Quiet Firing: Signs Your Client’s Job Is at Risk

Employment lawyer Faye Riva Cohen outlines the signs your client may be a victim of “quiet firing” and bullying, along with ways you can help.

Employees who assume they are secure in their jobs are often blindsided by their employer, who is really planning on terminating them. A recent article in Forbes explains that “Quiet firing is a form of passive-aggressive workplace bullying, in which a company makes an employee’s life so difficult that the employee eventually quits” and reveals some of the ways employers nudge workers out the door.

Although the term “quiet firing” is relatively new, I’ve seen the practice play out again and again in my employment law practice.

Why Not Simply Fire Someone?

Even though employees in many states are “at will” employees, meaning they can be terminated for almost any reason, the termination process is unpleasant for employers and human resources staff. By “unpleasant” I mean that employers fear a terminated employee may:

• Be shocked, disgruntled, unhappy and even become violent
• File charges of discrimination
• Seek a severance package or enhancement of a severance package

If an employer takes actions that encourage an employee to leave on their own, it can save them from uncomfortable confrontations and aggravation — as well as considerable funds as they cull their ranks.

‘Quiet Bullying’ to Force Out an Employee

To avoid firing, I’ve seen employers use “creative” procedures to force out someone or convince them to quit. There are myriad methods by which this bullying can be accomplished:

• Giving the employee negative feedback in the form of a lower performance evaluation rating than they deserve or they have received in past years.
• Placing the employee on a performance review, referred to as a PIP, which an employee rarely survives. (I call a PIP a “kiss of death” because they are generally designed for the purpose of terminating an employee and not for the purpose of improving performance.)
• Denying an employee opportunities for advancement.
• Making an employee’s work meaningless.
• Piling on more and more work and establishing unreasonable goals, which requires working longer hours.
• Changing the terms and financial benefits of employment to make the job less attractive.
• Creating a hostile work environment or isolating an employee from their colleagues.
• Bringing on new management who accuse employees of not being able to perform their jobs, often jobs they have held without issue for many years.
• Offering buyouts, early retirements or other incentives that encourage an employee to leave voluntarily.
• Requiring an employee to return to the office when they prefer to work remotely — a post-pandemic method of reducing workforce numbers by attrition.
• Forcing out an employee who develops physical or psychological problems due to the increased stress and anxiety of meeting the unrealistic goals set by an employer.

How You Can Help a Client Whose Job Is at Risk

If you have a client who is a potential quiet firing victim, suffering indignities at the hands of their employer, you may be able to assist by:

• Providing background support through advice and encouragement that enables them to endure ongoing mistreatment
• Asking the employee to tell human resources staff or their employer that a lawyer is monitoring the situation for them
• Trying to negotiate a severance package for the employee if it appears that termination is forthcoming, regardless of what they do.

Tip for a Client Who Fears Being Forced Out

Often an employee does not realize that an employer is forcing them out and will keep trying to remedy the situation themselves. This usually doesn’t work since the dye has been cast. An employee in this situation should be advised to:

• Document what is happening — but do not store this documentation on a computer that is owned by the employer, since they can gain access to this information. If an employee is asked to suddenly leave, they will no longer have access to the stored information.
• Keep track of any negative feedback, disciplinary actions, emails or conversations with managers.
• Make certain they familiarize themselves with disciplinary policies and PIP rules in their employer’s handbook or policies.
• Talk to their boss if they think it will be helpful to discuss their feelings that they are being pressured to leave, and if that is the case, ask whether their employer will consider a transfer, or offer a severance package.

Final Steps

If your client is terminated, you may be able to assist by:

• Negotiating a severance package or modifying a severance package. Even if additional severance funds can’t be secured, other valuable benefits can be negotiated, such as securing ongoing medical insurance, making the terms of the agreement fairer, clearing an employee’s discipline record, securing a neutral reference, non-disparagement provisions, asking the employer not to contest unemployment compensation benefits, and a host of other issues.
• Threaten to file, or actually file a discrimination charge with one or more government agencies.
• Providing a support system and advice to help a client secure other employment. 

By Faye Riva Cohen, Esquire and published on February 26, 2024 in Attorney at Work, and can be found here.

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Faye Riva Cohen has provided zealous legal representation to clients in the areas of employment, labor, civil rights and discrimination law for almost five decades. Faye also writes and speaks at seminars in those areas of the law. She enjoys a well-earned reputation for successfully litigating multi-faceted, complex cases against large and powerful adversaries, often in David and Goliath situations. She can be reached at frc@fayerivacohen.com, and her website is www.fayerivacohen.com.

A Collection of Articles by Others at the Firm

Over the course of years, various people at the Law Office of Faye Riva Cohen, P.C. have had articles published. While I have written, by far, the most articles of those at the Firm (you can find them all on this blog, but I created a roundup page here for ease of searching), several others have written some as well and you can find a collection of them below:

• Quiet Firing: Signs Your Client’s Job Is at Risk, by Faye Riva Cohen, Esquire. This article was published on February 26, 2024 in Attorney at Work.
• Layoffs and Mergers and Consolidations and Acquisitions … Oh My!, by Faye Riva Cohen, Esquire. This article was published on October 28, 2019 in The Legal Intelligencer;
• When You Should Accept an Early Retirement Offer, by Faye Riva Cohen, Esquire. The article was originally published in PBA Labor & Employment Law Section E-Newsletter in its Fall 2019 edition;
• Employers Need to Balance Motive, Knowledge, and Religion in Dress Codes to Avoid Charges of Religious Discrimination, by Faye Riva Cohen, Esquire and Shan R. Shah, Esquire.  This article was originally published in Upon Further Review as its featured article on August 25, 2015;
• Can you See the Light?!, by Adam S. Bernick, Esquire.  This article was originally published in Upon Further Review on January 22, 2015;
• Clarity Brought to Durable Powers of Attorney, by Adam S. Bernick, Esquire.  This article was originally published in Upon Further Review on December 16, 2014;
• McCutcheon v. FEC: The Effect on Campaign Finance, by Lane J. Schiff, Esquire. This article was originally published in Upon Further Review on April 16, 2014;
• Inheriting Digital Assets, by Adam S. Bernick, Esquire. This article was originally published in Upon Further Review on April 3, 2013;
• Attorneys Beware The Fake Creditor Scam, by Gregory S. Shields, Esquire. This article was originally published in Upon Further Review in March 2013;
• Movin’ on Up?, by Adam S. Bernick, Esquire. This article was originally published in Upon Further Review on December 18, 2012;
• No I.D.? No Problem – Judge Blocks Pennsylvania Voter I.D. Law, by Theodore Y. Choi, Esquire. This article was originally published in Upon Further Review on October 24, 2012;
• Supreme Court Spotlight: Obamacare – Victory or Defeat?, by Theodore Y. Choi, Esquire. This article was originally published in Upon Further Review on July 18, 2012;
• Social Media Sites “Likes” New Law’s Status, by Theodore Y. Choi, Esquire. This article  was originally published in Upon Further Review on January 11, 2012;
• Taking “Aim” at the Second Amendment, by Theodore Y. Choi, Esquire. This article was originally published in Upon Further Review on September 13, 2011;
• Supreme Court Spotlight: No “Cure” for Injuries Caused by Vaccines?, by Theodore Y. Choi, Esquire. This article was originally published in Upon Further Review on March 9, 2011;
• Considering Additional Types of Disability or Legal Relief for Your Social Security Disability Clients, by Faye Riva Cohen, Esquire, assisted by Gina Y. Mosley, Esquire. This article was originally published in National Organization of Social Security Claimants’ Representatives Forum in its March/ April 2010 edition;
• Divorce After Death?, by Adam S. Bernick, Esquire. This article was originally published in Upon Further Review on December 8, 2009;
• U.S. Supreme Court Weighs in on Beneficiary Issues in Savings and Investment Plans, by Adam S. Bernick, Esquire. This article was originally published in Upon Further Review on November 10, 2009;
• Avoiding Ambiguity in a Will and the Application of the Anti-Lapse Statute, by Adam S. Bernick, Esquire. This article was originally published in Upon Further Review on August 7, 2009;
• The Medical Authorization Process Under HIPPA: Protection or Burden?, by Samantha Bogin, Esquire. This article was originally published in The Legal Intelligencer on July 10, 2006;
• The Number of the Least: Establishing Small Firm Technological Infrastructure on a Shoe String Budget, by Ken Ruh, J.D.. This article was originally published in The Legal Intelligencer on January 30, 2006.

EMPLOYERS NEED TO BALANCE MOTIVE, KNOWLEDGE, AND RELIGION IN DRESS CODES TO AVOID CHARGES OF RELIGIOUS DISCRIMINATION

On June 1, 2015 the United States Supreme Court issued its opinion in the much publicized case, EEOC v. Abercrombie & Fitch Stores, Inc., 135 S.Ct. 2028 (2015).  In this case, Samantha Elauf, a 17 year old Muslim girl, wore a hijab, a religious headscarf, when interviewing for a sales associate position at an Abercrombie & Fitch location in 2008.  Abercrombie’s “Look Policy” at the time, which was essentially its dress code, prohibited sales associates from wearing “caps”, a loosely defined term which Abercrombie apparently construed to include all headwear.  Using Abercrombie’s ordinary system for evaluating applicants, Heather Cooke, the assistant manager who interviewed Elauf, rated Elauf highly enough to qualify her to be hired.  However, Cooke was concerned that Elauf’s hijab violated the Look Policy.  After the store manager that she worked under was not able to provide her with guidance on the subject, she turned to Randall Johnson, the district manager.  Cooke told Johnson that she believed that Elauf wore her hijab for religious reasons although Elauf had not explicitly communicated that to her.  Johnson told Cooke that Elauf’s hijab violated the Look Policy regardless of whether it was worn for religious reasons.  Elauf was subsequently rejected for the sales associate position and filed a charge with the EEOC.  The EEOC brought suit on behalf of Elauf, and the United States District Court for the Northern District of Oklahoma granted the EEOC’s motion for summary judgment on liability.  A trial was held on damages, and Elauf was awarded $20,000.

The Tenth Circuit reversed and granted summary judgment for Abercrombie on the basis that no evidence was presented showing that Abercrombie had been provided with explicit notice that Elauf was religiously obliged to wear the hijab.  The assistant manager interviewing Elauf assumed that she wore the hijab because she was Muslim, but Elauf never explicitly stated as such.  The EEOC argued that Elauf was not legally required to do so because the requisite notice is established when the employer has actual knowledge of an employee’s religious practice even if there was no explicit accommodation request, a stance which was adopted by the Seventh, Eighth, Ninth, and Eleventh Circuits.  Thus, the EEOC appealed to the Supreme Court to resolve this issue once and for all.

In an 8-1 decision, the Supreme Court ruled in favor of the EEOC, holding that for a plaintiff to prevail in a disparate treatment claim under Title VII of the Civil Rights Act, a job applicant need not show that her employer knew of her need for an accommodation.  Rather, she need only show that her need for an accommodation was a motivating factor in the employer’s decision, whether or not it could be proven that the employer actually knew of the need.  Justice Thomas was the lone dissenter.  The majority opinion, written by Justice Scalia, began its analysis by reviewing 42 U.S.C. § 2000e-2(a)(1), which makes it unlawful for an employer to “fail or refuse to hire or to discharge any individual…because of such individual’s race, color, religion, sex, or national origin.”  The Court then notes that under Title VII “because of” means that a protected characteristic cannot be a motivating factor in an employment decision.  The Court deemed it “significant” that § 2000e-2(a)(1) makes no mention of a knowledge requirement, while other antidiscrimination statutes, such as the Americans with Disabilities Act do in certain situations.  Rather, Title VII is focused on the employer’s motives, not its knowledge or lack thereof.  Thus, as the Court says, “the rule for disparate treatment claims based on a failure to accommodate a religious practice is straightforward: An employer may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions.”

Furthermore, the Court rejected Abercrombie’s argument that its prohibition on the wearing of “caps” was lawful because it was religiously neutral.  In other words, it was not in any way based on religion or intentionally discriminating against or favoring one religion over another.  However, the Court considered that irrelevant as Title VII does not demand mere neutrality with regard to religious practices but rather gives them favored treatment that affirmatively obligates employers to ensure that employment decisions are not being made on the basis of religion.  As a result, “Title VII requires otherwise-neutral policies to give way to the need for an accommodation.”  This is extremely important for employers to keep in mind when designing and enforcing dress codes, particularly when using them as factors in employment decisions.

In Justice Alito’s concurring opinion, he stated that while he agreed with the majority’s decision to reverse the Tenth Circuit’s decision granting summary judgment for Abercrombie, he did not agree with the majority’s determination that an employer’s knowledge of an applicant or employee’s potential need for a religious accommodation was not required.  After all, how could it be determined that an employer used religion as a motivation in an employment decision without showing that the employer actually knew about the applicant or employee’s religion?  It seems that the disagreement between the majority and Justice Alito on this issue comes down to what one defines as “knowledge”.  When the majority spoke of “knowledge”, it seemed to be referring to the type of knowledge that Abercrombie was arguing was required: explicit knowledge of the need for a religious accommodation provided directly from the employee.  Alito, on the other hand, seemed to be referring to “knowledge” as any such knowledge in general, even if nothing more than an unsubstantiated suspicion of the need for a religious accommodation.  It seems that Alito’s fear was that by simply stating that knowledge was not required, the majority was broadening the pool of potential liability to employers who did not even have any suspicion of an employee’s religion and potential need for a religious accommodation.  In a footnote, the majority conceded that it is arguable that the motive requirement itself cannot be met unless the employer at least suspects that the practice in question, such as the wearing of a headscarf, is a religious practice.  However, it refrained from elaborating on that issue any further as it was not presented in this matter since it was clear that Abercrombie at least suspected, if not knew, that Elauf’s headscarf was worn for religious reasons.  This could very well be an issue that comes before the Court in a future case.

Following the Supreme Court’s decision to remand the case, the EEOC and Abercrombie reached a settlement where Abercrombie agreed to pay Elauf $25,670.53 in damages and $18,983.03 in court costs.

While this decision is understandably frightening to some employers who fear that they may be held liable for religious discrimination when they did not suspect that an applicant or employee wore an item of clothing as a religious practice, that may not be the case.  The bottom line for employers is to be vigilant about the potential need for a religious accommodation and remember that any potential conflict between an applicant or employee’s religion and dress code or any other company policies should be attempted to be resolved through accommodations if at all possible.  An earnest effort to engage in good faith dialogue regarding potential accommodations will typically reflect very well on an employer in the unfortunate event that such a conflict ends up in litigation.  Furthermore, employers should make it clear to applicants from the beginning of the application process that it will try to accommodate all religious practices and beliefs to the fullest extent that is feasible.

While the law allows employers to enforce their policies without accommodating an applicant or an employee’s religious beliefs or practices in the occasional circumstance when it can be shown that doing so would impose an “undue hardship” on the employer, for the vast majority of the time, simple and open communication between the employer and applicant or employee will resolve the conflict without resorting to the unforgiving world of costly, protracted litigation.

Here is an article by Faye Riva Cohen, Esquire and Shan R. Shah, Esquire of my firm.  This article was originally published in Upon Further Review as its featured article on August 25, 2015.

CAN YOU SEE THE LIGHT?!

So asked Reverend Cleophus James of Jake and Elwood Blues in “The Blues Brothers”.  Yet, James Brown now sings the blues.  He died over 8 years ago at age 73, on December 25, 2006, and his estate remains unsettled, lost in darkness, with his body not permanently interred at the intended memorial.  Caught in estate litigation of Dickinsonian proportions, with personal representatives who were appointed, then resigned and were either dismissed and reappointed, one wonders whether any funds will be left for the charitable beneficiaries of his estate, as his estate preambles through the legal system.  .

Mr. Brown, the “Godfather of Soul”, lead a complicated life, including numerous marriages, children, accusations of alleged drug use, and alleged domestic violence.  While one would think that his estate plan documents, or possible lack thereof, would be equally complex or unplanned, he did leave a will and irrevocable trust, which left substantial portions of his wealth to provide scholarships to needy children.  However, despite the passage of over 8 years, the trustees have allegedly not distributed scholarships via the charitable trust to needy students.   Instead, the South Carolina State Attorney General intervened in the matter in an allegedly unprecedented scope.  Ultimately, the South Carolina Supreme Court overruled the decision of the Attorney General, to prevent the implementation of the Attorney General’s proposed changes to Mr. Brown’s dispositive intentions.

This summer, the Court sent the matter back to the local South Carolina probate court, which has yet to enter a final decision, due to various claims.  Why the matter did not promptly proceed to the local probate court for a trial to resolve all issues and so a decision could be rendered, remains unclear.

Of further complexity, the value of Mr. Brown’s estate remains unknown.  This remains a critical factor for determination of reasonableness of fees of the various professionals, which could ultimately further deplete the estate.

Presumably, Mr. Brown’s estate continues to earn millions of dollars a year in royalties.  An unknown factor remains regarding the allocation of the income earned after his passing.  If the executors/trustees could not or failed to distribute to the net income to the charitable beneficiaries/charitable trust their share of the income, then almost certainly the IRS, on behalf of the U.S. Treasury and possibly state or local governments, will receive substantial income tax revenues from and estate, instead of deducting said funds for charities from income earned.

Many individuals do not understand that an estate or trust, just like a person or corporation, must pay income tax, unless the estate distributes the income to the beneficiaries or the funds pass to a qualified charitable beneficiary, such as a charitable trust or other like organization.  When such distribution occurs, the income received by the beneficiaries/charitable trusts generally results in deductions at the estate level, with non-charitable individuals and entity generally then considered to have received income to the extent the funds distributed exceed principal.

A qualified charity receiving income from a qualified charitable entity generally does not have to pay any income tax.  But, when the income is accumulated and not distributed, the U.S. Treasury levies an income tax on estate income over $600 ($100 exemption for certain trusts) , with the maximum income tax currently generally set 39.5% for all income over $12,150 in a year.  By contrast, income allocated to qualified charities, is not generally subject to income tax.  The foregoing does not even factor in any state or local income taxes.  Thus, Mr. Brown’s estate ligation has exposed his estate to substantial income tax due to the lack of prompt settling of his estate.

How could some of the above-discussed issues have been avoided?

A family settlement agreement prepared before Mr. Brown’s passing in which he fully disclosed all assets, debts, income and expenses and had all heirs and beneficiaries execute, agreeing to the disposition he intended, may have limited litigation after his passing.  While to some extent this was attempted, at least with the individual claiming to be his spouse; as she is now a party to the estate litigation, presumably the agreement was not sufficient for some reason.

Failing such an agreement being practical, or possible, years before Mr. Brown’s passing he could have retained an independent appraiser to value his estate, and eventually transferred, while he was alive and in good health, assets to one or more types of irrevocable charitable trusts, such as a charitable remainder annuity trust.  Some funds/assets might have been allocated directly for the scholarship fund he intended to create, while others funds/assets could have been allocated for the individual beneficiaries he intended to benefit from his estate.  Indeed, transference of highly appreciated assets to one or more such trusts may have resulted in substantial reduction in taxes, either income taxes and/or estate taxes.

Of course, the funding while alive of charitable bequests or other gifting of assets to heirs in advance of one’s passing requires a willingness to live on less income and to accept one’s mortality. Moreover there are tax consequences.  There are potential gift taxes, depending on the sums in question.  Also, when a person dies, the cost basis to determine capital gain is normally the date of death of the asset in question, which is known as a “step-up” in cost basis.  This means in effect that if you wait until you die, and have a highly appreciated asset, when sold, at death there may be little to know capital gains tax.  But, if there asset had been transferred to a non-qualified charity while alive, there might have been substantial capital gain taxes.  There are a variety of charitable trusts that when used can minimize or eliminate the capital gain tax in question.  Accepting one’s mortality, and careful planning, can then minimize the possibility of disputes.

Here is an article by Adam S. Bernick, Esquire who is of counsel with my firm.  This article was originally published in Upon Further Review on January 22, 2015.

Clarity Brought to Durable Powers of Attorney

It seems as if every decade or so, the Legislature makes changes to the statutes governing powers of attorney.  It did so again with the passage of House Bill 1429, which Governer Corbett signed into law July 2014, thereby becoming Act 95 of 2014 (”Act 95”).

Act 95 modifies many provisions of the statutes governing financial powers of attorney (”POA”) in Pennsylvania.  See, e.g., 20 Pa. C.S. § 5600 et. seq.  Some of the changes are currently in effect, while others become effective in January 1, 2015.  As such, prior to drafting a POA, consultation of the statutes governing POAs should occur prior to meeting with the prospective client and drafting the document.

Act 95 changes the formal requirements for the execution of POAs.  They will now be required to be executed before two witnesses and a notary public.  The changes to the statute clarify that neither the prospective agent nor the notary may serve as a witness.  Also, the current statutory Notice alerting the principal to their rights, which the principal must read and sign before proceeding to execute the POA, has been modified.  Likewise, the Acknowledgment form to be executed by the Agent prior to their beginning to serve as the Agent under the POA has also undergone changes.  As the statute is not retroactive, it should not have any effect on currently executed valid POAs, but certainly there is an issue if a prospective Agent has not executed an acknowledgment and begun service as the Agent under a current POA, whether the Agent must execute the new form of Acknowledgement or the old one.

It is generally permitted for an attorney to act as a witness to the execution of certain documents when a notary is not available.  The attorney would then have his signature witnessed by a notary public that he witnessed the principal execute the POA and witnessed the witnesses sign in his presence and in the presence of the principal.  Such execution procedures prior to Act 95 changes were permitted and are with regards to wills.  See, 42 Pa. C.S. § 327(a);  57 Pa. C.S. § 316(2.1). Typically this might occur when a notary is not available and time is of the essence because the client is due to undergo a medical procedure or leave the country.  Under Act 95, counsel may no longer stand in for a notary in witnessing the execution of a POA, and a notary may not serve as a witness to a POA if they are also witnessing the execution of the POA in their capacity as a notary public.

Act 95, in an effort to clarify the scope of POAs, stipulates certain powers that must be specifically provided for in order for the Agent to act for the Principal.  These include:  (1) creating, amending, revoking or terminating a living trust, (2) making a gift, (3) creating or changing rights of survivorship, (4) creating or changing a beneficiary designation, (5) delegating authority granted under the POA, (6) waiving the principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan, (7) exercising fiduciary powers that the Principal has authority to delegate, and (8) disclaiming property, including a Power of Appointment.  If the POA does not specifically list these powers, and ideally, explain the scope of the powers in detail, then the Agent may not so act on behalf of the Principal.

Previously, the Pennsylvania Supreme Court issued a ruling that an individual or financial entity relying in good faith on a POA could be liable to the principal or another party for doing so even if the company had no way of knowing the POA was forged or otherwise void on its face.  Commonwealth v. Vine, 607 Pa. 648 (Pa. 2010).  While the Court recognized the abuses that occasionally occur by purported Agents under POAs, the resulting decision has led many financial companies to refuse to recognize a valid POA and insist that Principals execute separate POAs on the financial companies’ forms, contrary to the plain language of the statute.  Act 95 clarifies the protection granted such third parties by granting them the right to reject POAs or to otherwise require verification of same before acting on them.  How financial companies will act with regards to Act 95 remains unclear at present.   Certainly, agents may now have additional hurdles to overcome before having a valid POA accepted by the financial instution.

The above listed description of Act 95 impact on financial POAs is only a brief summary of the primary provisions.  Additional changes are made throught the statutes.  For specific wording, see: http://www.legis.state.pa.us/cfdocs/legis/li/uconsCheck.cfm?yr=2014&sessInd=0&act=95

Here is an article by Adam S. Bernick, Esquire who is of counsel with my firm.  This article was originally published in Upon Further Review on December 16, 2014.

 

McCutcheon v. FEC: The Effect on Campaign Finance

The Federal Election Campaign Act of 1971 (FECA), as amended by the Bipartisan Campaign Reform Act of 2002 (BCRA) imposes two types of limits on campaign contributions: (1) base limits, which restrict how much money a donor may contribute to a particular candidate or committee, and (2) aggregate limits, which limit the total amount of money a donor may contribute to all candidates and/or committees.  For the 2013-2014 election cycle, BCRA capped individual contributions to candidates at $2,600 in each the primary and general election. Individuals were additionally prevented from donating more than $32,400 to a national party committee, $10,000 to a local party committee, and $5,000 to a political action committee.   For the 2013-2014 election cycle, the law further capped aggregate contributions to federal candidates and political committees at $123,200.  Specifically, individuals could not contribute more than $48,600 to federal candidates and $74,600 to other political committees.

During the 2011-2012 election cycle, Sean McCutcheon, a businessman from Alabama, contributed to sixteen different federal candidates.  He would have preferred to keep donating to additional candidates and political action committees, but BCRA prevented him from doing so.  As a result, he challenged the constitutionality of the Act’s aggregate limits.  McCutcheon, et al v. Federal Election Commission eventually made its way to the Supreme Court, resulting in its most recent headline-grabbing ruling.

Campaign finance law is generally dependent on the distinction between expenditure limitations and contribution limitations. Independent expenditures consist of money spent by an individual on a political cause, independent of a candidate or party.  A contribution, however, is money that an individual specifically gives to a candidate or committee.  Since both implicate First Amendment interests, a reviewing court is to afford each a heightened level of scrutiny.  In Buckley v. Valeo, the Supreme Court ruled that limits on expenditures would be subjected to “the exacting scrutiny applicable to limitations on core First Amendment rights of political expression.”  Limits on contributions would, similarly, be sustained only if the government “demonstrates a sufficiently important interest” that is “closely drawn to avoid unnecessary abridgement of associational freedoms”.

However, in McCutcheon, the Court reasoned that there was no need to determine which level of scrutiny applied, as the prohibition on aggregate limits was unconstitutional even under the “closely drawn” test.  In reaching its determination, the Court recognized that it “has identified only one legitimate governmental interest for restricting campaign finances: preventing corruption or the appearance of corruption.”  Congress may further only target “quid pro quo” corruption, which is the spending of large amounts of money “in connection with an effort to control the exercise of an officeholder’s official duties.”

The Court concluded that limits on aggregate spending do not serve to further the government’s lone interest.  Once the aggregate amount is reached, BCRA effectively “ban[s] all contributions of any amount.”  The Court found this to be especially problematic because Congress’s enactment of a $5,200 base limit shows that it believes “contributions of that amount or less do not create a cognizable risk of corruption.” Thus, the government could only defend the constitutionality of the aggregate limitations “by demonstrating that they prevent circumvention of the base limits”.   For this to be the case, individuals would have to contribute large sums of money to specific candidates through donations to different entities who are likely to support that candidate.  The Court determined that this fear was “far too speculative” and therefore failed First Amendment scrutiny.

The Court further concluded that the aggregate limits violate the First Amendment “because they are not ‘closely drawn to avoid unnecessary abridgment of associational freedoms.’”  The potential harmful effects of a blanket ban on every contribution above the aggregate limit outweigh the benefits of the government’s stated legitimate interest in preventing circumvention.  The majority of contributions made in excess of the aggregate limits are not likely to be rerouted to candidates, the Court reasoned, but rather used by their recipients. To that end, the Court suggested numerous alternative methods that Congress could enact, which would both serve the Government’s interest in preventing circumvention and avoid the “unnecessary abridgment” of First Amendment freedoms.

 Therefore, the Court concluded that the “aggregate limits on contributions do not further” the government’s interest but instead unjustifiably “intrude on a citizen’s ability to exercise” his fundamental First Amendment rights.  Thus, while individual donors are still limited in the amount of money they can donate to a specific candidate or committee, they can now contribute to as many candidates and committees as they choose.

By Lane J. Schiff, Esquire who is a former associate at my firm.  This article was originally published in Upon Further Review on April 16, 2014.

Inheriting Digital Assets

Attorneys who write wills and trusts as part of their practice have frequently been requested to write detailed clauses disposing of various forms of property, from tangible personal property, such as jewelry, to intangible personal property, such as trademarks, copyrights and patents, and real property.  Within the last decade, a fourth category has come into being– digital property.   Problematically the law governing the disposition of digital property is out of date.

For example, who has the right to passwords and user names, and can these be given or bequeathed or otherwise devised via a will or trust?  Do domain names constitute intellectual property?  What about content of material posted on social media, such as photographs posted on a Facebook page of someone who is now deceased?  In addressing these questions two fundamental documents affect the answers to these questions:  the terms of service of agreements between the now deceased individual and the company providing the service, such as Comcast®, Google®, Yahoo®, etc…, and the 1986 Stored Communications Act, (“SCA”, codified at 18 U.S.C. Chapter 121 §§ 2701–2712).

The SCA, in essence, prohibits consumer electronic-communications companies, such as AOL® or Google®, from disclosing the content of an individual’s account and communications and postings therein without the owner’s consent or a government order such as a warrant.  18 U.S.C.A. § 2703.  While the statute predates popular use of the Internet or the more recent advent of social media, it remains in effect.

The Internet Service Providers (“ISP”) such as Comcast® or Verizon®, Internet Services such as Yahoo® and Google® (“IS”), social media companies such as Facebook® (collectively “Internet Companies”) have voluntary Terms of Service Agreements (“ToS”) between the company and individual or entity that creates an account with the Internet Company.  By way of illustration, Facebook’s® ToS specifically states that “[Y]ou [the account holder] will not share your password (or in the case of developers, your secret key), let anyone else access your account, or do anything else that might jeopardize the security of your account.”  Facebook®, Statement of Rights and Responsibilities, Section 4, 8.  Likewise, the account cannot be transferred without permission of Facebook®.  Similarly, Yahoo’s® ToS specifically states that “[N]o Right of Survivorship and Non-Transferability. You agree that your Yahoo! account is non-transferable and any rights to your Yahoo! ID or contents within your account terminate upon your death. Upon receipt of a copy of a death certificate, your account may be terminated and all contents therein permanently deleted.”  Yahoo® Terms of Service Agreement, Paragraph 28.  While Yahoo® “may” allow the account to transfer and data to be accessed if there is a specifically worded clause in a will, there is no guarantee this will occur.  Internet Companies, especially social media companies such as Facebook, have resisted such efforts, going so far as to seek court orders to deny access to protect the privacy of the deceased account holder.   Therefore, whether Internet Companies need allow access to the content of a deceased user’s account is up to the company providing the service absent a state law to the contrary, which in any event could be considered in conflict of the SCA prohibiting such access absent a warrant.

While some Internet Companies may permit the memorialization of someone’s account, so that they have a presence on a social media site even after they pass away, generally the account cannot be altered or otherwise accessed.

As of the date of March 1, 2013, 5 states have enacted statutes to enable fiduciaries to access online accounts:  Connecticut Statutes § 45a–334a (see also Proposed Bill 5227 introduced January 11, 2013, status); Idaho Statutes §–15–3–715(28); Oklahoma Statutes § 58–269; Rhode Island General Laws Chapter 33–27; Indiana Code § 29–1–13–1.1.  Whether the Internet Companies will respect these statutes or whether the courts will uphold them in light of the SCA remains to be seen as no cases have reached the US Supreme Court regarding executors accessing such content.

Pennsylvania had proposed legislation to amend Title 20 (Decedents, Estates and Fiduciaries) of the Pennsylvania Consolidated Statutes, in administration and personal representatives, providing for power over decedent account on social networking website, microblogging or short message service website or e-mail service website, under PA HB 2580 in the 2012 session of the Legislature, but the statute has not been so amended, and new legislation will need to be introduced in 2013.

Individuals may be tempted to consider the executor of the estate or heirs as third party beneficiaries to the digital information, but many ToS frequently specifically waive this.   Moreover, due to the SCA, even if you were to leave a list of your passwords to various sites, arguably only the person who registered for the account could use such passwords and it would be an arguable breach of the SCA for an heir or executor to do so after the account holder died.

Based on the above, then, even if one writes a will and specifically grants the executor authority over social media accounts, email, etc…the Internet Companies may not allow access to such accounts of a deceased individual or to the contents thereof.  Moreover, once the Internet Companies are aware that the individual is deceased, they will begin closing such accounts generally.

By contrast, if one executes a Power of Attorney or is under a guardianship, it may be possible to obtain such data and information because the agent/guardian is in essence acting for an individual who is currently alive.  Nonetheless, agents and guardians should expect a lot of red tape in accessing this data, and may have to take legal action to secure it.

I will not discuss the intricacies of the Internet in terms of who has the right to lease or otherwise grant the right to the use of a domain name.  However, it is generally recognized that if you are the registered owner of a domain name, you own the legal domain name rights to the domain name.  If the domain name is a registered trademark, it may be considered intellectual property, and thus possible to bequeath; however, a critical issue is if the registration lapses because the fees to renew or extend the rights to the domain name are not timely paid, which means the domain name might be re-issued to other individuals.  Likewise, if the domain name is registered in the name of a corporation, and the corporation has perpetual existence, even if a decedent is the sole owner of the corporation, it would be possible to renew the registration with only the payment of the registration fee.

A separate issue is whether forms of digital property that are not owned in any fashion, but used by the deceased individual.  By way of illustration, an individual does not generally own any of the items purchased on Apple’s Itunes® or Amazon’s Kindle® application because the purchaser generally purchases the license to use the digital files, not the actual song or book in a digital form.  Also, generally the license is “non-transferrable”.  While the files in the account may not be considered an asset that can be used by others, the account itself may be considered an asset.  It may be possible to create a trust while you are alive to own the license for benefit of your heirs.  While this in itself raises a variety of issues, such as who would serve as a trustee and would the digital licensor recognize or continue to recognize such rights, it is an option to consider.

Digital assets could be lent or sold to third parties if the licensor of the product permits such transfers by the retail store that has the right to resell the right to use the licensed product.   Presumably, there would be a variety of threshold questions to address, primarily compensation to the publisher of the material, compensation to the licensor, eliminating access by the initial purchaser.  By way of illustration, were Apple to permit sale of a music collection purchased on its iTune® store by customer A to Customer B, the transaction would have to proceed through the iTune® store.  Unlike purchase of a book or cd from a retail store, which could then be sold or left to heirs via a will, even if internet companies such as Apple permit transfer of the right to use a licensed product, freely transferring the rights to license to the product or leaving it to heirs may not be contemplated, or even if eventually granted would likely still involve fees for the transfer.  While there may be an eventual arraignment addressing these issues, with licenses eventually being transferable via the retail store that sold customer A the right use the initial licensed product, this is not generally currently the case.

Consequently, individuals should be aware that when they create their wills, their executor may not have any authority to retrieve data, including photographs posted to social media websites.  While such clauses may be added to their wills, the Internet Companies could still decline access to the data.  Likewise their books on Kindle® or collection of music on iTunes® may vanish when they die, instead of being able to be transferred to heirs.  Clients should be advised to save all such photographs and data that they want passed to heirs to a hard drive that can be backed up, or print out the data in question, to the extent that there is no license infringement in doing so.  If Internet providers or companies allow multiple account holders’ consideration should be made to setting up accounts to add heirs so that they can access the data.

By Adam S. Bernick, Esquire, and originally published in Upon Further Review on April 3, 2013.

Movin’ on Up?

Sherman Alexander Hemsley, a native of Philadelphia, better known for his role as George Jefferson in “All in the Family” and “The Jeffersons”, and later as Deacon Ernest Frye on “Amen”, died in Texas on July 24, 2012, yet remained unburied in a freezer until November 21, 2012, due to a will contest in the El Paso, Texas probate court.  Although the court there recently upheld the will and authorized the executrix to make burial arrangements, the court’s order may be appealed, leaving Mr. Hemsley, while now interred and hopefully “moving on up”, potentially in limbo.  What law applies to burial in similar situations in Pennsylvania?

As a general rule, the Courts of the Commonwealth have long recognized that “the duty to determine when, where and in what manner the body shall be buried rests with the executor or administrator.”  Pettigrew v. Pettigrew, 207 Pa. 313 (1904).  But, this presumes that the Register accepted a will for probate, and that no one challenged the will, so that the Register granted letters testamentary to a personal representative of testator’s estate, which actually has instructions as to the disposition of testator’s remains.  Absent such clear instruction deciding on the disposition of testator’s remains generally does not fall to the personal representative of the estate.  See, Hodge v. Cameron, 132 Pa. Super 1 (1938).  A person cannot become the executor until the will is filed with the Register of Wills, it is accepted, and letters testamentary issue under seal of the Register confirming the appointment of the individual as executor of the estate.

Problematically, most Registers of Wills in Pennsylvania will not issue letters testamentary prior to disposition of the remains of the decedent and issuance of the death certificate.  Nothing in the Probate, Estate and Fiduciary Code (Title 20, “PEF”) specifically states that a death certificate must be produced to the Register in order for the Register to accept into probate testator’s will.  Among the prerequisites that the proponent of the will must produce to the Register is “a death certificate (or other appropriate proof of death)”.  Register of Wills of Philadelphia County Manual, Chapter 2 of Blue Book.  The Register may issue the letters testamentary on affidavit that someone died, provided that the death certificate is actually filed within a set period of time, subject to revocation of the letters testamentary if not timely filed.  The foregoing is uncommon and presumably the affidavit would require counsel executing the affidavit to state something regarding the disposition of decedent.  Consequently, the Courts of this Commonwealth have long recognized that under Pennsylvania’s probate system you cannot determine who is the executor or administrator and can act under the will until the party has duly qualified and has received his commission from the Register of Wills.   Potentially the executor could not qualify.  Hodge, supra.  11.

The Orphans’ Court Division has mandatory jurisdiction over the control of the decedent’s burial.  20 Pa. C.S. § 711(1).  However, the Courts have not relied on this section of the statute on its own.  See, In re Fontana, 72 Pa. D. & C.2d 287 (Allegheny County, Orphans’ Court Division, 1975) (holding that the Orphans’ Court Division lacks subject matter jurisdiction to consider a dispute between brothers regarding the use of crypts in a mausoleum).  Likewise, jurisdiction presumably includes disposition of the body via other means such as cremation, other than the granting of anatomical gifts of the body or parts of it which are governed by separate sections of the PEF.

The Courts have long held that a testator’s wishes regarding the disposal of his remains are entitled to respectful consideration, whether or not the decedent’s directions are followed.  Pettigrew v. Pettigrew, 207 Pa. 313 (1904).

A review of the case law does not indicate any Superior Court decisions addressing a situation where a decedent provided for disposition of his remains in his will, including which cemetery/plot to use and if cremation was selected or not, which someone challenged in court prior to internment.  The common law developed several factors in determining burial disputes, such as the desire of the testator in stipulating a specific burial location or method, requesting that his remains not be disturbed, requesting that no re-internment occur, requesting that burial occur in a specific religious method, etc…  See, Florence E. Novelli and Lloyd E. Carroll v. Pamela Kay Carroll and Whitemarsh Memorial Park, 278 Pa.Super. 141 (1980).  Indeed, in Novelli, the Court relied in part on Judge Cardozo (then sitting on the New York Court of Appeals) who established not a rule, but a process, to guide a court of equity to act in an equitable manner to protect someone’s grave while allowing for the possibility of the need of survivors to make decisions regarding the deceased.  Novelli at 151 citing Judge Cardozo in Yome v. Gorman, 242 N.Y. 395, 403-05, 152 N.E. 126, 129 (1926).

In 1998 the Legislature codified the law on this subject.  Thereafter, absent clear language in a will, or provision in a power of attorney granting an agent authority to make an anatomical gift of part or all of a body (20 Pa C.S. § 8611(a)), or waiver and agreement by those individuals entitled to make burial decisions, 20 Pa. C.S. § 305 governs who may direct the disposition of decedent’s remains.  If a person died intestate or without a valid will, or valid anatomical grant (see, 20 Pa.C.S. § 305(a)), the surviving spouse has priority in deciding the disposition of the remains of their spouse, absent an allegation of enduring estrangement, incompetence, contrary intent or waiver and agreement which is proven by clear and convincing evidence.   20 Pa.C.S. § 305(b).  If decedent did not leave a spouse, the next of kin shall have sole authority in all matters pertaining to the disposition of the remains of the decedent.  20 Pa. C.S. § 305(c).

The statute provides clear guidance on procedural aspects of obtaining a decision from the Orphans’ Court.  An interested party desiring to block the disposition of decedent’s remains must file with the Clerk of Orphans’ Court an emergency petition within 48 hours of the death or discovery of the body of the decedent, whichever is later.  Upon the filing of such a petition, the Orphans’ Court Division may order that no final disposition of the decedent’s remains take place until a final determination is made on the petition.   The Court then must hold a hearing to determine that “clear and convincing evidence establishes enduring estrangement, incompetence, contrary intent or waiver and agreement” and only then shall the court “enter an appropriate order regarding the final disposition which may include appointing an attorney in fact to arrange the final disposition, with reasonable costs chargeable to the estate”.   See, 20 Pa. C.S. § 305(d)(1).

However, in those instances when “two or more persons with equal standing as next of kin disagree on disposition of the decedent’s remains, the authority to dispose shall be determined by the court, with preference given to the person who had the closest relationship with the deceased.” See, 20 Pa. C.S. § 305(d)(2).

In order to minimize the filing of petitions without merit, the statute specifically authorizes the court to award attorney’s fees if the court makes a determination regarding when the petition is not supported by clear and convincing evidence, which if brought by an heir or beneficiary would be offset against their distribution from the estate.  See, 20 Pa. C.S. § 305(d)(3).

The statute specifically authorizes the that court may require the filing of a bond, but the amount is not set.  Whether the filing of the bond will be required concurrent to the filing of the petition, or perhaps only prior to the court issuing a decree enjoining the disposition of the remains of decedent is uncertain, and presumably each county can decide their own procedure in this regards.

While the codification would appear to simplify matters, case law on the subject continues to provide guidance in this matter.  Indeed, Judge Herron recently provided some guidance on this matter and noted that Section 305 should be construed in light of the prior relevant precedent.   See, Estate of Rose Weiss, Phila O.C. No.  1463 DE of 2009 (Judge Herron citing Kulp v. Kulp, 2007 Pa. Super. 70, 920 A.2d 867 (2007).  Judge Herron examined the issue in depth and determined that courts should look to objective criteria, particularly when it is clear that each sibling loved and cared for their parent.  Among objective criteria utilized was who the decedent chose as their agent for making health care and personal decisions.  Judge Herron noted that “although the statutory language of Section 305 became effective in 1998, the recent appellate precedent of Kulp v. Kulp, 2007 Pa. Super. 70, 920 A.2d 867 (2007) emphasizes that the provisions of section 305 should be construed in light of the prior relevant precedent”.

In another court, the judge utilized the “closeness” test and received into evidence the emotional closeness of one interested party and the decedent, in terms of the number of telephone communications, among other factors.  See also Estate of N.P., 22 Fid. Rep. 2d 473 (Berks Cty. O.C. 2002).

So, in Pennsylvania, if a relative who is the next of kin learns that decedent died, they can block probate of the will, engage in a will contest and obtain an order delaying the burial of decedent, just like what occurred to Mr. Hemsley.  His unfortunate situation illustrates the importance of having detailed funeral, burial and related instructions in a will, power of attorney, trust and related documents, as well as the necessity of coordination between the agent under a power of attorney and proposed executor and other fiduciaries, the providers of medical services, and the funeral home.  Relatives concerned about the funeral and burial arrangements of their next of kin need to inquire into the matter, and may have to engage in costly litigation at a time when they will be emotionally disturbed by the death of a loved relative.

Judge Cardozo, more than 90 years after his opinion in  Yome, supra, remains correct in his statement that it ultimately rests with the court as a matter of equity to determine disputes about burial arrangements.

By Adam S. Bernick, Esquire, Law Office of Adam S. Bernick and of counsel to the Law Office of Faye Riva Cohen, P.C.

No I.D.? No Problem – Judge Blocks Pennsylvania Voter I.D. Law

            With the presidential election just a few weeks away, the upheaval in Pennsylvania over what voters must take with them to the polls has sparked a series of battles which is likely to continue.  Temporarily however, it seems that opponents of the photo I.D. law have garnered much success.

The new law, codified at 25 P.S. §§ 2602, 2626, 3050 and otherwise known as Act 18, signed in March 2012 by Republican Governor Tom Corbett in order to set a “simple and clear standard to protect the integrity of our elections,” mandates that potential voters furnish a standard government issued identification card in order to be able to cast a vote, has been a continual subject of political controversy especially in the wake of the upcoming presidential election.

The proposed law requires that “[a]t every primary and election each elector who appears to vote and who desires to vote shall first present to an election officer proof of identification.  The election officer shall examine the proof of identification presented by the elector and sign an affidavit stating that this has been done.”  25 P.S. § 3050.  Citizens voting in-person on Election Day must present one of several specified forms of photo identification.  This proof of identification must include the name of the individual, a photograph of the individual, and an expiration date that has not passed.  25 P.S. § 2602.

Several individuals and organizations (“Petitioners”) sought to enjoin the Commonwealth of Pennsylvania, Governor Thomas W. Corbett, the Secretary of the Commonwealth Carol Aichele, and their agents, servants, and officers from enforcing or otherwise implementing Act 18 and filed a request for preliminary injunctive relief with the Commonwealth Court of Pennsylvania for that purpose.  In this case, initially docketed under Applewhite, et. al. v. Commonwealth of Pennsylvania, 2012 WL 3332376 (Pa. Commw. Ct. 2012), Petitioners alleged that Act 18 and the photo identification requirement under the same violated the Pennsylvania Constitution on three (3) grounds:

1. Act 18 unduly burdens the fundamental right to vote in violation of Article I, Section 5 of the Pennsylvania Constitution which states, in pertinent part, “Elections shall be free and equal…” PA. CONST. art. I, § 5.
2. Act 18 imposes burdens on the right to vote that do not bear upon all voters equally under similar circumstances in violation of the equal protection guarantees of Article I, Section 1 and 26 of the Pennsylvania Constitution.
3. Act 18 imposes an additional qualification on the right to vote in violation of Article VII, Section 1 of the Pennsylvania Constitution.

As the Petitioners did not possess a valid form of identification as required under Act 18, they argued that the new law would serve to cause them to be disenfranchised and/or severely burdened to comply with a new requirement.   The Commonwealth Court analyzed Act 18 under a standard that “weigh[ed] the asserted injury to the right to vote against the precise interests put forward by the State as justifications for the burden imposed by its rule.”  Crawford v. Marion County Election Board, 553 U.S. 181 (2008).  The burden “however slight … must be justified by relevant and legitimate state interests sufficiently weighty to justify the limitation.”  Crawford, 553 U.S. at 191.  Rather than apply a strict scrutiny standard in its analysis, the Commonwealth Court adopted the standard announced in Anderson v. Celebrezze, 103 S.Ct. 1564 (1983), and applied the “flexible standard” in their analysis.  Utilizing this standard, the Commonwealth Court found that the requirement of Act 18 is a “reasonable, nondiscriminatory, non-severe burden when viewed in the broader context of the widespread use of photo ID in daily life.  The Commonwealth’s asserted interest in protecting public confidence in elections is a relevant and legitimate state interest sufficiently weighty to justify the burden.”  Thus, the preliminary injunction was denied.  However, the Commonwealth Court noted that if strict scrutiny were to apply, they may have reached a different conclusion.

Upon appeal of the Commonwealth Court’s decision, the Supreme Court of Pennsylvania held that the Commonwealth Court erred by not conducting an assessment of availability of alternative photo identification cards prior to ruling on the preliminary injunction request seeking to delay the implementation of Act 18 stating that “the Commonwealth Court has made a predictive judgment that the Commonwealth’s efforts to educating the voting public, coupled with the remedial efforts being made to compensate for the constraints on the issuance of a PennDOT identification card, will ultimately be sufficient to forestall the possibility of disenfranchisement.  This judgment runs through the Commonwealth Court’s opinion, touching on all material elements of the legal analysis by which the court determined that Appellants are not entitled to the relief they seek.”  This case is docketed under Applewhite, et. al. v. Commonwealth of Pennsylvania, 2012 WL 4075899 (Pa. Sept. 18, 2012).  The Supreme Court’s ruling remanded the matter to Commonwealth Court to make a decision by October 2, 2012 and make a present assessment of the actual availability of the alternate identification cards, directing the Commonwealth Court to conduct a an analysis of whether the procedures used for deployment of the cards comport with the requirement of liberal access which the General Assembly attached to the issuance of PennDOT identification cards.  Applying this analysis, the Supreme Court stated that if the Commonwealth Court found that the law would not result in voter disenfranchisement, the court would be obliged to enter a preliminary injunction.

After hearing two (2) days of testimony, on October 2, 2012 Pennsylvania Commonwealth Court Judge Robert Simpson ruled that state officials can ask for photo I.D. at the polls but cannot restrain those who do not possess identification from voting as the underlying offending conduct is not the request to produce photo I.D. but rather one of voter disenfranchisement.

In his ruling, docketed under Applewhite, et. al. v. Commonwealth of Pennsylvania, 2012 WL 4497211 (Pa. Commw. Ct. October 2, 2012), Judge Simpson granted a preliminary injunction that temporarily halts enforcement of the law until after the November 6, 2012 presidential election citing the disqualification of eligible voters as the reason: “Consequently, I am not still convinced in my predictive judgment that there will be no voter disenfranchisement arising out of the Commonwealth’s implementation of a voter identification requirement for purposes of the upcoming election.  Under these circumstances, I am obliged to enter a preliminary injunction.”  Despite a rise in the number of state issued photo identifications, the number was not significant enough to convince Judge Simpson that potential eligible voters would be prevented from voting if the new law were implemented.  Even with the streamlined procedures outlined by the new law to allow voters without I.D. cards to obtain them, Judge Simpson stated, “I expected more photo ID’s to have been issued by this time.  For this reason, I accept Petitioners’ argument that in the remaining five weeks before the general election, the gap between the photo IDs issued and the estimated need will not be closed.”

The result?  Judge Simpson’s ruling means that: (1) the same policy that was in effect during the state’s primary earlier this year will continue to be in effect for the upcoming presidential election.  Voters, regardless of compliance with the law, will be able to have their vote count in the 2012 presidential election; (2) those who cast provisional ballots will not be required to return to their county election board within six days of the election to show proof of identification in order to have their vote count.

Pennsylvania, which is a swing state, has twenty (20) electoral votes up for grabs with President Obama currently leading according statewide opinion polls.  Yet, the Commonwealth of Pennsylvania has acknowledged that it has never seen a case of in-person voter fraud.

Although the new law may not be in effect in Pennsylvania for the upcoming November 2012 presidential election, this does not mean to say that it will never be implemented in future elections.  Judge Simpson’s ruling did not strike down the entire law as being unconstitutional.  In fact, he rejected efforts from those challenging the law to prevent state officials from educating voters about the Voter I.D. requirement.  Challengers to the law have also conceded that the part of the law which requires proof of identification for absentee voting does not harm would-be voters and may be implemented.

For Republicans who had hoped of having this law implemented for the upcoming presidential election in order to narrow the margin in favor of GOP presidential candidate Mitt Romney, all hope is not lost.  Although people may not be required to have photo identification for the presidential election, they are made aware of the law and believe that they will need it.  On the other hand, Democrats feel that the injunction is only a temporary victory, rather than an absolute victory.

Although the voter I.D. requirement may not have an impact on the upcoming November 2012 presidential election, Judge Simpson’s ruling is surely to invoke an appeal.  It waits to be seen whether future elections will be affected, but for now, at least temporarily, eligible voters can rest assured that they will be able to vote without fear of being turned away at the polls.

By Theodore Y. Choi, Esquire and originally published in Upon Further Review on October 24, 2012.

Supreme Court Spotlight: Obamacare – Victory or Defeat?

            In 2010 Congress enacted the Patient Protection and Affordable Care Act (hereinafter referred to as “Act”), which was championed by President Barack Obama and is commonly referred to as “Obamacare.”  The Act was created in an effort to increase the number of Americans covered by health insurance and decrease the costs associated with health care coverage.  On June 28, 2012, in an eagerly awaited decision, the U.S. Supreme Court (“Supreme Court”) ruled on the provisions contained in the Act.

The main and most controversial portions of the Act are the individual mandate provision and the Medicaid expansion provisions.

The individual mandate provision of the Act outlines that:

• Americans, unless exempt, are required to maintain “minimum essential” health coverage. 26 U.S.C. §5000A.
• For individuals who are not exempt, and do not receive health insurance through an employer or government program, insurance must be purchased from a private company.
• Exempt individuals include those with very low incomes who are members of certain religious groups, or who face insurance premiums that would exceed 8% of family income even after including employer contributions and federal subsidies.

Beginning in 2014, all those who do not comply with this requirement will be required to make a “shared responsibility payment” to the Federal Government.  26 U.S.C. §5000A(b)(1).  This payment is classified by the Act as a “penalty” which must be paid to the Internal Revenue Service with an individual’s taxes and is assessed and collected in the same manner as tax penalties.  26 U.S.C. §§5000A(c), (g)(1).

The purpose of the Medicaid expansion provision of the Act is to enhance and expand the scope of the current Medicaid program and increase the number of individuals that States must cover.  As it stands currently, the Medicaid program provides federal funding to assist pregnant women, children, needy families, the blind, elderly and the disabled in obtaining the necessary medical care but does not provide any coverage for childless adults or even adults with children whose income does not fall significantly below the federal poverty level.  Under this provision:

• States must provide Medicare coverage to adults with incomes up to 133% of the federal poverty level, whereas currently, many States only cover adults with children only if their income is considerably lower than the federal poverty level.
• In order to effectuate the increase in Medicaid coverage, the Act would increase federal funding to cover the States’ costs. 26 U.S.C. §1396d(y)(1).
• If a State fails to comply with the Act’s new coverage requirement, it would not only lose the federal funding for those requirements, but would also lose its Medicaid funding altogether. 26 U.S.C. §1396(c).

It is easy to discern why the mandates of the Act sparked a controversial debate which will continue well into the future.  In a narrow 5-4 decision, the Supreme Court upheld the individual mandate provision of the Act but struck down the Medicaid provision.  In general, the Democrats celebrated the idea of Americans being provided access to health insurance, but Republicans contend that the ruling is a dangerous expansion of government.

First and foremost, the Supreme Court ruled that the Anti-Injunction Act was not a bar to the lawsuit challenging the constitutionality of the Act.  The Anti-Injunction Act bars suits where the payment is classified as a “tax.”  The mere label of the payment in the Act as a “penalty” rather than a tax, was controlling in determining whether the Anti-Injunction Act was a bar to a lawsuit.  However, the Supreme Court warns that the label, although determinative of whether the Anti-Injunction Act is applicable, was not controlling in assessing whether the payment is a tax for purposes of the Constitution.

In its ruling, the Supreme Court found that the individual mandate provision, although impermissible under the Constitution’s Commerce Clause or the Necessary and Proper Clause, was valid as a tax.  In striking down the individual mandate provision under the Commerce Clause, the Supreme Court held:

• The Constitution grants Congress the power to regulate Commerce – a power which presupposes the existence of commercial activity to be regulated;
• The Act sets out to create commerce by compelling individuals to become active in the marketplace on the premise that the failure to do so affects interstate commerce and thus, the Act did not regulate existing commercial activity.
• The Act would punish individuals for doing nothing and would open a vast domain of Congressional authority.

Similarly, under the Necessary and Proper Clause of the Constitution, the Supreme Court held:

• The Necessary and Proper Clause of the Constitution provides authority to Congress to exercise authority derivative of, and in service to, a granted power.
• The individual mandate clause of the Act gives Congress the ability to create the necessary prerequisites within its granted powers in order to draw those who would normally fall outside of its realm, within its regulatory powers.

Despite failing under the Commerce Clause and the Necessary and Proper Clause, the Supreme Court found that the individual mandate provision was proper under the Taxing Clause.  In following past precedent, the Court took a functional approach to determine whether the individual mandate provision of the Act was properly within Congress’ power to tax. Under such analysis, the Supreme Court determined that “[t]he payment is not so high that there is really no choice but to buy health insurance; the payment is not so limited to willful violations, as penalties for unlawful acts often are; and the payment is collected solely by the IRS through the normal means of taxation.”  The Supreme Court found that the individual mandate provision of the Act does not impose any legal consequences for failure to obtain health insurance other than requiring a payment to the IRS.  Furthermore, as a tax on insurance is unlike other direct taxes, it does not need to be apportioned to a State’s population to be in compliance with the Direct Tax Clause.

In upholding the individual mandate provision, Chief Justice John Roberts stated, “It is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance.”  He also stated, “the federal government does not have the power to order people to buy health insurance … the federal government does have the power to impose a tax on those without health insurance.”

Contrastingly, the Supreme Court struck down the Medicaid provision of the Act finding:

• The provision violated the Constitution by threatening the loss of a State’s existing Medicaid funding for failure or refusal to comply with the proposed expansion.
• The Spending Clause of the Constitution presupposes a State’s voluntary and knowing acceptance of a program.
• The Medicaid provision of the Act threatens to terminate other grants as a means of pressuring States to accept the Medicaid provision of the Act, which is not a power provided to Congress under the Constitution and runs afoul of our Nation’s system of federalism.

Nevertheless, the upholding of the individual mandate provision of the Act was the subject of much praise by Democrats.  Supporters of the national health care system stated that the law would reduce health care costs, expand coverage and protect consumers.  In place of creating a national health system, the law bans insurance companies from denying coverage to people with pre-existing medical conditions, bans insurers from setting a dollar limit on health coverage payouts and requires them to cover preventive care at no additional cost to consumers.

Following the decision, in a televised White House statement, President Barack Obama stated: “today’s decision was a victory for people all over this country whose lives are more secure because of this law.”  The underlying principle behind the Supreme Court’s decision was to ensure that no American should go bankrupt because of illness.

However, the new decision has been met with much criticism.  Critics of the new law claim that the new law gives the government too much power to make decisions over issues of what should be a personal decision.  Republican Rep. Michele Bachmann of Minnesota stated that the ruling “means now, for the first time in the history of the country, Congress can force Americans to purchase any product, any service.”

The Supreme Court’s ruling comes at a time very close to the 2012 Presidential election.  Presidential nominee Mitt Romney criticized the ruling as a bad law.  “What the court did not do in its last session, I will do on the first day if elected President of the United States, and that’s to repeal Obamacare.”  On the opposite end of the spectrum, President Obama stated, “I know the debate over this law has been divisive.  It should be pretty clear that I didn’t do this because it was good politics.  I did it because I believe it is good for the country.”  Now that the stage has been set, the extent of the beneficial or detrimental effects of the new law remains to be seen.

This is an article, by Theodore Y. Choi, Esquire who is a former associate at my firm.  This article was originally published in Upon Further Review on July 18, 2012.