July 2018 Headnotes: Bankruptcy/Franchise & Distribution Law

Dallas Bar Association

HEADNOTES

Focus Bankruptcy/Franchise & Distribution Law

July 2018 Volume 43 Number 7

Dick Sayles: 2018 DBA Trial Lawyer of the Year

BY ANDREW M. JONES

Growing up in the Smoky Mountains hamlet of Gatlinburg, Tennessee, Richard “Dick” Sayles knew from a very early age that he wanted to become a lawyer. “My parents ran a motel and gift shop there,” Sayles recalled. “When I was six years old, my dad said, ‘I wish I had been a lawyer. I think you should be one.’” That was all it took. Sayles went on to graduate from Sevier County High School, a few years behind the famed Dolly Parton.

But it was football, not music that earned Sayles a scholarship to Vanderbilt University, where he played four years, from 1967 to 1970. “I was fortunate to play college football,” Sayles said of the sport that paid for his college education. “I was the slowest lineman in the Southeastern Conference, and that’s a record that still stands to this day.”

At the time, Sayles real- Dick Sayles ized opportunities for young lawyers in East Tennessee were limited. Most lawyers in Gatlinburg who made a good living, Sayles noted, did so outside of the legal profession in businesses catering to the tourist industry. So Sayles set his sights on Texas, anticipating that opportunities would be more plentiful there.

Sayles attended law school at the University of Houston, where he graduated magna cum laude.

Upon graduation, Sayles clerked for United States District Court Judge Robert M. Hill in Dallas. The next year, Sayles joined Carrington Coleman, Sloman & Blumenthal, where he practiced law for more than 19 years. There, Sayles built a reputation as a highly skilled trial lawyer.

Sayles credits much of his success as an attorney to his mentor, the legendary Jim Coleman. “Jim lives what he taught: always take the high road.”

Sayles’ first jury trial was in 1975, just months after arriving at Carrington Coleman.

In a breach of contract case, Sayles obtained a $7,000 verdict. In his first year, Coleman assigned Sayles seven cases that went to trial.

Sayles won all seven. “I thought I had the secret to success and would never lose a case,” he noted to Mark Curriden of the Texas Lawbook.

Sayles left Carrington Coleman with a few other attorneys to start his own firm in 1994. Sayles Werbner has since enjoyed tremendous success as a high-profile, high-stakes trial firm. His practice spans commercial disputes, personal injury cases and patent litigation. Sayles is board certified in both Civil Trial Law and Personal Injury Trial Law by the Texas board of Legal Specialization. He has tried more than 150 jury cases, with more than a dozen resulting in verdicts of more than $1 million. A notable success includes a $1.67 billion verdict for Centocor Inc., a division

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of Johnson & Johnson, in a patent infringement case—at the time, the largest patent verdict in United States history. His impressive track record also features numerous significant defense wins.

“We stay lean,” Sayles said about his firm.

“We generally have about 10 attorneys, and that’s all we need.” Sayles credits his firm’s strong relationships with large national law firms as a key factor in its success, including significant participation in high profile matters. “We are often asked to be involved as local counsel,” he noted. “When we are, we insist on being substantially involved. Our roles in such cases always grow.” The model has worked for almost 25 years. “Each January 1, I look forward to the New Year but am never sure we can keep our momentum going. But somehow, each year, we’ve been able to do it again.”

Sayles fondly remembered a case he tried years ago with attorney Ed DeYoung, now deceased, in which his clients, oil and gas promoters, were sued by investors when some deals went sour. His clients, who had used both borrowed money and invested sums to promote the ventures, in turn sued a bank in a third party action on a theory of negligent lending. Against long odds, Sayles and his team obtained a whopping $13 million verdict on the third party claim against the bank. “We celebrated that evening, with plenty of Dom Perignon, and with a member of our team earnestly playing piano from our rented trial penthouse while we toasted our win.”

About a year later, however, the verdict against the bank was reversed. While Sayles’ team succeeded in defending the investors’ claims against the promoters, the promoters were unable to pay their legal fees. “The only payment I ended up getting was a case of Acacia wine.” Here, football lessons applied. “When you reach a verdict, your case is not over. You’re really just at halftime.”

The Texas Lawbook recently honored Sayles as a member of the highly prestigious Lions of the Texas Bar, a group of 50 prominent Texas attorneys. Sayles has also been honored by Chambers USA among the leaders in Commercial Litigation, by Benchmark Litigation as a top national litigator and by Texas Super Lawyers, named seven times to the list of Top 10 attorneys in Texas. He also received a Lawyer of the Year award for 2018 in Bet-The Company Litigation from the Best Lawyers in America.

Congratulations to Dick Sayles, recipient of the Dallas Bar Association’s Trial Lawyer of the Year award.

HN Andrew M. Jones is Co-Vice Chair of the DBA Publications Committee and can be contacted at andrewmilamjones@gmail.com.

Tips in Navigating the Retail Tenant Apocalypse

BY KATHARINE BATTAIA CLARK AND CASSANDRA SEPANIK SHOEMAKER

Expert opinions are mixed on the precise reason retailers have been hit hard by the latest bankruptcy cycle.

Many point to a significant increase in consumer online purchasing, which has certainly decreased demand for commercial real-estate space and has left vacancy rates skyrocketing. These troubles, and more, have left landlords scrambling to keep up with the deluge of retail lease workouts and bankruptcy filings. Below are key considerations for landlords navigating the retail tenant apocalypse.

First: Just as its name implies, the automatic stay arises automatically when a debtor files for bankruptcy protection. The automatic stay prohibits a landlord (or its agent) from taking any act to collect a pre-bankruptcy debt.

The stay halts the obvious, like eviction or foreclosure proceedings, but also the less obvious such as phone calls, default letters, and application of funds on account to amounts owed. Accordingly, landlords should carefully consider their actions vis-à-vis a bankrupt tenant. However, the automatic stay has limits. It generally does not protect non-debtor parties or their property, and a landlord may pursue non-debtors (including guarantors) outside of the debtor’s bankruptcy proceeding.

Second: Going-out-of-business sales are a common part of a debtor’s initial request to a bankruptcy court, and most bankruptcy courts give liquidators broad authority to conduct them, irrespective of lease terms (or even city ordinances) applicable outside of bankruptcy. For example, in the recent Toys “R” Us bankruptcy, the bankruptcy court permitted, over the landlords’ objection, the debtor-tenant to conduct GOB sales that violated lease terms regarding signage and hours-of-operation.

Third: Landlords and leases receive special attention in the Bankruptcy Code, and aligning with an experienced bankruptcy professional early in a case is key. On the one hand, debtortenants must pay rent if they remain in the space post-bankruptcy (although when rent payments start is not always a straightforward issue). Also, the Code sets out deadlines by which a debtortenant must assume or reject a lease, so the landlord is not captive indefinitely.

On the other hand, a debtor’s ability to assume or reject unexpired leases can create complications for landlords, and we offer a few points of caution: A debtor’s decision to reject a lease is difficult to challenge, so the general

focus should be on preserving a landlord’s claim (including reviewing landlord records carefully to determine how much was due to the landlord as of the bankruptcy filing not just for base rent, but any other component of rent, such as legal fees, taxes, late fees, etc.).

Landlords and their counsel should read over lease-rejection motions carefully. The effective rejection date and the timeline for filing claims against the debtor as a result of the rejection are both critical. If a debtor remains in the space post-bankruptcy, the landlord has a right to collect rent as an administrative (meaning, priority over others) creditor. Debtors work to reduce administrative claims as much as possible to preserve post-bankruptcy cash, making lease rejection a target for creative lawyering. Also, while many savvy landlords are aware of the concept of a claims-bar date, many have not experienced separate deadlines being set for filing administrative-rent or lease-rejection claims. These varying deadlines can get particularly tricky when multiple leases are being rejected by a staggered sale or a plan of reorganization.

The Bankruptcy Code expressly limits a landlord’s damages in lease-rejection scenarios. However, courts vary in how the limits are applied, depending on not only the underlying lease, but also the law in a particular circuit.

While lease assumption (as opposed to rejection) may seem initially attractive because a tenant will remain in the space, landlords should carefully consider what a debtor is offering.

For instance, landlords should review whether both payment and non-payment defaults will be cured, whether the debtor or the debtor’s assignee will be able to perform for the remainder of the lease, and any other additional matters the debtor may try to shoehorn into an assumption motion (such as resolution of tenant improvement disputes).

Inherent in the retail industry is the risk that a commercial tenant may become financially troubled. In today’s increasingly online retail environment, this risk is increasing and retail bankruptcies are making headlines and impacting parties’ respective rights and obligations. By having familiarity with the common issues that may arise when confronted with a bankrupt tenant, commercial landlords can better protect themselves to minimize the impact of a tenant’s financial woes.

HN Katharine Battaia Clark is a partner at Thompson & Knight LLP. She can be reached at katie.clark@tklaw.com.

Cassandra Sepanik Shoemaker is an associate at the firm.

She can be reached at cassandra.shoemaker@tklaw.com.

Inside

The 2018 DBA Membership Directory is now available in print & online.

Defining “Employees” Under FLSA – Who Can Sue?

Check out the directory and legal resource guide used by Dallas attorneys!

12 Bar None XXXIII: Suemanji 15 Industry Specific Relationship Statutes: Traps for the Unwary 17 Bankruptcy Treatment of LLC Member Interests

To view the Online Directory and Legal Resource & Expert Witness Guide, go to www.dallasbar.org/pictorial and login.

To request a copy of the new directory, contact pictorial@dallasbar.org.

2 He a d n o t e s l D a l l a s B a r A s s o ciation

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Calendar July Events JULY 6-BELO

Visit www.dallasbar.org for updates on Friday Clinics and other CLEs. Centre, 5420 Lyndon B. Johnson Frwy., Ste. 240, Dallas, TX 75240. Parking is available in the Visitor’s Lot located in front of the entrance to Two and Three Lincoln Centre.

There are several delis within the building.

Food is allowed inside the Conference Center.

Thank you to our sponsor Fox Rothschild LLP. RSVP to yhinojos@dallasbar.org.

FRIDAY CLINICS

No Clinic Today

“The State of the Attorney Immunity Defense,” Mike Northrup. (MCLE 1.00)* Two Lincoln Centre, 5420 Lyndon B. Johnson Frwy., Ste. 240, Dallas, TX 75240. Parking is available in the Visitor’s Lot located in front of the entrance to Two and Three Lincoln Centre. There are several delis within the building.

Food is allowed inside the Conference Center. Thank you to our sponsor Fox Rothschild LLP. RSVP to yhinojos@dallasbar.org.

JULY 20-BELO Noon

“Cross Examination,” Mike Lynn. (MCLE 1.00)* RSVP to yhinojos@dallasbar.org.

JULY 27-OAK CLIFF CLINIC Noon

“Professional Grievances in 2018: The Same Old Brand New Ballgame,” Jason Friedman and Jeanne Huey. (Ethics 1.00)* Oak Cliff Chamber of Commerce, 1001 N Bishop Ave, Dallas. RSVP to yhinojos@ dallasbar.org.

MONDAY, JULY 2

TUESDAY, JULY 3

Tort & Insurance Practice Section “Mediation and Arbitration Panel,” Karen Gammon, Hon. Jeff Kaplan, Aric Stock, and Hon. Mark Greenberg, moderator. (MCLE 1.00)*

No DBA Events Scheduled

WEDNESDAY, JULY 4

6:00 p.m. DAYL Board of Directors Meeting

DBA Offices Closed in Observance of Independence Day

THURSDAY, JULY 5 No DBA Events Scheduled

FRIDAY, JULY 6 Noon

Minority Clerkship Luncheon “Building Relationships Inside and Outside Your Organization,” John Ansbach, PJ Dunn, Nicole Munoz, Jennifer Wang, and Karen McCloud, moderator. (Ethics 1.00)* RSVP to bavina@ dallasbar.org.

MONDAY, JULY 9 Noon

Alternative Dispute Resolution Section “The Mediator’s Roundtable: A Guided Group Discussion,” Lisbeth Bulmash. (MCLE 1.00, Ethics 0.50)*

DWLA Leadership Class

WEDNESDAY, JULY 11

11:00 a.m. Family Law Section Board Meeting Noon

Family Law Section “The Proper Use of the Owelty Agreement & Lien,” Noel Cookman. (MCLE 1.00)*

Bench Bar Conference Committee

Public Forum/Media Relations Committee

DAYL Freedom Run Committee

DAYL Judiciary Committee

DAYL Lunch & Learn CLE

Dallas Asian American Bar Association

5:15 p.m. LegalLine. Volunteers needed. Contact sbush@ dallasbar.org.

5:30 p.m. Bankruptcy & Commercial Law Section

Topic Not Yet Available

Trial Skills Section “Cutting Edge Evidence issues,” Quentin Brogdon. (MCLE 1.00)*

DAYL Lawyers Promoting Diversity Committee

DAYL Politically Aware Committee

4th Annual L.A. Bedford Luncheon. RSVP to amberdhamilton@yahoo.com.

3:30 p.m. DBA Board of Directors Meeting

Moms in Law Lunch Chino Chinatown, Trinity Groves, 3011 Gulden Lane, Ste. 110, Dallas. RSVP to Rebecca at rfitzgib@gmail.com.

Collaborative Law Section “Credentialing and the Collaborative Lawyer,” Tim Crouch and Camille Milner. (MCLE 1.00)*

MONDAY, JULY 16

Entertainment, Arts & Sports Law Section “CR in VR and AR: Real World Copyright Issues in a Virtual World,” Joe Clemko and Sammetria L. Goodson. (MCLE 1.00)* DAYL Equal Access to Justice Committee

Senior Lawyer Committee

TUESDAY, JULY 17

Municipal Justice Bar Association

Noon

Labor & Employment Law Section “U.S. Tax Reform: Tax Cuts and JOBS Act Impact on Compensation & Benefits,” James Deets and Jim Griffin. (MCLE 1.00)*

International Law Section “The Nuts and Bolts of Foreign Asset Reporting,” Aaron Border. (MCLE 1.00)*

Legal History Discussion Group “The Intersection of History at the Belo Mansion, the Belo Family and the Dallas Bar Association,” Rob Crain. (MCLE 1.00)*

Noon

Criminal Law Section Topic Not Yet Available

Community Involvement Committee

DBA Community Service Fund Board Meeting

Entertainment Committee

DAYL CLE Committee

Dallas Bar Foundation Board Meeting

DAYL In-House Committee

Moms in Law Lunch Neighborhood Services - Village on the Parkway, 5100 Beltline Road #795, Dallas.

RSVP to Rebecca at rfitzgib@gmail.com.

6:00 p.m. Dallas Hispanic Bar Association

WEDNESDAY, JULY 18 Noon

Energy Law Section “Oil and Gas Case Law Update,” Reagan Marble. (MCLE 1.00)* Health Law Section “Medicare Appeals,” Pat Souter. (MCLE 1.00)*

Tax Law Section “Choice of Entity After Tax Reform,” Willie Hornberger. (MCLE 1.00)*

THURSDAY, JULY 12 Noon

CLE Committee

Peer Assistance Committee

Criminal Justice Committee

Pro Bono Activities Committee

TUESDAY, JULY 10

Publications Committee

DAYL/DWLA Women’s Mentoring Circle

11:30 a.m. Courthouse Committee

Christian Lawyers Fellowship

Noon

Business Litigation Section “Texas Discovery: Twenty Things You Don’t Know and May be Doing Wrong,” Robert Wise.

(MCLE 1.00)*

6:00 p.m. JLTLA Board of Directors Meeting

5:15 p.m. LegalLine. Volunteers needed. Contact sbush@ dallasbar.org.

Immigration Law Section “SCOTUS Immigration Decisions Term Recap,” Danial Gividen. (MCLE 1.00)*

Noon

North Dallas Friday Clinic “The State of the Attorney Immunity Defense,” Mike Northrup. (MCLE 1.00)* Two Lincoln

DBA Bench Bar Conference

Law in the Schools & Community Committee

THURSDAY, JULY 19 Noon

Minority Participation Committee “Spanish Sources of Texas Law,” Justice Jason Boatright. (MCLE 1.00)*

DAYL Animal Welfare Committee

Dallas LGBT Bar Association

Dallas Women Lawyers Association Board Meeting

FRIDAY, JULY 20 Noon

Friday Clinic-Belo “Cross Examination,” Mike Lynn. (MCLE 1.00)* RSVP to yhinojos@dallasbar.org.

MONDAY, JULY 23 Noon

SEPTEMBER 26-28, 2018 HORSESHOE BAY RESORT Up to 7 Hours of CLE Excellent Networking Meet your Judges Sponsorships and Exhibit Space dallasbar.org

DVAP New Lawyers Luncheon. RSVP to reedbrownc@lanwt.org.

Noon

Real Property Law Section Topic Not Yet Available

FRIDAY, JULY 13

WEDNESDAY, JULY 25 Noon

TUESDAY, JULY 24

Blockchain Law Study Group “Cryptocurrency Controversy: Lessons from the AriseBank Receivership,” James Cox and Mark Rasmussen. (MCLE 1.00)*

Legal Ethics Committee

No DBA Events Scheduled

DAYL Membership Committee

Noon

JULY 13-NORTH DALLAS** Noon

Securities Section Topic Not Yet Available

THURSDAY, JULY 26 Environmental Law Section Topic Not Yet Available

FRIDAY, JULY 27

Noon Oak Cliff Friday Clinic “Professional Grievances in 2018: The Same Old Brand New Ballgame,” Jason Friedman and Jeanne Huey. (Ethics 1.00)* Oak Cliff Chamber of Commerce, 1001 N Bishop Ave, Dallas. RSVP to yhinojos@dallasbar.org.

DAYL Deal Bootcamp Committee

MONDAY, JULY 30 No DBA Events

TUESDAY, JULY 31 No DBA Events

WEDNESDAY, AUGUST 1 No DBA Events

THURSDAY, AUGUST 2

8:00 a.m. Energy Law Section Seminar

33rd Annual Review of Oil & Gas Law. Two-day event. For more information, or to register, log on to www.reviewofoilandgaslaw.com.

FRIDAY, AUGUST 3

8:00 a.m. Energy Law Section Seminar

33rd Annual Review of Oil & Gas Law. Two-day event. For more information, or to register, log on to www.reviewofoilandgaslaw.com.

REMINDER: BELO CLOSED IN AUGUST The Belo Mansion will be closed during the month of August due to building renovations. No meetings or CLEs will be held during that time. The building will reopen Tuesday, September 4.

Staff will be available by phone or email during the remodel.

You can still get your CLE credits using the DBA Online CLE Catalog at onlinecle.dallasbar.org.

If special arrangements are required for a person with disabilities to attend a particular seminar, please contact Alicia Hernandez at (214) 220-7401 as soon as possible and no later than two business days before the seminar.

All Continuing Legal Education Programs Co-Sponsored by the DALLAS BAR FOUNDATION. *For confirmation of State Bar of Texas MCLE approval, please call Grecia Alfaro at the DBA office at (214) 220-7447. **For information on the location of this month’s North Dallas Friday Clinic, contact yhinojos@dallasbar.org.

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President’s Column

Headnotes

Lawyers As Leaders in The Community

BY MICHAEL K. HURST

I have heard it said that “leadership” is taking initiative for the benefit of others.

It just so happens that attorneys’ training in law school and in the practice of law prepares us for careers of advocacy and leadership. Because of our access to the courts, businesses, politicians, and political forums, lawyers are in enhanced positions to make a difference in the community. With our law licenses, we have both opportunities and, I humbly suggest, obligations for advocacy and leadership that are not necessarily available to the general population.

Twenty-five of the presidents of the United States were lawyers. Currently, 170 members of the House of Representatives and 60 senators are lawyers. Historically, lawyers in this country have led with their vision, courage, and passion to effectuate change: the adoption and establishment of the Constitution (Jefferson, Madison, and Marshall); anti-slavery (Lincoln); progressivism (Brandeis); Civil Rights (e.g., Thurgood Marshall); and containment of the Soviet Union post WWII, etc.

Like many lawyers today, these lawyers led with their hearts as agents of change through their profession.

More than ever, the Dallas legal community, led by the Dallas Bar Association, is contributing time and energy to improve our community. For example, on May 29 the DBA and the J.L. Turner Legal Association, led by DBA past president Paul Stafford, presented the first program in an initiative entitled COFFEE (Communities Organized for Fairness Equality & Empowerment) in response to the recent alleged racial profiling that transpired at Starbucks, and to address the omnipresent injustice of explicit and implicit bias. The program included insights and remarks from Rev. Dr. Michael W. Waters (Founding Pastor of Joy Tabernacle A.M.E. Church) and Sr. Pastor Richie Butler (St. Paul United Methodist Church), as well as J.L. Turner Legal Association past president Frederick J. Barrow, attendees from the DFW civic, corporate, professional, ecclesiastical, and political communities. Paul said “lawyers are not only armed with the knowledge to serve as guardians of the rule of law— they are imbued with the responsibility to lead with courage, and afforded the opportunity to serve as agents of change.”

Our DBA Board has resolved to extend our outreach, and open our minds and our hearts to other community injustices this year through partnering with community organizations that are meaningful to me and many of my colleagues. I have appointed Chalon Clark and Rocio Cristina Garcia Espinoza to lead our efforts. At our Board meeting each month, a representative from these organizations speaks about their mission and the societal wrong they address.

On April 11, the DBA Board traveled to the Genesis Shelter to meet with Executive Director, Jan Langbein, and to interact with the abused women and children who reside there. Genesis’ mission is to provide safety, shelter, and support to victims of domestic violence and to raise awareness of its cause, prevalence and impact. Many of my colleagues on the DBA Board commented about how impactful the experience was for them,

and that they desired to become more involved.

On May 23, our Board once again embarked upon a journey.

This time on a bus tour that is an initiative of New Friends New Life, an organization that provides education, job training, and interim financial assistance to trafficked women and girls. The tour was led by Phil Campbell, Homeland Security Investigator, and by fellow NFNL Men’s Advocacy Group member, Jeff Williams, the head of the anti-human trafficking department of the Texas Department of Public Safety.

Rocio noted that “taking part in the bus tour of human trafficking locations was impacting because we saw that human trafficking is happening everywhere in Dallas, not just ‘that side of town’; we have to be vigilant and take measures to make sure that we curtail it, including educating ourselves and our community about its existence. We can’t turn a blind eye to this problem because it affects our children.” DBA vice-president Robert Tobey said “Human trafficking is not someone else’s problem. At any given time more than 400 girls are being trafficked in the City of Dallas. Human trafficking is happening less than a mile from my office in Uptown and across the street from a major Dallas corporation and employer.”

On May 30, the One Love Foundation, presented the movie Escalation at the Belo to help bring awareness of the signs of abusive relationships for high school and college kids, and how to intervene before it is too late. This summer, the DBA Board will work with the All Stars Project, which helps thousands of inner-city youth to create success and see the possibilities in themselves. In the Fall, we will continue our journey with other community partnerships.

Of course, lawyers in Dallas have been community leaders for a long time. For instance, the DBA, largely through the leadership of DBA past president Al Ellis, has partnered with Habitat For Humanity for 27 years, and our lawyers have built 28 houses for economically challenged families. We commit hundreds of hours and hundreds of thousands of dollars every year to support pro bono legal services, and are upping our game with the DVAP Endowment this year.

I am not saying that lawyers should forsake financial remuneration for the important legal work we perform for our clients, which compensation is used to provide for ourselves and our families, and to pay back the substantial loans for the privilege of our education. I am saying that we are uniquely situated to have ideas for the betterment of society and to act on those ideas. Leaders generate action from ideas.

Law schools and law firms should foster students and lawyers to create, not just critique. As my kids aptly say, “be a creator, not a hater.” I recently heard a lecture from a retired General that “leaders get things done. They unite people. Leadership matters.” I owe a debt of gratitude for the opportunity to be a lawyer. I feel it is my obligation to lead and give back.

Ronald Reagan said, “We can’t help everyone, but we can help someone.” Let’s see how many someones we can help. I look forward to working with you.

Michael

Published by: DALLAS BAR ASSOCIATION

2101 Ross Avenue Dallas, Texas 75201 Phone: (214) 220-7400 Fax: (214) 220-7465 Website: www.dallasbar.org Established 1873 The DBA’s purpose is to serve and support the legal profession in Dallas and to promote good relations among lawyers, the judiciary, and the community.

OFFICERS President: Michael K. Hurst President-Elect: Laura Benitez Geisler First Vice President: Robert L. Tobey Second Vice President: Aaron Z. Tobin Secretary-Treasurer: Vicki D. Blanton Immediate Past President: Rob D. Crain Directors: A. Shonn Brown (Vice Chair), Jonathan Childers, Chalon Clark, Stephanie Culpepper, Isaac Faz (President, Dallas Hispanic Bar Association), Sakina Foster, Ashlei Gradney (President, J.L. Turner Legal Association), Hon. Martin Hoffman, Krisi Kastl, Dan Kelly, Shruti Krishnan (President, Dallas Asian American Bar Association), Bill Mateja, Karen McCloud (Chair), Kate Morris, Cheryl Camin Murray, Stephanie Osteen (President, Dallas Women Lawyers Association), Hon. Irma Ramirez, Jennifer Ryback (President, Dallas Association of Young Lawyers), Mary Scott, and Victor D. Vital Advisory Directors: Charles Gearing (President-Elect, Dallas Association of Young Lawyers), Erin Nowell (President-Elect, J.L. Turner Legal Association), Javier Perez (President-Elect, Dallas Hispanic Bar Association), Sarah Rogers (PresidentElect, Dallas Women Lawyers Association), and Jason Shyung (President-Elect, Dallas Asian American Bar Association) Delegates, American Bar Association: Rhonda Hunter, Mark Sales Directors, State Bar of Texas: Jerry Alexander, Rob Crain, David Kent, Gregory Sampson, and Brad Weber HEADNOTES Executive Director/Executive Editor: Alicia Hernandez Communications/Media Director & Headnotes Editor: Jessica D. Smith In the News: Judi Smalling Display Advertising: Tobin Morgan, Annette Planey, Jessica Smith Classified Advertising: Judi Smalling PUBLICATIONS COMMITTEE Co-Chairs: Alexander Farr and Carl Roberts Vice-Chairs: Andy Jones and Beth Johnson Members: Timothy Ackermann, Logan Adcock, Wesley Alost, Stephen Angelette, Michael Barbee, David Black, Jason Bloom, Grant Boston, Andrew Botts, Emily Brannen, Jonathan Bridges, Amanda Brown, Angela Brown, Eric Buether, Casey Burgess, Cory Carlyle, Paul Chappell, Charles Coleman, Wyatt Colony, Shannon Conway, Natalie Cooley, Daniel Correa, G. Edel Cuadra, Jerald Davis, James Deets, James Dockery, Elisaveta (Leiza) Dolghih, Angela Downes, Sheena Duke, Charles Dunklin, Dawn Fowler, Juan Garcia, Britaney Garrett, Michael Gonzales, Andrew Gould, Jennifer Green, Kristina Haist, Susan Halpern, Bridget Hamway, Edward Harpole, Meghan Hausler, Jeremy Hawpe, Lindsay Hedrick, Marc Hubbard, Brad Jackson, Andrew Jones, Kristi Kautz, Thomas Keen, Daniel Klein, Michelle Koledi, Kevin Koronka, Susan Kravik, Jess Krochtengel, Dwayne Lewis, Margaret Lyle, Lawrence Maxwell, Jordan McCarroll, R. Sean McDonald, Kathryn (Kadie) Michaelis, Elise Mitchell, Terah Moxley, Daniel Murray, Jessica Nathan, Madhvi Patel, Keith Pillers, Kirk Pittard, Laura Anne Pohli, Luke Radney, Mark Rasmussen, Pamela Ratliff, David Ritter, F. Colby Roberts, Bryon Romine, Kathy Roux, Stacey Salters, Joshua Sandler, Matthew Sapp, Justin Sauls, Mazin Sbaiti, Mary Scott , Jared Slade, Thad Spalding, Jacob Sparks, John Stevenson, Scott Stolley, Elijah Stone, Amy Stowe, Adam Swartz, Ashley Swenson, Robert Tarleton, Paul Tipton, Michael Tristan, Tri Truong, Pryce Tucker, Adam Tunnell, Kathleen Turton, Peter Vogel, Suzanne Westerheim, Yuki Whitmire, Jason Wietjes, Sarah Wilson, Pei Yu DBA & DBF STAFF Executive Director: Alicia Hernandez Accounting Assistant: Shawna Bush Communications/Media Director: Jessica D. Smith Controller: Sherri Evans Events Director: Rhonda Thornton Executive Assistant: Liz Hayden Executive Director, DBF: Elizabeth Philipp LRS Program Assistant: Biridiana Avina LRS Interviewers: Marcela Mejia, Viridiana Mejia Law-Related Education & Programs Coordinator: Melissa Garcia Membership Director: Kimberly Watson Director of Legal Education: Kathryn Zack Publications Coordinator: Judi Smalling Receptionist: Grecia Alfaro Staff Assistant: Yedenia Hinojos DALLAS VOLUNTEER ATTORNEY PROGRAM Director: Michelle Alden Managing Attorney: Holly Griffin Mentor Attorneys: Kristen Salas, Katherine Saldana Volunteer Recruiter: Chris Reed-Brown Paralegals: Whitney Breheny, Miriam Caporal, Tina Douglas, Zaporra Gonzales, Andrew Musquiz, Jamie Odom, Carmen Perales, Alicia Perkins, Dominick Vallejo Program Assistant: Patsy Quinn Secretary: Debbie Starling Copyright Dallas Bar Association 2018. All rights reserved. No reproduction of any portion of this publication is allowed without written permission from publisher.

Headnotes serves the membership of the DBA and, as such, editorial submissions from members are welcome. The Executive Editor, Editor, and Publications Committee reserve the right to select editorial content to be published. Please submit article text via e-mail to jsmith@dallasbar.org (Communications Director) at least 45 days in advance of publication.

Feature articles should be no longer than 750 words. DISCLAIMER: All legal content appearing in Headnotes is for informational and educational purposes and is not intended as legal advice. Opinions expressed in articles are not necessarily those of the Dallas Bar Association.

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Focus

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Bankruptcy & Commercial Law/Franchise & Distribution Law

Defining “Employees” Under FLSA—Who Can Sue?

BY PETER L. LOH AND ABIGAIL DRAKE

The Fair Labor Standards Act (FLSA) sets standards for labor issues, such as minimum wage, overtime, and maintenance of employment records. To bring an action under the FLSA, a plaintiff must establish that he is in fact an “employee,” which is fairly broadly defined by the FLSA. Most courts have developed and applied the “economic realities” test—in essence, the court evaluates whether, as a matter of economic reality, the plaintiff is in business for himself or is dependent on the alleged employer. This test considers (1) the alleged employer’s degree of control; (2) the extent to which the worker’s profit and loss are dependent on the alleged employer; (3) the extent of the worker’s investment in the business relative to the alleged employer’s investment; (4) the permanency of the relationship between the worker and alleged employer; and (5) the initiative and skill the work at issue requires. No one factor is determinative in the economic-realities

test. The Second Circuit, however, uses the “functional control” test, which evaluates the interchangeability of the worker’s position and the extent to which the alleged employer is involved or has the ability to control the worker’s work.

Regardless of the test used, the current definition of “employee” under the FLSA requires the employee be an individual and not an entity. This distinction recently came into play in Acosta v. JaniKing of Okla, in which the U.S. Department of Labor alleged that Jani-King of Oklahoma’s franchisees were employees and not independent contractors. However, the alleged employees included corporate entities, such as limited liability companies. Jani-King moved to dismiss, and the U.S. District Court for the Western District of Oklahoma ultimately determined that the FLSA’s definition of “employee” did not apply to corporate entities, no matter their size or makeup, and dismissed the case with prejudice.

The matter is currently on appeal to the

U.S. Tenth Circuit Court of Appeals.

A very recent decision out of California has shaken things up in the joint-employer world and may eventually impact the determination of “employee” under the FLSA. Dynamex Operations West, Inc. v. Super. Ct. of Los Angeles County reevaluated what it takes to be considered an independent contractor instead of an employee for the purpose of California wage orders. California defines “employee” similarly to the FLSA, and the California Supreme Court started with the assumption that if a person does work for an entity, he or she is an employee.

The court set forth three factors to determine if a person is an independent contractor instead of an employee: (1) whether the worker is free from the control and direction of the alleged employer in connection with the performance of the work both in the terms of any contract between them and in reality; (2) whether the worker performs work that is outside the usual course of the alleged employer’s business; and (3) whether the worker is customarily engaged

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in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.”

Only if the person meets all three of the aforementioned factors will the court determine the person to be an independent contractor and not an employee.

The Dynamex decision is currently limited to California jurisprudence and is a fairly recent decision, but given the similarity of definitions of “employee” between California and the FLSA, it is conceivable that this approach could catch steam in the coming months in FLSA matters. Mixed with the inconsistency in tests between circuits, whether a worker is an employee under the FLSA is a nuanced determination. Franchisors or businesses dealing with independent contractors should be aware of the potential that an independent contractor will be deemed an employee.

HN Peter Loh is a partner and Abigail Drake an associate at Foley & Lardner LLP. They can be reached at ploh@foley.com and ploh@foley.com, respectively.

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Jul y 2 0 1 8 â€

D al l as Bar A ssoci ati on l Headnotes 7

8 He a d n o t e s l D a l l a s B a r A s s o ciation

Jul y 2018

2018 DBA 100 CLUB - WE WANT YOU! What is the DBA 100 Club? The DBA 100 Club is a distinguished membership recognition category that consists of firms, law schools, organizations and government agencies with two or more attorneys as well as corporate legal departments that have 100% membership in the DBA. Recognition is FREE and given to the 2018 DBA 100 Club members in our June, July and August Headnotes and at our Annual meeting in November.

Please note that the DBA 100 Club is FREE recognition and open for renewal annually. We do not automatically renew an organization’s membership due to changes in attorney rosters each year.

Do you see your name on the list? If not, you need to GET ON THE LIST! To become a 2018 DBA 100 Club member, please submit your request via email and include a list of all lawyers in your Dallas office to Kim Watson, kwatson@dallasbar.org. We will verify the list with our member records and, if eligible, we will add your firm to the 2018 DBA 100 Club!

If we receive your qualifying list by July 6th, your firm will be included on the August DBA 100 Club recognition list in Headnotes.

Send in your list TODAY! DBA 100 Club Members as of June 11, 2018 2 to 5 Attorneys A. William Arnold III & Associates, P.C. Ackerman & Ramos, L.L.P. Adair, Morris & Osborn, P.C. Addison Law Firm P.C. Aldous \ Walker Alexander Dubose Jefferson & Townsend LLP Altaffer & Chen PLLC Anderson & Brocious P.C. Anderson Beakley, PLLC Ashcraft Law Firm Atkins, O’Toole & Briner, L.L.C. Atwood Gameros LLP Bisignano Harrison Neuhoff LLP Blackwell & Duncan, PLLC Blackwell, Blackburn & Singer, LLP Broden & Mickelsen Calloway Norris Burdette Weber & BaxterThompson, PLLC Carlock & Gormley Chen Dotson, PLLC Christiansen Davis LLC Clark Law Firm Clark, Malouf & White, LLC Davenport & Epstein, P.C. Duke Seth, PLLC Edwards & de la Cerda, L.L.C. Espinar Law, PLLC Fisher & Welch, P.C. Francis & Totusek, L.L.P. Fuller Mediations Gauntt Koen Binney & Kidd, LLP Gillespie Sanford LLP Goldfarb PLLC Griffith Barbee PLLC Grogan & Brawner P.C. Gussio Law Office Hahn Law Firm, P.C. Hamada Smith, PLLC Hamilton & Squibb, LLP Hance Law Group Hayward & Associates PLLC Henley & Henley, P.C. Herrera & Herrera Hitchcock Evert LLP Hollingsworth Walker Holmes Firm PC

Hunt Huey PLLC Hunter & Kalinke Jameson & Powers, P.C. Johnston Tobey Baruch, P.C. Kellett & Bartholow PLLC Kinser & Bates, L.L.P. Koning Rubarts LLP Langley LLP Law Office of Andrew & Mark Cohn Law Office of Jodi McShan, PLLC Law Offices of Maduforo & Osimiri Law Offices of Otstott & Jamison Law Offices of Terrence G. Turzinski, P.C. Lawrence Law PLLC Lemons & Hallbauer, LLC Letteer & Mock, P.C. Lidji Dorey & Hooper Little Pedersen Fankhauser LLP Madson Castello, PLLC Malouf & Nockels LLP Manning & Kass Maris & Lanier, P.C. Marshall & Kellow, LLP McDowell Hetherington LLP Mincey-Carter, PC MKim Legal Mosser Law PLLC Mullin Hoard & Brown, L.L.P. Musgrove Law Firm, P.C. Nesbitt, Vassar, & McCown, L.L.P. Okon Hannagan, PLLC Olson Nicoud & Gueck, L.L.P. Peeples & Kohler, P.C. Perry Law P.C. Potts Law Firm, LLP Prager & Miller, P.C. Quaid Farish, LLC RegitzMauck PLLC Richardson Koudelka, LLP Riney Packard PLLC Ritter Spencer PLLC Rogaliner Law Offices, P.C. Ross Barnes LLP Russell & Wright, PLLC Sawicki Law Schubert & Evans, P.C. Schuerenberg & Grimes, P.C. Shamieh Law PLLC Sheils Winnubst, PC

Smith, Stern, Friedman & Nelms, P.C. Sorrels Hagood The Swartz Law Firm, PLLC Turton & Pinkerton, PLLC Van Wey Law, PLLC Walker & Long Wolff Law, PLLC Woolley <> Wilson, LLP. Yarbrough & Elliott, P.C. Law Firms with 6 or More Attorneys Amy Stewart PC Baker Botts, L.L.P. Bell Nunnally & Martin LLP Bragalone Conroy PC Brousseau Naftis & Massingill Brown Fox PLLC Burford & Ryburn, L.L.P. ByrdAdatto Canterbury, Gooch, Surratt, Shapiro, Stein & Gaswirth, P.C. Carrington, Coleman, Sloman & Blumenthal, L.L.P. Carstens & Cahoon, LLP Carter Arnett PLLC Cavazos Hendricks Poirot, P.C. Cobb Martinez Woodward PLLC Connatser Family Law Cooper & Scully, P.C. Cowles & Thompson, P.C. Crain Lewis Brogdon, LLP Crawford, Wishnew & Lang PLLC DeHay & Elliston, L.L.P. Drinker Biddle & Reath LLP Duffee + Eitzen LLP Estes Thorne & Carr PLLC Figari & Davenport, L.L.P Godwin Bowman & Martinez PC Griffith Davison & Shurtleff, P.C. Guida, Slavich & Flores, P.C. Hankinson LLP Harper Bates & Champion LLP Hedrick Kring, PLLC Hiersche, Hayward, Drakeley & Urbach, P.C. Hoge & Gameros, L.L.P. Jones Carr McGoldrick L.L.P. Kelly, Durham & Pittard, LLP Key Harrington Barnes PC KoonsFuller Lynn Pinker Cox & Hurst, LLP

Malouf Nakos Jackson & Swinson, P.C. McCathern, PLLC McGuire, Craddock & Strother, P.C. McKool Smith P.C. Meadows, Collier, Reed, Cousins, Crouch & Ungerman, L.L.P. Munsch Hardt Kopf & Harr, P.C. Passman & Jones, P.C. Peckar & Abramson, P.C. Sayles Werbner, P.C. Sheppard Mullin Richter & Hampton LLP Stacy Conder Allen LLP Stuber Cooper Voge, PLLC The Ashmore Law Firm, P.C. The Hartnett Law Firm Thiebaud Remington Thornton Bailey LLP Thompson & Knight LLP Tollefson Bradley Mitchell & Melendi, LLP Udashen Anton Verner Brumley Mueller Parker, P.C. Vincent Serafino Geary Waddell Jenevein, P.C. White Wiggins & Barnes, LLP Wilson, Elser, Moskowitz, Edelman & Dicker, L.L.P. Winstead PC Zelle LLP Corporate Legal Departments Buckner International Capital Senior Living, Inc. Compatriot Capitol Inc. Dunhill Partners, Inc. Front Burner Restaurants, LP Gaedeke Group HighGround Advisors KidKraft, Inc. Klein Tools, Inc. LALA U.S., Inc. Tenaska, Inc. Government Agencies, Law Schools & Organizations City of Irving Dallas Baptist University Dallas County Probate Courts Mosaic Family Services Inc. UNT Dallas College of Law Special Recognition Student Members of UNT Dallas College of Law

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D al l as Bar A ssoci ati on l Headnotes 9

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10 H e a d n o t e s l D a l l a s B a r A s s ociation

Focus

Jul y 2018

Bankruptcy & Commercial Law/Franchise & Distribution Law

Your Client Receives a Preference Demand – What to Do Now

BY RUSSELL MILLS AND KENT LOVE

How can this be? It does not seem fair! A party who owes your client money files for bankruptcy to discharge the debt and, adding insult to injury, the party now demands that your client return money the party previously paid toward its obligation. Despite the apparent inequity, Section 547 of the Bankruptcy Code authorizes just that, allowing a trustee or debtor-in-possession to recover certain payments, or “preferential transfers,” made to creditors by the debtor during the 90-day period preceding the bankruptcy filing. But which ones are recoverable?

This article will provide non-bankruptcy practitioners with a primer on how to assess these preference claims.

Because preference demands are regularly asserted whenever any business files bankruptcy, it is important for all practitioners to have a basic understanding of the elements and defenses available for these claims.

Elements

In order to recover a transfer under Section 547, a trustee must establish five elements by a preponderance of the evidence.

First, the transfer must be of a debtor’s interest in property to or for the benefit of your creditor client. For example, the transfer can be a monetary payment or the granting of a lien in favor of your client.

Second, the transfer must be on account of an “antecedent debt.” In other words, the debt must have arisen before

the payment was made.

Third, the transfer must have been made while the debtor was insolvent.

The Bankruptcy Code uses the typical “balance sheet” test for insolvency and there is a rebuttable presumption that the debtor was insolvent during the 90 days preceding the debtor’s bankruptcy filing.

Fourth, the transfer must have been made within 90 days of the bankruptcy filing, or within one year if your client is an “insider.”

Finally, the transfer must have enabled your client to receive a greater share of the debtor’s assets than it would have otherwise received in a hypothetical Chapter 7 liquidation. This element is typically satisfied unless your client is fully secured (i.e., the value of your client’s collateral is greater than the debt).

A fully secured creditor cannot be forced to return a transfer because it is entitled to realize the full value of its collateral in bankruptcy.

Defenses

Even if all of the above elements are satisfied, your client can still retain the transfer by proving that one or more affirmative defenses apply. While there are many defenses to preference claims, three are most commonly asserted.

First, a trustee cannot recover a transfer if your client provided goods or services contemporaneously with the debtor’s payment for those goods or services. Thus, cash-on-delivery transactions are generally exempt from preference liability.

Second, a trustee cannot avoid a transfer made in the ordinary course of business. To prove this defense, your cli-

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ent must show that the transfer was consistent with either (1) the parties’ prior course of dealing, or (2) common industry practice. It is important to note that the term “ordinary” does not refer to the type of expense, but instead refers to whether the payment was made within a similar amount of time and under similar terms as payments made prior to the preference period.

Third, if your client subsequently provides new value (i.e., new goods or services) after a preferential transfer, the value of those goods or services can be used as a dollar-for-dollar offset against the preferential payment. However, new value can only be used to offset the immediately preceding payment; there is no netting of all new value against all payments made during the preference period.

Practice and Procedure

Trustees commonly send demand letters to creditors who received payments during the preference period with little or no analysis into the elements or available defenses. Many of these creditors will simply return the money while overlook-

ing even the most obvious defenses to preference liability.

For those who do not return the money, the trustee will file a lawsuit, or an “adversary complaint,” in the bankruptcy court. These “adversary proceedings” can involve substantial discovery and pre-trial motion practice just as any other lawsuit and, as a result, preference litigation can become extravagantly expensive.

To avoid this, it is usually best to respond to a trustee early, asserting all viable defenses and providing supporting documentation. Fortunately, trustees are typically willing to entertain settlement offers at a significant discount before a lawsuit is filed.

Engaging a skilled bankruptcy professional early in the process to undertake a thorough analysis and initiate settlement discussions can often significantly reduce or even eliminate preference liability, thereby avoiding expensive litigation.

HN Russell Mills is a partner at Bell Nunnally & Martin LLP. Kent Love is an associate attorney at Hiersche, Hayward, Drakeley & Urbach, P.C. They can be reached at rmills@bellnunnally.com and klove@hhdulaw.com, respectively.

Client Development— Speak at a DBA Program Interested in sharing your legal knowledge and expertise with your colleagues? The CLE Committee is looking for speakers willing to present on topics of interest to a broad range of members for the Friday Clinic programs it holds throughout the year. Please submit a short bio, title, and 2-3 sentence description of your presentation to yhinojos@dallasbar. org. Submissions will be discussed at monthly CLE Committee meetings.

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“The Intersection of History at the Belo Mansion, the Belo Family and the Dallas Bar Association” Speaker: Rob Crain Tuesday, July 17, Noon at Belo | MCLE 1.00

Jul y 2 0 1 8

Focus

D al l as Bar A ssoci ati on l Headnotes 11

Bankruptcy & Commercial Law/Franchise & Distribution Law

The Power of the U.S. Bankruptcy Code’s Automatic Stay

BY AMBER M. CARSON

The protection afforded by the automatic stay is arguably the most powerful instrument in a debtor’s toolbox. As globalization of businesses and economies increase, more and more commercial enterprises are forced to examine the impact, if any, of a domestic bankruptcy case on their foreign creditors and assets.

For instance, if foreign creditors are permitted to seize a debtor’s international assets notwithstanding the debtor’s U.S. bankruptcy proceeding, such seizure can result in significant adverse consequences, including, but not limited to: a loss of value to the debtor’s bankruptcy estate (and, in turn, its creditors as a whole), confusion and chaos when administering the debtor’s assets, and depending on what percentage of the debtor’s assets are located internationally, ultimately negate the debtor’s entire purpose for filing for bankruptcy protection.

Pursuant to section 362 of the Bankruptcy Code, the commencement of a bankruptcy case operates as a stay of various actions, including the commencement or continuation of judicial proceedings, the enforcement of judgments, collection activities, perfection of liens, and the setoff of debts against the debtor or its property. This is known as the “automatic stay” and is applicable to all persons. The purpose of the automatic stay is to allow a debtor a “breathing spell” from litigation and collection activities, thereby enabling the debtor time to repay its debts (to the best of its ability) or reorganize. It also provides a court the sole authority to control and marshal the debtor’s assets

over which it has in rem jurisdiction. This ameliorates the chaos, delays, and added expense that ensue as a result of creditors pursuing remedies against the debtor in several different courts.

The automatic stay applies to a debtor’s property “wherever located.” 11 U.S.C. § 541(a). Based upon this language, many courts have held that the automatic stay applies extraterritorially by way of in personam jurisdiction, thereby applying with equal force to actions taken outside of the United States. Such an interpretation means that, for example, once a debtor files for bankruptcy in the United States, foreign involuntary bankruptcy proceedings against the debtor, foreign proceedings seeking a judgment against the debtor, and seizure of the debtor’s foreign assets are all violations of the automatic stay.

Policy reasons justify extending the reach of the automatic stay extraterritorially. When several insolvency proceedings by or against the same debtor are initiated in different countries, each applying different laws, there is no uniformity.

Besides adding significant additional cost and delay to already complicated proceedings, creditors receive widely differing distributions of benefits depending upon where the debtor’s assets are located at the initiation of each proceeding. Furthermore, in such a case, reorganization is largely impossible, thereby depriving the community and company from the entity’s going concern value. These policy concerns drove the creation of the UNCITRAL Model Law on Cross-Border Insolvency (the “Model Law”), which has now been enacted in some form by over

forty countries around the globe, including the United States, Great Britain, Canada, and Mexico. The Model Law sets out guidelines for recognition of foreign insolvency proceedings and allows debtors the ability to seek recognition of the automatic stay in foreign countries that have adopted the Model Law. Courts have found additional justification for extraterritorial application of the automatic stay when foreign creditors actively participate in a debtor’s bankruptcy proceeding. Certain activities, such as seeking relief or filing a proof of claim in a United States bankruptcy court, can result in an inferred submission of the creditor to the court’s jurisdiction.

In such a case, courts have justified the application of United States bankruptcy laws to a foreign transaction or occurrence.

Domestic courts applying the automatic stay extraterritorially can be incredibly defensive over its protections.

Courts that have perceived violations of the automatic stay by foreign creditors have issued orders holding foreign creditors in contempt, imposing sanctions, and even threatening to issue bench warrants.

Whether such punishments are effective against a foreign creditor, however, is an issue for another day.

In sum, both domestic debtors and foreign creditors need to be aware of the potential impact of the automatic stay on operations, proceedings, and property outside the borders of the United States.

Until the Supreme Court of the United States makes a definitive ruling regarding the extraterritorial reach of the automatic stay, foreign creditors should exercise caution before taking any actions in their home countries that could violate this all-important and protected provision of the Bankruptcy Code.

HN Amber M. Carson is an associate at Gray Reed & McGraw LLP. She may be reached at acarson@grayreed.com.

Minority Clerkship Luncheon “Building Relationships Inside and Outside Your Organization” Friday, July 6, Noon at Belo | Ethics 1.00 Speakers: John Ansbach, PJ Dunn, Nicole Munoz, Jennifer Wang and Karen McCloud, Moderator RSVP to bavina@dallasbar.org.

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12 He a d n o t e s l D a l l a s B a r A s s ociationâ&#x20AC;

Jul y 2018

BAR NONE XXXIII Once again, Bar Noneâ&#x20AC;&#x2122;s cast revealed that their abilities extend beyond the practice of law. Celebrating their 33rd year, Bar None XXXIII: Suemanji: Welcome to the Courthouse provided an uproarious performance! Led by show director Martha Hardwick Hofmeister, choreographer Rhonda Hunter, and producer Tom Mighell, the show played for four nights in June, and thanks to the Dallas Bar Foundation and these hard-working singers, dancers and actors, more than $1.5 million has been contributed to the Sarah T. Hughes Diversity Scholarships, benefitting nearly 50 law students since 1986.

For more information, visit www.barnoneshow.com. Photo credits: Scott Alden.

Jul y 2 0 1 8

D al l as Bar A ssoci ati on l Headnotes 13

Suemanji: Welcome to the Courthouse

Thank You, Bar None Sponsors!

On behalf of the Sarah T. Hughes Diversity Scholarship, the Dallas Bar Foundation salutes and thanks the following sponsors of Bar None XXXIII. Their generous contributions not only benefit the scholarships, but they made this year’s show possible.

Mogul:

Carter Arnett • Hartline Dacus Barger Dreyer

Producers:

Attorney at Law Magazine • DataPlus Consulting • Platinum Point Media • Sarah T. Hughes Alumni Scholars

Directors:

Burdin Mediations • DBA Business Litigation Section • DBA Corporate Counsel Section • Farrow-Gillespie & Heath Witter, LLP • Haynes and Boone, LLP • Kastl Law • Shackelford, Bowen, McKinley & Norton, LLP

Stars:

Altrusa Int’l of Downtonw Dallas, Inc. • Brown & Hofmeister, LLP • Cooper & Scully, P.C. • Cowles & Thompson, P.C. • Dallas County District Attorney’s Office, Juvenile Division • DBA Mergers & Acquisitions Section • DBA Trial Skills Section • El Centro College • ExxonMobil • Hance Law Group • Hunton Andrews Kurth • John K. Horany P.C. • Koning Rubarts LLP • Millenium Settlements • Siemens PLM Software • The Gwinn Foundation • Waters Kraus & Paul, L.L.P. • William “Mac” Taylor American Inn of Court

14 H e a d n o t e s l D a l l a s B a r A s s o ciation

Column

Jul y 2018

Ethics

Beware the Zone of Insolvency and Unexpected Fiduciary Duties

BY HERSHEL CHAPIN AND ZIRWA SHEIKH

Texas lawyers have duties to safeguard clients who are organizations from reasonable risks that can and do occur within the scope of legal representation. Tex. Disciplinary Rules Prof’l Conduct R. 1.12(a). Likewise, Texas lawyers have duties to remediate consequences of those same risks in a reasonable manner. Id. R. 1.12(b),(c). Furthermore, Texas lawyers must also give appropriate disclaimers to control persons of entities when necessary to properly delineate the boundaries of the legal representation to avoid the problems of multiple, or conflicted representation. Id. R. 1.12(e). This particular set of axioms are especially tested by situations involving (and approaching) insolvency.

Under Texas law, a solvent entity’s directors generally owe no fiduciary duties to nontort creditors. See e.g. Tex. Bus. Org. Code §§ 21.223, 101.114 (Vernon 2012). However,

upon the occurrence of insolvency and the cessation of operations, the fiduciary duties of directors expand to include creditors as beneficiaries pursuant to the so-called “trust fund doctrine.” Fagan v. La Gloria Oil & Gas Co., 494 S.W.2d 624, 628 (Tex. App.—Houston [14th Dist.] 1973).

Insolvency is typically diagnosed in one of two ways: via reference to cash flow (matured debts cannot be paid in the ordinary course of business) or via reference to the balance sheet (assets minus liabilities equals a negative number).

The trend for Texas law has been to apply the “trust fund doctrine” to impose retroactive liability to officers in scenarios where the entity had only begun to approach insolvency. This condition is often termed the “Zone” or “Vicinity of Insolvency.” One of the seminal Texas law cases on the subject is Weaver v. Kellogg, 216 B.R. 563, 583-84 (S.D. Tex. 1997). Paradoxically, the crite-

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rion of “cessation of operation” appears to be necessary for such claims to accrue. Aurelius Cap. Master, Ltd. v. Acosta, 3:13-CV-1173-P, 2014 WL 10505127, at *2 (N.D. Tex. Jan. 28, 2014). In practicality, such territory could prove difficult to identify except perhaps in hindsight. So how exactly is a conscientious lawyer supposed to identify where this “zone” begins and ends? The answer remains undefined, but seems to be something akin to “when the entity begins to experience financial distress” and/or “when future insolvency becomes inevitable or imminent.”

The Delaware Court system has led the way in recognizing situations where the “zone” emerges. See Credit Lyonnaise Bank Nederland, N.V. v. Pathe Comm, Corp., No. 12150, 1991 WL 277613 (Del. Ch. Dec. 30, 1991). In federal Fifth Circuit jurisprudence, control persons’ awareness of financial distress is a major factor defining the zone’s borders. See Carrieri v. Jobs.com, Inc., 393 F.3d 508 (5th Cir. 2004).

One of the areas where Texas law has diverged from Delaware law is Texas courts’ refusal to recognize an independent tort for “Deepening Insolvency,” in other words, directors’ taking an entity experiencing insolvency and making it even more (and hopelessly) indebted. See Official Comm. of Unsecured Creditors of Vartec Telecom, Inc. v. Rural Tel. Fin. Coop; In re Vartec Telecom, Inc., 335 B.R. 631, 644 (Bankr. N.D. Tex. 2005). Both states’ judicial systems share the common precept that directors’ discharge of their fiduciary duties is balanced against the “business judgment rule,” a rebuttable presumption that directors acted on an informed basis, in good faith, and in the honest belief that the action was taken in the best interests of the business. See Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984).

It is also important to be aware of the relative risks of litigation created by direct versus derivative claimants. “Trust Fund Doctrine” creditors are relegated to the status of derivative claimants. In re VarTec Telecom, Inc., 2007 WL 2872283, *2-3 (Bankr.

N.D. Tex. September 24, 2007); U.S. Bank Nat’l Ass’n v. Stanley, 297 S.W.3d 815 (Tex. App.—Houston[14th Dist.] 2009).

Helpful General Recommendations: • Advise entity clients or their officers to make careful and informed decisions so as best to arrive at a business decision that will most likely be deemed as a proper exercise of the business judgment rule under any circumstance.

• Poke your nose in your client’s business: seek clarification as to client’s financial condition (and document such efforts).

• Embrace the uncertainty: don’t be afraid to hedge advice: “in a solvent scenario…, but in an insolvent scenario…”

• Advise clients as to consequences of continuing or ceasing operations.

• Carefully document advice given to control persons regarding minimizing their potential liability in expanded fiduciary roles scenarios.

• Remember to give—and document giving—Upjohn warnings to control persons when discussing expanding fiduciary roles.

• Advise clients to form special committees as needed and possibly even to involve groups of creditors in decision-making processes if approaching or entering the “zone of insolvency.”

HN Zirwa B. Sheikh is an associate at H. R. Chapin, Attorney & Counselor, PLLC and may be reached at zbsheikhlaw@gmail.com. Hershel R. Chapin is the managing attorney of H. R. Chapin, Attorney & Counselor, PLLC and the 2018 chair of the Dallas Bar Association Legal Ethics Committee. He may be reached at hchapin@gmail.com.

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Focus

D al l as Bar A ssoci ati on l Headnotes 15

Bankruptcy & Commercial Law/Franchise & Distribution Law

Industry Specific Relationship Statutes — Traps for the Unwary

BY DEBORAH COLDWELL, JAMEE COTTON, AND SALLY DAHLSTROM

If you represent clients seeking advice for a franchise or distribution company in Texas, read this article and take heed! As most lawyers know, some states have franchise relationship laws that are normally designed to protect franchisees from termination or nonrenewal without cause. While the Lone Star State does not have a generally applicable franchise relationship law, it does have many nuanced industryspecific relationship statutes regulating a wide assortment of businesses, from automobile dealers and manufacturers, to farm and industrial equipment manufacturers and wholesalers, to beer, wine and other alcoholic beverage manufacturers and distributors.

Motor Vehicles. The Texas motor vehicle dealer law addresses the manner of termination or nonrenewal, unfair practices, structure, transfer, and operations of a motor vehicle franchise.

These laws apply to manufacturers, distributors, and dealers. The Texas Motor Vehicle Board has exclusive jurisdiction to ensure compliance with these laws, and Texas courts provide a great degree of deference to the Board’s decisions. See Tex. Occ. Code Ann. § 2301 et. seq. The statute also imposes a duty of good faith and fair dealing actionable in tort on each party to the franchise.

Id. § 2301.478.

Farm and Industrial Equipment.

Texas regulates farm and industrial equipment dealer relationships in similar ways. This statute provides for manufacturer repurchase of equipment upon termination, prohibits termination without cause, protects the rights of the dealer to transfer, and addresses various operational issues. Do not assume your client’s business is not subject to this statute merely because it does not

deal in tractors. The range of products covered by this law varies widely and includes machinery, equipment, or attachments to machinery or equipment used for, or in connection with, landscaping, agricultural activities, construction, and mining, among many other activities. See Tex. Bus. & Com. Code § 57 et. seq.

Alcoholic Beverages, including Beer, Ale, and Malt Liquor. Perhaps one of the more interesting industries subject to relationship regulation in Texas is the alcoholic beverage industry. With the number of breweries and distilleries in Texas on the rise, the Beer Industry Fair Dealing Law (Beer Franchise Law) warrants special attention. The law regulates the relationship between a beer manufacturer (brewer) and a beer distributor and the rights of a distributor to purchase, resell, and distribute beer offered by the manufacturer. Tex. Alco. Bev. Code § 102.71, et seq. It also provides protections for a distributor related to termination, territory, dispute resolution, and inventory repurchasing requirements. It typically requires 90 days’ notice and good cause for termination, cancellation, or nonrenewal. The law also applies to agreements concerning the distribution and sale of ale and malt liquor. Id. § 102.81.

Texas courts are actively dealing with craft beer brewing disputes. Late last year in Texas Alcoholic Beverage Commission v. Live Oak Brewing Co., et al., 537 S.W.3d 647 (Tex. App.—Austin 2017, pet. filed), an appellate court ruled on the constitutionality of a provision in the statute that forbids selfdistributing beer brewers from selling the distribution rights to their products.

Tex. Alco. Bev. Code § 102.75(a)(7).

In 2014, three Texas-based craft breweries sued the Commission challenging the constitutionality of a provision stating that it is unlawful for a

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Starting in the late 1980s with a large firm, I knew I wanted to work with individuals as I had time. As my available time increased (that takes a while in a big firm!), I got involved first with clinics in South Dallas, then Garland.

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brewer to “accept payment in exchange for an agreement setting forth territorial rights.” The trial court granted summary judgment for the brewers, declaring the prohibition on a brewer’s sale of its distribution rights unconstitutional under the “due course of law” guarantees of the Texas Constitution. The Austin Court of Appeals reversed the decision, however, and upheld the constitutionality of the challenged provision. The brewers had argued that the statute denied them their fundamental economic liberty interest and that the statute was a naked transfer of wealth to beer distributors at the expense of brewers. The appeals court disagreed, noting that the same law including this prohibition also gave Texas brewers the right to distribute to retailers and to sell directly to consumers for on-site consumption. The court

further noted that this type of compromise was the result of legislative horse trading among the various constituencies of the beer industry.

Texas continues to provide the protection of special relationship laws to certain industries. These statutes often regulate the nonrenewal and termination of agreements, may impose a duty of good faith and fair dealing on the parties, and frequently dictate notice and cure timelines. A wary practitioner should remain mindful of the complexities and nuances of the various Texas statutes regulating those industries. HN Deborah Coldwell is a partner and Jamee Cotton and Sally Dahlstrom are associates at Haynes and Boone, LLP. They can be reached at deborah.coldwell@haynesboone.com, jamee.cotton@haynesboone.com, and sally.dahlstrom@ haynesboone.com, respectively.

16 H e a d n o t e s l D a l l a s B a r A s s o ciation

Focus

Jul y 2018

Bankruptcy & Commercial Law/Franchise & Distribution Law

Five Common Questions When a Franchisee Files for Bankruptcy

BY CHERYL MULLIN, LAURA CANADA LEWIS, AND JIM REA

Lawyers who represent franchisors often hear a similar set of questions when a franchisee files bankruptcy.

The authors have collected five of the most common questions they field from franchisors after a franchisee files bankruptcy in addition to the general application of the automatic stay of 11 U.S.C. § 362.

Question: “Will I get paid for the goods we just delivered?”

Answer: Maybe. Section 503(b)(9) of the Bankruptcy Code authorizes a party who sold goods to the debtor in the ordinary course of business to make a claim for the value of goods received by the Debtor in the 20 days prior to bankruptcy. For the Debtor to confirm a Chapter 11 plan of reorganization, your client’s administrative claim must be paid in full. But, advise your client to remain patient. It may be several months before they receive any money.

Additionally, subject to state law and other limitations stated in Section 546(c)(1) of the Bankruptcy Code, goods sold to the debtor in the 45 days prior to bankruptcy may be subject to reclamation.

Question: “The Debtor owes me money! Is it true I may have to give some of that back?”

Answer: Yes. Subject to available

defenses, your client may have to pay back some of the money it received from the Debtor. Sections 547 and 550 of the Bankruptcy Code allow the Debtor or Trustee to recover payments made within 90 days of the bankruptcy filing to the extent the payments provided the franchisor with an advantage vis-à-vis other creditors.

Question: “Does the franchise agreement survive the bankruptcy?”

Answer: Franchise agreements in effect when the bankruptcy is filed are typically treated as executory contracts. In general, a debtor has the right to assume or reject the franchise agreement and, unless precluded by other law, assign it to another party (such as when the Debtor sells its business). For the Debtor to assume an executory contract, the Bankruptcy Code requires the Debtor to: (a) cure or provide adequate assurance defaults will be cured; (b) compensate or provide adequate assurance of compensation for the franchisor’s pecuniary loss; and (c) provide adequate assurance of future performance of the contract. The Bankruptcy Code also sets certain deadlines to assume the franchise agreement. If the agreement is not expressly assumed within those deadlines, the agreement is deemed rejected, and the franchisor has a general unsecured claim for damages.

Question: “The franchise agreement was not terminated before the bankruptcy.

Can it be terminated now?”

Answer: Yes, with the Bankruptcy Court’s approval. The franchisee-debtor’s rights under the franchise agreement are protected by the automatic stay of 11 U.S.C. § 362. To terminate the agreement your client will have to seek and obtain court approval. Generally speaking, this will require the franchisor to prove that the debtor is in default, not performing their obligations and has little or no hope of curing its defaults.

Question: “Is the Agreement discharged?”

Non-Compete

Answer: This is a complex question. Authorities are split on whether the non-compete covenants are discharged. Applicable state law and the terms of the contract further complicate the issue. The covenants in most franchise agreements provide for injunctive relief and liquidated damages. Currently, the most common analysis starts by considering whether the non-compete gives rise to a “claim.” Under Section 101(5) of the Bankruptcy Code, a “claim” includes a “right to payment” or “right to an equitable remedy for breach of performance

if such breach gives rise to payment . . .” 11 U.S.C. § 101(5)(A) & (B).

Under this approach, if the only adequate remedy for violation of the noncompete is injunctive relief as opposed to a “claim,” then the enforcement of injunctive relief is not a “claim” against the debtor’s bankruptcy estate that is subject to discharge. As a result, the debtor is still bound by the covenant not to compete after a discharge is entered in the bankruptcy. The recent case In re La Femina, 2017 WL 4404254 (Bankr. E.D.N.Y. Sept. 2017) (addressing enforcement of the non-compete provision under the Camp Bow Wow franchise agreement) provides a good survey of the complex issues related to non-competes in bankruptcy and the disarray in opinions.

Franchisee bankruptcies present complex issues and many competing interests. The authors recommend you refer your client to bankruptcy counsel to review their specific situation. HN Cheryl L. Mullin, J.D., LL.M and Laura Canada Lewis, J.D. are Shareholders at Mullin Law, P.C. They can be reached at cheryl.mullin@mullinlawpc.com and laura. lewis@mullinlawpc.com, respectively. Jim Rea, J.D., is an attorney at McGuire, Craddock & Strother, P.C. He can be reached at jrea@mcslaw.com.

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Jul y 2 0 1 8

Focus

D al l as Bar A ssoci ati on l Headnotes 17

Bankruptcy & Commercial Law/Franchise & Distribution Law

Bankruptcy Treatment of LLC Member Interests

BY HON. HARLIN D. HALE AND ELIJAH C. STONE

If a member of a multi-member LLC files bankruptcy, what happens to the debtor’s interest in the LLC? Can the debtor-member continue on as if nothing happened, or has the debtor-member’s interest terminated? Are the non-debtor members now business partners with the bankruptcy trustee? The answer is, unsurprisingly, “it depends.” This article peers into the murky waters one must navigate to answer these questions.

Fundamentally, an LLC member’s interest includes two components: (1) economic rights (e.g., rights to profit or property distributions) and (2) non-economic rights (e.g., managerial rights such as voting). When a debtor files bankruptcy, § 541 of the Bankruptcy Code says that all the debtor’s interests become property of the bankruptcy estate. It follows that the estate receives both the economic and managerial rights.

Once the LLC interest enters the estate, the critical issue becomes whether the LLC’s Operating Agreement is an executory contract. The Code doesn’t define an executory contract, but the most widely accepted definition comes from Professor Vern Countryman: a contract under which the obligations of both parties are so far underperformed that the failure of either party to perform would constitute a material breach excusing the performance of the other.

This is where things get muddy. Case law is far from clear on what creates a material obligation. In many instances, courts come to different conclusions under similar facts.

An agreement appears executory when it requires a member to actively participate in

management, provide services, or contribute capital. On the other hand, if the Operating Agreement merely sets out a management structure—or if the failure to perform an explicit obligation is immaterial—the agreement is likely non-executory.

Take the simpler outcome first. If nonexecutory, the debtor-member’s interest is property of the estate, and the debtor or trustee may exercise the economic and managerial rights. The agreement itself and underlying state law provide the content of those specific rights.

Now let us wade into the mire of executory Operating Agreements. If executory, then § 365 applies, which provides that the trustee may assume, reject, or assign the agreement. But there is one significant exception in § 365(c): the trustee may not assume or assign any executory contract if “applicable law” excuses the counterparty from accepting performance from an entity other than the debtor.

The next step is to determine whether such “applicable law” exists. Most states, including Delaware, have an LLC statute that dissociates a member upon filing bankruptcy. Dissociation usually results in a loss of managerial rights but not economic rights.

Under the Texas LLC statute, rather than dissociate the member upon bankruptcy, the statute provides that an assignee of a member’s interest is not entitled to participate in management. For our purposes, this is a similar but technically distinct result compared to dissociation.

Generally, the Bankruptcy Code invalidates with great antipathy any contract provision or statute that limits the debtor’s rights solely on account of a bankruptcy (so-called ipso facto clauses). But under §

365(e), ipso facto clauses modifying or terminating the debtor’s rights are enforceable to the extent that “applicable law” excuses the counterparty from accepting performance from someone besides the debtor.

Under these statutes, the non-debtor members are relieved from accepting managerial performance, but they are not relieved from rendering economic performance.

Because “applicable law” excuses the non-debtor members from accepting performance from someone besides the debtormember, § 365(c) prohibits the Operating Agreement’s assumption. To add another layer of complexity, courts are split on whether this prohibition applies when the debtor-member itself intends to perform.

Under the “hypothetical” test (Third, Fourth, Ninth, and Eleventh Circuits), the debtor cannot assume the agreement if applicable law excuses the counterparty from accepting performance from a hypothetical third party. Under the “actual” test (First and Fifth Circuits), courts disallow assumption only if actual third-party assign-

ment is contemplated.

Here’s an attempt to clarify. If the Operating Agreement is non-executory, the debtor or bankruptcy trustee can immediately exercise both the economic and managerial rights. In contrast, if the agreement is executory, then § 365 kicks in to preserve certain ipso facto clauses that strip away the debtor’s previously held managerial rights.

This is much more favorable to non-debtor members.

The takeaway: If non-debtor members desire the enhanced protection of § 365, which often prevents a stranger to the LLC—and sometimes the debtor—from exercising managerial rights, the members must ensure that the Operating Agreement is executory. This is accomplished by creating material, ongoing obligations on the part of all members.

HN Hon. Harlin D. Hale is a U.S. Bankruptcy Judge for the Northern District of Texas, Dallas Division. Elijah C. Stone received his J.D. in May 2018 from SMU Dedman School of Law, and he will join Jones Day in Dallas in the fall. He can be reached at ecstone@smu.edu.

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18 H e a d n o t e s l D a l l a s B a r A s s o ciation

Jul y 2018

Communication Skills Part I: Communicating with New Clients

BY CLAUDE DUCLOUX

In my speeches to young lawyers around the country I tell them there is no more important skill to the successful practice of law than to effectively communicate with all of the participants in your legal system. This includes your clients, any court or governmental unit which is involved in your practice, as well as opposing counsel. Your ability to communicate effectively demonstrates integrity, knowledge, empathy, and continuing thoughtful evaluation of changing circumstances.

I also personally believe that good communication habits also make you a better lawyer because effective communication practices require you to constantly evaluate, distill, and clarify positions, changing dynamics, opportunities for resolution, and risk. But, I’m getting a bit ahead of myself. Let’s discuss this in the general chronological order of practice.

The Client

Always remember that you rarely encounter a new client in a celebratory mood. Clients who are coming to see lawyers (just like doctors) are usually trying

Column

to address a stressful failure in their life, whether that be an unexpected social condition, a failure resulting from their own inappropriate decisions, or an unforeseen event like an injury or other loss caused by themselves or an opposing party. Bottom line: new clients are rarely happy.

Your communications skills, presentation, and forming the “bond” of trust and professionalism starts the moment the client meets you for the first time. In the majority of situations, nothing will be more important than the bond of respect you form in your initial interview. So, how do you do that?

Initial Presentation

First and foremost, present yourself as a professional. For me, someone who has been practicing nearly 40 years, I will always wear a tie: I want to look like the image that a new client would expect someone of my age and generation to look like. Your own personal style, your age, your cultural orientation may dictate a different look, but again, the result should be that the Client sees a person who looks professional. If you present unprofessionally, you add an unnecessary barrier which you must overcome.

Be Sensitive, Attentive, and Thorough

In any initial interview, you “begin the healing process.” Devote 100 percent of your attention to interviewing and sizing up this client. Emotionally, this means empathizing with their plight, being patient as they unload information (which often may be more than you actually need), and simply allowing the Client to vent.

As you will see, because the goal of this initial interview is “reasonable expectations” on everyone’s part, you may be required to “push back” on unrealistic expectations, bad facts, etc. You cannot do that (i.e., thoughtfully criticize or push back) with credibility unless you have thoroughly extracted all the information from the client that will be the basis of your overall analysis. Further, by being patient, you may discover facts which change your opinion of the case.

The Goal: Reasonable Expectations

Remember, your client is always looking for you to lead the client to a solution.

Lawyers are taught early in law school that a good contract requires a “meeting of the

minds.” This applies to the attorney-client relationship. The object of a good interview is to result in reasonable expectations: the scope of work the lawyer will do, the relief or resolution being sought, the alternatives to be explored, and the basis of the fee. Moreover, the client’s willingness to pay you (as well as your willingness to continue working) depends on each side honoring this agreement. Boiled down to its most basic formula the interchanged messages should be: From Lawyer’s perspective, communicate: “I will do this for you and you will compensate me by doing X.” From the client’s perspective, the client should leave with these thoughts and understandings: “I understand what you are going to do for me, what my alternatives are, how long it might take, and how I will compensate you.”

Keep this primary concept in mind: If you achieve reasonable expectations, it allows you to collaborate with the client to achieve realistic and lawful goals and outcomes. Keep the word “collaboration” in the front of your mind.

HN Claude Ducloux is the Director of Education at LawPay and is Board Certified, Civil Trial Law and Civil Appellate Law, Texas Board of Legal Specialization.

In The News

FROM THE DAIS

Rogge Dunn, of Rogge Dunn Group, PC, spoke on FINRA Arbitration and Enforcement: What You Need to Know for the Knowledge Groups Seminar.

Trey Cousins, of Meadows, Collier, Reed, Cousins, Crouch & Ungerman, L.L.P., spoke at the Midland Hospital Association and Midland College Foundation Conference. David Colmenero, of the firm, spoke at the Dallas CPA Society 2018 Convergence; Charles Pulman and Matt Roberts spoke at the Accounting Continuing Professional Education Network National Webcast in Plano.

KUDOS

Christopher Staine, of Crowe & Dunlevy, has been promoted to Director.

Charles Hosch, of Clark Hill Strasburger, earned the ANSI-accredited Certified Information Privacy Professional/United States credential through the International Association of Privacy Professionals. Kathryne (“Kate”) M. Morris, of the firm, earned the ANSI-accredited Certified Information Privacy Professional/Europe credential through the IAPP. Cathy Altman, of Carrington, Coleman,

Sloman & Blumenthal, L.L.P., was elected to the national Governing Committee of the ABA Forum on Construction Law.

Vincent Allen, of Carstens & Cahoon, LLP, has been elected to membership in the Fellows of the Texas State Bar Foundation.

Quentin Brogdon, of Crain Lewis Brogdon, LLP, has been elected President-Elect for 2018 to The Association of Plaintiff Interstate Trucking Lawyers of America.

Jeff Dorrill, of Haynes and Boone, LLP, competed for Team USA at the 2018 World Duathlon and Triathlon Championships in Odense, Denmark. He qualified for this honor by winning two national championships in 2017

Debra L. Witter has become a name partner in Farrow-Gillespie & Heath, now Farrow-Gillespie Heath Witter.

Frank Stevenson II, of Locke Lord LLP, has been elected Vice President of the Western States Bar Conference and to the Board of Trustees of the Texas Bar Foundation.

Jenny L. Womack, of Jenny L. Womack, P.C., has been elected Vice President of the Academy of Adoption and Assisted Reproduction Attorneys for 2018-19.

Robert Roll, of Hoge & Gameros, L.L.P., has been promoted to Partner.

Jerry Selinger, of Patterson + Sheridan, and Marc Hubbard, of Hubbard Johnson, were awarded the American Intellectual Property Law Association’s Project Award for guiding the AIPLA Patentable Subject Matter Task Force as its co-chairs. Prof. David Taylor, of SMU, acted as reporter for the Task Force.

REVIEW OF OIL & GAS LAW XXXIII August 2-3 at Belo Register at www.reviewofoilandgaslaw.com

Presented by the DBA Energy Law Section

ON THE MOVE

The Hon. Dean Royal Furgeson, of UNT Dallas College of Law, will step down from his position as Dean on June 30, 2018, and will continue working with UNT Dallas on fundraising.

Carlisle Braun has joined Scheef & Stone, L.L.P., Frisco, as Associate.

Cynthia Brotman Nelson, Kevin Kelley, and Scott Tuthill joined Jackson Walker L.L.P. as Partners.

Eduardo Espinosa, Michael Napoli, and Matthew Schroeder joined Akerman LLP as Partners.

Jeff Cash and Antonio Devora joined Spencer Fane LLP as Partner and Of Counsel, respectively.

Jennifer Ayers, Carolyn Benson, Gemma Descoteaux, Stephen Fox, Dwight Francis, Yvette Mabbun, Bill Mateja, Jason Mueller, and Steven Schortgen joined Sheppard Mullin Richter & Hampton LLP as founding partners of the Dallas office located at 2200 Ross Avenue, 24th Floor, Dallas, TX 75201.

Rachel Freeman joined Gray Reed & McGraw LLP as Associate.

Rogge Dunn has established the firm Rogge Dunn Group, PC. Joining the firm are Bryan Collins and Brian Shaw as Partners and John Lynch as Attorney.

Machir Stull joined Cantey Hanger LLP as Partner.

Tricia DeLeon joined Holland & Knight as Partner.

L. Kimberly Steele has joined Clyde & Co. as Senior Counsel.

Kennedy Barnes, Ward White IV, and Nnamdi Anozie joined White Wiggins & Barnes LLP as Partners.

Angela Stockbridge joined Wilkins Finston Friedman Law Group LLP as Senior Counsel.

Brian Hail and Nicole Herron joined Kane Russell Coleman Logan, PC as Director and Associate respectively.

Laurie Arnold joined Johnston Pratt, PLLC as Senior Counsel.

Christine Williford has joined Locke Lord as Partner.

Felicity Fowler has joined the newly opened Dallas office of McGinnis Lochridge.

The Fort Worth office of Thompson & Knight LLP has moved to 777 Main Street in downtown Fort Worth.

News items regarding current members of the Dallas Bar Association are included in Headnotes as space permits. Please send your announcements to Judi Smalling at jsmalling@ dallasbar.org

Need Help? You’re Not Alone.

Texas Lawyers’ Assistance Program…………...(800) 343-8527 Alcoholics Anonymous…………………………...(214) 887-6699 Narcotics Anonymous…………………………….(972) 699-9306 Al Anon…………………………………………..…..(214) 363-0461 Mental Health Assoc…………………………….…(214) 828-4192 Crisis Hotline………………………………………..1-800-SUICIDE Suicide Crisis Ctr SMU.…………………………...(214) 828-1000 Metrocare Services………………………………...(214) 743-1200 More resources available online at www.dallasbar.org/content/peer-assistance-committee

Jul y 2 0 1 8

Classifieds

D al l as Bar A ssoci ati on l Headnotes 19

July

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Located just steps away from the heart of the Bishop Arts Restaurants and Shops and on historic Bishop Avenue.

Two office spaces are available. One office is large and could easily accommodate 2 to 3 people. The large office has a dedicated restroom and large storage closet. The second space accommodates 1-2 people; has direct access to a beautiful balcony facing Bishop Ave.; direct access to restroom; and a storage closet. Building amenities include access to two (2) conference

rooms (well suited for mediations) and a reception area staffed during standard business hours. This location is very close to downtown Dallas County and Federal Courthouses. You can be at George Allen Courthouse in 8 minutes and at Belo Mansion in 5 minutes. For more information or to schedule a visit, contact Brett Christiansen at (214) 838-3501 ext. 1 or at bchristiansen@ cdfirm.com.

Virtual Office – Available Immediately! Contemporary office space, 12222 Merit Drive, Suite 1200, offers nine conference rooms, receptionist, Internet service, mail service, parking, fully equipped breakroom. $300 monthly fee–competitive rates! Email Amy at arobinson@englishpllc.com or (214) 528-4300.

Office space available at 4054 McKinney Avenue. First floor suite with three offices, a file room and a sink.

The space faces Cole Park, is 914 sq/ft and rents for $1,522.00 flat rate. Second floor corner suite with three offices and file room. This space is 1127 sq/ft and rents for $1,878.00 flat rate. Call (214) 520-0600 Executive office space available for lease in a professional Legal environment, in uptown. Share office space with experienced and established lawyers. Case referrals and other case arrangements are possible. Amenities include: Bi-lingual receptionist, fax and copy machines, two conference rooms, two kitchen areas and plenty of free parking. Location is convenient to all Dallas Courts and traffic arteries.

Please call Rosa (214) 696-9253 for a tour.

2 Professional Window Offices available for $790 each for short or long term. Lakewood Towers just east of downtown. Very Nice. Reception, conference, and break rooms. Free easy parking & Internet. Furnished if needed. (469) 458-6255 www.

BranumPLLC.com.

75 Central & Forest Lane. Johnson English Law Center–Merit Tower Office Space. For lease – Sleek, contemporary office space: 12222 Merit Drive–12th Floor. Nine conference rooms, lobby with receptionist/mail service, high speed Internet, library, spacious breakroom… plus parking and workout facilities are complementary! Come take a look – Contact arobinson@englishpllc.com or (214) 528-4300.

Turtle Creek Blvd./Hall St. Area executive office space available for lease in a professional, legal environment. Two large executive window offices available (furnished or unfurnished) to share with experienced and established lawyers. Separate areas available for assistants or paraprofessionals. Three bench seat spaces available for daily or short-term use, if desired. Referrals and other case arrangements are possible. Amenities include reception area, telephone, fax and copy machines, Wi-Fi, notary, conference room, kitchen area, covered visitor parking, and free secured office parking. Location convenient to Dallas courts, downtown, and all traffic arteries. Please contact Judy at (214) 740-5033 for a tour and information.

Downtown Dallas – Two window offices with included secretarial space available, in the historic KATY Building overlooking the Old Red Courthouse and Kennedy Memorial. Receptionist, notary, phone system, conference room, Wi-Fi, fax and copier pro-

vided for tenants use. No deposit or lease required. Please inquire at (214) 748-1948.

Need A Conference Room? We have two conference rooms available at full and half day rates. One conference room comfortably seats eight and a second conference room comfortably seats six. Our conference rooms are perfect for client meetings, depositions and for mediations. Located on historic Bishop Ave. – we are steps away from the dining and entertainment of the Bishop Arts District. We are minutes from downtown. Perfect for mediations - the conference rooms are situated on opposite ends of the building and on different floors. Wi-Fi and Beverage Service available. For additional information and rates, please contact Brett Christiansen at (214) 838-3501 ext. 1 or via email at bchristiansen@cdfirm. com.

Historic West End - Dallas. We have 3837 square feet of unique office space available in the historic West End of downtown Dallas for sublease significantly below market rates. All offices have a beautiful downtown view.

There are two separate entrances and two separate reception areas that make it perfect for two solo or small firms to share. Included are these amenities at no additional cost: high speed Internet, on-site building security, conference rooms, kitchen, fitness center, building directory listing, all utilities and CAM charges. Call John Sheley at (469) 233-1111 for more information.

POSITIONS AVAILABLE

Litigation Associate (1-2 years).

National litigation firm hiring for civil litigation associate position as part of defense practice in Dallas office for focus on personal injury, construction defect, professional liability and employment practices claims. Exceptional writing, communication and project management skills prioritized.

Send resumes to rhellner@wshblaw. com.

Retained Counsel General Liability Attorney. Seeking an independent contractor insurance defense attorney to work on a wide variety of litigation including insurance defense, casualty defense, premises, auto, commercial litigation, products liability, and general negligence litigation in the Dallas and Houston areas. Requirements: Admission to Texas State Bar and the U.S. District Courts of Northern District and Southern District of Texas; 4 years of general litigation experience; and insurance defense experience including in negligence, products and premises

liability, property damage and automobile accident litigation. Send resume and references to: texaslawfirm01@ gmail.com.

Retained Counsel, Employment Law. Seeking an independent contractor attorney to work on a wide variety of employment litigation, and charges of discrimination in State and Federal Courts, and before governmental agencies in the Dallas and Houston areas.

Requirements: Admission to Texas State Bar and the U.S. District Courts of Northern District and Southern District of Texas; 4 years of employment litigation experience; and experience before the EEOC/TWC and state and federal courts. Send resume and references to: texaslawfirm01@gmail.com.

Are you overwhelmed by the headaches of running your law office or the politics/economics of a larger firm?

We know, because we’ve been there and done that. Palmer & Manuel, PLLC (now in its 12th year) provides a platform where you (and we) get to do what we love – practice law! Run your own practice, keep 70% - 95% of your fees, and pay a fixed, reasonable monthly overhead (includes legal assistants, Lexis, malpractice insurance, supplies, etc.). See www.pamlaw. com or contact Larry Chek, Jeff Sandberg or Rebecca Manuel at (214) 2426444.

SERVICES

Credentialed Forensic Genealogist & Attorney – hire an experienced attorney and credentialed forensic genealogist to ethically find next of kin and missing heirs for intestacy, probate, guardianship, property issues, and more. Reasonable hourly rate. See www.ProfessionalAncestryResearch. com. Wanda Smith, (972) 836-9091.

Immediate Cash Paid For Diamonds and Estate Jewelry. Buying all types of jewelry and high end watches. Consignment terms available @ 10-20 % over cash. For consultation and offers please call J. Patrick (214) 739-0089.

What’s your language? Are you ready to help your clients in any language you like (or you must!). Just call +1 972 665 6295 OR +1 469 388 5899. Or send an email to simon.salman@mirora. com. OR visit www.mirora.com and see how we can help your clients at a time they need. Mirora Translations US LLC. MiroraUS@mirora.com | www. miroraus.com.

To place an affordable classified ad here, contact Judi Smalling at (214) 2207452 or email jsmalling@dallasbar.org.

Create Your Account at onlinecle.dallasbar.org

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