SBA ISSUES UPDATE GUIDANCE ON PPP LOANS AND FORGIVENESS

May 13, 2020

The Small Business Association (SBA) released today a number of clarifications regarding the recent Paycheck Protection Program (PPP).  The forty-six question and answer responses address many of the process and forgiveness questions that have been on the minds of borrowers and lenders alike since the program launched on April 3rd.  Topics range from good faith certification and auditing to signature requirements and authorization documents.  Details can be found at this link.

About the author:  Patrick Clisham assists clients in all aspects of chapter 11 reorganizations, out of court restructurings, asset acquisitions and sales, lease negotiations and enforcement, and business transactions.  pac@eblawyers.com | 602.222.4968

Disclaimer: This article is not legal advice and is only for general, non-specific informational purposes. It is not intended to cover all the issues related to the topic discussed. If you have a legal matter, the specific facts that apply to you may require legal knowledge not addressed by this article. If you need legal advice, consult with a lawyer.


YOUR FIRST MOVE – TIMING INITIAL FILINGS AND SERVICE DURING THE PANDEMIC

April 28, 2020

If you are thinking about filing a lawsuit during the Covid-19 pandemic, consider your strategy for serving process at the outset of the case.  While some courts in other states have ordered temporary suspensions of personal service, the Arizona State Court has yet to take such action.  Arizona Rules of Civil Procedure 4 and 4.1 provide the rules for serving pleadings that bring an Arizona-based party into an action.  In most cases, serving an individual under Rule 4.1 requires hand-delivery of a copy of the summons and the pleading to the individual being served, someone at that individual’s home, or an agent authorized to accept service.  With the Covid-19 pandemic in the picture, such methods of service of process may give rise to health and safety concerns, and may prove to be ineffective with individuals evading such service for fear of infection.

Parties initiating a lawsuit in Arizona state courts have a limited time—ninety days—to serve a defendant before the court dismisses the action or orders service within a specified time.  This rule also allows parties to request an extension under certain circumstances, including a showing of “good cause” for the failure to serve.  Accordingly, would-be litigants are currently faced with the following questions:  (1) is it better to file a complaint now and try to serve process during the ninety day limit, or wait a few months to file in hopes that the pandemic will have subsided; and (2) what constitutes “good cause” for a failure to serve within the ninety days allowed by Rule 4(i)?

A recent Arizona Supreme Court opinion sheds some light on these questions.  In Sholem v. Gass, et al., the Arizona Supreme Court held that under Rule 4(i), if a plaintiff shows good cause for failing to serve a defendant within ninety days, a court is required to extend the time for service. However, Rule 4(i) also allows a court, in its discretion, to extend the period for service without a plaintiff showing good cause.  The Court also shed some light on factors to be considered when trying to show “good cause” under Rule 4(i), such as: (1) whether the plaintiff abandons service after only a few unsuccessful attempts over a limited time during the allotted time period for service, (2) whether the reason for failure to serve is outside the plaintiff’s control, such as “sudden illness, natural catastrophe, or [defendant’s] evasion of service of process,” and (3) whether the plaintiff attempts to serve the plaintiff at more than one location (such as business and home addresses) or by alternative means (after first seeking permission from court).  Finally, the Court listed some factors to be considered when determining whether to grant a discretional extension under Rule 4(i): (1) whether a plaintiff would be time-barred from re-filing the lawsuit due to the statute of limitations; (2) if the defendant evaded service; and (3) if the defendant would be harmed, or prejudiced, in some way if the court grants the extension.

As long as plaintiffs consider the “good cause” and “discretionary” factors set forth in Sholem, fear of being unable to serve pleadings within the ninety day time period should not, alone, deter a party from initiating a lawsuit during the pandemic.  Ultimately, the decision of whether to send a process server out to effect personal service should still be still be made on a case-by-case basis in consultation with your attorney during the pandemic.  Plaintiffs who go ahead with filing during the pandemic should consider the following strategies during the ninety day period for service to avoid running afoul of Rule 4(i):

  • Consider reaching out to defendant early in the ninety-day period and asking if they will waive service or accept service.  The Rules provide further guidance on each option;
  • Make multiple attempts at serving the party throughout the ninety-day period, not just over a limited period in the ninety days (i.e., instead of making six attempts at service during the second week, try spreading these attempts over the ninety days);
  • If it appears that the party is evading service or service will be unsuccessful for reasons outside of the litigant’s control (i.e., the defendant will not leave her home or answer the door for health reasons), consider asking the court for permission to use an alternative means of service under Rule 4.1(k) before the expiration of the ninety-day period.

About the Author: Rachel Phillips is a business litigation attorney who assists clients across multiple industries in both state and federal courts. Rachel has represented lenders, recycling and waste solutions providers, food companies, regional financial institutions, commercial landlords, and insurance providers. She focuses on providing innovative solutions and effective advocacy for clients. rep@eblawyers.com | 602.222.4962

Disclaimer: This article is not legal advice and is only for general, non-specific informational purposes. It is not intended to cover all the issues related to the topic discussed. If you have a legal matter, the specific facts that apply to you may require legal knowledge not addressed by this article. If you need legal advice, consult with a lawyer.

SUPPORT FOR NONPROFITS: ARIZONA COMMUNITY RESPONSE FUND

April 21, 2020

In an effort to help support nonprofit organizations assisting families and children with essential services, the Maricopa County Industrial Development Authority is contributing $1 million to the Arizona COVID-19 Community Response Fund.  Together with many other contributing businesses and organizations, the Arizona Community Foundation created the Community Response Fund to provide general operating support for nonprofits serving their communities.   Arizona nonprofits providing community services in response to the COVID-19 pandemic, including childcare, eldercare, education, food, healthcare and mental health, are encouraged to apply for the grants. 

Eligible organizations are any Arizona 501(c)(3) nonprofit corporation , government agency, tribal entity or religious organization.  Organizations may reapply for additional funding every 30-days during the State of Arizona’s Emergency Declaration.  Each nonprofit is asked to answer the question “How has your nonprofit been impacted by the spread of COVID-19 in Arizona?”

Information about the Community Response Fund can be accessed by contacting the Arizona Community Foundation at info@azfoundation.org or by filling out the request form here.

About the Authors: Julie Arvo MacKenzie works closely with nonprofit corporations and public finance sector clients to assist with capital project and equipment financings.  Brigitte Finley Green serves as bond counsel and helps clients navigate the complex federal tax rules that allow them to borrow money at lower tax-exempt rates.  Together Julie and Brigitte have handled countless bond transactions in Arizona for state agencies, universities, counties, cities, school districts, charter schools, 501(c)(3) nonprofit organizations and other entities. jam@eblawyers.com | 602.222.4971 | bfg@eblawyers.com | 602.222.4990

Disclaimer: This article is not legal advice and is only for general, non-specific informational purposes. It is not intended to cover all the issues related to the topic discussed. If you have a legal matter, the specific facts that apply to you may require legal knowledge not addressed by this article. If you need legal advice, consult with a lawyer.

CONSIDERATIONS FOR COMMERCIAL LANDLORDS AND TENANTS IN DEALING WITH COVID-19 DISRUPTIONS

April 16, 2020

Disruption of business and government-mandated closures related to the COVID-19 pandemic are creating significant stress on commercial landlords and their tenants. Although we encourage an open line of communication between landlord and tenant, we also strongly recommend completing a thorough review of the lease and applicable law as a prudent first step in assessing each party’s risk exposure and preparing to mitigate damages. Because each leased property, each lease and each lease default is unique, the parties should consult with counsel for guidance in determining their respective rights and obligations so that they are better equipped to navigate the current uncertainty and determine the appropriate time for taking action. Some general guidelines follow.

Review Applicable Lease Provisions. Prior to engaging the other party, both landlords and tenants should review the lease to determine which provisions may apply to COVID-19 events, including:

  • force majeure (note that even if COVID-19 events qualify as force majeure events, rent is still likely due as force majeure clauses typically excuse performance of non-monetary obligations, but not payment of rent) and, if not applicable, applicability of equitable doctrines of impossibility or frustration of purpose;
  • covenant of continuous operation or minimum opening hours (compare to likely inconsistency with tenant’s general covenant to comply with all laws), including similar covenants in leases with other tenants;
  • permitted use, restrictions and exclusives (e.g. where tenants have been forced to adapt their use to continue operating);
  • landlord’s covenant of quiet enjoyment (e.g. where premises are voluntarily closed absent government mandate);
  • eminent domain or taking;
  • landlord’s obligation to provide basic services, and exculpation or termination rights for interruption in or failure to provide same;
  • general rent abatement provisions; and
  • applicable notice requirements.

Prerequisites to Granting Relief. Prior to considering granting any relief to a tenant, landlords can generally be expected to require that the tenant submit a specific written request for relief and demonstrate financial hardship by means of:

  • confirming application and approval for an SBA loan or other disaster assistance available under the CARES Act;
  • making a claim under any available business interruption insurance policy; and
  • supplying current financial statements or projections, to the extent available.

Options for Relief. Possible solutions for providing relief to tenants, and consideration therefor, include:

  • rent deferment (repaid in lump sum, amortized over all or part of remaining lease term, or a tenant promissory note in the case of a short term lease);
  • rent reduction;
  • rent abatement (base rent only, or to include triple-net/CAM charges), with or without commensurate extension of lease term or mandatory exercise of extension option;
  • forbearance on late charges and interest;
  • application of security deposit to rent (to be replenished at later date);
  • grant of more favorable lease terms or relinquishment of other negotiable tenant rights such as rights of first refusal, options or expense caps; and
  • addition of personal guaranty, security or other credit enhancement

Landlord Lender Considerations. Landlords should review their loan documents and engage with their lender early in the process, considering the applicability of:

  • loan covenants or SNDAs restricting or prohibiting lease amendment or termination without lender consent;
  • loan covenants obligating landlord to use commercially reasonable efforts to enforce leases;
  • effect on debt service coverage ratio and other financial covenants and MAC covenants; and
  • possible imposition of liability under nonrecourse guaranty carve-out for failure to obtain required lender consents or admitting to insolvency.

Operational Issues. Landlords and tenants should consider the effects of COVID-19 events on operational and administrative issues, such as:

  • ongoing maintenance and security obligations, and increased costs for same;
  • responsibility and protocol for addressing positive-tested persons within the premises and general prevention of the spread of COVID-19;
  • access rights to leased premises and common areas;
  • deadlines for delivery of premises, build-outs, use of tenant improvement allowances and the like; and
  • fair market rent valuations for extension options.

Documenting Lease / Loan Document Amendments. All rent concessions, loan modifications or forbearances, and related agreements should be documented in a formal, written lease or loan amendment, executed by both parties and any guarantors. In addition to the business terms, landlords may consider including the following in any lease amendment:

  • prohibition against tenant double-dipping on disaster relief;
  • requirement that tenant pursue all insurance claims;
  • increased tenant financial reporting obligations;
  • requirement that tenant comply with CDC guidelines;
  • estoppel language confirming no landlord defaults;
  • waiver of (or revisions to) any force majeure clause;
  • waiver of common law defenses and all claims against landlord; and
  • confidentiality provision.

General Considerations. Underlying all of the above considerations are:

  • effect of governmental moratoriums such as Arizona Executive Order 2020-21 (effective through May 31, 2020), which suspends evictions and other remedies under commercial leases for small businesses, as well as imposes additional obligations and restrictions on both landlords and tenants;
  • cost-benefit of an informal forbearance given the indefinite duration of the COVID-19 events and possible future avenues of financial assistance;
  • unintended consequences on other contractual arrangements; and
  • how current decisions may be viewed in hindsight, by business partners and also by the courts in a litigation context.

About the Author: Kurt Peterson assists clients in the areas of real estate, commercial finance and general business law. Drawing on over 30 years of experience, Kurt’s commercial transactional practice includes real estate acquisitions, financing, leasing, operation and disposition as well as a diverse general business practice representing business owners on corporate formation, risk management, acquisitions, contracts and operational matters. kap@eblawyers.com | 602.222.4951

Disclaimer: This article is not legal advice and is only for general, non-specific informational purposes. It is not intended to cover all the issues related to the topic discussed. If you have a legal matter, the specific facts that apply to you may require legal knowledge not addressed by this article. If you need legal advice, consult with a lawyer.

EMPLOYER’S DUTIES TO MAINTAIN A SAFE AND COMPLIANT WORKPLACE DURING THE COVID-19 PANDEMIC

April 14, 2020

The COVID-19 pandemic has created a number of logistical and financial headaches for employers, not the least of which is how to comply with duties to keep their employees safe.  The maze of federal laws governing health and safety may cause many employers to be fearful of unknowingly acting in a manner that is violative of these laws. Below is a brief summary of guidance provided by the governing agencies that will assist employers in making informed decisions when deciding how to protect their employees and comply with the law. Employers should review all the categories, as compliance with one does not ensure compliance with another.

1. CDC Guidance

When an employer has a positive case of COVID-19 in the workplace, the Centers for Disease Control and Preventions (“CDC”) has recommended that the employer promptly inform fellow employees of their possible exposure to COVID-19, but maintain confidentiality as to the identity of the infected employee as required by the Americans with Disabilities Act (“ADA”). To the extent possible, the employer should ask the infected employee to create a list of employees, clients, vendors, etc. who may have been exposed to the virus. The employer should then recommend that exposed persons and co-workers self-monitor for symptoms (e.g., fever, cough, or shortness of breath). Additional CDC Guidance may be found here.

The workplace itself must also be addressed by employers.  The CDC has issued some guidance regarding cleaning and disinfection practices in the workplace, which can be found here.

2. Employer responsibilities under the Americans with Disabilities Act and EEOC Guidelines

The Americans with Disabilities Act (“ADA”) prohibits an employer from making disability-related inquiries and requiring medical examinations of employees, except under limited circumstances, including where an employee poses a “direct threat” to the health or safety of the individual or others (without a reasonable accommodation).

U.S. Equal Employment Opportunity Commission (“EEOC”) has determined that the COVID-19 pandemic meets the direct threat standard. During the COVID-19 pandemic the EEOC has advised that employers are permitted to do the following:

  • Send employees home if they have COVID-19 symptoms;
  • Ask employees who call in sick about their symptoms, including, for example, fever, chills, cough, shortness of breath, or sore throat;
  • Measure employees’ body temperatures, with the caveat that if an employee has a fever or other symptoms, the ADA confidentiality requirements will apply;
  • Follow the advice of the CDC, and local health authorities regarding whether to allow employees who have returned from travel (both work and pleasure) to return to the workplace;
  • Encourage employees to telework; and
  • Require employees to wash their hands often and/or wear personal protective equipment (including masks).

While the EEOC does not specifically address whether coworkers or customers can be informed of a positive case of COVID-19, it may be appropriate to do so, as long as the employer can ensure the confidentiality of the infected employee. Click here to review the EEOC’s guidelines regarding Pandemic Preparedness in the Workplace and the Americans with Disabilities Act, which has been updated to address issues specifically related to the COVID-19 Pandemic.

In addition, the EEOC has encouraged employers to review their recently updated guidance, What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws.

3. Employer responsibilities under OSHA

As employers know, the Occupational Safety and Health Act (“OSHA”) requires that employers provide safe and healthful workplaces for their employees. OSHA also requires that workplace illnesses be reported to the agency. On February 10, 2020, OSHA issued guidance to employers providing that COVID-19 cases need not be reported to OSHA as workplace illnesses, unless:

a. Employees are workers in the healthcare industry, emergency response organizations (e.g., emergency medical, firefighting, and law enforcement services), and correctional institutions whereby employers must continue to make work-relatedness determinations pursuant to 29 CFR § 1904; or

b. There is objective evidence that employee’s COVID-19 case may in fact be work-related.

Click here to review OSHA’s Enforcement Guidance for Recording Cases of Coronavirus Disease 2019 (COVID-19).

Worth noting, OSHA prohibits employers from retaliating against workers for raising concerns about safety and health conditions. OSHA urges employers to review its publication, Recommended Practices for Anti-Retaliation Programs.

About the Author: Meaghan Kramer assists clients with employment law and commercial litigation matters. Meaghan is advising clients on workplace related legal issues arising from COVID-19. Meaghan writes about employment issues, including safeguarding workplace confidences, and creating work environments that are free from discrimination and harassment. mkramer@eblawyers.com | 602.222.4995

Disclaimer: This article is not legal advice and is only for general, non-specific informational purposes. It is not intended to cover all the issues related to the topic discussed. If you have a legal matter, the specific facts that apply to you may require legal knowledge not addressed by this article. If you need legal advice, consult with a lawyer.

ARIZONA COURTS DURING COVID-19: KEY ADMINISTRATIVE ORDERS

April 14, 2020

Updated: May 28, 2020

The COVID-19 pandemic has created an unprecedented global, national, state, and local crisis, impacting significantly on the health and welfare of the general public.  Just as businesses are struggling to cope with the economic impact of the pandemic, courts must also balance necessary safety and social distancing/shut-down directives against the need to ensure reasonable and meaningful access to the courts and judicial processes.  To ameliorate judicial disruptions, Arizona’s courts have issued a number of administrative orders, the purpose of which is to temporarily modify specific rules of procedure and, when constitutionally permitted, restrict or limit the necessity for in-person judicial appearances.  Below are key Arizona state-wide and county specific administrative orders to consider as relates to both ongoing and contemplated litigation and judicial actions:

Arizona Supreme Court Order*

Coconino County Superior Court Order

Gila County Superior Court Order

LaPaz County Superior Court Order

Maricopa County Superior Court Order

Mohave County Superior Court Order

Navajo County Superior Court Order

Pima County Superior Court Order

Yavapai County Superior Court Order

Arizona’s courts have made every effort to remain open and assessable, but we can expect there to be some unavoidable delays in obtaining hearings and orders from the court.  Further, while emergency relief (such as prejudgment remedies, appointment of receivers, etc.) remain available, accommodations may be necessary to allow for telephonic or video appearances.

*April 28, 2020 Update: Arizona Supreme Court Order

*May 12, 2020 Update: Arizona Supreme Court Order

*May 28, 2020 Update: Arizona Supreme Court Order

About the Author: Wade Burgeson assists clients in matters involving commercial litigation, receiverships, collateral enforcement, loan workouts, medical marijuana disputes and operations, and debtor-creditor related matters, ranging from pre-judgment remedies to disputes in bankruptcy court.  He also works closely with businesses and individuals to help them resolve disputes and negotiate outcomes that support their financial objectives. wmb@eblawyers.com | 602.222.4989

Disclaimer: This article is not legal advice and is only for general, non-specific informational purposes. It is not intended to cover all the issues related to the topic discussed. If you have a legal matter, the specific facts that apply to you may require legal knowledge not addressed by this article. If you need legal advice, consult with a lawyer.

CARES ACT VASTLY EXPANDS NUMBER OF SMALL BUSINESSES ELIGIBLE FOR STREAMLINED CHAPTER 11 BANKRUPTCY UNDER SMALL BUSINESS REORGANIZATION ACT

April 13, 2020

Many small businesses owners who suddenly found their revenues devastated by the economic fallout from the COVID-19 pandemic have looked to the billions of dollars of low-interest loans made available by the CARES Act. While it has received far less public attention, another provision of the Act expands access to a powerful financial tool with the potential to help businesses avoid ruin and weather the storm. This tool—a Chapter 11 reorganization under the recently enacted Small Business Reorganization Act— streamlines the traditionally expensive and cumbersome Chapter 11 bankruptcy process into a more manageable and less taxing proceeding.  

Small Business Challenges in Traditional Reorganizations

In a traditional Chapter 11 bankruptcy, the debtor (the business or individual that is the subject of the bankruptcy) is given a reprieve from creditors’ collection efforts. The bankruptcy filing acts as an “automatic stay” that temporarily prohibits creditors from filing or prosecuting lawsuits, executing on judgments, foreclosing liens on the debtor’s assets, or taking certain other actions that threaten the debtor’s financial stability. And, the debtor is given the opportunity to file a plan of reorganization that permanently alters the debtor’s obligations to its creditors. The plan may allow the debtor to effectively reduce the principal amount of its debt to its secured creditors down to the value of the collateral, stretch payments out over a longer period of time, reduce interest rates, and lower monthly payments. The plan may also provide for a significant reduction, restructuring, or elimination of the debt owed to unsecured creditors.

While a traditional Chapter 11 reorganization can be tremendously beneficial to a struggling business, it can also be prohibitively expensive, time-consuming, risky, and involve contested litigation to gain bankruptcy court approval of a reorganization plan. The debtor and its lawyers and financial consultants must spend substantial time to formulate the reorganization plan and an accompanying “Disclosure Statement,” documents that require technical and financial expertise and disclosures about the debtor’s past, present and future finances, management and the like. Committees may be appointed to represent the interests of creditors. These committees may hire their own lawyers and other professionals, whose fees are payable out of the debtor’s property and income. The debtor must generally obtain votes accepting its plan by at least one class of creditors, which often requires the debtor to engage in heavy negotiations. The debtor risks having a creditor or committee file and obtain confirmation of its own plan of reorganization, which is likely to be more burdensome, and which may even provide for the business’s liquidation. And, the debtor’s owners are prohibited from retaining their equity unless the plan provides for full payment of all pre-bankruptcy debt or the equity holders make a “new value contribution”—generally in the form a cash payment equal to the value of the equity retained. 

In short, a traditional Chapter 11 reorganization can often be far too expensive and time consuming for many small businesses to undertake. This is where the CARES Act and the Small Business Reorganization Act (SBRA) that was passed by congress in 2019 may now provide small businesses with much needed and meaningful relief.

Relief under the SBRA

Earlier this year, before the scale of the economic and public health emergency wrought by the coronavirus became evident, the SBRA became effective. The SBRA makes it significantly more expedient and cost-effective for eligible small businesses to restructure their debts through a Chapter 11 bankruptcy reorganization. Among other benefits:

  • No committees are allowed in an SBRA case unless the bankruptcy court expressly orders otherwise;
  • The debtor need not obtain approval of a disclosure statement unless the bankruptcy court expressly orders otherwise;
  • The debtor has the exclusive right to seek confirmation of a plan. Competing plans are not allowed;
  • It is not necessary for the debtor to obtain votes approving its plan by any class of creditor. The bankruptcy court may confirm the debtor’s plan as long as it satisfies certain minimum requirements and is “fair and equitable;”
  • It is also not necessary for the debtor’s owners to make a new value contribution as a condition of retaining their equity. Instead, the debtor must commit to contributing its projected disposable income (i.e., net revenues minus reasonable operating costs) for a period of 3 to 5 years toward payment of its pre-bankruptcy debts.

These provisions of the SBRA significantly improved small business access to the bankruptcy courts, but it too had its limitations.  Most critically, reorganizations under the SBRA were limited to businesses and individuals with no more than $2,725,625 in debt, at least 50% of which must have arisen from the commercial or business activities of the debtor. Small businesses whose total debt exceeded this limit could only seek reorganization through a traditional Chapter 11 proceeding, with all of its attendant costs and complexity.

The CARES Act Expands Eligibility under the SBRA

The CARES Act substantially expands access to the SBRA for small businesses and individuals by temporarily increasing the debt limit from about $2.7 million to $7.5 million.  This increase in the debt limit applies to bankruptcy petitions filed from March 27, 2020 through March 26, 2021. It sunsets one year from the CARES Act’s enactment.

Thus, small businesses that do not qualify for the SBA loan or other relief under the CARES Act, or who find this relief insufficient to fully recover, should know that all is not lost. If ongoing debt issues prevent stabilization or threaten viability, a small business with less than $7.5 million in debt may still later seek relief and reorganize is obligations under the streamlined and more efficient SBRA—at least until the increased debt limit sunsets on March 26, 2021.    

About the Author: Bradley Pack is a shareholder with the law firm of Engelman Berger, P.C. He is a certified business bankruptcy specialist, whose practice focuses primarily on debtor-creditor relationships, workout and insolvency issues, commercial litigation, and civil appeals. bdp@eblawyers.com | 602.222.4994

Disclaimer: This article is not legal advice and is only for general, non-specific informational purposes. It is not intended to cover all the issues related to the topic discussed. If you have a legal matter, the specific facts that apply to you may require legal knowledge not addressed by this article. If you need legal advice, consult with a lawyer.

ALTERNATIVE DISPUTE RESOLUTION DURING COVID-19

April 10, 2020

COVID-19 has dramatically altered our way of life both socially and professionally.  Like many other industries, the legal system has been forced to adapt to the “new normal.”  While many court proceedings have been postponed, such as in-person hearings and jury trials, other court services have continued. One issue that many clients and attorneys have found themselves facing is the current status of alternative dispute resolution (“ADR”). How are parties to address a previously scheduled settlement conference before a court-appointed Judge Pro Tempore (“JPT”) or a private mediator?

I am a JPT in Maricopa County, and I hold settlement conferences to assist parties in settling their pending lawsuits. The Alternative Dispute Resolution program for the Maricopa County Superior Court has issued a directive that JPTs may continue to hold settlement conferences either telephonically or through video conference. In fact, in February 2020, the ADR program hosted a Continuing Legal Education seminar for JPTs encouraging JPTs to hold settlement conferences via video conference. I recently conducted a telephonic settlement conference due to the concerns surrounding COVID-19. I found the process to be efficient and effective, and we settled the case in less than three hours. I wanted to share my observations from my experience and offer recommendations on how clients and attorneys can best approach telephonic or video settlement conferences.[1]

At the outset, the parties need to be prepared to modify the methodical approach of a traditional, in-person, settlement conference to the faster-paced telephonic/video settlement conference. The telephonic/video settlement conference tends to naturally move at a swift pace. Before the conference, it is critical to provide the JPT with streamlined, efficient information so the JPT can be prepared to jump-start the conference from the beginning. The settlement conference memorandum, setting forth your position to the JPT, is of utmost importance. It must be concise and include only the essential exhibits. Remember the parties and the JPT are at best sharing a screen – not a conference room where multiple exhibits can be spread out and reviewed simultaneously. The negotiations also move at a much quicker pace. Clients and their attorneys need to be prepared to adjust their strategy and to quickly make and respond to settlement offers to create and sustain the momentum that so often leads to resolution of their dispute.

During this difficult time where many aspects of our legal system have been slowed or entirely brought to halt, it is important for clients and attorneys to know they continue to have the opportunity to participate in ADR and obtain final resolution of their disputes.


[1] If you have a scheduled mediation with a private mediator, contact the mediator to discuss their particular office procedures. Some private mediators are offering to conduct mediations by video conference to continue to allow litigants the opportunity to resolve their cases.


About the Author: Damien Meyer focuses his practice on commercial litigation, assisting clients in their business matters and contractual disputes.  He counsels clients in several different industries including real estate, construction and banking.  His goal is to proactively guide businesses and individuals in the resolution of disputes to achieve and protect their business objectives and interests.  Damien also serves as a Maricopa County Judge Pro Tempore. drm@eblawyers.com | 602.222.4948

Disclaimer: This article is not legal advice and is only for general, non-specific informational purposes. It is not intended to cover all the issues related to the topic discussed. If you have a legal matter, the specific facts that apply to you may require legal knowledge not addressed by this article. If you need legal advice, consult with a lawyer.

EXPANDED UNEMPLOYMENT INSURANCE UNDER THE NEW CORONAVIRUS AID, RELIEF, AND ECONOMIC SECURITY (“CARES”) ACT

April 9, 2020

The CARES Act, which was signed into law on March 27, 2020, expanded eligibility for unemployment benefits, and increased the amount of unemployment benefits that eligible individuals may receive. The CARES Act increased unemployment benefits, and access to unemployment benefits for millions of Americans affected by the COVID-19 crisis in three primary ways:

  1. Pandemic Unemployment Assistance: Extended eligibility for people who have traditionally been ineligible for unemployment insurance benefits (including the self-employed and independent contractors);
  2. Pandemic Unemployment Compensation: An additional $600 per week, on top of regular benefits, to all unemployment insurance recipients; and
  3. Pandemic Emergency Unemployment Compensation: An additional 13 weeks of unemployment insurance benefits, beyond the regular 26 weeks already provided, for a total of 39 weeks of coverage.

Individuals are eligible for Pandemic Unemployment Assistance if they are able to work, but cannot work because they:

  • Are diagnosed COVID-19 or have COVID-19 symptoms and are seeking diagnosis;
  • Have a member of the household who is diagnosed with COVID-19;
  • Are providing care for a family or household member diagnosed with COVID-19;
  • Are the primary caregiver for a child whose school or care facility closed, due to COVID-19;
  • Are unable to reach their place of employment due to an imposed quarantine, or medically-recommended quarantine related to COVID-19;
  • Were scheduled to start new employment and cannot reach the workplace as a result of COVID-19;
  • Became the major breadwinner because the head of household died from COVID-19;
  • Quit their job as a direct result of COVID-19;
  • Had their place of employment closed as a direct result of COVID-19; or
  • Meet any additional criteria specified by U.S. Secretary of Labor.

Individuals who can work remotely, or who are receiving paid sick or other paid leave benefits are not eligible.

Pandemic Unemployment Compensation provides individuals with an additional $600 per week, on top of the weekly benefit of their home state (currently $240 in Arizona). The additional $600 per week will expire on July 31, 2020, unless extended by the United States Congress.

In addition to the foregoing, Pandemic Unemployment Emergency Compensation permits all covered individuals to receive up to 39 weeks of state unemployment benefits (an increase from the prior limit of 26 weeks).

To apply for unemployment benefits or for more information on Arizona’s unemployment insurance program, click here.

About the Author: Meaghan Kramer assists clients with employment law and commercial litigation matters. Meaghan is advising clients on workplace related legal issues arising from COVID-19. Meaghan writes about employment issues, including safeguarding workplace confidences, and creating work environments that are free from discrimination and harassment. mkramer@eblawyers.com | 602.222.4995

Disclaimer: This article is not legal advice and is only for general, non-specific informational purposes. It is not intended to cover all the issues related to the topic discussed. If you have a legal matter, the specific facts that apply to you may require legal knowledge not addressed by this article. If you need legal advice, consult with a lawyer.

PAYING FOR BENEFITS PAID PURSUANT TO THE FAMILIES FIRST CORONAVIRUS RESPONSE ACT (THE “FFCRA”)

April 9, 2020

The Families First Coronavirus Response Act requires private employers with fewer than 500 employees to provide paid family leave and emergency paid sick leave to eligible employees. In order to pay for these benefits, the FFCRA allows eligible employers to take advantage of dollar-for-dollar tax credits.

Under the FFCRA, employees may receive up to 80 hours of paid sick leave, and an additional ten weeks of paid leave to care for one or more school-aged child whose school or daycare is closed for COVID-19 related reasons. Eligible employers that pay employees qualified wages under the FFCRA can claim a dollar-for-dollar quarterly payroll tax credit for the total amount of qualified emergency sick and family medical leave wages paid to their employees, including the Medicare tax imposed on those wages, and allocable qualified health plan expenses.

Eligible employers are also entitled to retain the amount paid for qualified wages under the FFCRA rather than pay those sums to the IRS. If an employer’s would-be employment tax deposit is insufficient to cover the cost of the qualified wages, allocable qualified health plan expenses, and share of Medicare tax imposed on those wages, the employer will be permitted to request an advance payment from the IRS.

Click here to read the IRS’s current Frequently Asked Questions related to these tax credits.

About the Author: Meaghan Kramer assists clients with employment law and commercial litigation matters. Meaghan is advising clients on workplace related legal issues arising from COVID-19. Meaghan writes about employment issues, including safeguarding workplace confidences, and creating work environments that are free from discrimination and harassment. mkramer@eblawyers.com | 602.222.4995

Disclaimer: This article is not legal advice and is only for general, non-specific informational purposes. It is not intended to cover all the issues related to the topic discussed. If you have a legal matter, the specific facts that apply to you may require legal knowledge not addressed by this article. If you need legal advice, consult with a lawyer.