4th Circuit Overrules Own Precedent, Holds Certain Primary Residence Claims Can Be Crammed Down in Chapter 13 Bankruptcies

By Daniel Cohn

The general rule in bankruptcy is that debtors cannot cram down loans secured only by mortgages on their primary residences. But wait, “what’s a cram down?” you ask. For non-bankruptcy folks, a cram down is where a debtor bifurcates a creditor’s claim into a secured claim (in the amount of the value of the property) and an unsecured claim (for the balance of the outstanding debt above the value of the property), paying the secured claim in full and paying the unsecured claim pro rata along with other general unsecured creditors. Take this example: at the time of bankruptcy filing, a lender is owed $150,000, but the property is worth only $100,000. The general rule in bankruptcy is that if the property is the debtor’s primary residence and the lender’s only collateral, the lender has a secured claim of the full $150,000. Otherwise, the debtor could cram the lender down, giving the lender a secured claim of only $100,000 that would be paid in full, and an unsecured claim of $50,000 that would be paid pennies on the dollar. Thus, we can see the obvious benefit to debtors and the obvious detriment to creditors of the powerful cram down option.

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Fourth Circuit Court of Appeals Deals Significant Blow To Traditional Contractor-Subcontractor Relationship

  By Arty Bolick and John Ormand

On January 25, 2017, the Fourth Circuit Court of Appeals[1], dealt a significant blow to the traditional contractor-subcontractor relationship.  In finding a contractor and subcontractor could be considered “joint employers” of the subcontractor’s workers for purposes of the Fair Labor Standards Act (“FLSA”), the court’s decision has opened a pandora’s box of potential wage and hour issues, including claims for overtime pay against contractors and higher tier subcontractors from the employees of lower tier subcontractors. Read more

Damned If You Do: Supervisors Could Be At Risk For Reporting Sexual Harassment

By Michael A. Kornbluth and Joseph E. Hjelt

On June 7, 2017, Judges Traxler, Motz and Agee on the U.S. 4th Circuit Court of Appeals issued a decision which could make employees think twice before they report other individuals’ complaints of sexual harassment in the workplace. The facts of the case, Villa v. CavaMezze Grill, LLC, No. 15-2543, 2017 WL 2453254 (4th Cir. Jun. 7, 2017), are alleged as follows:

In October of 2013, Judy Bonilla, a former employee at Cava Mezze Grill in Merrifield, Va., told Patricia Villa, a low-level manager at Cava Mezze, that the restaurant’s General Manager had offered her a raise in exchange for sex. Villa then approached Rob Gresham, the restaurant chain’s Director of Operations, to report the conversation with Bonilla and convey her suspicions that the same quid pro quo offer had been made to another former employee. Gresham is close friends with the General Manager who was accused of sexual harassment. In investigating Villa’s report, Gresham interviewed Bonilla and the other individual Villa suspected had been offered a raise in exchange for sex. Sergio Valdiva, Area Manager, accompanied Gresham in the interview with Bonilla to serve as a translator. In their interviews with Gresham and Valdiva, both employees denied the allegations and denied having ever said anything to Villa. At the close of the investigation, Gresham fired Villa, telling her that he concluded that she fabricated the story.

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SCOTUS Sends Transgender School Case Back To 4th Circuit

By Michael A. Kornbluth

On March 6, 2017, the Supreme Court remanded a case about a transgender boy’s right to use the bathroom associated with his gender identity. Gavin Grimm, a transgender boy, wanted to use the boys’ restroom at his high school. After Gavin had been using the boys’ restroom for seven weeks with the school’s permission, the local school board passed a policy that banned Gavin Grimm from using the boys’ restroom. Gavin Grimm filed for an injunction to use the bathroom based on his gender identity.

The U.S. District Court for the Eastern District of Virginia, 122 F. Supp. 3d 736 (2015), dismissed Grimm’s Title IX claim. On appeal, the primary issue for the 4th Circuit was whether Title IX requires schools to provide transgender students restroom access that comports with the student’s gender identity as stated in 34 CFR 106.33. G.G. v. Gloucester County School Board, 822 F.3d 719 (2016).   The regulation permits the provision of “separate toilet, locker room, and shower facilities on the basis of sex, but such facilities provided for students of one sex shall be comparable to such facilities for students of the other sex.” On Jan. 7, 2015, the Department of Education’s Office for Civil Rights interpreted 34 C.F.R. 106.33 as requiring that if a school treats students differently due to their sex, the school must also treat transgender students consistent with their identity.

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Sharif v. United Airlines, Inc.: Discharging Employee For FMLA Fraud and Dishonesty Is Not FMLA Retaliation

Murray,JoeBy Joseph S. Murray IV

A Halloween treat for employers and a trick for FMLA-abusing, dishonest employees: The 4th Circuit held that terminating an employee for abusing FMLA leave and for lying during an investigation into the FMLA abuse is not retaliation under the FMLA. Sharif v. United Airlines, Inc., No. 15-1747 (4th Cir. Oct. 31, 2016). While the ruling in this case was easy based on the facts, the 4th Circuit has provided a clear framework going forward for attorneys to defend or prosecute claims of FMLA retaliation when the circumstances surrounding the request for leave or the leave itself triggers an investigation and adverse action.

In 2009, Masoud Sharif was diagnosed with anxiety disorder. United approved every one of Sharif’s requests for FMLA leave to handle his panic attacks. Sharif used a total of 56 days of FMLA leave in the two years prior to his discharge, including days after United initiated an investigation into his FMLA use.

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Fourth Circuit Approves Legislative Prayer

willjamisonEditor’s note:  On Oct. 31, 2016, the 4th Circuit Court of Appeals agreed to re-hear the case en banc.  Oral arguments are tentatively scheduled for Jan. 24-26, 2017.

By Will Jamison

On March 4, 1789, the First United States Congress met in Federal Hall in New York City.  The air was (probably) thick with dust from the street and powder from their wigs.  With the ink still drying on the U.S. Constitution, the actions of that First Congress shed light on how the founders of our nation interpreted the supreme law of the land…that is, according to our U.S. Supreme Court.

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