Depew Gillen Rathbun & McInteer

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Workplace Safety and You: How you can protect yourself and other employees

January 15, 2018 By dgrm1

Wichita has had a rough couple of months when it comes to workplace accidents. It seems like every time the news comes on there is another large-scale workplace accident that has claimed another life. Employers should always look for ways to increase workplace safety. Employees, however, might fear being terminated or retaliated against for reporting workplace safety issues.

While it is true that Kansas is an at-will employment state, meaning you can be fired at any time and for any reason as long as it is not discriminatory, the Kansas Supreme Court has carved out a public policy exception to the at-will status of employees. This public policy exception functions as a sort of whistleblower protection. It protects employees who have been fired for reporting a violation of the law if a “reasonably prudent person” could conclude that either a co-worker or an employer was engaged in activities in violation of rules, regulations, or the law pertaining to public health, safety, and the general welfare; the employer knew that the employee reported the violation before being terminated; and the employee was discharged in retaliation for making the report.

How would this look in practice? Say, for instance, that you work as a truck driver and you have a set number of hours you are allowed to drive. If your employer is making you drive in excess of those legally permitted hours and endangering the lives of other motorists on the road, what can you do? You can report it to the applicable regulatory agency, which in this instance would be the Department of Transportation. To ensure that you are protected under the public policy exception the employer must know that you reported the violation. If your employer terminates you following the reporting of the violation, then you most likely have a viable case for retaliatory discharge. What are you allowed to recover in a case for retaliatory discharge? Typically, you can recover back pay, front pay, damages for emotional distress, and punitive damages (if the circumstances support it).

Another example is the Occupational Safety and Health Administration (OSHA) regulations. These guidelines are put in place to protect worker safety and are often violated in order to save costs. The recent horrific accident in Bel Aire where a 29-year-old man was killed when a trench he was working in collapsed is currently being investigated by OSHA. OSHA requires trench shoring to stabilize the sides of all trenches over five feet deep. The use of trench shoring and other OSHA safety regulations is exactly the type of regulation anticipated by the public policy exception. Reporting the failure to use trench shoring, or some other type of OSHA requirement by employees is a protected act under the public policy exception in Kansas and if you are terminated as a result you could have a viable case for retaliatory discharge.

The above examples are not exhaustive. The whistleblower protections apply to the reporting of all violations of rules, regulations, or laws pertaining to public health, safety, and the general welfare. Some other examples are reporting misuse of funds, mishandling chemicals, and failing to comply with licensing requirements.

If you believe that you have been retaliated against for reporting a violation of rules, regulations, or the law pertaining to public health, safety, and the general welfare, then you may have a case. Whistleblowers are protected from retaliation in employment in Kansas to the extent that they act in good faith. If your employer is violating the law and endangering your safety, it is always best to consult an attorney. If you fear that your employer will retaliate against you for reporting a workplace safety violation, then you should always ensure that you will be protected before taking any action.

Benjamin K. Carmichael

January 15, 2018
ben@depewgillen.com
Depew Gillen Rathbun & McInteer, LC
depewgillen.com

This article is based on hypothetical facts and is issued for general informational purposes only. It is not intended to be construed or used as legal advice.

Filed Under: News Tagged With: Benjamin Carmichael, employee protection, osha, retaliatory discharge, whistleblower, whistleblower retaliation, workplace safety

Verdict Obtained in Nuisance Trial

November 20, 2017 By dgrm1

Depew Gillen Rathbun & McInteer LC attorney Benjamin Carmichael successfully brought a nuisance claim against an automotive repair shop that had dumped waste oil and solvents on their clients’ property. The plaintiffs alleged that the dumping of waste oil created a substantial and unreasonable interference with the use and enjoyment of their land. The Sedgwick County, Kansas jury returned a verdict for the plaintiff. Judge Eric Commer presided.

Filed Under: News Tagged With: Benjamin Carmichael, dumped chemicals, pollution, property damage

Wichita Business Journal Emerging Leaders discuss talent retention, quality of life

October 30, 2017 By dgrm1

One of the major breakthroughs that has happened recently in Wichita is that it has become aware of itself.

So says Joe Schremmer, a Wichita lawyer who grew up in Derby and one of a dozen WBJ Emerging Leaders who participated in a roundtable discussion on Thursday.

“I’m a little excited about how we have become conscious of ourselves,” Schremmer said. “I’ve perceived in the last few years that we’ve started to talk about Wichita almost from a third-party perspective. We’re in some kind of evaluative process that I don’t recall happening in the past.”

Schremmer, who works for Depew Gillen Rathbun & McInteer, said the self-reflection can be depressing at times, but he thinks the awareness will ultimately improve the community.

See the full article:
https://www.bizjournals.com/wichita/news/2017/10/26/emerging-leaders-discuss-talent-retention-quality.html

Filed Under: News Tagged With: leadership, schremmer, wichita ks

CO₂ Capture and Utilization in Kansas

September 29, 2017 By dgrm1

The Kansas Geological Survey, the Great Plains Institute, and the State CO₂-EOR Deployment Working Group recently held an invitation-only workshop to discuss opportunities to capture, transport, store, and utilize CO₂ from industrial sources in Kansas and neighboring states. The meeting included discussions of new revenue opportunities for industry sectors such as ethanol, and for new oil production in Kansas through CO₂ Enhanced Oil Recovery. The meeting included a discussion of current policy initiatives aimed at scaling up carbon capture, storage, and utilization from various sources and the potential for Kansas. Chris Steincamp was one of the expert presenters, and Joe Schremmer was an attendee.

Filed Under: News Tagged With: carbon capture, carbon storage, carbon utilizaiton, CO2, oil and gas

Rathbun Recognized in Best Lawyers in America

September 7, 2017 By dgrm1

Randy Rathbun has been recognized in the 24th edition of Best Lawyers in America in two separate areas of practice. He was named “Lawyer of the Year” in Wichita Employment Law for his work in representing employees in wrongful discharge, wrongful discharge, FMLA and pregnancy discrimination cases.

Additionally, Rathbun was named to Best Lawyers in America for the 22nd straight year in Environmental Litigation for his work representing landowners, farmers and environmental groups in pollution claims.

Filed Under: News Tagged With: environmental law, environmental litigation, FMLA discrimination, pregnancy discrimination, wrongful discharge

Best Lawyers 2018 Lawyer of the Year, Environmental Law

August 24, 2017 By dgrm1

Charles C. Steincamp has once again been recognized as Best Lawyers’ 2018 Wichita Environmental Law “Lawyer of the Year”. This is the fourth time he has received this honor. The award is based on the consensus opinion of leading lawyers about the professional abilities of their colleagues within the same geographical area and legal practice area.

Filed Under: News Tagged With: best lawyer, environmental law, lawyer of the year, oil and gas, wichita ks

Why Doesn’t My Title Insurance Commitment Cover Minerals and What Can I Do to Fix it?

May 23, 2017 By dgrm1

Many purchasers of real estate find themselves searching for answers to these very questions. Virtually all title commitments and insurance policies exclude coverage of oil, gas, and other minerals as a matter of ordinary course. Anyone who’s reviewed an industry-standard ALTA title commitment has noticed that minerals are a standard exception from coverage. But why?

The reason is the Kansas Marketable Record Title Act, found at Chapter 58, Article 34 of the Kansas Statutes, K.S.A. 58-3401, et seq. Originally passed and signed into law in 1973, the Act’s purpose is to “attack the curse of the hidden ancient interests in land,” according to the Uniform Law Commission that drafted the uniform law that Kansas’s Act is modeled from. In Kansas real property law, interests in land can continue to exist for long periods of time—even permanently. Some property interests are disclosed in public land records, but some are not. Before the Marketable Record Title Act, this fact of life posed quite a quandary for buyers of land—how far back should a title search go to identify any possible interest that may exist in the land that might affect marketable title?

Under the Act, ancient interests in land that nobody presently asserts are extinguished so as not to create a cloud on title to the land. The word “ancient” may be a bit misleading; the Act really extinguishes interests that are older than 25 years from the date the purchaser takes title. So when you hire a title company to write a title commitment on a parcel of land you want to buy, the title company searches title records going back only 25 years, rather than all the way back to the beginning of the records. This saves the title company—and ultimately the buyer—a bundle of time and money.

Nothing in life is free, not even the conveniences provided by the Marketable Record Title Act. The Act doesn’t apply to all types of ancient property interests. One type of property interest than can’t be extinguished by the Act are severed mineral interests. No matter how old a severed mineral interest is, or how long ago anybody presently asserted ownership of it, a present-day buyer of the land will take subject to the interest. That’s why title companies don’t insure title to minerals—because to do so would require them to search title going all the way back to the grant from the United States federal government.

Most buyers of land have no idea whether they are truly buying all of the minerals in, on, or under the land because their title policy won’t cover them. It’s not uncommon to encounter landowners who are dismayed to later learn their interest is subject to a third-party mineral owner. There is a solution, however. Title companies will usually remove the standard exception from coverage for minerals if the buyer provides a title opinion from a licensed Kansas real estate attorney covering the mineral estate in the land. Obtaining a mineral title opinion prior to closing on the purchase of a piece of real estate is the only way to truly ensure that you are buying all of the mineral interests in the property.

Getting a lawyer’s title opinion on a piece of property has other benefits, too. For instance, it can cover other types of property interests that aren’t covered by the Marketable Record Title Act, such as easements (or right-of-way) as well as remainder and reversionary interests. The only way to know about these kinds of interests is to look for them in the public land records, which typically stretch back to the late 1800’s in Kansas. By examining only the last 25 years of records, as title companies do, it’s possible to miss ancient interests that the Act won’t take care of.

Buyers of land in Kansas should consider hiring a licensed and qualified Kansas real estate lawyer to examine title to the land as a supplement to the title insurance commitment.

Joseph A. Schremmer
joe@depewgillen.com

May 2017
Depew Gillen Rathbun & McInteer, LC

This article is based on hypothetical facts and is issued for general informational purposes only. It is not intended to be construed or used as legal advice.

Filed Under: News Tagged With: mineral estate, mineral rights, real estate lawyer, title insurance, title insurance commitment, title opinion

WHEN A CORPORATION MAKES SENSE FOR ENTREPRENEURS

March 17, 2017 By dgrm1

Clark and Lois moved to Wichita, the Air Capital of the World, to work among other leaders in aerospace and for Clark to be closer to his stepparents. Lois has two patents on a holographic simulator at the forefront of interactive, virtual reality technology. Clark owns a patent on a tactile sensor technology that provides a sense of touch when interacting with switches and controls in a holographic image. They also are adapting this system for use in overriding failed switches or components in cockpits during flight and are working with a major manufacturer to introduce this safety technology on its next generation of jets. What form of business makes sense for this super duo?

Clark, “Lois and I would like to formally combine our ideas in a company, and we want our personal assets shielded from what happens in the business.”

Lois, “I have some money from a golden parachute to invest in our company, but, of course, we don’t expect to make money for a while. We expect to operate at a loss for at least a year.  We aren’t quite ready to seek venture capital, but will need to do so.”

Clark, “And, at some point, Lois and I would like to go public.”

At first, it appears that an S corporation is the form of business that will best serve Clark and Lois.  Here’s why.

An S corporation is an excellent shield against personal liability. It also is well-suited for any business that will be seeking outside capital, if such funding is not imminent and the founders, like Clark and Lois, would personally like to take advantage of the early anticipated losses of the business.

A corporation provides a “corporate veil” or shield against personal liability for activities conducted by the corporation. So long as all corporate formalities have been complied with, the shareholders of the corporation, Clark and Lois, will only be liable for the debts, obligations and liabilities of the corporation up to the amount of their respective investments.

There are two primary types of corporations: an S corporation and a C corporation. They are called S corporations and C corporations because they are bound by the rules and regulations of Subchapter S or Subchapter C of the Internal Revenue Code. An S corporation refers to an eligible business that is formed as a corporation under state law and elects to be taxed at the ownership level like a partnership.

One of the differences between a C corporation and other structures, such as an S corporation, is in the way they are taxed. Unlike an S corporation that does not tax the business directly, C corporations are required to pay both federal and state taxes at the entity level. While other structures like the S corporation only mandate that shareholders or interest holders pay taxes on any profits they receive, C corporations face the possibility of being double-taxed since both the business and the owners must pay taxes on profits.

An eligible business can elect to become an S corporation by submitting Form 2553 “Election by a Small Business Corporation” to the IRS. Since an S corporation is a “pass through” entity, i.e., profits and losses of the corporation pass through to the individual shareholders, Clark and Lois can each account for their pro rata share of income, deduction, loss and credit. The S corporation structure will allow Clark and Lois to write off their early losses.

Another advantage of an S corporation is that it can establish a salary or bonus for its stockholder-employees, and they would only pay Social Security and Medicare taxes on such salary or bonus.  The caveat is that the salary or bonus must be reasonable and not too low for the job performed. If the salary or bonus is too low, the “dividends” may be treated as salary or bonus and the IRS may assess penalties on the underpayment of taxes.

An additional perk of an S corporation is that non-wage income earned in such a “pass through” business is not currently subject to income tax at the state level in Kansas. More money for Clark and Lois.

Lois, “What form of corporation is best to attract venture capital, and eventually go public?”

A C corporation is well-suited to attract venture capital, especially if the exit strategy is an initial public offering or IPO. It is wise to perform due diligence on prospective funds.  Get to know their key personnel and expectations and requirements up front.  From a tax perspective, certain venture capital funds avoid investing in “pass through” entities such as S corporations because the pass-through mechanism may require the fund to report losses to the fund’s investors, or may require the fund’s foreign investors to file U.S. tax returns. Under an S corporation, all shareholders must be U.S. citizens like Lois, or residents, like Clark. In addition, an S corporation cannot have more than 100 shareholders and can only have one class of stock. These features are not attractive to raising capital, especially if a venture capital fund would want preferred stock in return for their investment.  On the other hand, some angel investors or family offices may prefer to invest in “pass through” entities for the reasons set forth in the prior paragraphs.

When venture capital funding is imminent, Clark and Lois can convert the S corporation to a C corporation by terminating the S election, with tax ramifications of course. Unlike an S corporation, a C corporation may have an unlimited number of shareholders and different classes of stock. The flexibility to issue different classes of stock facilitates raising capital by making a broad range of financial instruments accessible, including preferred stock, warrants, convertible notes and subordinated debt.

Robert J. Vincze
robert@depewgillen.com

March 2017
Depew Gillen Rathbun & McInteer, LC

 

This article is based on hypothetical facts and is issued for general informational purposes only.  It is not intended to be construed or used as legal advice.

Filed Under: News Tagged With: business taxes, C corporation, CORPORATION, entrepreneurs, s corporation

KANSAS MINERAL LAPSE ACT: SWORD OR SHIELD?

February 24, 2017 By dgrm1

Title to real estate includes title to the surface of the land as well as to the oil, gas, and other minerals located under the surface, often called the “mineral estate.” Title to the minerals may be separated from or “severed from” title to the surface, so that, for example, John Smith may own 100% of the surface of Blackacre but transfer, or convey, to his brother, Bob Smith, 100% of the minerals under Blackacre. Both John and Bob may possess, convey, and pass to their heirs or devisees under a will all or a portion of their interest in Blackacre to other persons. The result, which is not uncommon in Kansas, may be that title to the mineral interest in Blackacre is owned by numerous individuals with each owning a relatively small fractional amount of the total minerals.

In most respects, John Smith’s title to the surface of Blackacre and Bob Smith’s title to the minerals in Blackacre are equivalent property rights in the eyes of the law. However, Kansas, like many other states, has adopted a dormant mineral act, also known as a mineral lapse act, which can have the effect of extinguishing Bob’s title to the mineral estate in Blackacre (and rejoin the mineral estate with the surface estate) if he fails to “use” his mineral interest.

The Kansas Mineral Lapse Act (K.S.A. §§ 55-1601 to 55-1607) is designed to identify the owners of severed mineral interests and incentivize them to “use” their mineral interests. Under the Act, if an owner of a severed mineral interest has not used the mineral interest for a continuous period of 20 years or more, the owner of the surface estate may, after giving notice to the severed mineral interest owner, extinguish the severed mineral interest and reunite the interest with the surface estate.

For severed mineral interest owners, and owners of surface estates subject to severed mineral interests, it is important to understand what constitutes “use” of the mineral interest under the Kansas Mineral Lapse Act. For severed mineral interest owners, this knowledge is key to avoiding lapse and loss of their mineral interest. For owners of a surface estate subject to severed mineral interests, knowledge of what constitutes use of a severed mineral interest may come in handy should the owner one day wish to extinguish the severed mineral interests and reunite them with his or her interest in the surface. Under the Kansas Mineral Lapse Act, a mineral interest is considered to be used when:

(1) Any minerals (including oil or gas) are produced from the property;

(2) Operations are being conducted on the property for the injection, withdrawal, storage, or disposal of water, gas, or other fluid substances;

(3) Rentals or royalties are being paid by the owner of the severed mineral interest to the owner of the severed surface estate for the purpose of delaying or enjoying the use of the mineral rights;

(4) The property is unitized or pooled for oil or gas production purposes with other property that is being used under this definition;

(5) In the case of coal or other solid minerals, there is production from a common vein or seam by the owners of the severed mineral interests, or

(6) Taxes are being paid on the severed mineral interest by the owner. In counties that separately tax severed minerals, “using” a severed mineral interest is as simple as paying annual property taxes on it.

To attempt to extinguish Bob Smith’s severed mineral estate and reunite it with his surface estate in Blackacre, in our example, John Smith would have to give notice to Bob that Bob’s mineral interest has lapsed for nonuse. This requires that John publish notice of the lapse in a newspaper of general circulation in the county where Blackacre is located and, if he knows Bob’s address, by mailing a copy of the notice by restricted mail to Bob within 10 days after publication of the notice in the county newspaper. For 60 days following publication of the notice in the county newspaper, Bob may file a statement of claim in the office of the Register of Deeds of the county where Blackacre is located preserving his mineral interest. If Bob files a statement of claim, his mineral interest will remain valid for at least another 20 years.

If, however, Bob fails to file a statement of claim during the 60-day period, then, under the Mineral Lapse Act, the severed mineral interest reverts to the owner of the surface estate—John in our example. John Smith would therefore take title to the severed mineral interests and would own both the surface and the mineral estates of Blackacre. John must then file a quiet title action in the district court of the county where Blackacre is located to quiet his title to the mineral interest against any claim of Bob in order to obtain marketable title to the mineral interest.

As you can see, the Kansas Mineral Lapse Act may be a trap for the unwary severed mineral interest owner in Kansas. The Act may also be a tool for a surface owner who wishes to reunite severed minerals with his or her surface estate. Sometimes this is the only way the land may be leased and developed for oil and gas purposes. Owners of real estate in Kansas should remain vigilant about the use or nonuse of severed mineral interests, and are strongly encouraged to contact qualified Kansas real estate legal counsel if and when issues of nonuse and mineral lapse arise.

Joseph A. Schremmer
joe@depewgillen.com

February 2017
Depew Gillen Rathbun & McInteer, LC

This article is based on hypothetical facts and is issued for general informational purposes only. It is not intended to be construed or used as legal advice.

Filed Under: Areas of Law, News Tagged With: coal, kansas mineral lapse act, mineral estate, minerals, oil and gas

The Challenges of a Successful Age Discrimination Case

January 25, 2017 By dgrm1

Friends of mine who know I represent employees in discrimination cases often ask me about age discrimination in the Kansas courts and how I prove these cases. Frankly, it is not easy.

Age discrimination cases arise under a federal act, the Age Discrimination in Employment Act, also referred to as the ADEA. Although these cases can be filed in state court, they are almost always removed to federal court because employers and their counsel are well aware of the hostile lens through which the federal courts view employment cases. Age discrimination cases can be removed from state court to federal court because they involve a “federal question.”

What does an older worker (the plaintiff) have to show if he or she believes they are the victim of age discrimination? The jury in Kansas is required to find the following elements to rule in favor of the employee in an age discrimination claim:
1. The plaintiff was an employee of the defendant employer
2. The plaintiff was forty or more years old at the time of his discharge;
3. The plaintiff’s employment was terminated; and
4. The plaintiff would not have been terminated but for his/her age. The plaintiff has the burden of proof to prove all of these elements by a “preponderance of the evidence,” which simply means more believable than not.

Obviously, an age discrimination rises and falls on the 4th element: whether an employee would not have been terminated but for his age. How do I go about proving this? There are two kinds of evidence that can be used to prove age discrimination: direct and circumstantial. Direct evidence is direct proof of a fact, such as testimony of an eyewitness. The best example of this is the plaintiff’s boss saying: “Bob, you are just getting too old to do sanding. Shouldn’t you be enjoying your life in an easy chair?” This type of evidence rarely comes along because most employers are well-trained to hide such feelings. Circumstantial evidence, on the other hand, is indirect evidence that leads a juror to believe that age discrimination took place. The best description of circumstantial evidence I ever heard was by one on my heroes, Federal Judge Frank Theis, who was appointed by President Johnson and passed away in 1998.  In one of my first trials in federal court back in the 1980’s, Judge Theis (an avid outdoorsman) used this story to describe circumstantial evidence:
Imagine you are out rabbit hunting early one December morning. It is a beautiful winter morning and a fresh blanket of snow covers the ground. You come across a set of tracks which any hunter worth his salt instantly recognizes as rabbit. In the fresh snow, you follow the tracks to a hollowed out log. Now, you didn’t actually see the rabbit hop into the log, but you know that rabbit is in the hollow log. How? Because the tracks go to the hollow log and do not come out. That, folks, is circumstantial evidence.

The task in age discrimination is proving that age is the “but for” reason for an older worker’s discharge. The employer always has a plethora of reasons about why my client was fired–none of which ever has anything to do with age. The attorney representing the older worker must take on these reasons and show they are pretextual. That, is age discrimination in a nutshell.

Randall K. Rathbun
randy@depewgillen.com

January 2017
Depew Gillen Rathbun & McInteer, LC

This article is based on hypothetical facts and is issued for general informational purposes only. It is not intended to be construed or used as legal advice.

Filed Under: News Tagged With: age discrimination, employment law, older worker discharge

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