From its office in Clayton, Missouri, Danna McKitrick, P.C., delivers legal representation to new and growing businesses, financial institutions, non-profit and government-related entities, business owners, individuals, and families throughout the greater St. Louis region and the Midwest.
Danna McKitrick attorneys practice across many areas of law, both industry- and service-oriented.
Yes, small businesses need estate plans. Business estate plans determine what happens if the owner can no longer operate the business due to death or disability. A plan must be in place to address either potentially devastating situation.
Businesses with multiple owners commonly use Buy/Sell Agreements for such a plan. These provisions can be inserted into the Operating Agreement if the business is a limited liability Company (LLC) or can be provided in a separate agreement if the business is a corporation or partnership. There are two general forms used:
Buy/Sell Provisions: Remaining owners (whether shareholders, members, or partners) buy the deceased owner’s interest from the estate. A life insurance policy can provide funds for the purchase.
Redemption Agreement: The company buys the deceased owner’s interests from the estate. The remaining owners own the company. Proceeds from the sale go to the estate. This arrangement can also be funded by a life insurance policy.
Because of the tax and legal considerations involved, it is critical that these plans be thought out and planned in advance with the advice and input of the business’ attorney, accountant, and insurance professional.
If no agreement exists, the remaining owners must deal with the deceased owner’s estate, possibly controlled by the spouse, children, or other persons not involved in the business. This can be very disruptive. The business may have to be sold or liquidated to the detriment to all concerned. The value of the business is not passed on to the estate. The remaining owners must deal with a hostile party and potential litigation which could destroy the business.
The loss of an owner can also cause a vacuum in the management of the company. Continue reading »
Part 5.2 of a 5-part series: Options for Small Business Owners in Financial Distress
Your company’s Chapter 11 bankruptcy has been filed and you’re now running your business under the provisions of the United States Bankruptcy Code.
It’s now time to work toward the ultimate goal of a Chapter 11: a Plan of Reorganization, confirmed by the court, allowing your company to restructure its debts, exit Chapter 11, and continue in business. It is important that you explain all of your concerns about all aspects of your business to your attorney and provide complete and accurate information, all before you even file the case. This will help both of you develop good ideas for successfully navigating your reorganization case and getting a plan confirmed. Advise your attorney if a new problem develops so you can consider all the potential solutions available to you.
Your next steps in planning for reorganization will include you and your attorney:
Participating in two mandatory meetings with a U.S. bankruptcy trustee within the first 30 days after filing and begin filing monthly operating reports.
“Initial debtor interview:” Learn procedural issues such as the ins and outs of filing periodic operating reports such as monthly operating reports and where and how your company can bank.
Section 341 “meeting of creditors:” Be questioned under oath by the U.S. trustee’s office about your need to file Chapter 11, your plan to exit bankruptcy, how you will implement your ideas, etc. This meeting is open to all interested parties.
Negotiating the terms of your proposed plan with the creditors’ committee if one has been formed by large unsecured creditors.
Negotiating lease terms. Any lease which commenced prior to the filing can be “rejected.” You can then renegotiate the terms or terminate the lease, in which case the lessor’s claim will be treated as a pre-petition claim.
Treating an equipment lease as an installment purchase agreement secured by the equipment, possibly converting a portion of the secured debt to unsecured and altering the terms of repaying the secured debt.
Businesses are to avoid potentially deceptive conduct that would confuse consumers under Section 5 of the Federal Trade Commission Act, and the FTC is now focusing very heavily on deceptive customer reviews and endorsements. Deceptive conduct includes any conduct which treats positive and negative reviews unequally, thus misleading consumers of useful information and inflating the product’s star rating.
In one of its first cases, the FTC pursued Fashion Nova, LLC, a fast fashion retailer that attempted to conceal negative reviews. According to the complaint, “Fashion Nova used a third- party online product review management interface to post four- and five-star reviews and hold off on lower star reviews [estimated in the hundreds of thousands] for the company’s approval.” Fashion Nova never approved or posted the lower star reviews. In its settlement with the FTC, Fashion Nova is prohibited from suppressing customer reviews of its products and is required to pay $4.2 million to settle the FTC’s allegations.
What does this mean for businesses that use or consult regarding consumer reviews? Continue reading »
Part 5.1 of a 5-part series: Options for Small Business Owners in Financial Distress
Your attorney has just filed your company’s Chapter 11 reorganization case and you have no clue what to do next. Seriously, the first thing you should do is nothing. Take a breath and keep running your business.
That’s not to say there’s nothing for you to do during the entire Chapter 11 process – there’s actually quite a lot for which you will be responsible. Any competent bankruptcy attorney already has discussed your statutory and practical responsibilities in a Chapter 11 case with you prior to filing.
Now is the time to implement those decisions made before the case was filed. If you forget a decision you made (or come across an issue you hadn’t discussed), call your attorney. The two of you should be in frequent contact during the case to be sure that you don’t take any actions which don’t make sense in the Chapter 11 context, or which might violate the Bankruptcy Code, Bankruptcy Rules, or Local Rules.
Your primary concern after the case is filed is, of course, money to operate with. That topic should be discussed thoroughly with your attorney prior to filing. Be sure your attorney discusses post-petition financing and use of ‘cash collateral’ with you. Be sure that you have post-petition financing lined up before you file, either from internal operations or from a lender. If your post-petition financing falls through, or you’re not as profitable as you expected to be after filing, you may not be able to afford to operate during the Chapter 11. If so, there is no way for you to reorganize and your Chapter 11 case may be dismissed outright. Continue reading »
With continued and widespread COVID-19 infection and the FDA’s full approval of the Pfizer-BioNTech COVID-19 vaccine, many employers have instituted COVID-19 vaccination mandates. Title VII requires employers to provide reasonable accommodations for employees with sincerely-held religious beliefs that conflict with getting vaccinated. Given that religious beliefs are difficult to disprove, many employees have taken this as an opportunity to request religious exemptions to avoid COVID-19 vaccination mandates.
The Law – Title VII
Title VII of the Civil Rights Act of 1964 prohibits employment discrimination on the basis of religion and requires employers to provide reasonable accommodations to employees claiming their sincerely-held religious beliefs conflict with getting vaccinated. Title VII protects not only people who belong to traditional, organized religions, such as Buddhism, Christianity, Hinduism, Islam, and Judaism, but also others who have “sincerely-held religious, ethical or moral beliefs.”
Given this sweeping definition of religion, the U.S. Equal Employment Opportunity Commission (“EEOC”) has cautioned that an employer should generally assume that an employee’s request for a religious accommodation is based on a sincerely-held religious belief. Nevertheless, an employer is permitted to question the sincerity of an employee’s purported religious belief where there is an objective basis for doing so. Further, an employer is not required to accommodate an employee’s religious beliefs and practices if doing so would impose an “undue hardship” on the employer’s legitimate business interests. For the EEOC’s list of factors to be considered when determining whether an accommodation imposes an undue hardship on an employer, visit: EEOC Undue Hardship.
The EEOC’s Guidance on Religious Exemption Requests
On October 25, 2021, the EEOC updated its technical assistance related to the COVID-19 pandemic, which included additional guidance on how employers should handle religious exemption requests (Section L). Read the full EEOC update here.
The key takeaways are:
Employees who have a religious objection to receiving a COVID-19 vaccination must inform their employer and request a reasonable accommodation to be afforded protection under Title VII. Reasonable accommodations may include telework or reassignment.
If an employer has an objective basis for questioning either the religious nature or the sincerity of a particular belief, the employer can make a limited factual inquiry seeking additional supporting information.
An employer who objectively demonstrates that it would be an “undue hardship” to accommodate an employee’s request for religious exemption to the employer’s vaccination mandate is not required to provide the accommodation.
An employer is not required to grant all employees’ requests for religious exemptions on the basis that it has granted some employees requests for religious exemptions. The determination is fact-intensive and specific to every request.
While an employer should consider the employee’s preference, if there is more than one reasonable accommodation that would resolve the conflict between the vaccination requirement and the religious belief without undue hardship, the employer may choose which accommodation to offer.
An employer has the right to discontinue a previously granted religious accommodation. If the employer learns that the belief is not religious in nature or sincerely-held, or if the accommodation becomes an undue hardship, the employer can discontinue the accommodation.
Due to the pandemic and labor shortage, Missouri courts have not had an opportunity to consider Amendment 2 and employment issues related to medical marijuana in the workplace. Amendment 2 allows state licensed physicians to recommend medical marijuana to patient employees diagnosed with chronic debilitating conditions. It also protects employees with a medical marijuana card issued by the Department of Health and Senior Services (DHSS) from being terminated unless the employer proves that the employee is “under the influence of marijuana.”
There are no reliable tests available yet to scientifically confirm if someone is “under the influence” of marijuana. A person will test positive for marijuana for up to 25 days after use. However, there are impairment tests on the market that can help determine whether workers in safety-sensitive positions are at risk by testing current fitness for duty. Those tests include computer-based alertness tests similar to a video game and apps that test for cognitive and motor impairment. Some tests take 20 seconds and are advertised as testing for fatigue, dehydration, emotional distress, alcohol, cannabis, etc.
Without more guidance, employers will have to create Observed Behavior tests that are signed by company personnel to bolster an argument of “under the influence.” Further, because Amendment 2 is a constitutional amendment, it would necessarily trump existing Missouri law found in laws such as workers’ compensation and unemployment statutes.
Another possible employee defense is an Americans with Disabilities Act (ADA) defense where the employee is taking physician-prescribed medical marijuana for a chronic debilitating condition that is protected by the disability laws. Missouri has no case law at this time. U.S. case law trends are that when courts are asked to apply federal law (the ADA) versus state law (i.e., Missouri Human Rights Act), federal courts are not finding a protected disability due to the employee using an illegal drug. Continue reading »
In spite of the uncertainties caused by the pandemic, your lease remains critical to your business. Commercial leases are complex transactions and should be undertaken with great care.
Following these basic points will make the lease renewal or new lease go smoothly. Continue reading »
Authored by Jeffrey R. Schmitt, with assistance from Haley E. Gassel, contributor
Business interruption coverage is like most insurance for small businesses – we pay for it with the hope we never need it. The coverage is intended to protect against revenue lost after a business experiences a covered peril or event which results in a temporary closure. Often this involves a casualty event like a fire or flood, or the inability to operate due to loss of utilities or information systems.
However, businesses across the country have filed claims with their insurers seeking business interruption coverage for COVID-related losses. This is a theory that, fortunately, most businesses have never had to claim in the past. Some claims have found their way to the courts for determination. The issue often boils down to whether there is physical loss or damage to the policyholder’s business location to trigger business interruption coverage. Some policies include coverage for communicable diseases as well.
While most business interruption coverage lawsuits have not concluded, some recent decisions by federal courts in Missouri have been favorable for businesses seeking coverage. This is due in part to ambiguities in the policies and the lack of prior court decisions involving business interruption claims based on a pandemic. In many ways, these are uncharted waters for the litigants and the courts. Continue reading »
Changes have been made to punitive damages claims in civil actions filed in Missouri on or after August 28, 2020.
Under the revisions, Missouri Revised Statute Section 510.261 now prohibits parties from making a claim for punitive damages in their initial pleading in a civil action. Any claimant who wishes to add a punitive damages claim to a civil action must file a written motion to amend 120 days prior to the pretrial conference, or, if no conference is scheduled, 120 days prior to trial, seeking leave to bring a claim for punitive damages. The claimant seeking leave must provide exhibits, affidavits, and discovery materials establishing a reasonable basis for the recovery of punitive damages. Any party opposing leave may submit admissible evidence to demonstrate that the standards for a punitive damage award have not been met. The court may grant leave to add the punitive damages claim if it determines that a judge or jury could reasonably conclude, based on clear and convincing evidence, that the standards for a punitive damage award have been met. This statute has the effect of preventing meritless claims being made in litigation as well as saving both the time and money of the parties involved.
Substantive Changes and Clarifications
After clearing the hurdle of obtaining leave to bring a punitive damages claim, a claimant must satisfy the statute’s requirements to receive an award of punitive damages. To do so, RSMo 510.261(1) requires the claimant to prove by clear and convincing evidence that the defendant “intentionally harmed the plaintiff without just cause or acted with a deliberate and flagrant disregard for the safety of others.” The revised statute does three things:
Codifies the original common law regarding punitive damages. In Klingman v. Holmes, 54 Mo. 304, 308 (1873), the first Missouri Supreme Court case allowing an award of punitive damages, the Court held that exemplary damages are only appropriate where an evil intent has manifested itself in acts. The court reasoned that under common law there must have been intent, or positive proof of malice, to justify granting punitive damages.
Clarifies the requisite mental state of the defendant, to intentionally harm without cause or with a deliberate and flagrant disregard for the safety of others. This gives the judge or fact finder a clear standard for determining whether the claimant is entitled to punitive damages.
Codifies the “clear and convincing” burden of proof standard. The Missouri Supreme Court has previously adopted this standard, but it had yet to be codified.[1],[2] The clear and convincing burden of proof standard falls within the middle ground of the ordinary civil burden of proof standard, preponderance of the evidence, and the criminal law standard, beyond a reasonable doubt.
According to Ruth, the fact that the vaccination does not yet have FDA approval is keeping many companies from considering a mandatory vaccination policy at this time. To date, none of her clients have a mandatory policy in place. “I do think it’s changing a little bit because of the Delta variant, and now [companies are] thinking about whether or not they should have a mandatory policy.”
Ruth said that another concern employers about enforcing a mandatory COVID-19 policy is the national worker shortage. Continue reading »
Yes, small businesses need estate plans. Business estate plans determine what happens if the owner can no longer operate the business due to death or disability. A plan must be in place to address either potentially devastating situation.
Part 5.2 of a 5-part series: Options for Small Business Owners in Financial Distress
Businesses are to avoid potentially deceptive conduct that would confuse consumers under 
With continued and widespread COVID-19 infection and the FDA’s full approval of the Pfizer-BioNTech COVID-19 vaccine, many employers have instituted COVID-19 vaccination mandates. Title VII requires employers to provide reasonable accommodations for employees with sincerely-held religious beliefs that conflict with getting vaccinated. Given that religious beliefs are difficult to disprove, many employees have taken this as an opportunity to request religious exemptions to avoid COVID-19 vaccination mandates.
