When the Paycheck Protection Program (“PPP”) ran out of funds last week, many of our nation’s small businesses hardest hit financially by COVID 19 were left without relief. And, reports that hundreds of millions of PPP dollars when to large, publicly traded companies led to strong criticism of the program. Over the last few days, we’ve learned that Ruth’s Chris Steak House, Potbelly, and even Harvard got millions of dollars in PPP funding.
New guidance
On the heels of attacks over this use of PPP funds, the U.S. Small Business Administration (SBA) has issued new guidance that sends a strong message that PPP funds secured by large companies that don’t really need the money may need to be paid back.
The SBA added the following question today to its “Frequently Asked Questions” document: Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan?
You can read the full answer here (see question 31). In summary, the answer reminds us that as part of the application process all PPP borrowers must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
Successful public companies likely cannot make good faith certification of need
The answer to the FAQ also points out that it is unlikely that “a public company with substantial market value and access to capital markets” is able to make that certification in good faith. According to the guidance, if such a company does make that certification, it needs to be prepared to provide the SBA with a basis for the certification.
What if such company already took PPP money?
Finally, the answer to the FAQ gives direction on what a company should do if it already made a certification of need that may not be supportable. Essentially, it needs to pay the loan back by May 7, 2020:
“Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith.”
Conclusion
Finney Law Firm will continue to provide updates as more guidance is given by the SBA on the Paycheck Protection Program. If you have questions about the PPP, please feel free to contact Rebecca L. Simpson at 513.797.2856.
Here is the podcast from today on 550 WKRC Radio with Brian Thomas. The broadcast starts at 69:50.
The discussion in this show again addressed the Finney Law Firm suit on behalf of Tanya Hartman and her business, Gilded Social, a bridal dress shop, who desires a due process hearing on the forced closure of her business in the COVID-19 crisis.
Contact Christopher P. Finney (513.943.6655) if you care to discuss your rights as a business owner under a COVID-19 closure order.
As society changes the way we communicate and receive information, social media has become a more important medium for communicating with the government. This is all the more so as public meetings are moving toward “virtual meetings” on the internet.
When a public body or government official posts on social media and allows comments, it opens a “public forum.” It is well settled constitutional law that government actors cannot pick and choose who may speak in a public forum, and it most certainly cannot discriminate based upon the viewpoint or content of the speaker’s message.
SORTA, the Southwest Ohio Regional Transit Authority – operator of Cincinnati’s bus system – posted on its Facebook page regarding its then plan to offer free fares. Our client, Jordan Arnold, posted a comment suggesting that rather than offer free fares, that the bus system should shut down during the Coronavirus pandemic. SORTA then deleted Mr. Arnold’s comment and blocked him from being able to comment on any of its posts. SORTA left other comments that were supportive of SORTA’s decision undisturbed
By deleting Mr. Arnold’s comment, SORTA stifled Arnold’s speech in a public forum that SORTA itself opened. SORTA went further by blocking Arnold, but not others, from commenting at all on any of its Facebook posts. There can only be one reason for specifically targeting Mr. Arnold for deleting and blocking – that SORTA was specifically attempting to silence a critical voice. This is the textbook definition of viewpoint discrimination. Other citizens who share SORTA’s viewpoint are permitted to comment, but Mr. Arnold, who does not share SORTA’s position, is silenced.
Just as President Trump may not block critics from commenting on his social media posts, neither may SORTA.
Federal law provides a remedy. Finney Law Firm, along with Curt Hartman, brought suit on behalf of Mr. Arnold pursuant to 28 U.S.C. § 1983, seeking injunctive relief and damages. Via the injunction, we seek to force SORTA to restore Mr. Arnold’s comment and cease blocking him from commenting on its social media posts. Further we seek financial compensation for the damages Arnold suffered by having his speech stifled.
The complaint and motion for injunctive relief are available below and online here and here. Sharon Coolidge’s Cincinnati Enquirer’s coverage of the lawsuit is available here.
If a public official or government body has deleted or blocked your comments on social media, there is a remedy.Email or call Julie Gugino (513) 943-5669.
Here is the podcast from today, starting from the top of the show.
The discussion in this show addressed the Finney Law Firm suit on behalf of Tanya Hartman and her business, Gilded Social, a bridal dress shop, who desires a due process hearing on the forced closure of her business in the COVID-19 crisis.
We lost yesterday in getting a Temporary Restraining Order to stop Ohio’s practices without due process. The Judge has called for a Preliminary Injunction hearing for May 11.
Contact Christopher P. Finney (513.943.6655) if you care to discuss your rights as a business owner under a COVID-19 closure order.
We have many clients whose application for a forgivable loan under the Paycheck Protection Program are currently pending and waiting for new funding from Congress, the US Senate passed a bill today to allocate $320 billion in additional funds. Action by the US House is expected Thursday.
Tens of thousands of Ohio businesses have been forcibly closed due to the order of Ohio Health Director Dr. Amy Acton, who on her own decided which categories of businesses would be deemed “essential” and “non-essential” during the COVID-19 crisis.
Today, a hearing was held before Judge Algenon Marbley, Chief Judge of the United States District Court for the Southern District of Ohio, on a motion for Temporary Restraining Order in the case of Hartman et al. v. Acton et al. In that case, Finney Law Firm attorneys Curt C. Hartman, Rebecca L. Simpson and Christopher P. FInney along with the 1851 Center for Constitutional Law argued simply that Tanya Hartman and her bridal shop, Gilded Social, are entitled to a due process hearing as to whether retail shops such as hers are properly categorized as “non-essential” and therefore subject to mandatory closure by the State. In other words, she simply asked for a hearing to ascertain the propriety of her closure under Ohio law and the US Constitution.
Now, I preface this by noting that I previously have appeared in front of Judge Marbley, and not only respect him as a Judge, but genuinely like him . He has at all times shown himself to be a knowledgeable and wise jurist, and a kind man as well.
Today, Judge Marbley, for a variety of reasons, ruled that Ms. Hartman and tens of thousands of similarly-situated businesses in Ohio have no right to a due process hearing following their forced closure by the State — at least on the emergency basis sought.
Rather, he scheduled a second hearing on May 11 on a Preliminary Injunction, a similar kind of relief but one that would last until resolution of the merits of the case.
One reason enunciated by Judge Marbley I found particularly unfortunate for the decision was that Ohio could not possibly hold hearings for the tens of thousands of businesses who might appeal their closure order. In other words, that due process would simply be overwhelming to the state bureaucrats if that right was recognized.
This notion is a frightening one indeed, reminding me of the forced internment of more than 120,000 US citizens of Japanese heritage during World War II without due process. In 1944, Fred Korematsu (Korematsu v. United States, 323 U.S. 214 (1944)) challenged the “yellow scare” incarceration of Japanese Americans based solely upon their ancestry. Naturally, the outrageous, unconstitutional and racist Order was borne of fear that Japanese Americans might hold dual loyalties and harm the United States during the War. The U.S. Supreme Court ultimately upheld President Roosevelt’s Executive Order 9066 that resulted in that forced internment, citing that irrational fear. From Wikipedia:
In a majority opinion joined by five other justices, Associate Justice Hugo Black held that the need to protect against espionage by Japan outweighed the rights of Americans of Japanese descent. Black wrote that: “Korematsu was not excluded from the Military Area because of hostility to him or his race”, but rather “because the properly constituted military authorities…decided that the military urgency of the situation demanded that all citizens of Japanese ancestry be segregated from the West Coast” during the war against Japan.
Can you imagine if Justice Black had added as a reason for that now-discredited decision that the U.S. Courts could not possibly sustain petitions for freedom by 120,000 individuals? It would deeply offend our claim as a nation to equal justice under the law. What if the Governor incarcerated all 10,000,000 Ohioans (which effectively he has done)? Would it be an exception to a Habeas Corpus petition that the system would be overwhelmed to provide justice to that many Ohioans?
We don’t lose our Constitutional rights when everything is going swimmingly. Rather, they become subverted from circumstances that instill such fear in our populace that the Courts elect to ignore the clear meaning of our Constitution. In other words, fear drives bad court decisions.
Today, the State of Ohio repeatedly played the fear card — the boogie man of disease and death — if we simply afforded Ohio businesses due process rights in response to the devastation of their life’s work. And it worked.
Judge Marbley has a chance to correct this unfortunate decision at the upcoming Preliminary Injunction hearing and we hope to provide him with the legal arguments and evidence he needs to reach the correct conclusion to allow due process rights to be afforded to these businessmen and women who have had their hard work and risk of capital snatched from them by unthinking, uncaring arbitrary bureaucrats.
According to Lieutenant Governor John Husted, Ohio is working to process a massive increase in applications for Ohio unemployment benefits. More people have applied for Ohio unemployment benefits over the last month than had applied for such benefits in the last two years.
Expanded unemployment benefits
Additionally, the CARES Act expanded unemployment benefits to cover self-employed and independent contractors and promised an additional $600 per week on top of what the state pays. This has all resulted in slow processing times and numerous questions.
Answers to FAQs
The State is working to answer those questions and decrease processing times. Here are some updates:
Claim number: If you are filing a claim due to COVID 19, use the mass layoff number 2000108 on applications.
Self-employed and independent contractors: The State will start taking your information but anticipates it will not be able to process or pay benefits until May 15 of this year. Once processed and approved, however, benefits will be retroactive.
Additional $600 per week: These additional payments should be starting now.
Efforts to alleviate slow processing time: Ohio Department of Job and Family services is adding 337 new employees, text-to-speech capabilities, and adding a virtual call center.
Funding challenges: According to Husted, without federal assistance Ohio’s unemployment system is on track to run out of funds in June, but, he says, that doesn’t mean Ohioans will lose their benefits. State legislators are working to resolve this issue.
If you have questions on this or other relief available for small businesses, self-employed, and independent contractors during the COVID 19 crisis, please contact Rebecca L. Simpson at 513.797.2856.
The SBA burned through $342 billion in Paycheck Protection Program’s (“PPP”) loan funds in just over a week. And of course it ran out of funds long before all applications were processed, leaving many businesspersons waiting to see if the program will be properly and fully funded (we think it will).
Where did the money go?
Well, the SBA has issued a good and short PowerPoint presentation on the destination of the loaned funds to date. That is here.
If you need help accessing PPP funds or the companion Emergency Income Disaster Loan funds, please contact Rebecca L. Simpson (513-797-2856).
Unless you’ve been living under a rock somewhere, chances are the current COIVD-19 pandemic has affected at least one, and likely multiple facets of your life. But how do these circumstances impact contractual obligations made pre-COVID-19? Can the pandemic or the economic turmoil it is has created serve as a justification or excuse for getting out of a contract? For instance, if you contracted to purchase real estate in February, before all of the furloughs and Stay at Home Orders, do you still have an obligation to close on that purchase? While the case law surrounding this question is likely to dramatically expand in light of recent events, the answer could likely be “no” under Ohio law, at least as it stands today.
Four Corners Rule
As an initial proposition, contracts are governed by the “four corners rule,” meaning they will be interpreted consistent with what appears on the face of the document. Chan v. Miami Univ., 73 Ohio St. 3d 52, 57 (1995) (“[A]n instrument must be considered and construed as a whole, taking it by the four corners as it were.”). Where unambiguous, no additional terms will be read into the contract, and the terms that are contained within the document will be given their ordinary meaning. Fidelity & Casualty Co. v. Hartzell Bros. Co., 109 Ohio St. 566, 569 (1924) (“This court cannot make a new contract for the parties where they themselves have employed express and unambiguous terms. In the construction of contracts the language employed must be given its usual and ordinary meaning.”).
Parties to a contract are, thus, bound by the contract’s plain and unambiguous terms and are obligated to do that which they have promised in the contract, subject to certain narrow exceptions…
Force Majeure
Contracts often contain “force majeure” clauses. Roughly translated, force majeure is Latin for “superior forces.” Often, you will see this interpreted or referred to as an “Act of God.” What this means in a practical sense is that there is some sort of unforeseeable, intervening circumstance that justifies non-performance under the contract. For example, you have a contract to rent an apartment unit (a lease) but, right before you move in, a bolt of lightening strikes the apartment building and it burns to the ground. Depending on the language of the force majeure clause, this would likely be a qualifying unforeseeable circumstance that could nullify the lease.
Relative to real estate transactions, force majeure clauses are perhaps more often seen in the commercial context than the residential. Many standard realtor’s contracts do not contain such clauses. These clauses may also appear in certain consumer transactions – think contracts for goods or services to be performed.
Consistent with the four corners rule, courts cannot “read in” a force majeure clause where one does not appear on the face of the contract. Therefore, if your contract does not contain a force majeure clause, you likely cannot claim it as a reason for terminating the contract or skirting your obligations thereunder. SeeWells Fargo Bank, N.A. v. Oaks, 2011 Ohio Misc. LEXIS 4812, at *7 (Franklin C.P. June 24, 2011) (rejecting force majeure argument where the contract did not contain a force majeure clause).
Where a contract does contain a force majeure clause, courts are likely to interpret such clauses in a very narrow fashion. Thus, if the clause does not specifically contemplate disease, pandemic, unexpected unemployment, or business closures, it may not provide relief in the specific COVID-19 context.
What about changing financial circumstances or “impossibility” of complying with your obligations, more generally?
Despite the non-existence of an applicable force majeure clause, one might think that his or her general inability to pay that which they promised under the contract or worsening financial conditions might excuse performance under the contract. While this may seem like a logical conclusion at first glance, the law dictates that “[m]istaken assumptions about future events or worsening economic conditions, however, do not qualify as a force majeure.” Stand Energy Corp. v. Cinergy Servs., 144 Ohio App. 3d 410, 416 (1st Dist. 2001); see also Wells Fargo, at *7-8 (“[E]conomic down-turn is a risk that every business person necessarily undertakes when they enter into a contract . . .That this country incidentally suffered an economic downturn during the term of their contract does not discharge them from their contractual obligations.”). “A party cannot be excused from performance merely because performance may prove difficult, burdensome, or economically disadvantageous.” State ex rel. Jewett v. Sayre (1914), 91 Ohio St. 85, 109 N.E. 636, 12 Ohio L. Rep. 291.
This body of case law generally speaks to “objective” versus “subjective” impossibility. While the law might sanction non-performance based on objective impossibility (i.e., no one could reasonably fulfill their obligations under the circumstances), it typically does not excuse performance based on subjective impossibility (i.e., a particular party cannot fulfill their obligations under the circumstances).
Can challenges posed by COVID-19, independent of financial concerns, create a justification for non-performance?
In the real estate context, for instance, what about the health risks posed by out-of-state buyers or sellers traveling for closings? Fortunately, we live in an era that offers a wealth of technological options here. For example, many title companies are offering “remote” closings. If this is a concern for you, consider reaching out to Ivy Pointe Title for your closing needs, as they offer a staff of experienced title professionals, e-notary licensure in both Ohio and Kentucky, and remote closings, which allow parties to close on real estate transactions from the comfort and safety of their own homes where necessary.
We can help…
All this being said, parties to a transaction can often jointly agree to terminate or delay performance if they so choose, though a subsequent writing may be required to effectuate this agreement in a manner that will be enforceable and protect both sides down the road. If you are party to a transaction and the other side has threatened non-performance where there has been no agreement to terminate or delay, these are likely some of the arguments you will see. On the other hand, if you are concerned about your ability to perform under a contract, there may be additional language within the “four corners” of your contract that could provide some relief. Contracts are exceedingly unique from one another, such that there really is no “one size fits all” approach.
Finney Law Firm has a team of legal professionals with experience ranging from real estate to employment to general commercial law, and we would be happy to review your contract and provide feedback as to your options or help with drafting amendments thereto. Please feel free to reach out to me at (513) 943-5673 or casey@finneylawfirm.isoc.net to set up a remote consultation.
Additionally, our attorneys have authored a number of blog entries relative to the COVID-19 crisis and hosted webinars as to potential relief for employers, small businesses, and 1099 employees that may also be of interest. And for more on commercial or real estate transactions and “force majeure,” click here.
We hope you are all staying safe and healthy during this unprecedented time.
As a result of the current pandemic, millions more Americans are working from home than there were just a month ago. This significant change in circumstances presents a good opportunity for employers to review their policies when it comes to recording the hours worked by their employees, and the payment of overtime.
Remember that employees who earn at least $684 a week, and who are otherwise “exempt” from the overtime requirements of federal and state law, do not have to be paid additional wages or salary when they work more than 40 hours in a week. Keeping track of the hours these exempt employees work when they are working at home, therefore, is not important from a legal point of view.
Exempt or non-exempt?
This is a good time, however, for employers to make sure that they are correctly classifying their employees as exempt or non-exempt. If an employee is misclassified as “exempt” when he or she is not truly exempt from the overtime laws, the employer can be exposed to significant liabilities for unpaid overtime compensation and additional amounts.
For non-exempt employees, working from home creates some definite challenges when it comes to keeping track of hours worked, and making sure they are paid appropriately. All employers are required to keep accurate records of the hours worked by their non-exempt employees. Note that it is the employer’s responsibility – not the employee’s responsibility – to make sure that these accurate records are kept and maintained. For obvious reasons, it can be harder to keep track of an employee’s hours worked when he or she is working remotely, as opposed to when he or she is working on the employer’s premises.
Time-tracking policies
To make sure that employers comply with their duty to keep accurate time records, they should either have a software solution in place that keeps track of when an employee clocks in and out, or require employees to submit daily timesheets. Employees should also be reminded to clock in and out for lunch, and should be refreshed on the employer’s policies regarding authorization for overtime work.
It is also a good idea to tell employees, when working from home, that they are expected to maintain the same work schedule that they had when working at the employer’s physical location.
Conclusion
Whether you are an employer or an employee, if you have questions or need clarification about this complicated area of the law, please feel free to reach out to one of our employment attorneys. And stay safe!
