Attorneys from O’Neil Cannon argued three cases before the Wisconsin Supreme Court this Fall term.

On September 7, 2018, Dean Laing argued the case of Koss Corporation v. Park Bank, Appeal No. 2016AP636, which involves the issue of a bank’s liability under the Uniform Fiduciaries Act.

On November 7, 2018, Mr. Laing argued the case of J. Steven Tikalsky v. Terry Stevens, Appeal No. 2017AP170, which involves the issue of the circumstances under which a constructive trust can be imposed against an innocent party.

A law firm having three arguments before the Wisconsin Supreme Court in a two-month period is a rare feat. O’Neil Cannon is appreciative of the opportunity.

O’Neil Cannon has been ranked in the 2019 U.S. News – Best Lawyers® “Best Law Firms” list in 15 practice areas.

• Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law
• Commercial Litigation
• Construction Law
• Corporate Law
• Family Law
• Litigation – Bankruptcy
• Litigation – Labor and Employment
• Mergers and Acquisitions Law
• Municipal Law
• Personal Injury Litigation – Plaintiffs
• Product Liability Litigation – Defendants
• Real Estate Law
• Securities / Capital Markets Law
• Tax Law
• Trusts and Estates Law

Firms included in the 2019 “Best Law Firms” list are recognized for professional excellence with persistently impressive ratings from clients and peers. Achieving a tiered ranking signals a unique combination of quality law practice and breadth of legal expertise.

Recently, Justice Sandra Day O’Connor, the first woman appointed to the United States Supreme Court, wrote a letter addressed to “Friends and fellow Americans” discussing her diagnosis with the beginning stages of dementia. In her letter, Justice O’Connor explained that her condition is “probably Alzheimer’s disease.”

Justice O’Connor, age 88, was appointed to the Supreme Court by President Ronald Reagan in 1981. Since retiring from the Supreme Court in 2006, Justice O’Conner has continued to demonstrate her commitment to public service. In 2010, Justice O’Conner began the iCivics program, which she describes as an educational program designed “to teach the core principles of civics to middle and high school students with free online interactive games and curriculum that make learning relevant and remarkably effective.” As explained in her recent letter, Justice O’Connor believes her diagnosis means she can no longer help to lead this cause, but she believes the program will continue to flourish under new leadership. More information on the iCivics program can be found at www.icivics.org.

The sad news regarding Justice O’Connor’s diagnosis reminds us that even the brightest minds are not immune to the devastating impacts of Alzheimer’s disease and other forms of dementia. Justice O’Connor’s letter might also serve as inspiration for those who suffer from dementia or who have family members or other loved ones who suffer from such conditions. You can find the full letter here.

It is important to acknowledge the significant impacts that this tragic disease can have on families and on our society as a whole. As our nation’s baby boomers continue to age,  the number of people impacted by dementia will likely increase significantly. According to the Alzheimer’s Association, there are currently about 5.7 million people suffering from Alzheimer’s disease in the United States, and that number is expected to double by 2050.

We would do well to heed one of the statements that Justice O’Connor made in her letter: “It’s not enough to understand [the effects of dementia], you’ve got to do something.” At O’Neil Cannon, we remain committed to helping to protect the legacies of those who suffer from this disease. Unfortunately, there are times when a family member or other acquaintance might attempt to take advantage of a person suffering from dementia by exerting undue influence to gain a financial benefit. These attempts to take advantage might involve unauthorized transfers or withdrawals of money from an elderly person’s accounts, or improperly seeking to elicit changes to a will, trust, or other legal document. While many people diagnosed with dementia remain capable of changing their estate plans for some period of time after they are diagnosed, if such changes are the result of undue influence, then those who are impacted may have the right to pursue relief in court.

If you would like to further discuss this article, please feel free to contact Attorney Trevor Lippman at 414-276-5000 or Trevor.Lippman@wilaw.com.

Arbitration clauses in commercial and employment contracts are increasingly popular as a means to try to settle business disputes without going through a court trial. Arbitration clauses should be clear regarding how the arbitration is to be carried out.

In addition to detailing who will hear the dispute (the arbitrator), an arbitration clause should designate a place or venue for the arbitration. This is particularly important if there is a chance the dispute will be between a private party and a foreign government. If so, the private party may wish to have any arbitration take place in a neutral country.

An arbitration clause also should make clear how the arbitration will be carried out. For example, what issues will be decided in the arbitration – and what issues, if any, should be excluded from the arbitration? There may be certain issues that are not suited to arbitration, or that cannot be arbitrated in a particular jurisdiction. In addition, arbitration clauses can specify whether the arbitration is intended to be binding or non-binding, as well as the governing law to be applied.

A “good faith negotiation” or mediation clause can be useful to allow the parties to attempt to settle their dispute before the arbitration begins, either by direct negotiation or with a third party mediator.

Also, consider language to address certain procedural issues, such as: the scope and nature of discovery and the discovery process and the arbitration hearing procedures, including rules of evidence, exhibits, court reporters, and the record (if any) of the proceeding. Arbitration clauses also can include information on the scope of allowable remedies, including whether injunctive relief is allowed or the parties can agree to limitations or exclusions of remedies.

If you have any question, please contact Grant Killoran at grant.killoran@wilaw.com or 414-276-5000.

Newsletter Article Highlights:

• Family Secures Large Settlement in Contentious Inheritance Dispute
• OCHDL Proudly Sponsors Annual Archbishop’s CRS Reception
• Six Questions Every Family Business Owner Should Be Asking
• Wage and Hour Liability–The Hidden Danger in Asset Acquisitions
• How to Make Spendthrift Trusts Work for You

Pleased to Announce:

• OCHDL Welcomes New Attorney Jessica K. Haskell
• Dean P. Laing Named 2019 Best Lawyers “Lawyer of the Year®” for Product Liability Litigation
• Congratulations to Our 20 Attorneys Listed in The Best Lawyers in America® 2019

Click the image below to read more.

With the Wisconsin general election coming up next week on November 6, 2018, now is the time for employers to brush up on their obligations surrounding voting.

All Wisconsin employers are required to provide employees who are eligible to vote up to three consecutive hours of unpaid leave to vote while the polls are open (from 7 AM until 8 PM), and employees must request the time off prior to the election. Voting leave cannot be denied on the basis that employees would have time outside of their scheduled work hours to vote while the polls are open, but employers can specify which three hours an employee is permitted to utilize. Other than the time being unpaid, employers may not penalize employees for using voting leave. However, employers should remember that, under the FLSA, they may not deduct from an exempt employee’s salary for partial day absences.

Additionally, all Wisconsin employers are also required to grant an employee who is appointed to serve as an election official 24 hours of unpaid leave for the election day in which the employee serves in his or her official capacity. Employees must provide their employers with at least seven days’ notice of their need for this leave. Other than the time being unpaid, employers may not penalize employees for using election official leave.

Finally, Wisconsin employers are not permitted to make threats that are intended to influence the political opinions or actions of their employees. Specifically, employers cannot distribute printed materials to employees that threaten business shut down, in whole or in part, or reduction in salaries or wages of employees if a certain party or candidate is elected or if any referendum is adopted or rejected.

In an ideal world, parties involved in the sale and purchase of goods would have a signed contract to establish the terms and conditions of the sale. A well-drafted, signed contract confirms the parties’ intentions to create a contract and clearly articulates its material terms in a single document. If a dispute arises, the parties can refer to that contract to determine each side’s rights and obligations.

More often than not, though, companies conduct business via purchase orders and acknowledgments without ever signing a separate contract. In such cases, how do you determine the governing terms of the agreement or whether a contract has actually been formed?

This article answers these critical questions by providing an overview of contract formation and discussing the rules and laws that govern contracts when disputes occur. Particular attention is focused on the “Battle of the Forms,” which arises when there is no signed contract between buyers and sellers and each party refers to their own standard terms and conditions. Although this battle puts sellers at a distinct disadvantage, there are steps that sellers can take to protect themselves if such a battle arises.

Contract Formation Overview

Common law and the Uniform Commercial Code (the “UCC”) are the two bodies of law that govern the creation, performance, and enforcement of contracts. Common law applies to contracts relating to services, real estate, insurance, and intangible assets, while the UCC covers contracts for the purchase and sale of goods. If a contract contains both goods and services, then whichever transaction is dominant dictates the applicable body of law.

Under both bodies of law, a contract is created by an offer and its acceptance (plus consideration, but that’s not of issue here). However, the laws diverge when it comes to defining the actions that constitute “acceptance.”
Let’s take a look at these differences.

Acceptance: Common Law

Under the common law, a contract is valid only if the offer and acceptance mirror each other. In other words, when a party accepts an offer it must be on the exact same terms as the original offer. If the terms differ, a rejection, not an acceptance, has occurred and no contract is formed. This is called the “mirror image rule.”

If a party accepts an offer but attaches different terms to the offer, common law views the acceptance as a counter-offer instead. The original offeror may then accept the counter-offer or make a counter-offer of its own. If this back-and-forth continues on the terms, but the goods are eventually sent, then the terms contained in the last document apply. This is known as the “last shot rule.” Obviously, this rule gives an enormous advantage to whomever sends the last document.

Acceptance: The UCC

The UCC modifies both the mirror image rule and the last shot rule. Under Section 2-207 of the UCC, a binding contract may arise even if an offeree’s acceptance makes changes to the terms of the original offer, excluding a few specific situations. In addition, to avoid the last shot rule, Section 2-207 has special rules that dictate how the law handles conflicting terms and conditions. To best understand how Section 2-207 works, let’s examine its application in the formation of different sales contracts.

Signed Contract

Section 2-207 does not apply to signed contracts. Accordingly, a written and signed contract setting forth the agreed upon terms and conditions is the best scenario for both sellers and buyers. While there may be a dispute regarding interpretation of the contractual language, Section 2-207 would not come into play in this scenario. Section 2-207 thus does not apply to signed contracts.

Contract by Exchange of Forms: Battle of the Forms

When a seller and buyer create a contract through an exchange of forms, a Battle of the Forms is inevitable. A contract by exchange of forms usually occurs as follows: A buyer and seller negotiate and agree on main points such as price, quantity, quality and time for delivery.  The buyer then submits a purchase order with pro-buyer boilerplate terms and conditions. The seller responds with an acknowledgement containing equally strong pro-seller terms and conditions. Following the exchange, performance occurs and the seller ships the goods and the buyer accepts them.

If a dispute arises, one party may argue that there was no agreement on certain terms because such terms were additional terms prohibited by the UCC. Under Section 2-207, if an acceptance or confirmation includes additional terms, those extra terms will become part of the contract unless:

• the offer expressly limits acceptance to the terms of the offer;
• the additional terms materially alter the offer; or
• notification of objection has been given or is given within a reasonable time after the additional terms are received.

Conflicts often arise over whether an additional term is a material alteration such as:

• Changes to price, quantity, delivery;
• Warranty disclaimers;
• Limitations on liability;
• Limitation on time for bringing claims;
• Choice of law or forum provisions; or
• Attorneys’ fees provisions.

Sellers are in a precarious position in a Battle of the Forms. Most of the protections a seller would include in its acknowledgement to a buyer would be considered material alternations.  As a result, those protections would not become a part of the contract between seller and buyer.

Contract by Conduct

Now, let’s imagine that there’s been a Battle of the Forms with material alterations included in the acknowledgment, but the buyer and seller have performed despite the differences. A subsequent dispute arises over the terms. How does the UCC determine the applicable terms?

Section 2-207 dictates that terms in both forms that do not clash become part of the contract. The remaining terms, however, are supplied by the UCC. These are called “gap fillers” and are very buyer friendly. They include:

• Implied warranties of merchantability and fitness;
• No limitation on seller’s liability;
• Consequential damages;
• Four-year statute of limitations;
• Payment due on delivery;
• Insurance risk remains with the seller until delivery of goods; and
• Additional buyer and seller remedies.

Advice for Sellers

As previously stated, it’s best to always operate with a signed agreement. Unless you have a signed contract, you will likely be dealing with the Battle of the Forms. Given the pro-buyer nature of the UCC, sellers are at a distinct disadvantage in this battle, even with well-drafted terms and conditions. If UCC gap fillers are used, the seller is subject to much additional risk.

So what’s a seller to do?

• Never assume that your terms and conditions will automatically be applied.
• Never sign a buyer’s form unless key issues have been addressed and resolved.
• Reference and attach your terms and conditions early, often and every single time there’s an exchange.
• Attempt to have the buyer accept and sign the seller’s terms and conditions.
• Carefully review the terms and conditions in the buyer’s forms and respond with express objections prior to commencing performance.
• Get the buyer to modify its standard terms and conditions to include the seller’s key protections.
• Always include certain non-negotiable terms in your terms and conditions.
• Attempt to negotiate a master contract with the buyer that lays out all of the applicable and acceptable terms and conditions for contractual dealings with one another moving forward.

Also note that certain protections in a seller’s terms and conditions should be considered to be non-negotiable, including:

• Payment provisions;
• Disclaimer of implied warranties;
• Limitations of buyer’s remedies to repair or replace at seller’s option;
• Limitation on seller’s liability;
• Limitation on period to bring claims;
• Protections of seller’s intellectual property;
• Disclaimer of consequential damages; and
• Specifying what law applies and what courts have jurisdiction.

The Fair Credit Reporting Act (“FCRA”) requires that employers who request “consumer reports,” which include background checks, criminal histories, driving records, and credit reports, from a third-party service about employees and applicants follow certain rules. These rules contain specific requirements for notice, disclosure, and consent both in conjunction with obtaining a report and taking adverse employment action because of information in the report.

One requirement is that an employer must make certain disclosures before the employer takes an adverse action based on information discovered in the consumer report. This includes providing the employee or applicant with a written summary of consumer rights under the FCRA. Recently, the Bureau of Consumer Financial Protection updated its model disclosure to reflect recent legislative changes to the FCRA, such as the consumer’s right to place a security freeze or fraud alert on their credit report. The new model form can be found here.

Employers must ensure that their authorizations and disclosures meet all FCRA requirements and that they are providing the correct notifications, including the updated summary of rights.

Earlier this month, for the third consecutive year, O’Neil, Cannon, Hollman, DeJong and Laing S.C. proudly sponsored the Catholic Relief Services (CRS) reception at the Wisconsin Club, downtown Milwaukee. Attendance was the highest it has been in years, making the event one of the most successful that CRS has ever held in Milwaukee.

Catholic Relief Services is one of the largest international aid organizations in the world. It is also one of the most efficient and effective, with 97% of its expenditures going directly to programs that benefit individuals overseas. CRS works to alleviate suffering and provide assistance to more than 100 million people in need who live in some of the most impoverished places in over 100 countries.

O’Neil Cannon is honored to have been a part of such a meaningful event.
Read more about CRS >>

When we think of children blowing through trust funds, we often envision the rich and famous. The reality, though, is that everyday folks waste vast inheritances, too. Take, for example, Mary McClelland who, throughout her 20s, squandered her tri-annual $5,000 and $10,000 payments from her grandfather’s investments on traveling and shopping and ran out of money by age 30.

Unfortunately, McClelland’s story is far from unique. The Williams Group wealth consultancy estimates that 70% of wealthy families lose their fortune by the second generation; that percentage rises to 90% by the third generation.

If these cautionary tales and statistics scare you, they shouldn’t—but they are excellent reminders of what could happen if you don’t plan to pass down your wealth in a smart way. The good news is that if you’d like to pass down your wealth to your heirs but also want to make sure they won’t fritter away your hard-earned assets, you have options, and spendthrift trusts just may be the answer.

What are spendthrift trusts?

Merriam-Webster defines “spendthrift” as “a person who spends improvidently or wastefully.” Not surprisingly, this textbook definition is the origin of the name of the legal concept of “spendthrift trusts.”

With spendthrift trusts, you as the creator can protect the trust’s assets from creditors as well as from your heirs’ potentially dangerous spending habits by placing certain conditions on the distribution of funds.

At its initial set-up, a spendthrift trust works like any other trust. You choose assets to place in the trust—money, property, etc.—and transfer them into it. You name a beneficiary, who is the person who will benefit from the trust. You must also name a trustee to manage the trust’s assets.

With a spendthrift trust, you would include in the trust document certain restrictions on the beneficiary’s receipt of trust assets. These conditions may involve the beneficiary having to reach a minimum age or achieving a life event, such as graduating college, before receiving trust property. Alternately, you may decide that doling out smaller amounts of trust property at specified times (monthly, bi-monthly, bi-annually) may make the most sense for your situation.

The late actor and comedian Robin Williams, for instance, had set up spendthrift trusts for his children before his death. Under the conditions of the trusts, each of Williams’ children is scheduled to receive shares of the trust at specified intervals: one-third at age 21; one-half of what remains at age 25; and the rest at age 30.

In any event, a spendthrift trustee has a fiduciary duty to the trust and is also obligated to act in the best interests of the beneficiary. The trustee acts as protector of the trust’s assets both from creditors and the potential wasteful behavior of the beneficiary as well.

You may also choose to have the trustee make direct payments such as tuition and rent for the benefit of the beneficiary; this may be the best idea if you have serious reservations about how your heir will handle even periodic, smaller monetary distributions. After all, once the beneficiary receives the funds, there isn’t a whole lot you can do to make sure they use the funds wisely. Indeed, once the money is out of the trust, it is no longer protected from creditors.

While you’re still alive, though, you can discuss financial responsibility with your heirs to help ensure that your family avoids becoming part of the dire statistic of families who lose their wealth by the second or third generations.