• POLARTEC MAKER EMERGES FROM CHAPTER 11 WITH GE CAPITAL IN CONTROL
• CASES OF INTEREST
• OWNERS OF SUBDIVISION PROPERTIES HAVE GREATER DEVELOPMENT OPPORTUNITIES
• AGE DISCRIMINATION IN EMPLOYMENT
• BE CAREFUL WHAT YOU FAX
• "CYBERSMEAR" LAWSUITS
• CAPPED COMMISSIONS

POLARTEC MAKER EMERGES FROM CHAPTER 11 WITH GE CAPITAL IN CONTROL

Malden Mills, the Lawrence, Massachusetts based manufacturer of Polertec has emerged from Chapter 11. The company had filed from protection from creditors in November of 2001. It is reported that Aaron Feuerstein, the company's 77 year old chairman missed the crucial deadline to repurchase control from creditors. After nearly a century of control by the Feuerstein family, the company has emerged with the family holding approximately 5% of the stock and G.E. Capital holding the largest equity stake with just under 15% of the reorganized company's stock.

CASES OF INTEREST

* Federal Civil Practice: Attorney Work Product held to be subject to discovery after it was provided to a testifying expert witness for consideration. In re McRea (Bkrtcy N.D.FLA., 2003).

* Federal Bankruptcy: Informal Proof of Claim must 1) be timely filed; 2) state existence and nature of debt; 3) state amount of claim; and 4) evidence creditor's intent to hold debtor liable. In re Gonzalez, (N.D. Ill, 2003).

* CT Environmental: A Conservation Commission was not restricted to statutory definition of "Intermittent Watercourses" in finding that standing water was a Watercourse. Laurel Brook I Association v. Cons. Comm. of Fairfield.

* CT Business Law: Foreclosure of Home while homeowner suffers from severe depression not a violation of the ADA. Webster Bank v. Oakley.

OWNERS OF SUBDIVISION PROPERTIES HAVE GREATER DEVELOPMENT OPPORTUNITIES

By Linda Alderman

Appellate Court Decision May Change Zoning Laws

Zoning laws related to subdivision properties could be substantially changed after the state of Connecticut court of appeal's decision of Poirier v. Town of Wilton Zoning Board of Appeals, allowing owners of subdivision properties to make significant modifications to their homes that otherwise wouldn't have been allowable.

In Poirer, a Wilton couple sought a building permit to add a garage and breezeway to their home that was built in 1954 as part of a 38-lot subdivision. The planning and zoning commission denied their request because the addition would have exceeded the lot coverage limitations allowed under the current zoning regulations. They appealed, arguing that the commission had to apply the zoning regulations that were in effect in 1954, which would have allowed the building permit, and could not apply the current zoning regulations that had been modified to restrict the lot coverage limitations. In support of their argument, the Poiriers cited C.G.S. § 8-26a(b), which provides that "when a change is adopted in the zoning regulations . . . no lot or lots shown on a subdivision plan for residential property, which has been approved, prior to the effective date of such change shall be required to conform to such change." Wilton attorneys argued that other state laws restricted the Poiriers from getting a building permit. The superior court upheld the town's denial, but the appellate court reversed unanimously. The appellate court held that 8-26a(b) placed a "sweeping statutory restriction" on a town's ability to regulate land use once it has approved a subdivision plan and that the statute forever prohibits the application of new subdivision or zoning regulations to all subdivisions once they are approved. It further stated that by enacting the statute, "the legislature has clearly made a policy decision that once the division of the land and proposed lot layout has been reviewed by the municipality through its planning commission the subdivision does not have to be reviewed again, and that the subdivision lots are not affected by subsequently enacted zoning regulations." The court's holding, therefore, is that owners of approved subdivision lots had a vested right to build in accordance with the zoning regulations in effect at the time of the subdivision approval.

The effects of Poirier will be numerous and far reaching. First, and most importantly, zoning commissions will no longer be able to apply just one set of zoning regulations -- each application related to a subdivision will be subject only to the (usually much less stringent) laws that were on the books at the time the subdivision was created. Not only will this create a bureaucratic nightmare for zoning commissions, zoning boards of appeal and courts alike, but houses built next to each other but built upon different subdivisions could be subject to different regulations, undermining the goal of uniform zoning. For example, if a developer wants to build larger homes than are allowed by current lot coverage restrictions he can purchase subdivision lots that were approved prior to the passage of those restrictions, raze the current structures and then build those larger homes. Poirier will, therefore, probably have the impact of increasing the value of homes located in older subdivisions in towns where there are stringent lot coverage limitations. For example over the past decade, Greenwich has been inundated with applications for the construction of "McMansions", which some residents say ruin Greenwich's character. This year the Greenwich Planning and Zoning Commission approved regulations meant to limit house size uniformly throughout the town by reducing bulk-control measures such as floor area ratio. Poirier could have the effect of allowing owners and/or developers in Greenwich to circumvent those regulations in subdivisions that were formed prior to the passage of those new regulations.

OWNERS OF SUBDIVISION PROPERTIES HAVE GREATER DEVELOPMENT OPPORTUNITIES

By Linda Alderman

Appellate Court Decision May Change Zoning Laws

Zoning laws related to subdivision properties could be substantially changed after the state of Connecticut court of appeal's decision of Poirier v. Town of Wilton Zoning Board of Appeals, allowing owners of subdivision properties to make significant modifications to their homes that otherwise wouldn't have been allowable.

In Poirer, a Wilton couple sought a building permit to add a garage and breezeway to their home that was built in 1954 as part of a 38-lot subdivision. The planning and zoning commission denied their request because the addition would have exceeded the lot coverage limitations allowed under the current zoning regulations. They appealed, arguing that the commission had to apply the zoning regulations that were in effect in 1954, which would have allowed the building permit, and could not apply the current zoning regulations that had been modified to restrict the lot coverage limitations. In support of their argument, the Poiriers cited C.G.S. § 8-26a(b), which provides that "when a change is adopted in the zoning regulations . . . no lot or lots shown on a subdivision plan for residential property, which has been approved, prior to the effective date of such change shall be required to conform to such change." Wilton attorneys argued that other state laws restricted the Poiriers from getting a building permit. The superior court upheld the town's denial, but the appellate court reversed unanimously. The appellate court held that 8-26a(b) placed a "sweeping statutory restriction" on a town's ability to regulate land use once it has approved a subdivision plan and that the statute forever prohibits the application of new subdivision or zoning regulations to all subdivisions once they are approved. It further stated that by enacting the statute, "the legislature has clearly made a policy decision that once the division of the land and proposed lot layout has been reviewed by the municipality through its planning commission the subdivision does not have to be reviewed again, and that the subdivision lots are not affected by subsequently enacted zoning regulations." The court's holding, therefore, is that owners of approved subdivision lots had a vested right to build in accordance with the zoning regulations in effect at the time of the subdivision approval.

The effects of Poirier will be numerous and far reaching. First, and most importantly, zoning commissions will no longer be able to apply just one set of zoning regulations -- each application related to a subdivision will be subject only to the (usually much less stringent) laws that were on the books at the time the subdivision was created. Not only will this create a bureaucratic nightmare for zoning commissions, zoning boards of appeal and courts alike, but houses built next to each other but built upon different subdivisions could be subject to different regulations, undermining the goal of uniform zoning. For example, if a developer wants to build larger homes than are allowed by current lot coverage restrictions he can purchase subdivision lots that were approved prior to the passage of those restrictions, raze the current structures and then build those larger homes. Poirier will, therefore, probably have the impact of increasing the value of homes located in older subdivisions in towns where there are stringent lot coverage limitations. For example over the past decade, Greenwich has been inundated with applications for the construction of "McMansions", which some residents say ruin Greenwich's character. This year the Greenwich Planning and Zoning Commission approved regulations meant to limit house size uniformly throughout the town by reducing bulk-control measures such as floor area ratio. Poirier could have the effect of allowing owners and/or developers in Greenwich to circumvent those regulations in subdivisions that were formed prior to the passage of those new regulations.

AGE DISCRIMINATION IN  EMPLOYMENT

The combined effects of an aging population and a sluggish economy have led to an increase in lawsuits alleging age bias in the workplace. The Age Discrimination in Employment Act (ADEA) prohibits age discrimination in the employment of persons who are at least 40 years old. The ADEA covers most private employers of 20 or more persons. It forbids age discrimination in advertising for employment, hiring, compensation, discharges, and other terms or conditions of employment. Retaliation against a person who opposes a practice made unlawful by the ADEA or who participates in a proceeding brought under the ADEA is a separate violation.

The ADEA takes into account that sometimes there is a correlation between age and the ability to fulfill the requirements of a job, and that even older workers must comply with employers' rules and requirements that have nothing to do with age. An employer does not violate the ADEA if it takes an otherwise prohibited action where age is a "bona fide occupational qualification" necessary to the operation of a particular business. Nor is it a violation to differentiate among employees based on reasonable factors other than age or to fire or discipline an employee for good cause.

Before suing in court, an aggrieved person first must allege unlawful discrimination in a charge filed with the Equal Employment Opportunity Commission (EEOC) and then wait 60 days to allow the EEOC an opportunity to resolve the dispute informally before taking further legal action. Court remedies include injunctions (court orders stopping a discriminatory practice), compelled employment, promotions, reinstatement with back pay and lost benefits, and an award for attorney's fees and costs of bringing the suit. If a court finds that an employer's violation of the ADEA was willful, it may also award liquidated damages equal to the out-of-pocket monetary losses of the plaintiff.

It is not essential to an ADEA lawsuit that there be a "smoking gun" in the plaintiff's favor in the form of derogatory age-based comments about older employees. In fact, remarks of that kind will not support liability if they have no connection to the challenged employment decision. In a recent lawsuit brought by an on-air television reporter who was fired, a boss's comment that "old people should die" was an insignificant stray remark because it was made about the boss's own father. On the other hand, it was very helpful to the plaintiff's case that the same boss had stated repeatedly that she wanted to "go with a younger look" and she did not like having an older man appearing on the news.

Employers sometimes select older workers to be terminated as a money-saving measure, given their generally higher compensation and perhaps their being close to vested retirement benefits. There is no ADEA violation in a decision that treats employees differently because of something other than age, such as money. An employer will not be liable under the ADEA for terminating an employee solely to prevent his pension benefits from vesting. (That conduct might very well violate ERISA, however.) Such a scenario is distinguishable from situations in which employers face ADEA liability because they have made decisions based on the stereotype that productivity and competence always decline with old age.

BE CAREFUL WHAT YOU FAX

The Telephone Consumer Protection Act (TCPA) prohibits any person within the United States from using a telephone facsimile machine to send an unsolicited advertisement to a person with whom the sender does not have an existing business relationship. A prior business relationship will be treated as consent to a faxed advertisement unless the recipient withdraws that consent.

Court remedies under the TCPA should command the attention of any company giving thought to a fax advertising blitz directed at potential customers. A person receiving an unsolicited fax may bring an action to prohibit violations of the TCPA and for actual damages, or statutory damages of $500 per violation. For a willful or knowing violation, a court has the discretion to triple the amount of statutory damages. Actual damages may amount to cents per page and the costs of tied-up telephone lines. Statutory damages, however, could reach into the millions for a "blast-faxed" advertising campaign with hundreds or thousands of faxes, with each transmission considered a separate violation.

Not only can the cost of TCPA violations be steep, but in some cases that cost may be extracted from the personal assets of corporate officers, not just the business itself. In one case, the officers and sole shareholders of a small advertising service were found to be personally responsible for statutory damages based upon nearly a million unlawful faxes a month, over five months.

They were personally liable not simply because they held particular offices and sat on the board of directors, but because they actively oversaw and directed the unlawful conduct. With good reason to believe that their actions violated the TCPA, the individual defendants had persisted, as the court put it, "with their eyes and pocketbooks wide open."

"CYBERSMEAR" LAWSUITS

The free-wheeling give and take in various online forums is leading to more defamation claims by individuals and businesses. Given that so many online speakers are anonymous, however, Internet service providers sometimes become trapped between the speaker and his offended subject. Before the alleged victim can seek redress, the perpetrator must be identified, and providers often resist divulging such information. Courts are still in the early stages of setting rules for these legal contests.

An electronics company brought an action in California against an anonymous individual who allegedly had made negative comments regarding the company's publicly traded stock on an Internet message board. Among other comments, the secretive critic had said that the company produced "low tech crap" and that its president was manipulating stock prices. In its efforts to identify the speaker, the company discovered that his online name was registered with a service provider with headquarters in Virginia.

When the plaintiff sought permission from a Virginia court to examine the provider's records, the request was met with stiff resistance. The provider argued that it would infringe on the constitutional right to speak anonymously if it were forced to reveal subscriber information. Citing the principle that the courts of one state generally should respect court orders from a sister court, the Virginia court allowed the review of the provider's records. The right to free speech was not an impediment to the court's ruling, as "the constitutional guarantees of free speech afford no more protection to the speaker than they do to any other tortfeasor who employs words to commit a criminal or civil wrong."

Wounded by disparaging comments posted anonymously on an Internet message board, another company similarly sought to unmask its detractors by forcing information from a provider. In that case, the court saw more merit in the free speech defense raised by the provider, but it did not completely block the request for subscriber information. The court balanced the right to speak anonymously with the right of the injured company to protect its proprietary interests and its reputation.

The result was a compromise of sorts: The company could gain access to the speakers' identities only if it first showed to the court's satisfaction that it could make out a plausible defamation case against them. This meant exactly identifying the offending statements and demonstrating how they harmed the plaintiff. In this case, the critics remained safely in the dark because the company could not substantiate its claims that the comments adversely affected its stock price and its hiring practices.

CAPPED COMMISSIONS

As a sales representative for a computer software company, Richard received an annual salary and sales commissions as determined by a compensation plan that was part of his contract. There was a specific formula for how commissions were to be calculated, but language in the plan gave the company broad authority to make a final decision about compensation and to change the plan at any time. For sales commissions, in particular, the employer reserved the right to review any transaction generating a commission beyond a salesman's annual quota and to determine the "appropriate treatment" of it.

When Richard scored an especially large sale, the company decided that its "appropriate treatment" was to cap Richard's commission at an amount that was less than he expected under the usual formula. The company's position was that the large commission expected by Richard was not justified because it arose from a single transaction on which Richard had not done as much work as he claimed, and because he had only been employed by the company for eight months. Richard quit and sued for breach of contract.

A federal court ruled in favor of the employer. The language in the compensation plan was broad, but it was not ambiguous. The whole thrust of the document was to leave determination of the commissions to the employer's discretion, notwithstanding that the plan identified some forms of appropriate treatment of commissions.

When a contract leaves a decision up to one party's discretion, it is nearly unassailable in court. A court may intervene if that party is guilty of fraud, bad faith, or a grossly mistaken exercise of judgment, but Richard did not make those arguments. Despite the fact that it was arguably unfair, the court ruled that such a decision was "out of our reach."