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Friday, December 07, 2018

Lessons Learned from Celebrity Death: Stan Lee

Stan Lee, the co-creator of superheroes like Spiderman, Iron Man, and the X-Men, passed away on November 12, 2018.

Mr. Lee reportedly left and estate valued at more than $50 million.  Prior to Mr. Lee’s death, reports also circulated of possible elder abuse, from Mr. Lee’s 67-year-old daughter spending $20,000 to $40,000 a month on credit cards and demanding changes to a trust set up for her benefit, to caregivers using their position of trust to gain access to Mr. Lee’s money.

Celebrity deaths can shed light on important estate planning lessons. Mr. Lee lived to be 95. Increasing numbers of people are also living into their 80s, 90s and 100s, yet many elders may not have the mental or physical faculties to manage their financial affairs during these later years. Even for those who do not have to worry about family fights or estate taxes, estate plans can still serve a valuable purpose in avoiding probate and ensuring privacy.

Additionally, estate planning frequently focuses on the details of wealth distribution upon death but not other vital considerations, such as aging and late-life planning.  Fortunately, however, prudent individuals can take steps to plan ahead, such as:
  • Consider drafting a healthcare power of attorney or advance health directive.  Very rarely can families and loved ones predict incapacity. However, putting protections in writing can provide family members and health care professionals with valuable guidance and clarity regarding your wishes in the event of mental or physical incapacity.
  • Consolidate financial accounts.  Shifting assets into fewer accounts can simplify a loved one's balance sheet that and make finances easier to manage.
  • Consider a revocable living trust.  Wills protect individuals only after they have passed away, not while they are alive.  Individuals who put assets into a revocable living trust during their lifetime can gain valuable financial assistance as one ages.
  • Choose Qualified Trustees.   Prior to Mr. Lee’s death, Mr. Lee and his attorney filed a declaration in a Los Angeles court stating that certain caregivers and acquaintances were attempting to “gain control over [Mr. Lee’s] assets, property and money.”  Clients are frequently inclined to choose those closest to them as trustees, but that is often not the best approach. Even if the designated person is honest and reliable, the duties of a trustee are complex and demanding. Professional advisors or even institutional trustees are often a better alternative, especially for high-net-worth individuals.
  • Remember to Update Your Estate Plan.  An estate plan is a living document and should be frequently reviewed and updated.  Consider revisiting estate plans after major life changes, such as marriage, divorce, having a child, buying property, or even on birthdays ending in 0 or 5.
by Angela Schulz | Associate Attorney at BridgehouseLaw LLP

Monday, December 03, 2018

“Click Here to Accept” a Non-Competition Agreement?

If you have a smartphone or most any electronic device, you have likely seen a window containing a long list of terms and conditions appear with an instruction to click “I AGREE” in order to download the necessary software.  But how many of you have actually read all of those terms and conditions before clicking to accept?

These electronic interactions can form an enforceable contract, and are commonly referred to as “Clickwrap Agreements.”  While Clickwrap Agreements are extremely common for technology downloads, more and more companies are using web-based agreements with their employees as part of the onboarding process for new hires, or during the regular course of employment (e.g., issuing Company Handbooks, updates, or Bonus Offers and Stock Awards).  But suppose the Company Clickwrap contains new restrictions for the employees to follow, such as a covenant not to compete or a non-solicitation clause – are these rules enforceable?

Recent U.S. court decisions appear to say YES.

In ADP, LLC v. Lynch (3rd Cir. Feb. 2017), the payroll processing company ADP offered several of their employees an incentive stock award, which was accessible through an ADP-webpage. The webpage stated, “You must select the checkbox to indicate you have read all associated documents before you can proceed,” and provided a checkbox next to the statement, “I have read all the documents below.” Next to the checkbox was a hyperlink to access a PDF document which included (1) a stock award program, (2) stock award agreement, and (3) a non-competition restriction. The employees were offered 90 days to review the terms, and were informed in writing that acceptance of the stock award was conditioned on their agreement to 12-month non-competition and non-solicitation restrictions.

Two employees of ADP later resigned from their jobs, went to work for a competing payroll company, and began soliciting current and prospective customers of ADP. ADP then sued the 2 former employees for improper solicitation and for breaching non-competition restrictions they previously accepted in exchange for incentive stock awards.   The former employees argued the clickwrap was invalid and not enforceable, and that ADP had secretly inserted the non-competition restrictions into the stock award programs without providing sufficient notice.  The former employees confirmed they did not recall reading the non-competition clause.

The court determined the non-competition and non-solicitation clauses were indeed part of enforceable clickwrap agreements, and the former employees were provided with adequate notice of all relevant terms.  The facts in the case also mentioned after the employees clicked the “I have read” box, they also clicked the “Accept Grant” button and then entered their personal passwords. The court determined these affirmative acts were enough to provide reasonable and sufficient notice to the employees.

When they are properly structured, many US courts are inclined to enforce clickwrap agreements in the employment context.  If you are interested to use Clickwrap to set terms for employment restrictions, consider the following:

-       Provide clear notice, make it prominent to the reader
-       Disclose the document contains a non-competition clause or other similar restriction
-       Allow employees a reasonable amount of time to consider the offer (24 hours is likely too short, but 30 days would likely be reasonable)
-       Require the employee to clearly indicate his/her affirmation by clicking a box labeled, “I have read and agree to accept the terms of [DOCUMENT TITLE],” before the employee can proceed to the next step
-       Provide a full electronic copy of the documents to the employee

Going forward, we anticipate more companies will seek to use electronic documents with their workforce, and we expect more terms will be included, such as arbitration agreements, Non-Disclosure Agreement (NDAs), confidentiality restrictions, etc.

This article is intended to provide an overview of practical insights and interesting developments of US legal matters. It is not intended to provide and should not be construed as providing legal advice. Each situation is unique, including the governing local, state or federal law. Please contact an attorney at BridgehouseLaw LLP to address your specific needs or concerns.

Friday, November 23, 2018

Congress Passes Legislation Standing Up Cybersecurity Agency in DHS

On November 16, 2018, President Trump signed into law a bill that authorizes the reorganization of the US Department of Homeland Security's National Protection and Programs Directorate (NPPD) into a new cybersecurity agency, the Cybersecurity and Infrastructure Security Agency (CISA). 

The new federal agency operating within the Department of Homeland Security (DHS) will have a Cybersecurity Division, an Infrastructure Security Division, and an Emergency Communications Division.  The NPPD will benefit from an increased budget, streamlined operations, and improvements in the agency’s ability to recruit top cybersecurity talent. Christopher Krebs, the current NPPD Undersecretary, will head up CISA.

The move to transform the NPPD into a separate, operational cybersecurity agency comes amid growing threats to critical US infrastructure and industries from various nation-state adversaries and increasingly sophisticated cybercrime groups.  Still, some cybersecurity analysts question whether reorganizing the NPPD into a new agency will make much of a difference in the US's ability to address its cybersecurity concerns.  Cybersecurity increasingly is an integral concern for consumers, businesses, and non-federal assets.  However, the DHS’s primary focus of addressing cyber crime remains on the federal government, not the epidemic problems that private citizens and businesses also face.

The CISA Act (H.R. 3359) was initially proposed last year, passed in the Senate in October, and passed the House earlier in November.

by Angela Schulz | Associate Attorney at BridgehouseLaw LLP

Thursday, November 15, 2018

SCAM ALERT: Beware of Scams Mailers Targeting Businesses

SCAM ALERT: Beware of Scams Mailers Targeting Businesses

BridgehouseLaw would like to warn customers and businesses to avoid scam mailers that appear to be official state communications regarding Labor and Employee Laws.  The mailer scams inform recipients that their labor law powers are out-of-date and claim that revised state and federal labor law notices must be posted, directing recipients to purchase new notices at varying rates.

Our office has received notices addressed from a “PCI - Customer Compliance Department” on behalf of North Carolina-based companies.

Remember, the U.S. Department of Labor Wage and Hour Publication System offers electronic copies of the required posters free of charge in the English language (and some posters in languages other than English).  For information on how to order a poster directly from the U.S. Department of Labor, visit:

Monday, November 05, 2018

Facebook Data Breach Could Mean Up to $1.63 Billion in Fines from the EU

Facebook Data Breach Could Mean Up to $1.63 Billion in Fines from the EU

On September 28, 2018, social media giant Facebook disclosed that it had discovered a cyber breach in its security which allowed hackers to access the information of approximately 50 million accounts. Of those 50 million accounts around 10 percent (5 million) are based in the EU according to the Irish Data Protection Commission (DPC). Facebook’s European subsidiary is headquartered in Ireland so the Irish DPC is the organization which regulates Facebook in Europe. Now, the DPC is considering opening a formal investigation into Facebook which could generate millions of dollars in fines under strict new rules in the region. In a statement to CNBC the Irish DPC said that it was awaiting “more detailed numbers” and that it was assessing whether to open a formal probe into Facebook.

The Facebook data breach will be the first major test of Europe’s tough data protection laws introduced in May known as General Data Protection Regulation (GDPR) which regulates any company that handles the data of EU citizens and puts strong controls on how that information is used and stored. A big part of GDPR concerns data breaches and includes punishments for companies who fail to notify regulators about data breaches within 72 hours of the incident happening. Firms can also be fined if they are found to have not done enough to prevent the data breach or went against any of the principles around the processing of information outlined in GDPR legislation. If found to have breached GDPR, Facebook could face a maximum fine of up to 4 percent of its annual global turnover, around $1.63 billion of its $40.65 billion turnover from 2017.

In recent years the EU has been cracking down hard on U.S. technology companies. Last year, the EU fined Google 2.4 billion euros ($2.77 billion) after it determined that the search engine violated antitrust rules with its online shopping practices. In early 2018, the EU placed another fine on  Google for another 4.34 billion euros accusing the company of abusing its dominant position with its Android mobile operating system.

In the United States, where no equivalent to the GDPR exists, the possibility of such a fine for this incident is more remote. However, Facebook is still facing a Federal Trade Commission investigation into whether several data breaches including the Cambridge Analytica scandal and a “data-scraping incident” which affected most of the websites 2.2 billion users violated a 2011 consent decree on user privacy, which could result in record fines of over a billion dollar. It’s unclear so far how the two investigations may intersect. Facebook shares are down nearly 8 percent year-to-date. This data breach is just the latest of the major issues the company has faced this years, amidst the departure of Instagram co-founders Kevin Systrom and Mike Krieger. While Europe has moved first on a major data protection law, politicians in the US have yet to introduce a nationwide piece of legislation in likeness to European data protection laws. Several tech companies, including Amazon and Google, recently appeared in front of law makers, saying that they would be happy to support a federal privacy bill.