Brunini Law

Brunini Law

Chris Fontan Presents to Headmasters for the Jackson Area Association of Independent Schools (JAAIS)

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On October 27, 2016, Chris Fontan presented to the Headmasters for the Jackson Area Association of Independent Schools (JAAIS).  During his presentation, he discussed the implications of the Fair Labor Standards Act (FLSA) and Overtime Regulations in Mississippi Educational Establishments.  You may view the presentation here.

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Ron Yarbrough elected a Fellow of the American College of Construction Lawyers

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Ron A. Yarbrough, of Brunini, Grantham, Grower & Hewes, has been elected a Fellow of the American College of Construction Lawyers.  He is one of only three ACCL Fellows from Mississippi.  The ACCL is a national organization of lawyers who have demonstrated skill, experience and high standards of professional and ethical conduct in the practice, or in the teaching, of construction law, and who are dedicated to excellence in the specialized practice of construction law.

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The Brunini Firm Welcomes R. Lane Bobo

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Lane Bobo has joined Brunini, Grantham, Grower & Hewes, PLLC as an associate in the firm’s litigation department. Lane will concentrate his practice in medical malpractice defense, construction and general commercial litigation.

Lane is a recent magna cum laude graduate of the Mississippi College School of Law.  Prior to attending law school, he received his Bachelors of Arts in History with a minor in Business Administration from the University of Mississippi.

Sam Kelly, Managing Partner of the Brunini firm said “We are excited to welcome Lane to the Firm and are confident that he will be a great asset to our team.”

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Mississippi Environmental Quality Permit Board Summary of Meeting Held September 13, 2016

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Prepared By Brunini, Grantham, Grower & Hewes, PLLC

The Mississippi Department of Environmental Quality Permit Board (Board) convened its regular monthly meeting at 9:00 a.m. on September 13, 2016 at the offices of the Mississippi Department of Environmental Quality in Jackson.  Mr. Mike Bograd, RPG, chaired the meeting.

The Board approved minutes from August meeting and the non-controversial actions/ certifications by the staff since the August meeting.

Following a prepared agenda, items considered were as follows:

OFFICE OF POLLUTION CONTROL

Municipal & Private Facilities

Meridian POTW – Lauderdale County – MS0020117

The Board denied the request by one individual for a public hearing to be held in Meridian (rather than at the MDEQ offices).  This individual was advised of the time date and location of this Permit Board hearing and did not attend.

Further, the Board approved the reissuance of the NPDES Permit.  One letter of concern was submitted; however staff noted that the permit was drafted within the limits and meets all federal and state laws and regulations.  No one in opposition was in attendance.

Agricultural Branch

The Board approved issuance of coverage under the AFO General Permit (MSG201887) and issuance of construction under the Storm Water Coverage (MSR107212) for Wegner Farms in Noxubee County.  The application proposes four poultry houses and construction activity on seven acres of disturbed land.  Staff stated that upon notification by the Applicant, three neighboring property owners submitted letters of concern; however, they did not attend the meeting.  Because the facility’s application is complete and the Applicant is in compliance, MDEQ staff recommended issuance of the Permit.

OFFICE OF GEOLOGY

In accordance with MDEQ staff recommendations, the Board approved the following surface mining bond releases and permits to combine:

 Surface Mining Bond Release:

 

Permittee County Permit Staff Recommendation
James Construction Group, LLC Hinds P14-005A Initial 50%
Krystal Gravel, Inc. Copiah P13-002 Additional 50%
Martin Meadowlands, LLC Madison P10-041AA Initial 90%
Joe McGee Construction Co., Inc. Clarke P12-008 Initial 90%
Joe McGee Construction Co., Inc. Winston P13-015 Additional 50%
Memphis Stone & Gravel Company DeSoto P03-033 Final 10%
Oddee Smith & Sons, Inc. Lincoln P95-091 Final 10%
Talbot Bros. Constr. Co. and Talbot

Bros. Grading Co.

 Grenada Pll-012 Initial 10%

Surface Mining Permit to Rescind:

Permittee County Permit
Eutaw Construction Company, Inc. Madison P1S-007

OFFICE OF LAND AND WATER RESOURCES

The Board approved the Proposed 2016 General Permit for Mississippi River Valley Alluvial Aquifer (MRVA) Groundwater Withdrawals.  The proposed 5-year permit is for irrigation, aquaculture and wildlife habitat enhancement.  A hearing was held on April 21, 2016 with comments accepted until May 21, 2016.  Modifications to the permit were made and incorporated per the comments.

OTHER BUSINESS

Mr. Roy Furrh, MDEQ General Counsel advised the Board Evidentiary Hearings have been scheduled for the next three permit Board Meetings and that each hearing should be completed in less than a day.

The next Permit Board meeting will be held on October 11, 2016 at 9 a.m.

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Over 20 States and 50 Business Groups File Suit Seeking to Block Enforcement of New Overtime Rule

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With less than 75 days before the U.S. Department of Labor’s (DOL) New Overtime Rules are scheduled to go into full effect (click here for a summary), two separate federal court lawsuits were recently filed challenging the legality of DOL’s proposed changes.  On September 21, 2016, a group of 21 states (lead by Texas and Nevada) sued the DOL, seeking to enjoin and ultimatelystrike the New Overtime Rule.  On the same day, several nationwide business groups and trade organizations filed a second lawsuit against the DOL concerning the controversial New Overtime Rule, which is slated to take effect on December 1, 2016.

In the first lawsuit (Nevada et al. v. U.S. Department of Labor et al., No. 1:16-cv-407, Eastern District of Texas), the 21 states argue that the New Overtime Rule—which raised the minimum salary threshold required to qualify for the Fair Labor Standards Act’s (FLSA) “white collar” overtime exemption to $47,476 per year—is unconstitutional on numerous grounds.  Specifically, the States argue that DOL overstepped its authority by imposing a salary requirement as the primary basis for determining exemption eligibility, instead of focusing on the bona fide job duties of an employee.  Similarly, the States claim that the FLSA’s statutory language does not permit the inclusion of the New Rule’s “automatic increase” provision.   Additionally, the States argue that by forcing them to comply with the New Rule, the Obama administration would unilaterally deplete individual states of their financial resources, in violation of the Tenth Amendment.

Joining Texas and Nevada in the lawsuit are Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, New Mexico, Ohio, Oklahoma, South Carolina, Utah and Wisconsin.  The States’ lawsuit seeks both declaratory and injunctive relief—meaning that the states are asking the Court to enter a temporary order blocking the New Rule’s scheduled enforcement on December 1st, as well as a permanent judgment declaring the New Overtime Rule illegal.

In the second lawsuit (Plano Chamber of Commerce, et al. v. U.S. Department of Labor, et. al., No. 4:16-cv-00732, Eastern District of Texas), the U.S. Chamber of Commerce, along with over 50 other national business organizations, claims that the DOL exceeded its statutory authority under federal law in enacting key provisions of the New Overtime Rule, including the minimum salary threshold and the automatic increase provision.  Like the States, the Chamber of Commerce’s lawsuit seeks both declaratory and injunctive relief.

Both suits contend that, if implemented, the New Overtime Rule would require state governments, local municipalities, and private businesses alike to substantially increase their employment costs to the point that employers may ultimately be forced to either reduce services or lay off workers.  “Once again, President Obama is trying to unilaterally rewrite the law,” Texas Attorney General Ken Paxton said in a statement. “And this time, it may lead to disastrous consequences for our economy. The numerous crippling federal regulations that the Obama administration has imposed on businesses in this country have been bad enough. But to pass a rule like this, all in service of a radical leftist political agenda, is inexcusable.”

“The DOL went too far in the new overtime regulation,” said Randy Johnson, senior vice president of Labor, Immigration, and Employee Benefits for the U.S. Chamber. “We have heard from our members, small businesses, nonprofits, and other employers that the salary threshold is going to result in significant new labor costs and cause many disruptions in how work gets done. Furthermore, the automatic escalator provision means that employers will have to go through their reclassification analysis every three years. In combination, the new overtime rule will result in salaried professional employees being converted to hourly wages, and it will reduce workplace flexibility, remote electronic access to work, and opportunities for career advancement.”

The DOL did not immediately comment on the lawsuit, though it previously expressed confidence in the legality of the New Rule.

Experts predicted that the New Overtime Rule would face some type of legal challenge before its implementation at the end of this year.  However, not everyone agrees that the DOL exceeded its authority in enacting the regulations.  Many feel these challenges to the legality of New Overtime Rule are long-shots at best—with most feeling that the challenges to the automatic increase provision have the greatest likelihood of success.

While it is possible the federal court could enter an order staying the implementation of the New Overtime Rule, at this time, employers are best served to continue preparing as if the New Rule will go into effect on December 1st.

 

 

 

 

 

 

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Jones, Sclafani and Drinkwater Obtain Judgment and Dismissal

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On August 18, 2016, Trey Jones, Joseph Sclafani and William Drinkwater obtained a judgment and dismissal for one of the firm’s bank clients in an important case regarding a bank’s duty to protect noncustomers from the wrongdoing of its customers. After being injured in an automobile accident, the plaintiff hired a law firm to pursue her claims arising from the accident. Subsequently, the plaintiff filed for bankruptcy. During the pendency of the bankruptcy, the law firm the plaintiff hired to pursue her personal injury claim obtained a $500,000 settlement. The law firm then hired a separate bankruptcy attorney to obtain bankruptcy court approval of the settlement and payment of the law firm’s legal fees. After receiving the $500,000, the bankruptcy attorney deposited the funds into his personal account at the bank. The bankruptcy attorney paid the law firm its legal fees but stole the money owed to the plaintiff.

Following the bankruptcy attorney’s theft, the plaintiff sued the law firm she hired to litigate her personal injury claim for malpractice and negligence, among other claims, for allowing the bankruptcy attorney’s conversion. As part of the plaintiff’s settlement of her claims against the law firm, the law firm assigned any causes of action it may have against any financial institution relating to the conversion. The plaintiff, assignee of the law firm, then sued the bank for negligence and conversion, arguing that a bank that has notice or knowledge of a customer’s misappropriation of funds from the customer’s trust account may be held liable to the non-customer whose funds were misappropriated.

Resolving a complicated issue not yet addressed by the Mississippi Supreme Court, the U.S. District Court held that plaintiff, as successor in interest to the law firm, did not have standing to assert a conversion claim because the funds converted never belonged to the law firm. Likewise, the court held, as a matter of law, that the bank owed no duty to plaintiff, as successor in interest to the law firm, to protect it from its customer’s misappropriation of funds that belonged to the law firm’s client. Accordingly, the court dismissed all of plaintiff’s claims with prejudice.

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Mississippi Environmental Quality Permit Board Summary of Meeting Held August 9, 2016

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The Mississippi Department of Environmental Quality Permit Board (Board) convened its regular monthly meeting at 9:00 a.m. on August 9, 2016, at the offices of the Mississippi Department of Environmental Quality, in Jackson.  Mr. Mike Bograd, RPG, chaired the meeting.

The Board approved minutes from the Regular July meeting. Also, the Board approved non-controversial actions/certifications by the staff since the July meeting and incorporated the reports of these actions into the July minutes.

Following a prepared agenda, items considered were as follows:

OFFICE OF GEOLOGY

In accordance with MDEQ staff recommendations, the Board approved the following surface mining bond releases and rescinded the following surface mining permits:

Surface Mining Bond Releases

Permittee County Permit Staff Recommendation
Eutaw Construction Company, Inc. Pontotoc P12-017 Final 30% release
Eutaw Construction Company, Inc. Rankin P12-020 Final 50% release
Eutaw Construction Company, Inc. Clay P13-022 Additional 30% release
Eutaw Construction Company, Inc. Madison P15-007 Initial 40% release
Jim Grotkowski Harrison P98-055T Final 50% release
Joe McGee Construction Co., Inc. Madison P11-024 No release
C. Steve Lee Hancock P07-012 Final 20% release

Surface Mining Permits to Rescind

Permittee County Permit Staff Recommendation
South Byram Properties, LLC Hinds P06-009 Rescind Permit
W.P. Properties, LLC Hinds P03-025T Rescind Permit

OFFICE OF POLLUTION CONTROL

 

The Board approved a Modification of Section 401 Water Quality Certification (No. WQC 2012071) for Drying Facility Assets Holding, LLC, Picayune Frac Plant, located in Pearl River County, MS. The modification will alter permittee’s mitigation plan to allow for off-site mitigation, rather than on-site. MDEQ staff took no position on whether the Board should grant the proposed modification. The Modification was approved on the condition that the wetlands designated for enhancement and restoration are left within the perpetual conservation easement.

OTHER BUSINESS

Mr. Roy Furrh, MDEQ General Counsel, advised the Board that due to legislation, passed in the 2016 Regular Session of the Mississippi Legislature, that places fees collected by state agencies into the state’s general fund, the Office of the Attorney General would no longer be able to provide hearing officers to MDEQ. Mr. Furrh stated that a list of former assistant attorneys general and private practitioners was being compiled to serve as hearing officers.

The next Permit Board meeting will be held on September 13, 2016, at 9 a.m.

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Twenty- seven honored by Best Lawyers® 2017, Four attorneys named “Lawyer of the Year”

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Twenty- seven attorneys with Brunini, Grantham, Grower & Hewes, PLLC, were recently selected by their peers for inclusion in the 2017 edition of The Best Lawyers in America. Brunini lawyers were recognized in the following categories:

Jackson, Miss.

  • Matt Allen: Mass Tort Litigation / Class Actions – Defendants
  • Sheldon G. Alston: Litigation-Real Estate, Personal Injury Litigation-Defendants
  • P. David Andress: Real Estate Law
  • Benje Bailey- Mass Tort Litigation / Class Actions – Defendants
  • Stephen J. Carmody:  Employment Law – Management, Labor Law – Management, Litigation – Intellectual Property, Litigation – Labor and Employment,  Mass Tort Litigation/Class Actions – Defendants
  • R. Richard Cirilli: Mass Tort Litigation / Class Actions – Defendants, Product Liability Litigation – Defendants
  • John M. Flynt: Administrative/Regulatory Law, Corporate Law
  • Louis G. Fuller: Litigation and Controversy – Tax, Tax Law
  • Lynne K. Green: Trusts and Estates
  • James L. Halford: Communications Law and Energy Law
  • William Trey Jones III: Commercial Litigation and Litigation – Environmental
  • R. David Kaufman: Bet-the-Company Litigation, Commercial Litigation, Litigation – Securities, Personal Injury Litigation – Defendants, Product Liability Litigation- Defendants
  • Samuel C. Kelly: Construction Law, Litigation – Construction
  • James A. McCullough, II: Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law, Commercial Litigation, Litigation-Bankruptcy, Mortgage Banking Foreclosure Law
  • M. Patrick McDowell: Commercial Litigation, Mass Tort Litigation/ Class Action- Defendants, Product Liability Litigation – Defendants
  • John E. Milner: Environmental Law, Litigation – Environmental
  • William C. Penick, IV:  Corporate Law
  • W. Ken Rogers: Corporate Law
  • Joseph A. Sclafani: Appellate Practice
  • Watts C. Ueltschey: Administrative/Regulatory Law, Energy Law, Energy Regulation Law, Mining Law, Oil and Gas Law, Real Estate Law
  • Leonard D. Van Slyke, Jr.: Litigation – First Amendment, Litigation – Trusts and Estates, Litigation and Controversy – Tax, Tax Law, Trusts and Estates
  • Joseph E. Varner, III: Tax Law, Trusts and Estates
  • John E. Wade: Commercial Litigation, Personal Injury Litigation – Defendants
  • Walter S. Weems: Corporate Law, Mergers and Acquisitions Law, Tax Law
  • Ron A. Yarbrough: Construction Law and Litigation – Construction

Biloxi, Miss.

  • Leonard A. Blackwell II:  Gaming Law

Columbus, Miss.

  • J. Gordon Flowers: Commercial Litigation, Environmental Law, Mass Tort Litigation/Class Actions – Defendants, Personal Injury Litigation – Defendants, Product Liability Litigation – Defendants

In addition to the above selections, the following attorneys were chosen as the Lawyer of the Year:

  • J. Gordon Flowers:  Best Lawyers® 2017, Tupelo, Miss., Personal Injury Litigation-Defendants
  • R. David Kaufman: Best Lawyers® 2017, Jackson, Miss., Product Liability Litigation-Defendants
  • Watts Ueltschey:  Best Lawyers® 2017, Jackson, Miss., Energy Law
  • Ron Yarbrough: Best Lawyers® 2017, Jackson, Miss., Construction Law

The Best Lawyers lists, representing over 125 specialties in all 50 states and Washington D.C., are compiled through an exhaustive peer-review survey in which thousands of the top lawyers in the U.S. confidentially evaluate their professional peers. Since it was first published in 1983, Best Lawyers has become universally regarded as a reliable guide to legal excellence. Because Best Lawyers is based on an exhaustive peer-review survey in which more than 36,000 leading attorneys cast almost 4.4 million votes on the legal abilities of other lawyers in their practice areas and because lawyers are not required or allowed to pay a fee to be listed, inclusion in Best Lawyers is considered a true honor.

 

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Three Takeaways from the Recent Settlement in CFPB v. BancorpSouth

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There were many things from the recent settlement of Fair Lending and Fair Housing Claims against BancorpSouth that didn’t surprised me (see United States of American and Consumer Financial Protection Bureau v. BancorpSouth Bank, Case No. 1:16cv118-GHD-DAS, U.S. District Court for the Northern District of Mississippi, Aberdeen Division).  I was not surprised that BancorpSouth settled a Fair Lending investigation since it had been fairly well known that the bank was undergoing an investigation that had put on hold its regulatory applications for two planned bank acquisitions.  I also was not surprised that a Mississippi bank was the subject of such an investigation since Federal regulators have long utilized Mississippi’s tortuous and inescapable past as a reason to plow its fertile ground and harvest a rich political yield in the form Fair Lending investigations.  This regulatory tendency has existed at least a decade, going back to when the FDIC started sending Mississippi banks nasty letters about their HMDA data.  There were three big points worth noting, though, some of which were concepts I already knew but had reinforced by the settlement.  Others, however, were eye-opening revelations.  Below is a description of each.

  1. HMDA Data Matters

I have never represented BancorpSouth on this or any other matter so I don’t have any knowledge of how this investigation began or what exactly triggered it.  However, by reading through the lines in the complaint, there are too many references to “regression analysis,” “statistically significant” rate differentials, and the Memphis MSA to not think that it may have begun as a review of the bank’s HMDA data from Memphis.  That is just a guess, but based on prior experience, it seems to be a good one.  The way these things typically play out, the Feds, after sticking their statistics geeks in the corner with a bank’s HMDA data, find that there are statically significant differentials as to interest rates charged or denial rates for minority borrowers relative to non-minority borrowers.

Their questions start out benign at first, asking whether these differentials can be explained by business non-discriminatory reasons.  What they are looking for is for you to provide them a rate sheet, loan policy, or some other objective measure that shows why the mortgage borrowers were charged a certain rate on a certain loan or why a minority borrower was denied credit.  If they select a sample of loans and find that the rates charged followed closely a standard rate sheet used to price mortgage loans, or if denials of minority applications were the result of the applicant clearly not meeting objective credit standards stipulated in their loan policies, and those factors were carefully documented in the file as the reason for the decision made by the loan officer, the regulators will conclude (hopefully) that the “statistically significant” differences were caused by other non-discriminatory factors and move on to their next prey, I mean bank.  However, if they take a sample to test, and in the process cannot find any objective reason for why minority borrowers would be treated differently, the bank that is the object of the investigation had better hold on; it is going to be a bumpy ride!  This leads me to my second point . . .

  1. Underwriting Discretion is the Fair Lending Death Nail

I am the son of a community banker.  Like all of us, I remember asking my dad one time when I was small why he decided to pick his career.  His dad became a banker later in life, and both of my dad’s older brothers are bankers, so his choice was not a novel one.  Family influence, though, was not the reason he gave.  Instead, my dad believed that, as a community banker, he had the opportunity to help people meet the needs of their businesses and families.  Of course, one of the greatest tools a community banker has in his or her toolbox to pursue this divine calling is good common sense to exercise reasonable discretion when warranted.  Not only does it assist the community banker in pulling that customer out of a tough financial place in life, it also allows the community banker to compete with larger, less flexible institutions that have a tremendous advantage when it comes to economies of scale, especially in today’s compliance environment.

That tool now, though, has become the regulator’s number one enemy.  When it comes to Fair Lending, discretion is a four letter word, especially as to HMDA reportable loans.  If your bank’s LAR reveals that rates paid by minority borrowers or women are slightly higher on average than the control group, and they discover that your loan officers have the discretion to assign to borrowers whatever rates they, in their professional opinion, deem appropriate, your bank is presumed to be guilty of discriminating against minority borrowers until you somehow prove yourself innocent.  This all but forces banks to standardize their pricing and credit decisions, turning consumer credit into a commodity and erasing any competitive advantage community banks may have on such loans over their larger brethren that see the borrower as another number.  Unfortunately, what regulators don’t realize is that the one who really suffers is the borrower, black or white, who just needs a break to get over that next financial hurdle.  After all, you don’t receive any compassion from a loan policy or a rate sheet.

  1. The CFPB is Taking No Prisoners

I’m sure no one was shocked that the CFPB would aggressively pursue fair lending enforcement, especially among those banks that are larger than $10 billion in assets and within the wheelhouse of their examination authority.  There is a reason why that threshold was a big deal during the Dodd-Frank negotiations.  I was flabbergasted, though, by the lengths they went to in order to satisfy their appetite for a trophy kill.  Secret recordings of lower level management meetings and spies sent into branches in markets totally unrelated to where the original problems were found are just two examples of that.  This was not a regulatory investigation; it was a James Bond novel.  Apparently, the CFPB has inherited the playbook of the KGB.

Not only that, but in a settlement that was supposedly negotiated, they felt compelled to include in the complaint unnecessary and embarrassing quotes from their secret recordings just to rub salt in the wound.  I can only hope that waterboarding was not used to convince the bank to accept the complaint’s content.

Make no mistake, the CFPB is on a war path, and it is scalps, not justice, that it is after.  As an agency that is still trying to prove its worth and fend off political and judicial challenges to its constitutionality and unfettered administrative authority, the CFPB is more worried about justifying its existence than protecting its charge, the American consumer.  What will happen to American consumers, though, much less our financial system, when the CFPB scares half of our community banks into ending consumer lending all together and assaults the reputation of the other half until their safety and soundness is compromised?  They will be forced into the arms of industries much less regulated and unconcerned about their wellbeing, I’m sure.  This case may be the best illustration yet of what happens when you separate the consumer regulator from the prudential one.