whose help, this Epilogue could not have been prepared. ' "

Continuing Legal Education JUNE

OCTOBER

8-11th

13-14th

85th Annual Meeting "Anatomy of a Tort Trial" - Arlington Hotel, Hot Springs

Practice Skills Seminar - Sponsored by Young Lawyers Section and AICLE, Little Rock

28th

13-14th

"Doing Business with Troubled by Com pan ies" - Sponsored AICLE and ABA, Little Rock

Agriculture Law Seminar Sponsored by the U of A Fayetteville Law School

AUGUST 26th Health Law Seminar - Sponsored by Health Law Committee and AICLE, Little Rock

DECEMBER I-2nd 22nd Annual Federal Tax Institute - Sponsored by ASCPA and AICLE, Little Rock

SEPTEMBER 8-9th Fall Legal Institute - Sponsored by ABA and AICLE, Fayetteville Hilton, Fayetteville

16th "Drafting Wills and Trusts - A Systems Approach" - Sponsored by AICLE and ABA, Little Rock

July 1983/Arkansas Lawyer/125

LEGAL ECONOMICS By: Kline D. Strong CPA, JD, PhD

The First Mistake Most Lawyers Make Looking For Computers The first mistake is to go looking for computers! Sound silly... or redundant? Sure it is but that's still the first mistake and it breeds shock waves of secondary mistakes as you will qUickly see. It's as much a mistake to look first for a computer as it would be for a farmer to go looking first at cars when what he really needs is a pickup. Need is the first consideration and, indeed, the computer itself is-for reasons to be listed-<lne of the last priorities. Why buy a barrel stave to swat a fly or a power mop to clean ash trays! If need is first and the computer last, then what is second, third, and so forth? Software is second... and third ... and everything in between, because software puts the enginethe computer in this analogy-into gear and on the right course at the right speed. Software-not hardware-satisfies need and this, then, is the total solution.

Why Hardware is Not First Although hardware technology can still be improved and further miniturized and sped up, the functions performable on 'good' hardware are now so adequate and satisfactory that these aspects of choice are virtually worry-free. That's not to say that a 'lemon' cannot be encountered nor that sensible configuration rules, such as having a 10-key pad if the computer is to be used for data processing, can lightly be disregarded-<lnly that most present vendors with good track records for reliable equipment and service can usually provide these physical requirements rather faultlessly. 126/Arkansas Lawyer/July 1983

The Elements of Determining Needs In a big firm, this determination of need can get 'real hairy' because the interacting variables to consider are an exponential function of the number of bodies around, to say nothing of egos, staff problems and potential personality conflicts. Thus, if the complexity of decision making for one lawyer is 1, the complexity for two lawyers is 4... for three, 9... and so forth. But for twenty-five lawyers, the complexity factor is 625! Incidentally, that is why large firms still use consultants-informal 'referees' in many cases-and RFP's, an abbreviation which literally stands for "Request for Proposal" but really means "here are our numerous needs, give us a proposal to solve our problems." So, unless the smaller firm really wants to hire a consultant at $50-100 per hour or wants to fill out a fullblown, large-firm RFP to obtain bids from 3 or 4 competing vendors-either or both of which may be highly desirable-it must look for quick and accurate ways which are already developed to assess need. Happily, need for smaller law firms has exhaustively been investigated and sensible parameters have been established, of which the following abbreviated list contains the most essential and typical of the concerns to be considered. 1. Word or Data Processing... or Both. Microcomputers (herein sometimes 'micros') can be run as word processors during business hours while-literally at the swapping of a

floppy disk-they can be run as data processors after hours... or during hours for that mailer. Again, the hardware is usually not the problem-though as the definitive research checklist shows, some hardware is less flexible than other hardware-the real problem is the software. And with respect to software, the usual problem is not the word processing program but the data processing program. 2. Full Screen, Window or Blind Manipulation. The first rule is, 'if it ain't broke, don't. fix it.' In other words, don't throwaway anything that works, not even 'blind' word processorsi.e. mag cards, without windows or screens-if they can continue to pump out 'boilerplate-type' documentation which does not require significant editing or manipulation. The second rule is, 'if text manipulation of any significant kind or extent is necessary-<lr if any data processing is involved' -get at least a standard 24 line by 80 column screen. Anything less will be disappointing and anything larger may be profligate. Again, your need is all that counts, not what the vendor has to sell. 3. Capacity of Internal and External Memory. This is usually the crucial factor. For any adequate word processing manipulation, 64 Kbytes--64,000 lellers, numbers, etc.-<>f internal or 'resident' memory is essential. However, this does not usually present a problem.

The critical problem involves external memory, i.e. floppy disk or archive memory, which, for efficient processing purposes must be 'on line' while the program is running. For word processing purposes, this is, again, usually available with few problems, but for data processing, it is frequently the Archilies heel! So what are the expected needs of various sizes of law offices for 'on-line' external storage of data? Table I is a quick overview for a fUlly-integrated data processing program-one that handles both 'time/account/billing' functions as well as the regular accounting books of the office including financial statements, aging of accounts

receivable and lawyer productivity reports. And why are these measurements critical? Because very few 5" floppy disk drives can handle the data needs of a fUlly-integrated data processing program without excessive and very inefficient 'disk swapping.' Furthermore, even many 8" floppy drive systems handle such data processing requirements badly because either (1) the disks each have low capacity (e.g. neither double sided nor double density) or (2) there are not enough disk drives available where data can be accessed as needed simultaneously. So, to illustrate, if a 3-lawyer office expecting to grow to 5 or 7 in

the next few years were to choose a barely adequate system now, it would assuredly regret that choice shortly as either clients or timekeepers increased in number or service demands. Because of space limitations, the third element of the trilogy of 'Need, Software & Hardware' will be discussed in the next issue. Entitled "Software, the Solution to Lawyers' Needs", this last element is crucial. Meanwhile, readers who want references to ABA Economics Section monographs or other sources of relevant help from which extracts have been summarized above may write to the author at 1039 Vista View Drive, Salt Lake City, Utah 84108. Please enclose a stamped and self-addressed envelope.

TABLE 1: DATA PROCESSING DISK STORAGE REQUIREMENTS BY SIZE OF LAW OFFICE Based upon the following presumed averages: (1) 100 active clients per lawyer; (2) 2 active legal matters per client; (3) 45 days of unbilled data--<:alled work in process or W/P; (4) 50 bills mailed per month, and (5) 3-month collection cycle. (All data shown in Kbytes.) Realistic Needs per size of law office Irreducible 5 ace-Programs Kb es

Solo

2-5

6-10

11-15

16-20

21-25

language, forms, backup and other utililies

100-125

Applications program for "lime/accounting billing" only I. 'Program' requirements

135-200 235-325 325

325

350

40 300

600-1500

1800-3000

3300-4500

4800-6000

6300-7500

Totals of I & II Complete Accounting-Data General ledger, financial statements, management reports and journals

625

925-1825

2125-3325

3625-4825

5150-6350

6650-7850

100

125

150

Space requirements for total package

725

1025-1925

2225-3425

3750-4950

5275-6475

6800-8000

Micro operating system including routines for

Time/Accounting and Billing-Data Timekeeper, client and maner TIme records, advances for clients -unbilled I.e. W P

Billings mailed but unpaidso-called 'accounts receivable' Practice specialties, standard rates, billing phrases and other utility functions and reports

II. Total per timekeeper

115 68 77

July 1983/Arkansas Lawyer/127

office

Methods And Means By: Bernard Sternin

A Method For Overlap Search This article will describe an indexing system that will help you to search for and locate many items qUickly and easily. I developed it initially to help locate anyone of the several hundred prerecorded letters and legal documents we had stored for our automatic typing equipment. But in time we extended it to take in other jobs, such as the storing of names and phone numbers in office directories, for storing and rapidly finding file records of pending cases, and for locating items of legal research. The system uses standard sheets of 8V2 by 11 inch paper stored in a three ring, fourteen inch binder. Because the fourteen inch binder is three inches longer than the eleven inch paper, you can punch each sheet of paper 1/3rd of an inch higher than the sheet that comes before it. When you store the sheets punched this way in a fourteen inch three ring binder the bottom of each sheet protrudes 1/3rd of an inch below the sheet that's on top of it. This overlap provides an area in which you can write or type a one or two line descriptive title of what is on the sheet. You will then be able to scan these titles very rapidly, see what you are looking for and zero in on the page you want in just a few seconds. You will see each title in the context of what comes before it and after it, and that itself is also very helpful in locating what you want. When you spot the title you think you are after, you can turn the sheets that are on top of the sheet you have found and examine the document in full. The approach we are describing here is sometimes cal128/Arkansas Lawyer/July 1983

led "shingling" by peopie in the printing trades, and that is a good descriptive name for it. The three inch difference between the eleven inch paper length and the fourteen inch height of the ring binder will enable you to overlap ten sheets of paper without anything sticking out of the binder. After you have put ten consecutive sheets into the binder you then add a 14 inch tab divider, and begin another bank of ten sheets. The system can be numbered very easily based on numbers group by tens. Each tab divider indexes ten sheets. The first tab divider is numbered 00. The ten sheets that follow it are numbered 00 to 09. The next tab divider is numbered 10. The ten sheets that follow it are numbered 10 to 19. The next tab divider is numbered 20. The ten sheets that follow it are numbered 20 to 29, and so on. In some geographic areas you may have difficulty getting a three ring binder in fourteen inch legal size from your local stationer. You can order one from Circle West Corp., Post Office Box 186, Elmont, New York 11003. Write to them for a brochure. in order to punch the holes correctly and accurately you should use a standard three hole punch. A standard three hole punch punches holes that are four and a quarter inch apart, measured from the center of each hole to the center of the next. However, you can use a single hole punch if you aim carefully. The pattern to follow is shown on the accompanying page. You punch the number 0 at both places it appears for any sheet that's to be numbered

00,10,20, etc. You punch the number 1 at both places it appears for any sheet that is to be numbered 01, 11, 21. You punch the number 2 at the three places it appears for any sheet that is to be numbered 02, 12, 22, etc. The final number of a two digit number indicates what printed numeral is to be punched out. The distance between the top edge of the sheet and the center of the first hole is 5/16th of an inch. The distance between each number and the next number is 1/3rd of an inch. You can either type your materials directly onto the body of the sheets, as we did with the prerecorded letters and legal instruments we used with our word processing equipment, or you can glue any items you want onto the sheets, as we did with some of the cases we took out of the advance sheets or photocopied from bound volumes. If you would like to have several samples of these sheets to use as a pattern send a self-addressed envelope stamped with postage for two ounces and marked with the title of this article to Bernard Sternin, Desk 70A, 5 Hawke Lane, Rockville Centre, New York 11570. This method of indexing stored materials can become an important part of a word processing system using automatic typing equipment. If you are now using any of these machines and want to have further relevant materials included, indicate what equipment you have. 8

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July 1983/Arkansas Lawyer/129

The Tax Equity And Fiscal Responsibility Act Of 1982

Part II By Joseph M. Erwin and Paul J. Nicholson (Editor's Note: Part I of this article appeared in the April 1983 issue of The Arkansas Lawyer. This series is presented on behalf of/he Taxation, Trust and Estate Planning Section of the Arkansas Bar Association.)

The Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA" or "the '82 Act") was signed by President Reagan on September 3, 1982. It made changes in a large number of areas of the tax laws (only a few of which are discussed here) and is supposed to raise the largest amount of revenue ever raised by any single Congressional Act. Many of the provisions of the Internal Revenue Code of 1954 ("Code") which were affected by TEFRA were only recently added or modified by the Economic Recovery Tax Act of 1981 ("ERTA" or "the '81 Act"). This is the second of two articles describing the changes wrought by TEFRA. DEPRECIATION The '81 Act changed the tax treatment of depreciation drastically. The old ADR and useful life methods were replaced with cost recovery schedules ("ACRS") which incorporate the 150 percent declining balance method with a switch to the straight line method. This schedule was to accelerate in 1985 and 1986 to 175 percent and 200 percent declining balance methods, respectively.' These 1985 and 1986 accelerations were repealed by TEFRA.' 130/Arkansas Lawyer/July 1983

LEASING Under the '81 Act, qualifying transactions were treated as leases for Federaltax purposes allowing the nominal lessor to be treated as the owner. These safe-harbor rules allowed the transfer of the tax benefits of depreciation and investment credit without haVing to meet the more stringent requirements established by case law and IRS rulings.' The safe harbor provisions are still in effect but they have been modified by TEFRA for property placed in service or leases entered into after July 1, 1982,'" and repealed in their entirety for property placed in service after 1983.' The areas of change include term of the lease, interest rates, use of different ACRS schedules, limitations on the amount of property under a safe harbor lease by one lessee and limitations on reductions in the lessor's tax liability.' After the safe-harbor leasing provisions expire December 31, 1983, a relatively new statutory creature arises, the "finance lease.'" A "finance lease" is a non-safe-harbor lease that would be a lease within the meaning of Rev. Proc. 75-21, 1975-1C.B.715 (which, along with case law continues to govern leasing transactions generally') except for the fact that there is a purchase option or that the leased property was of "limited use" (a disqualifying faclor for non-safe-harbor leases).' The property subject to a finance lease must be new §38 property; the transaction must have economic substance independent of tax benefits; the ITC must be spread out over 5 years (for property placed in service before October 1, 1985); the lessor

can't reduce his tax liability by more than 50% (for property placed in service before October 1, 1985, in tax years beginning on that date or thereafter); carrybacks and carryforwards are like those of safe-harbor leases; only 40% of the lessee's qualified base property in any calendar year may be under a finance lease; in computing percentage depletion, the lessee must compute it as if it owned the property using the regular ACRS deductions in effect at the lime of the lease agreement; and the finance lease rules don't apply to transactions between related parties.' An exception to the effective date for finance leases of particular importance in Arkansas applies to new §38 property for farming purposes. Property placed into service after July 1, 1982, may qualify for finance lease treatment if the cost basis of the leased property when added to the cost basis of all other farm property subject to a finance lease entered into in that calendar year does not exceed $150,000.'· TAX CREDITS TEFRA reduces part of the benefit of tax credits in that the basis of assets must be reduced by 50 percent of the amount of regular, energy, and certified historic structure investment tax credits." A taxpayer can elect in lieu of the reduction in basis, however, a 2-percentage point reduction in the credit on a property by property basis." This applies, generally, to property placed in service after December 31, 1982." Also, the investment tax credit may only reduce 85% of the income tax liability (instead of 90%) in excess of

$25,000. This is effective for tax years beginning after December 31, 1982." Finally, the targeted jobs credit, giving a credit for a percentage of wages paid to certain employees, is extended to 1984.' s EMPLOYMENT TAXES The IRS has perennially argued with taxpayers about whether certain individuals are employees or independent contractor, two categories of statutory" non-employees" are created by TEFRA. Licensed real estate agents and direct sellers are treated as independent contractors after 1982 if substantially all the remuneration is related to personal services such as sales and such services are performed pursuant to a written contract which states that they will not be treated as employees for Federal employment tax purposes. '6 The wage base for the Federal Unemployment Tax Act (FUTA) is increased to $7,000 and the rate is increased to 3.5% but wages paid to certain alien farm-workers are excluded from FUTA taxes until 1984." There are also revisions in the administration of the unemployment tax system. Perhaps the only welcome provision of the '82 Act for individuals subject to FICA is the inclusion of most Federal employees under the hospital insurance portion of the FICA tax. This makes such employees eligible for Medicare Part A." CONSTRUCTION INDUSTRY PROVISION Certain provisions of TEFRA address perceived abaises of tax accounting procedures by the construction industry. All corporations are now required to capitalize interest and taxes atlributable to the construction period of non-residential real property and to amortize such amounts over 1a-years." It will be important to determine exactly when "construction" begins because the provision applies to projects started before 1983. This does not apply to residential real property constructed by regular corpora-

ttcms. 20 TEFRA also directs the Treasury to amend its regulations on the completed contract method of accounting, under which income and costs allocable to the contract are not reported until the year the contract is compieted." The result of the change in the regulations will be to cause more currently deductible costs to become contract costs. Also, the determination of

when a contract is completed would be revised so as to prevent the practice of aggregating several contracts, thereby extending the time for reporting the in-

come. 22 EMPLOYEE BENEFIT PLANS TEFRA makes substantial changes in the qualification requirements and tax treatment of qualified employee benefit plans. Although by statute the changes are applicable to all qualified plans, the changes are primarily directed toward pension and profit sharing plans of the Professional Corporation. Parity. Starting in 1984 there will be few differences between qualified employee benefit plans for corporations and for self-employed individuals (Keogh Plans). The changes involve removing the added requirements for self-employed plans and makes certain rules, formerly applicable only to self-employed plans, effective for corporate plans. Specifically, the following requirements for self-employed (Keogh) plans are removed effective in

1984: (a) that the plan's trustee be a bank; (b) that the employee is fully vested when a contribution is made; (c) that a profit sharing plan provide a definite contribution formula for a common-law employees. (d) that employees with 3 years of service must participate. (e) that the owner-employee consent to participate; (I) that benefits not be paid to an owner-employee before he reaches age 59Y2. (g) that contributions may not be made on behalf of owner-employee in excess of the amount deductible; (h) that an owner-employee can't participate for the five years after he makes an early withdrawal; (i) that a plan which benefits only owner-employees not permit non-deductible voluntary contributions; (j) that a plan covering an owneremployee have special restrictions if its integrated; (k) that benefits payable to the surviving spouse of an owneremployee be distributed within 5 years of his death; (I) that compensation over $200,000 can't be taken into account; and (m) that an excise tax on excess contributions is due."

Furthermore, several requirements, presently applicable only to Keogh plans, will apply to all plans after 1983. These are: (a) special rules for integration with Social Security; (b) distributions must begin by age 70Y2. (c) distributions after the death of the participant must be completed in 5 years." Contribution and Benefit Limits: The '82 Act makes the following changes in regard to limits or contributions and benefits: (a) defined benefit plans must reduce the maximum allowable benefit to the lesser of 25% of compensation or $90,000 (for 1982 it was $135,425); (b) defined contribution plans must reduce the maximum allowable contribution to the lesser of 25% of compensation or $30,000 (for 1982 it was $45,475); (c) the cost of living adjustment for the dollar limitations on contributions and benefits is suspended for 1983 through 1985. (d) an actuarial adjustment must be made for benefits paid from a defined benefit plan for early retirement before age 62 (formerly age 55). (e) for participants who are covered by a defined contribution plan and a defined benefit plan, the old "1.4 rule" is now the "1.0 rule" (although it actually is 1.25 for dollar limits and 1.4 for percentage limits)." Top Heavy Plans. A new concept, "top heavy" plans, is introduced by TEFRA and applies for tax years beginning after 1983. A plan is top heavy if the accrued benefits for "key employees" (officers, shareholders, etc.) exceeds 60% of the aggregate of all accrued benefits for all employees covered by the plan." The consequences of a plan being top heavy are that one of two minimum vesting schedules must be used and a minimum, non-integrated benefit or contribution, as the case may be, must be provided for non-key employees. Professional and Personal Service Corporations. There are several ways in which highly paid professionals can structure their business so as to provide a very liberal employee benefit program for themselves while offering a less favorable one to lower paid employees. The term "affiliated service continued on page 132 July 1983/Arkansas Lawyer/131

Tax Equity. .., continued from page 131 group" has been with us for several years now. TEFRA expands the class of organizations covered so as to include organizations performing management functions." Similarly, "leased employees" will be treated as employees of the company for which they actually perform services (the "service recipient") for purposes of gauging whether the employee benefit plan of the service recipient qualifies.'" These provisions are effective after December 31, 1983.29 Furthermore, the IRS now has the authority to allocate income to the shareholder of a corporation whose principal activity is the performance of personal services substantially all of which are performed for one other entity. The corporation must, before the IRS can re-allocate income, be availed of for the purpose of utilizing some tax benefit not otherwise available to it.'" For instance, a pathologist's professional corporation would be ignored by the IRS for tax purposes if the pathologist did substantially all his work for one hospital, thereby causing the income of the corporation to be taxed to the pathologist directly." Loans. Loans made after August 13, 1982, in excess of $10,000 from qualified plans will be treated as distributions." Before TEFRA, a loan was allowed if available on a non-discriminatory basis, was adequately secured, bore a reasonable rate of interest, and was otherwise prudent under the circumstances. The new law requires that the loans be repaid within 5 years and do not exceed the lesser of: (a) $50,000, or (b) 1/2 of the present value of the participant's vested interest in his accrued benefit but no less than $10,000. Home loans are not subject to the 5-year limitation." Miscellaneous. TEFRA limits the estate tax exclusion for amounts payable under qualified plans and individual retirement accounts to $100,000." Before TEFRA, the exclusion was available for the full value of periodic distributions (to the extent attributable to employer's contributions) from qualified plans, for lump sum distributions for which favorable income tax treatment was not elected, and for annuity and IRA payments spread out over at least three years." After 1983, only surviving spouses will be allowed to obtain rollover treat132/Arkansas Lawyer/July 1983

ment for distributions from a deceased spouse's IRA and partial rollovers from IRAs will receive the same treatment as partial rollovers from qualified plans, namely, only the part not rolled over is taxes.'" CORPORATION PROVISIONS Tax Payments. TEFRA reduces the following tax benefits by 15% for all corporations except S corporations. (a) percentage depletion of iron are and coal (b) amortization of pollution control facilities (c) financial institutions' bad debt reserves (d) certain capital gains on sale of * 1250 property (e) financial institutions' interest deductions to carry tax exempt bonds (I) deemed dividends from DISCs (g) intangible drilling costs of "integrated" oil companies (h) mining exploration and development costs." The general effective dates for the above are tax years beginning after 1982." Corporation income tax payments have been accelerated in two ways. First, the election to pay the balance of tax due as shown on the return in two equal installments is eliminated." Second, in order to avoid the 20% penalty for underpayment, the estimated tax payments due throughout the tax year are increased to 90% of the estimated tax due (from 80%).'· Partial Liquidations. Prior to the '82 Act, amounts received in exchange for stock upon partial liquidation of a corporation received exchange treatment under *331 (a). Even if appreciated property was distributed, the distributing corporation recognized no gain or loss (with certain exceptions). "Partial liquidation" was a word of art with certain requirements to be met before treatment under *331 (a) could be used. 41 The '82 Act changes the tax treatment to the shareholder-distributees and to the distributing corporation. As to share holders' treatment, *331 (a) no longer provides exchange treatment for partial liquidations. Non-corporate shareholders may still use partialliquidation treatment under new *302(b)(4) and corporate shareholders must rely on §302(b)(1), (2) or (3)." Treatment of the distributing corporation is determined under *311 ." Section 311 as amended by the '82

Act provides for non-recognition of gain to the distributing corporation with respect to its stock, with certain exceptions stated at §311 (b), (c), and (d)(1). New §311 (d)(B) allows non-recognition of gain to the distributing corporation upon distribution of appreciated property to a non-corporate shareholder in partial liquidation of the distributing corporation (a new *302(b)(4) distribution). This non-recognition treatment is available if the distribution is made with respect to "qualified stock", which is, generally, at least 10% of the stock of the corporation and is held by a non-corporate shareholder for the preceeding five years." Similarly, there is non-recognition treatment for distributions of stock of a controlled corporation in partial liquidation or redemption." Stock Purchases Treated as Asset Purchases. New *338 eliminates some of the differences in the methods of taxable acquisition of the assets of target corporations (one, purchase of assets in §337 liquidation and, two, purchase of stock followed by §334(b)(2) liquidation)." New §338 replaces §334(b)(2) by allowing the corporation purchasing the target corporation's stock to elect cost basis/non-recognition treatment" The effect of electing new *338 is that the target corporation is treated as having sold its assets in a §337 transaction on the day of the stock purchase and then, on the following day, as having purchased those assets as a new corporation; the election is irrevocable." Bail-out of Corporate Earnings. TEFRA provides that *304 controls in situations which are literally described in *304 and *351 ." This is illustrated by the following facts: A, an individual, owns all the stock of Corporation X and 80% of the stock of the Corporation Y. A transfers stock in X to Corporation Y and receives stock in Y and $300 cash. If *304 controlled, A would be taxed on the $300 as a dividend. If *351 controlled, it would be taxed on $300 of capital gain. New §304(b)(3) requires that *304 control. 5. TEFRA attacks another device used to get earnings out of corporations with little tax consequences, namely, recapitalization of an existing corporation, a common estate planning technique. The '82 Act provides that the attribution rules of §318 apply to determine whether preferred stock was §306 stock." This foil to an effective estate planning device is shown as follows: Father and Son own all of the

common stock of Corporation. Father wants to get out of the active business but needs the income from the stock. If Father exchanges is common for preferred stock, he "locks" in an estate tax value on his stock but retains income and, possibly, control of Corporation. If the preferred is "§306 stock," its sale will produce ordinary income. The test of whether the preferred is §306 stock rests, in large part, on whether, if cash had been distributed, it would have been treated as a dividend. If Father "terminates his interest" in the corporation by surrendering all of his common stock it would be treated as a redemption and his preferred stock would not be §306 stock. This is the result only if §318 is not applied. Section 318, as amended by TEFRA would impute son's ownership to Father, thus preventing the "complete termination of interest" necessary to redemption treatment." NOTES 1. ERTA §201(a) adding LR.C. §168. 2. TEFRA §206. 3. ERTA §201(a) adding I.R.C. §168. 3A. TEFRA §208(d). 4. TEFRA §209(d). 5. TEFRA *208 amending LR.C. §168(D. 6. TEFRA §209 amending LR.C. *168(1)(8). 7. H. Rept. No. 97-760, 92d Cong .• 2d Sess. p. 489 (1982). 8. TEFRA *209 amending LR.C. §168(n(8). 9. LR.C. §168(D(8) and (i) amended byTEFRA *209. 10. Id. 11. TEFRA §205(a) adding LR.C. §48(q). 12. Id. 13. TEFRA §205(0)(1). 14. TEFRA §205(b) amending LR.C. §46(a)(3); and TEFRA §205(0)(2). 15. TEFRA §233 amending LR.C. §51. 16. TEFRA §26g(a) and (b) adding LR.C.. 3508. 17. TEFRA **271 (a), (b) and 277 amending LR.C. §3306. 18. TEFRA §278 amending LR.C. §3121. 19. TEFRA .207 amending LR.C. 189. 20. Id. 21. TEFRA .229. 22. Id. 23. TEFRA *237 amending I.R.C. §§72. 401. 404.4972. 24. TEFRA §§242. 249 amending LR.C. §401 25. TEFRA. 235 amending LR.C. §415. 26. TEFRA 240 adding I.R.C. §416. 27. TEFRA §246 amending I.R.C. 414. 28. TEFRA §248 adding I.R.C. §414(n). 29. TEFRA §246(b) and 248(b). 30. TEFRA §250 adding LR.C. §269A. 31. New I.A.C. §269A

32. 33. 34. 35. 36. 37. 38. 39.

is specifically intended to

prevent the result reached in Keller v. Comm., 77 T.C. 1014 (1981). H. Rept. No. 97·760 97th Long, 2d Sess.• p. 634 (1982). TEFRA §236 amending LR.C. §72. Id. TEFRA 1245 amending LR.C. *2039. LR.C. §2039 before amendment by TEFRA. TEFRA **243 and 335 amendment by TEFRA. TEFRA §204 adding LR.C. 1291. TEFRA §204(d). TEFRA §234 amending LR.C. *6152.

40. TEFRA 1234 amending LR.C. §6655. 41. LR.C. §1331. 336 before amendment by TEFRA. 42. TEFRA. §222 amending LR.C. 1302. 43. TEFRA. §223. 44. LR.C. 311(d)(2)(B) and (e)(l) as amended by TEFRA 1223. 45. LR.C. 1311(d)(2)(C) and (e)(2) as amended by TEFRA *223. 48. TEFRA 224. 47. Id. H. Rept. No. 97-760. 97th Cong., 2d Sess. 530. at 536 (1982). 48. LR.C. §338(a) and (g)(3) as added by TEFRA 224.

49. TEFRA 1226. 50. Id. P. Faber, How the New Tax Law Changes the Rules Affecting the Bail-Oul of Corporate Earnings. 57 J. Tax 28', at 284 (1982). 51. TEFRA §227 amending LR.C. 1306 P. Faber, How the New Tax Law Changes the Rules Affecting the BailOut of Corporate Earnings. 57 J Tax. 281. at 284 (1982). 52 TEFRA §227 amending LR.C. 1306.

.-:,

ARKANSAS BAR ASSOCIATION 85TH ANNUAL MEETING "ANATOMY OF THE TORT TR IAL"

WITH SEVEN NATIONALLY RENOWNED SPEAKERS JUNE 8-11, 1983 ARLINGTON HOTEL HOT SPRINGS, ARKANSAS July 1983/Arkansas Lawyer/133

.............

1111

JURIS DICTUM by Robert L. Lowery Executive Secretary, Judicial Department

DWI REFORM: Slogans intended to discourage the combination of driving and drinking will likely, more than ever, be given heed. The force of law has now become more forceful with the passage of Act 549 of 1983, the "Omnibus OWl Act," and of its financial companion, Act 918 of 1983, which sets an additional court cost of $250.00 upon conviction of OWl. Two separate, distinct offenses are defined in Act 549. One offense is the familiar OWl offense, the operation or physical control of a motor vehicle by an intoxicated person. "Intoxicated" is defined to mean a person influenced or affected by the ingestion of alcohol, a controlled substance, or a combination thereof, to such a degree that the driver's reactions, motor skills, and judgment are sUbstantially altered and the driver, therefore, constitutes a clear and substantial danger of physical injury or death to himself and other motorists or pedestrians. It is presumed that the defendant was not under the influence of intoxi-

Number

Range of Imprisonment

First

24 hours-{)ne

Offense

year. (Public

service may be

IF YOU DRINK, DON'T DRIVEIF YOU DRIVE, DON'T DRINK. cating liquor if there was 0.05% or less by weight of alcohol in the defendant's blood, urine, breath, or other bodily substance within two hours of the alleged offense. There is no presumption if the blood alcohol content within two hours of the alleged offense was in excess of 0.05% but less than 0.1 DOlo, but such fact may be considered with other competent evidence in determining guilt or innocence. The other offense, requring no proof of intoxication, is the operation or physical control of a motor vehicle by a person when there is 0.10% or more by weight of alcohol in the person's blood as determined by a chemical test of the person's blood, urine, breath or other bodily substance. The ranges of the various penalties for those convicted of OWl or of driving while there was 0.10% or more alcohol in the person's blood are as follows: For imprisonment purposes and for purposes of suspension or revocation of the operator's license, subsequent offenses are those occurring within

Action Re: Operator's License

Other Requirements

90 days minimum suspension

Must complete an alcohol treatment and/or

Range of Fine

$150$1.000.

education

ordered in lieu of jaIl

program.

but court must state reasons therefor In

its wntten order.)

Second

7 days-one year.

Third

Fourth

One year minimum suspenSiOn.

Same as first

5400-

offense.

53,000.

90 days-one

Two years

Same as first

year.

minimum suspension.

offense.

S900S5,000.

Felony: One year-six years.

Three years

Same as first offense.

$900$5,000.

minimum revocation.

three years. For fine purposes, subsequent offenses are those occurring within five years. Offenses occurring within three years of the effective date of Act 549 are considered in determining subsequent offenses. Pre-sentence reports are required to be submitted to the court within thirty days of the finding of 9uilty or a plea of guilty or nolo contendere. These reports are required to include the offender's driving record, alcohol related criminal record and alcohol problem assessment, and a victim impact statement, where applicable. Plea bargaining is not to be used. Persons arrested under Act 549 for OWl or for driVing while there was 0.10"10 or more alcohol in the person's blood "shall be tried on such charges or plead to such charges and no such charges shall be reduced." Circuit and Municipal Judges are specifically prohibited from utilizing probation and expungement under Act 346 of 1975 (Ark. Stal. 43-1231 et seq.). In addition to the provisions listed above for suspension of an operator's license, the operator's license may be suspended if the jUdge determines that the iaw enforcement officer had reasonable cause to believe the arrested person had been driving while intoxicated or while there was 0.10% or more of alcohol in the person's blood, and the person refused to submit to a chemical test upon the request of the law enforcement officer. If within a period of three years, the person had not previously refused the test and had not been convicted of either of the above offenses, the period of suspension will be for a period of not less than six months. If the person had previously refused the test within three years of the refusal in question, or if continued on page 137

134/Arkansas Lawyer/July 1983

YOUNG LAWYERS' UPDATE By Frank C. Elcan, II YLS Chairman

YLS Participates In Annual Meeting The Young Lawyers Section will sponsor the afternoon session of the annual meeting of the Arkansas Bar Association on Thursday, June 9, 1983. Highlighting the afternoon session will be a panel discussion dealing with presentations by the speakers at the morning session. Panei members will be Michael Cooley of Columbus, Ohio; Jeffrey Smith of Atlanta, Georgia; and David Shrager, of Philadelphia, Pennsylvania. All three panelists have outstanding credentials as trial attorneys. They will be responding to questions on their morning presentations on psychology of a trial, the standards of care for a trial, and preparation for the trial. These topics are all of major interest to young lawyers, and I hope each of you will make plans to attend. The session will start immediately upon conclusion of the luncheon. The section is also sponsoring the annual dance scheduled for Thursday night. Walter Paulson of Little Rock has arranged for The Stylemasters' Orchestra from Little Rock. They provide a "Big Band" sound that will appeal to participants of all ages. Make plans to come early and stay late. A good time will be had by all who attend! Immediately upon conclusion of the question and answer session in the afternoon, the Young Lawyers Section will hold its annual business meeting. The main item of business will be election of section officers for the 1983-1984 bar year. There are also some important by-law amendments dealing with methods of election of

future section officers. The meeting will begin immediately upon conclusion of the panel discussion, and every effort will be made to conclude in time for all to participate in the afternoon cocktail parties.

Section Hosts Affiliate Outreach/CLE Meeting On March 25 and 26 the section hosted lawyers from Oklahoma, Missouri, Texas and Arkansas for a Regionai Affiliate Outreach meeting of the Young Lawyers Division of the American Bar Association. Steve Waxman of Philadelphia, Pennsylvania and Mike McNerney of Fort Lauderdale, Florida conducted an excellent workshop session on Friday morning. The section sponsored a race at Oaklawn Park on Friday afternoon and made a trophy presentation to the winners. On Saturday morning Fred Cornish and Pat Cremin of Tulsa, Oklahoma made outstanding presentations on methods and presentation of effective opening statements. We had a good number of participants at both sessions. Based on the success of the last two years, our section will plan on making this an annual event.

Law Week Plans Underway Vicki Cook of Hot Springs served as our section's chairman in coordinating Law Week activities. The section participated in sponsorship of Legal Check-Up Clinics in the various bar districts, mock trial presentation in various school districts throughout the state, and work in coordination with the Arkansas Bar Association in spon-

soring an essay contest for high school students. Kaye Oberlag also worked with Arkansas Educational Television to sponsor a one-hour presentation during the week on a iaw related topic. Our goal was to encourage a greater appreciation by the public for the jUdicial system and to upgrade the image of the legal profession in general. At the conclusion of the annual meeting, Carl Crow of Hot Springs will assume the position of Chairman of the Young Lawyers Section. I want to take this opportunity to thank all of those who have served so well as members of the Executive Council and Committee Chairmen of the section's committees. Because of their efforts, and the efforts of previous section m$T1bers, we had a very active year, receiving accolades at the 1982 annual meeting of the American Bar Association and accomplishing many tasks which were of importance to the senior bar and our profession as a whole. The thrust of our future activities will be to increase the active participation of Young Lawyers' Section members in its activities. It is also a goal to increase our emphasis on providing benefits and training to the young lawyers of Arkansas. As our by-laws provide, any active member of the Arkansas Bar Association under age 35 is eligible to participate. If you are a young lawyer who is not yet involved, make plans to do so. Our future leadership is in good hands, and each member can rest assured that participation in section activities will reap far more benefits than burdens.

......

JUly 1983/Arkansas Lawyer/135

OYEZ - OYEZ

••

By: Carol Utley Communications Director

DECEMBER Municipal Judge EDWARD MADDOX of Harrisburg was honored with a retirement luncheon for his years of service to the Trumann Municipal Court. WILLIAM S. MEEK became a partner in the Ashley County firm of Arnold, Hamilton and Streetman in Hamburg and Crossett. TIM WOMACK of Camden became a partner in the firm of Barnes, Laney, Gaughan, and Singleton. Texarkana attorney NICK PATION was named to the International Academy of Trial Lawyers. Jonesboro City Attorney JUDY HENSON was named 1982 Woman of the Year by the Jonesboro Downtown Business and Professional Women's Club. H. WILLIAM ALLEN of Little Rock was re-elected to the Board of Directors of the American Judicature Society, a national organization for improvement of the courts. W. KELVIN WYRICK, former Chancery Judge of the Eighth Judicial District of Arkansas announced his return to the private practice of law in the Autrey Professional Building, 503 East 6th Street, Texarkana, Ark. BILL JOHNSON of Hamburg, was honored for his service to the city after serving fourteen years before retiring as Hamburg City Attorney. ROBERTT. BRANCH of Paragould has been appointed to the Supreme Court Committee on Professional Conduct. He replaces Caldwell Bennett of Batesville whose term expired. In addition, JERRY CAVENEAU of Searcy has been elected chairman and SUSAN MILLER, secretary for 1983. JANUARY JOYCE WILLIAMS WARREN was sworn in as Pulaski County Juvenile Judge on January 8th. Judge Warren had been an attorney with Central Arkansas Legal Services since January 1983. The law firm of JONES, GILBREATH & JONES announced that the following associates became 136/Arkansas Lawyer/July 1983

JOYCE WILLIAMS WARREN members of the firm: RANDOLPH C. JACKSON, KENDALL B. JONES and MARK A. MOLL. HANKINS, HICKS & MADDEN announced that PAUL D. CAPPS has joined the firm now known as HANKINS, CAPPS, HICKS and MADDEN. The law firm operating in Pine Bluff under the name "Coleman, Gantt, Ramsey & Cox", which is a partnership of Louis L. Ramsay, Jr., E. Harley Cox, Jr., John G. Lile, III, William C. Bridgforth, Martin G. Gilbert, F. Daniel Harrelson, M. Jefferson Starling, Jr., James W. Hyden, Spencer F. Robinson, Richard L. Ramsay and, Phillip A. Raley, announced that the name has changed to "Ramsay, Cox, Lile, Bridgforth, Gilbert, Harrelson, & Starling". John D. Davis and Patrick A. Burrow are associated with the firm. JUDITH A. DESIMONE has been named a partner in the Pine Blufffirm of Baim, Baim, Gunti, Mouser & Bryant. DAVID P. SOLOMON of Helena was honored with the Distinguished Eagle Scout Award by the Eastern Arkansas Area Council, Boy Scouts of America.

In addition, Solomon received the "Citizen of the Year" Award from the Phillips County Chamber of Commerce. JAMES C. HALE JR. and JOE M. ROGERS, both of West Memphis, have been reappointed as Crittenden County deputy prosecuting attorneys for the Second Judicial Circuit. CHRISTINA McQUEEN of Hope was guest speaker at the noon meeting of the Hope Kiwanis Club. She discussed the importance of good attorney/client relations and the lawyers public image. Retired Circuit Judge JOHN ANDERSON of Helena, was appointed Phillips County Juvenile Judge replacing Kathleen Bell. JANET L. PULLIAM announced the relocation of her law office to Gazette BUilding, Suite 350, 112 W. 3rd, Little Rock, 72201. JEFF STARLING was elected president of the Pine Bluff Chamber of Commerce. WILLIAM M. CLARK was elected to the Conway Development Corporation Board of Directors. JAMES M. DENDY, formerly assistant counsel of First Arkansas Bankstock Corporation, entered the private practice of law as an associate of the firm of Pope, Shamburger, Buffalo and Ross. Bairn, Baim, Gunti, Mouser & Bryant announced that JUDITH ANN DESIMMONE is now a partner in the firm. Former Circuit Judge KEITH RUTLEDGE has become a partner in the firm now known as Highsmith, Gregg, Hart, Farris and Rutledge. WILLIAM E. "BILL" JOHNSON was elected to the Farmers Bank Board of Directors in Hamburg. RICHARD NELSON is Mountain Home's new city attorney for four years. WILLIAM NASH of Little Rock retired as a member of the Board of Trustees of the Donaghey Foundation after serving for 37 years. JOHN RICHARD BYRD and TIMOTHY A. TARVIN formed a partnership for the practice of law in Hamburg known as Tarvin & Byrd at 204-A East Lincoln Street. Mitchell, Williams Selig Jackson & Tucker announced that PAT

MORAN became a partner in the firm. GREGORY B. GRAHAM and JOSH R. MORRISS III formerly of the firm Wheeler, Graham, Gooding, & Morriss have formed the firm of Graham & Morriss, with offices at 4122 Texas Boulevard, Suite D, Texarkana, Texas. Mena attorney DANNY THRAILKILL was reappointed deputy prosecuting attorney for Polk County. R. BRYAN TILLEY has joined the firm of Reed & Irwin, P.A., in Heber Springs. Dayton G. Wiley, Arkansas, 1949, of Wiley Garwood, Stolhandske & Simmons, an路 nounced that GEORGE F. EVANS, JR. and BRUCE W. BODNER have become associated with the firm in San Antonio. MARION HUMPHREY announced the opening of his new iaw office at 706 Linden Street, Suite A, Pine Bluff. BILL BALL spoke to the Drew County Retired Teachers Association in Monticello about "Legal Preparedness for Retirees." RICHARD L. MILLER announced the opening of his law office at One Mcilroy Plaza, Suite 502, Fayetteville. He was associated with F. H. Martin prior to the move. ALLEN GORDON of Morrilton, was appointed to the state Job Training Coordinating Council by Gov. Bill Clinton. Malvern attorney LAWSON GLOVER received the "For He's A Jolly Good Lion" award from the Arkansas Enterprises for the Blind, an organization sponsored by Lions Club. LESLIE R. ABLONDI joined the office of North Little Rock City Attorneys as an assistant. MICHAEL E. HALE of Little Rock was elected a Fellow of the International Society of Barristers. ROBERT MOREHEAD of Pine Bluff, was featured speaker at the Pium Bayou-Tucker School District's observance of Black History Month. BOB LESLIE of Little Rock spoke to the Opportunity Chapter of the American Business Women's Association at a meeting held at Eden Park Country ClUb. Newport attorney SAM BOYCE was appointed vice chairman of the Social Security Advisory Committee to Congressman Bill Alexander. Lowell lawyer JOHN M. STEPHENS was selected to serve as chairman of the Benton County Democratic Central Committee. FEBRUARY LARRY YANCEY joined the firm now known as Overbey, Peace, McClain and Yancey located in the First Federal Plaza. LINDA GRIM McCORMICK is now working as an estate planner for the Federal Land Bank

in Fayetteville. WILLIAM H. L. WOODYARD, III has been named of counsel to the Little Rock form of Mitchell, Williams, Selig, Jackson & Tucker. JOE B. COGDELL, JR. was named a partner in the firm of Mcintyre, McDivitt, Casey. Kivel & Cogdell in Oklahoma City. Attorney LONNIE GEHRING spoke to the Round Table Literary Club in Brinkley on "Good News for Senior Citizens." JEFFERY STORY was guest speaker at Mt. Tabor Baptist Church in Magnolia during "A Salute to Black Awareness." The assistant attorney general is a native of Magnolia. JUDGE WARREN O. KIMBROUGH, Chancery Judge of Fort Smith, spoke during the five-county mid-winter meeting of the 13th district of the American Legion. MARK ROBERTS has joined the Malvern law firm of Glover & Glover. JOHN FORSTER was named to membership in the American Board of Criminal Lawyers. He is a partner in the North Little Rock law firm of Wallace Hilbum, Clay1on, Calhoon, and Forster, ltd. DAVID R. ROGERS of Greenwood, opened a law office in the Boyd Building in Mansfield. ARK MONROE III was promoted to senior vice president and general counsel of Union Life Insurance Co. of Little Rock. Attorney HERSCHEL H. FRIDAY of Little Rock was elected to the newly expanded board of directors for Union Pacific Railroad. MARCH DON BASSETT of Little Rock was selected one of the Five Outstanding Young Men in Arkansas and also one of the Outstanding Young Men in America. PAT BURROW of Pine Bluff was the guest speaker at a meeting of the Jefferson County Legal Secretaries Association. BUD NEWTON of Searcy was promoted to Vice President and Trust Officer of First Security Bank. HARRY BARNES, Camden attorney and judge, was guest speaker at the annual Blue and Gold banquet held by Stephens Cub Scouts. LINDA FAULKNER BOONE of Batesville, was appointed juvenile judge of Independence County. JAMES E, CROUCH and WILLIAM M, CLARK, JR. were named p'artners in the Springdale firm of Cypert and Roy. MORRIS S. "BUZZ" ARNOLD, state chairman of the Republican Party, was featured speaker at the Hempstead County Republican Committee's lincoln Day Dinner. RODNEY C, WADE, attorney, U.S. Internal Revenue Service, St. Louis District, was admitted to

the State Bar of Missouri and appointed to the Missouri State Tax Commission. He is also serving as legal instructor for a C.P.A. examination preparation course in St. Louis. PAUL JOSEPH JAMES has formed a partnership with W. H. "Sonny" Dillahunty for the practice of law to be known as Dillahunty and James in Littie Rock. RANDALL W. ISHMAEL of Jonesboro, was afternoon speaker at a seminar hosted by the Jonesboro Legal Secretaries Association. ' "

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lln jfMemoriam He that keepeth the law, happy is he. Proverbs 29: 18

HOMER T. ROGERS Homer T. Rogers, aged 79, of Smackover, died Friday, March 11, 1983, in Little Rock. He practiced law in Smackover from 1925 until his retirement in 1980. He helped to form and was on the board of the Union County Barton Library and the board of Smackover State Bank. Survivors are his wife, Mrs. Gladys Lawson Rogers of Smackover; two sons, Bill Rogers of Ruston, La. and Dr. Henry B. Rogers of EI Dorado; one sister, Mrs. Lillian Sanders of Columbia, Ala.; five grandchildren and three great-grandchildren.

* • • HARRY EDWARD MEEK Harry Edward Meek, aged 91, of Brookside Drive in Little Rock, died Thursday, October 14, 1982. He was best known for his work in banking law and for the drafting of the state's corporation and commercial codes and for founding the Pulaski County Humane Society more than 30 years ago. Mr. Meek received his law degree from the Little Rock Law School in 1913 and briefly practiced law in Stuttgart before joining the Army. After World War I, he moved to Little Rock where he joined the firm of Robinson, House and Moses. He was later appointed regional counselor for the Reconstruction Finance Corporation by the late President Herbert Hoover. In 1940, he joined the Rose Law Firm. At his retirement from the practice of law in 1980, he was one of Arkansas' oldest practicing lawyers. Mr. Meek was responsible for drafting the 1957 law which allowed Arkansas cities to adopt the city-manager form of government. In an article written for The Arkansas Lawyer (Vol. 12, No.1, Jan. 1978) about Mr. Meek, Phillip Carroll perhaps describes him best: "Legislators will remember Harry Meek as the draftsman of the Cor138/Arkansas Lawyer/July 1983

poralion and Inheritance Codes and perhaps because he was one of the few who ever understood the Uniform Commercial Code. Bankers will recall Harry Meek during the tumultous days of 1933 and 1934 when, as an attorney for the RFC, he guided the reorganization of dozens of closed and foundering banks. Dogs, cats and birds with broken wings think of Harry Meek as a sort of St. Francis /I, for none of them who were hungry, stuck in a tree, or in need of a veterinarian, were ever passed by... Most of us will remember him for his humor. For almost forty years, this tall, gaunt, bespectacled man with the errant tufts of hair, tickled the funny bones of thousands of people." He was named Lawyer of the Year in 1962 by the Arkansas Bar Association and received the Pulaski County Bar Association's Lawyer Award. The Arkansas General Assembly honored him on March 8, 1977, at a special joint session and declared the day "Harry Meek Day." Survivors are his wife, Mona Voght Meek; two daughters, Mrs. W. H. Youngchild of Heber Springs and Mrs. C. L. Garrett of EI Dorado, five grandchildren and three greatgrandchildren.

•• • JOSEPH CAHILL HITI Joseph Cahill Hilt, aged 45, died February 9, 1983 in Baytown, Texas. He was a partner in the law firm of Smith, Hitt and Mescall and was noted as the first board certified specialist in personal injury and civil trial law to join the firm. Mr. Hitt was a 1962 graduate of the University of Texas School of Law. He had been an adjunct professor of law at South Texas College of Law since 1979 and at the University of Houston in 1980-81. He was a member of the Houston, Arkansas and American Bar Associa-

tions and the State Bar of Texas. He was also a director of the Texas Trial Lawyers Association since 1969 and held memberships in the Arkansas Trial Lawyers Association, the Association of Trial Lawyers of America and the American Board of Trial Advocates. Survivors are his wife, Pauline Hitt of the home; two sons, Jeffrey Warren Hitt of Austin and Robert Line Hitt of Texarkana; a daughter, Angela Cay Hitt of Houston; and his mother, Oma Ellen Hitt of Austin.

••• ARCHER WHEATLEY Archer Wheatley, aged 97, of Jonesboro, died Tuesday, March 15, 1983, at St. Bernard's Regional Medical Center. Mr. Wheatley was born in DuQuoin, III. and moved to Jonesboro in 1909 to begin his law practice. He was graduated in 1907 from the Transyivania College of Law in Kentucky. He was a former chancery judge and legisiator. In 1943, he formed a law partnership with the late Joe Barrett. The firm later became Barrett, Wheatley, Smith and Deacon. He was a member of the First Christian Church where he served as board member and Sunday School teacher. In addition, he was a member of the Craighead County, Arkansas and American Bar Associations. Survivors are a daughter, Miss Betty Jeanne Wheatley of the home and a grandson.

•• EDWARD H. PATIERSON, SA. Edward H. Patterson, Sr., aged 76, of Clarksville, former state representative and Clarksville city attorney, died January 10, 1983. He was admitted to practice before the Arkansas Supreme Court in 1928 and was a member of the Clarksville firm of Patterson and Patterson where he practiced with his father, brother and son. He was a member of the First Presby1erian Church where he served as an elder and deacon. Survivors are his wife, Gladys Thomson Patterson; three sons, Edward H. Patterson, Jr. of Germantown, Tenn., George T. Patterson of Denver and Circuit Judge John S. Patterson of Clarksville; and four grandchildren.

Juris Dictum, continued from page 134 the person had been convicted of driving while intoxicated or of driving while there was 0.10% or more of alcohol in the person's blood, the minimum period of suspension will be one year. Any person who operates a motor vehicle during the period of suspension will be for a minimum of one year. Any person who operates a motor vehicle during the period of suspension or revocation of an operator's license shall be imprisoned for ten days, and if the motor vehicle operated by the person is owned in whole or in part by the person, the motor vehicle license plate shall, at the time of arrest, be impounded by the law enforcement officer for no less than 90 days. If a court determination is made that it is in the best interest of the dependents of the offender, a temporary substitute license plate indicating that the original plate has been impounded shall be issued to such vehicle. For the blood alcohol test, Act 549 requires that the machine performing the chemical analysis shall have been dUly certified at least once in the last three months preceding arrest, and the operator thereof shall have been properly trained and certified, and that the person calibrating the machine and the operator of the machine shall be made available by the state for cross-examination by the defendant or his counsel of record upon reasonable notice to the prosecuting attorney. These are only some of the features found in the 11 pages of Act 549 of 1983. The Municipal and City Court Clerks in Arkansas reported to the Judicial Department that more than 26,000 DWI cases were docketed in 1982. Hopefully, these numbers will drop dramatically with the added impetus given by Act 549 of 1983 to the separation of drinking and driving.

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ADDENDA by C. E. Ransick Editor

(Editor's Note: We have attempted in recent issues of The Arkansas Lawyer to assist practicing lawyers with ethical considerations. At our request, Professor Howard W. Brill of the School of Law, University of Arkansas at Fayetteville, has prepared a series of comments growing out of questions he has had from lawyers. The series will cover (1) Conflicts of Interest; (2) Gifts and Bequests from Clients to Attorneys; (3) Unauthorized practice of law; (4) The Codes; and (5) Retaining liens of attorneys. We are indebted to Professor Brill and will publish the series in the next two issues.)

Unauthorized Practice of Law: In Pope County Bar Association v. Suggs, 274 Ark. 250, 624 SW. 2d 828 (1981), the Supreme Court, although finding that real estate brokers may have been engaging in the practice of law by completing legal instruments, held that the public interest permitted such activities, within the limitations of the trial judge. The court approved the use of warranty deeds, quit-claim deeds, release deeds, bills of sale, lease agreements and mortgages with power of sales by real estate brokers, provided six conditions are complied with: The client must decline to employ a lawyer and authorize the broker to complete the instruments; the forms must be approved by a lawyer, either before or after the blank spaces are filled in; the forms should be used only for simple real estate transactions arising in the course of the brokers' business and only in connection with transactions actually handled by the broker; the broker shall make no charge for filling in the blanks; and the broker shall not give any legal advice or opinions as to the effect of the legal instruments. The opinion extended to the entire state the decision in Creekmore v. Izard, 236 Ark. 558 367 SW. 140/Arkansas LawyerlJuly 1983

2d 419 (1963) which had allowed such actions by brokers in sparsely populated areas where attorneys were not readily available. The Supreme Court Committee on Unauthorized Practice of Law, established at 264 Ark. 960, which is authorized to initiate unauthorized practice actions was not a party in this law suit and did not submit an amicus brief. Hopefully the committee, which is composed of both lawyers and nonlawyers, will take the affirmative step of other jurisdictions and bar associations and draft a statement of principles for lawyers and real estate brokers that would set out the guidelines for such activities, rather than wait for a case by case determination by the Supreme Court. The court did emphasize that real estate brokers who elect to take on such obligations cannot avoid the consequences of any neglect or incompetence that result by their activities in the practice of law. In another opinion the same day, Wright v. Langdon, 274 Ark. 258, 623 SW. 2d 823 (1981) the Supreme Court emphasized that one who holds himself out as a lawyer or who engages in the practice of law is held to the same standard of care as that required of lawyers. Retaining liens of attorneys: Arkansas attorneys may collect legal fees with a retaining lien. Crosby v. Hurst, 149 Ark. 11 (1921),154 Ark. 300 (1922) (lien not supported by the allegations). An attorney who has performed legal services and has not been paid is entitled to retain any documents, chattels, books, papers, money, securities or possessions of the client that have come into the custody of the attorney pursuant to the attorney-client relationship. Under this "passive" lien, the property may not be sold, destroyed or "foreclosed" in

any way; the only use the attorney can make of it is to hold it until the client becomes desperate enough to pay fees, any costs and disbursements, 3 A.L.A. 2d 148. The liens includes work product documents of the attorney, evidence (even if supplied by the client), and materials supplied by the client pursuant to the attorney client relationship. Although the lien may be utilized to collect any legal fees owed, the lien does not apply to items that the attorney may be holding for a special favor outside the attorney client relationship. 2 A.L.A. 1488 Attorneys may also assert a lien upon a jUdgment, Ark. Stat. Ann. ยง 29-132 (Aep!. 1979) or upon a cause of action, Ark. Stat. Ann. ยง 25-301 et seq (Aep!. 1962). Gifts & Bequests from Clients to Attorneys: Although no disciplinary rule prohibits clients from giving sizeable gifts to attorneys or leaving them property in a testamentary transaction, the burden is upon the attorney to prove the fairness and equity of the transaction and the adequacy of the consideration. Bond v. Marland, 199 Ark. 806, 136 SW. 2nd 460 (1940). The attorney also has the responsibility of providing all information and advice to allow the client to act in an understanding fashion in both making a gift to the attorney and in deciding whether to seek independent legal advice before making such a gift. Norfieet v. Stewart, 180 Ark. 161, 20 SW. 2nd 868 (1925). As the Court of Appeals has recently reminded the bar, the better practice is to refer the client to another attorney to draw up a deed or to take whatever steps are necessary if the client desires to make a gift to the original attorney. Fletcher v. Long, 271 Ark. 942, 611 SW. 2d 799 (Ark. App. 1981)..... 1IF "

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