WHEN:   Wednesday, October 6, 2010

WHERE: Briarwood Golf Club

TOPICS: Board Member/Officer Liability and Planned Community Act (ORC §5312): What HOA Board Members Need to Know

TIME:       6:00pm   Free Appetizers/Cash Bar

6:30pm  Board Member/Officer Liability

7:45pm  Planned Community Act: What HOA Board Members Need to Know

9:00pm  Seminar concludes

Prior to the seminar, the course is offering attendees a discounted rate on  a round of golf.  For more information about golf packages, or to set up foursomes, please contact us.

Please RSVP to Stacy by September 15, 2010 by calling (216) 771-2600 or by email at sbubb@ottesq.com.

In the case, the court identified one key issue: Is a general awareness of an infringing activity on an online site or service enough to raise a “red flag,” and therefore deprive the service provider the protection of the Digital Millennium Copyright Act (DMCA), safe harbor from liability or is knowledge   of   specific  infringement

required?

The court determined that service providers are protected by the DMCA because the mere knowledge of a prevalence of infringing activity in general is not enough and that service providers do not have an obligation to monitor their sites or services for the purpose of identifying infringing activity.  This now leaves the owners of copyrights to videos with the burden of monitoring the internet for infringement.

A: Yes.  While a dress code policy can be important to the company, it is important to insure that the dress code does not cause discrimination issues.  Three big areas of concern with regard to discrimination claims are religion, gender and race.

Religion

The Courts rule favorably upon religious discrimination claims where the employer has not been reasonable. The most common religious claims arise from the need to keep the head covered and to grow a beard.

In order to overcome this type of discrimination claim, you must be able to show how an accommodation for religious   beliefs    would    create   an

“undue hardship” on your business.

For example, if an employee works in a factory setting and a head covering could cause a safety hazard if it were to get caught in machinery, a policy against it would be reasonable.

Gender

Courts usually find in favor of the employer when there is a difference in the dress code policy by gender when the difference is based in social mores.  An employee is likely to win a lawsuit against only if the gender-differentiated policy has no basis in what is considered a common social custom.

For example, the requirement that males must wear a tie while women are not required to do so too does not warrant a claim of gender discrimination.  However, if the policy required women to wear only one color, while men can wear any color they wanted, a female employee could have        a        legitimate          gender

discrimination claim.

Race

It is usually difficult for an employee to prove that a dress code policy was aimed at his or her race or ethnic group.  One of the few situations where courts have sided with employees has been in situations involving no-beard rules where an employee is unable to shave due to a medical condition known as pseudofolliculitis barbae.  In such a situation it would be unlawful for an employer to require shaving because pseudofolliculitis barbae only affects African-American males.

Basically, when enforcing a dress code policy it is important to focus on the business reasons for the policy.  If there are legitimate business reasons behind the policy, an employee is less likely to feel singled out and discriminated against.  It is also important to consistently enforce the policy with all employees.

In a  recent  case in the  U.S. District Court  for the Southern District of  Indiana, the court shed some light on how much information on social networking sites, such as Facebook and MySpace, is discoverable to an employer defending an employment discrimination claim.

In the case of EEOC v. Simply Storage Management, two employees claimed that they were subjected to sexual harassment during their employment with Simply Storage.  The Equal Employment Opportunity Commission (EEOC) filed a complaint on their behalf.

During the course of the litigation, Simply Storage sought discovery of the following information from the employees’ social networking pages on Facebook and MySpace:

• All photographs or videos posted by the employees or anyone on their behalf on Facebook or MySpace; and
• Electronic copies of the employees’ complete profiles on Facebook and MySpace (including all updates, changes, or modifications to their profiles) and all status updates, messages, wall comments, causes joined, groups joined, activity streams, blog entries, details, blurbs, comments, and applications (including, but not limited to, “How well do you know me” and the “Naughty Application”).

The EEOC objected to the request for production on the grounds that the requests were not relevant, improperly infringed on the employees’ privacy, and would harass and embarrass the employees.  Simply Storage claimed that discovery of these matters was proper because the employees put their emotional health at issue beyond that typically encountered with “garden variety emotional distress claims.”

The court agreed with Simply Storage and ordered the discovery.  In doing so, it made the following  observations about the discovery of social networking in discrimination cases:

1. Social networking content is not shielded from discovery merely because it is “locked” or protected as “private.”
2. However, all social networking content is not necessarily relevant or discoverable in all cases; the information must still be relevant to a claim or defense in the case.  The court used the following example to illustrate this difference: “If a claimant sent a message to a friend saying she always looks forward to going to work, the person to whom she sent the message and the substance of the message are what should be considered to determine whether the message is relevant…. But the mere fact that the claimant has made a communication is not relevant because it is not probative of a claim or defense in this litigation.”
3. Allegations of depression, stress disorders, and similar injuries will manifest themselves in some social networking content.  An examination of that content might reveal whether and when onset occurred, the degree of distress, and other stressors that could have produced the alleged emotional distress.

1. Because discovery is meant to be liberal, the producing party should err in favor of production if there is any doubt over the arguable relevance of social networking information.

So, keep in mind that if an employee thought the relevant information was fit to share with his or her Facebook friends, it is fit to be disclosed in discovery.  As these issues become more widespread in litigation, they will certainly be scrutinized more and possibly restricted.  In the meantime, consider including requests for social networking information in all employment disputes.

When an employer sends an employee’s W-2 form to the Social Security Administration (SSA), the employee’s name and Social Security number are checked against the SSA records.  U.S. Immigration and Customs Enforcement also verify the accuracy of information on the I-9 forms.  If either or both the SSA or ICE cannot verify the  employee’s

information, a “no-match” letter is sent to the employer, indicating that the employee’s name or Social Security number did not match government records.  The employer then has 30 days to correct any errors.

If you, as an employer, receive a “no-match” letter, it is important that you do not disregard the letter.  The letter is an official notification of a problem that could have significant legal consequences for you and your employee.  If you disregard the letter and it is determined that the employee was not authorized to work, the DHS could find that you have violated the law by knowingly continuing to employ unauthorized      persons,      which         could lead to civil and criminal sanctions.

Instead, you should take reasonable steps to resolve the discrepancy.  It is possible that a mismatch was the result of a clerical error on the part of the employee, the employer, or the government.  As  such,  you should not take immediate action against the employee.

A “no-match” letter is only an indication that the employee’s information did not match government records, and it does not necessarily mean an that the employee is ineligible to work in the United States.  You must allow the employee an additional 93 days to confirm that the information provided on the I-9 forms and W-2 form is correct.  However, if the discrepancy cannot be explained, the employee must be terminated.

The best method to insure that the member list information will be properly used is to require that the owner requesting the list to sign a “Confidentiality Agreement” before receiving information about all of the owners in the association.  At a minimum, this Agreement would include:

> The name and address of the titled owner (s) requesting the information;

> A statement that the owner will not share the information with anyone, except for 1) other members of the association, 2) professionals such as attorneys or accountants who the owner hires (if absolutely necessary), or 3) if the board authorizes another purpose to the owner in writing;

> A statement that the owner will not use the information except for lawful matters involving the governing documents and the Association;

> A statement that the owner will not use the information for commercial or business purpose;

> A statement that if the owner improperly discloses the information as set forth above and a claim for damages is brought against the association or the owner, that the owner will hold the association harmless and indemnify the association against any claims or damages awarded, regardless of the nature of the claim;

> A statement that the owner cannot make or distribute copies of the information; and

> Finally, the signature of the owner requesting the information and the date.

Make sure to give the owner a copy of the Agreement once they have signed it.  If you need help regarding exact wording, please contact our office.

A: YES. First of all, is important to recognize that this is a fire hazard and that the safety of the other unit owners is being compromised.  Most major appliances should under no circumstances be plugged in by an extension cord.

Immediately demand that the owner remove the extension cords, and make sure to follow-up this demand in writing if you are making a personal visit.  Explain the risk, and that the unit owner has violated a specific rule or regulation.  The association may impose enforcement assessments on the owner’s account if the owner continues to commit the violation.  Moreover, look at the situation from a preventative stance.  It is really necessary to have several outlets in the hallway?  Can we just have an outlet in the storage closet for vacuuming, etc.?  The simple truth is that it is impossible to monitor all of the common areas at all times.  If one person is taking advantage of the free electricity paid for by the association, then several more are probably doing the same thing without the board’s knowledge.  Make sure all unit owners know that this behavior is not acceptable and that they may be subject to enforcement assessments.

The board then decides that the documents need to be amended.  For many associations, trying to pass an amendment with the consent of the membership is a challenge.

Know though that certain amendments, such as an amendment to add provisions of Ch. 5311 of the Ohio Revised Code do not need a vote of the membership, just a majority vote of the board.

Most governing association documents provide that amendments must be passed with a specific percentage of the membership vote as set forth in the association documents.  Some have specific procedures for amendments as well.

If the board is ready to put an amendment out for a vote, the best time to start the process is at the annual meeting.  Put it in the notice and on the agenda to see if you can get the members to decide on the amendment before leave the annual meeting.  Keep a spreadsheet to see who received ballots.  If the members insist on taking the information home to sleep on it, then provide them with a self-addressed, stamped envelope to return the ballot.  Mail the ballots to the rest of the non-attending members.

Hopefully this will get most of the owners to respond. If not, there is always the option of going door-to-door in an attempt to get the votes you need.

Also, based on the type of association you have, you could do something such as provide a copy of the ballot when you distribute your pool tags or provide a copy with the monthly/annual statement.

Keep in mind that although you obtain the necessary member vote, many of the governing documents require that a lender must be notified of the proposed amendment, and it may required that the lenders of record consent to the amendment.

If the board is considering amending several provisions of the governing documents, consider doing a separate ballot for each section.  The membership may find one section controversial and another acceptable, so the board doesn’t want a member to vote “no” on a whole ballot, if, for example, the member only disagrees with one out of five provisions.

Although this process of amending your governing documents may seem like a tedious process that may take several months, or in some cases, over a year, it is important that the proper attempts are made to get the vote to better your community.  It is especially important that these votes are accurate (are signed by the titled owner(s) ) who are in good standing.

1) Make sure that board members are the signatories on your bank accounts. If a property manager has signing rights, make sure a board member is also required to sign all checks.

2) Ensure that the board members physically go to the bank and sign signature cards.  We discovered in pending litigation that board members signed signature cards, but they were never given to the bank by the property manager.

3) Make sure that board members only (at least 2) are signatories on reserve or savings accounts.

4) Make sure the association’s bank accounts are not eligible for online banking.

5) Make sure that both the property manager and the board’s treasurer receive account statements directly from the bank.

6) Verify interest rates and fees directly with your bank.  Inflated interest rates prevented many associations from switching banks and realizing a problem sooner.

7) Make sure that the association has adequate insurance to protect it from fraud, embezzlement, or other activities that may cause money loss.

Make sure that your property manager has adequate insurance to protect the association from fraud, embezzlement, or other activities that may cause money loss.  This amount should be at least equal to the monetary amount in your association’s accounts.

9) Request a monthly financial report from your property manager.  Have the treasurer match this report with the bank statements.

10) Hire a CPA to do annual audits.

The Ohio Planned Community Act will govern all community associations with the exception of condominium associations, which are governed by Chapter 5311 of the Ohio Revised Code.

The Act will incorporate much needed regulations for many community associations.  This will be especially important with regard to collections in the advent of widespread foreclosures in Ohio.  If a community association does not have the procedure already outlined in its Declaration or By-Laws, the Act provides for a specific method of payment application and provided for the recovery of court costs, collection costs, attorneys fees, and paralegal fees from a delinquent lot owner.

In addition, the Act sets out the proper procedures for enforcement assessments and the corresponding hearing opportunity for the lot owner.  Many homeowners associations have governing documents that are either extremely vague or silent on this particular issue, so there will be no question of these procedures now that the Act has been signed into law.

If a section of the Act and your Declaration/Bylaws conflict, then your governing documents will control.  If your governing documents are silent on a particular issue, then the Act will control the particular situation.  If you live in any type of community association other than a condominium association, it is important that your board review these new laws so that is properly proceeds with association business.

For more a more detailed synopsis of the Ohio Planned Community Act, please visit our announcements page at www.ottesq.com.

For full text of the bill, please visit http://www.legislature.state.oh.us/bills.cfm?ID=128_SB_187