All Dried Up? - SGR · PDF fileAll Dried Up? Analyzing Georgia ... when a product is recalled? Tim Bumann, Josie Krause and Lori ... SGR construction attorneys Mark de St. Aubin and

LeadersTrustThe

A Publication of Smith, Gambrell & Russell, LLP Issue 21 / Spring 2008

All Dried Up?Analyzing Georgia’s New Water Management Plan

georgia’s lake lanier

LeadersTrustThe

SGRLAw.com Trust the Leaders 1

A Publication of Smith, Gambrell & Russell, LLP Issue 21 / Spring 2008

16Water Worries

Does Georgia’s plan to combat its water crisis go far enough?

4Multidistrict Litigation

How federal courts manage pretrial proceedings in mass tort and similar litigation.

28The Murphy Family

How SGR is helping this deserving family plan for the future.

25Legal Briefs

Recent accomplishments of SGR attorneys.

32The Finish Line

One attorney’s rock ‘n’ roll fantasy comes true with the band No Appeal.

Departments

8Employment Law

Updates on immigration, FMLA, ERISA and employee benefits law.

Building Information21Modeling

An overview of a new approach to collaboration in the world of construction.

12The Business of Recalls

The panoply of decisions a company faces when orchestrating a consumer product recall.

29Client Profile

FishQuest! – it’s not your granddad’s fishing company.

2 Trust the Leaders SGRLAw.com

Advertisement

LeadersTrustThe

eDitorinchiefDana Richens

aDvisoryboarDBrett Lockwood, Anton Mertens, Jessica Lee Reece, John Saunders

smith,gambrell&russell’smarketingteamChuck Jones, Andy Carlyle, Nicole Kwasnik, Sarah Weikel, Lamar Dixon

contributingwritersTim Bumann, Scott Cahalan, Mark de St. Aubin, John Despriet,

Ed Konieczny, Josie Krause, Lori Leonardo, Kristen Lewis, Steve O’Day, Jessica Lee Reece, Bobby Schwartz

DesignanDproDuction

Atlanta Magazine Custom Publishing

trusttheleadersmagazineispublishedby

1230 Peachtree Street, N.E.Promenade II, Suite 3100Atlanta, GA 30309-3592

[email protected]

the information contained herein has been obtained from sources believed to be reliable. the content and information in

this publication do not constitute legal advice, do not in all cases reflect the opinions of sgr or its attorneys and are not in all cases complete or current as of the publication date. this publication is

not intended to and does not create an attorney-client relationship or provide legal advice or legal opinion.

legal advice should be obtained from one’s legal counsel.

permission is granted to use and reproduce this publication in whole or in part for internal and personal reference. except for material in the public domain, this publication may not be further copied, modi-fied, used or distributed, in whole or in part, in any form or by any

means without the written permission of smith, gambrell & russell, llp.

all other rights expressly reserved.

© 2008 by smith, gambrell & russell, llp

leaders used with permission of leaders magazine, inc.

Smith,GambrellAttorneys at LawRussell,llp&

SGRLAw.com Trust the Leaders �

Dana RichensEditor in [email protected]

From The Editor

Spring Has SprungWelcome to spring! And to the 21st issue of Trust the Leaders.As you might expect, the rain has come with the change in

seasons. But those of us who live in the southeastern United States should not be fooled by the recent heavy downpours and violent storms in the area (including the first-ever tornado to blow through downtown Atlanta). This portion of the country remains fixed in a 100-year drought, which this past summer brought unprecedented devastation to the area, relentless coverage of the “water wars” among Georgia, Florida and Alabama, and heightened concerns about how to deal with the ongoing water crisis.

In response, the Georgia General Assembly enacted the state’s first “State Water Plan” in January. But what does the Plan really accomplish, and does it go far enough? Could it have been bet-ter thought out and more forward thinking with respect to actual water conservation? SGR’s Steve O’Day and Jessica Lee Reece take a close and candid look at the Water Plan in this issue’s cover story.

Also in this issue:Ed Konieczny uses the example of a fictional drug product,

“Prolonga,” to introduce a procedural device utilized by the federal courts in handling product liability and mass tort cases. It’s called multidistrict litigation, or “MDL,” and involves the temporary consolidation of related cases from many different jurisdictions for purposes of pretrial proceedings. Ed examines the pros and cons of MDL from the perspective of both the plaintiffs and the defendants in such cases.

These days, it seems that not a week goes by without news of a consumer product recall. Ever wonder what actually happens when a product is recalled? Tim Bumann, Josie Krause and Lori Leonardo take a “soup to nuts” look at a product recall, from the decision to recall a product, through the structure of the recall itself, to disposing of the recalled products without running afoul of hazardous waste regulations.

In their article on building information modeling, or “BIM,” SGR construction attorneys Mark de St. Aubin and Scott Cahalan introduce us to an increasingly utilized method of project delivery in the building industry. BIM relies on an unprecedented level of collaboration among owners, developers, designers and contrac-tors. Owners love it, but other industry players may be uneasy about the risk of being held responsible for activities outside their own areas of expertise.

If the arrival of spring isn’t uplifting enough for you, take a look at page 28, which features the wonderful story of the Murphy family of Morrow, Georgia. John and Jeanette Murphy have adopted 23 “special needs” children over the years, and SGR is proud to be involved in providing estate-plan-ning and other legal counsel to this remarkable family.

This month’s Client Profile features FishQuest!, a specialized tour company headquartered in Hiawassee, Ga. The pictures tell much of the story: incredible sport fishing in exotic places around the world, unique travel experiences and humanitarian efforts in some very remote locations. You’ll want to pack a bag and join in the excitement after reading this story.

Or, if you’re SGR’s Bobby Schwartz, you may just decide to pull up a chair, put in your earplugs and jam on the electric guitar for a while. In “The Finish Line,” Bobby tells how he has spent the last year living the life of a rock star with SGR’s own band, No Appeal, coming soon to a very small venue near you.

We can’t say it enough – we’re delighted to have the opportu-nity to bring Trust the Leaders to our readers, and always welcome your comments and suggestions.

edkonieczny

It’s 10:00 a.m. when you get The Call. Your company has been sued by the family of a man who died while using your cancer drug, Prolonga. Your general counsel sounds glum.

“The complaint alleges that Mr. Rogers was 85 years old, had Stage Four cancer, was prescribed Prolonga, and died two weeks later.”

Don’t elderly men sometimes die of heart attacks?“Of course they do. So, causation will be hard to prove, and

damages should be limited. We should be in great shape. Unless –”Unless what?

“Unless the mass tort bar mobilizes, advertises for similar claims and starts filing suits in unfriendly jurisdictions. Fortunately, Pro-longa is relatively new to the market and has been used by only a few thousand patients. We have had very few adverse incident reports. That, coupled with the age and health of the typical Prolonga user, should make us an unattractive target. We should prepare for more lawsuits – perhaps a few, perhaps a dozen or two, but hopefully no more. And we need to think carefully about an MDL.”

A what?

MulTIdIsTrIcT lITIgaTIon

� Trust the Leaders SGRLAw.com

* * *


An MDL. It stands for “multidistrict litigation,” a type of legal proceeding designed to help federal courts efficiently manage many related cases filed in different jurisdictions. The federal MDL statute, 28 U.S.C. § 1407, permits the tempo-rary transfer of federal civil lawsuits to one or more district courts for pretrial consolidation or coordination.

To be eligible for an MDL, a group of lawsuits must involve one or more common questions of fact. The Judicial Panel on Multidistrict Litigation, consisting of seven appellate and district court judges all from different circuits, decides by majority vote whether to create an MDL and where to send it. The Panel may find an MDL appropriate, even if no party requests or desires one, if it concludes that transfer will serve “the convenience of parties and witnesses and will promote the just and efficient conduct of such actions.”

The district court presiding over an MDL is called the “transferee” court. It has jurisdiction over all pretrial matters in all transferred cases. It can dispose of claims completely through dismissal or summary judgment. It controls the pace and scope of discovery and the limits of expert testimony. Although it must remand each case to its “transferor” court for the trial itself, most mass tort claims are resolved before then.

The Panel’s selection of the transferee court may affect the outcome of the litigation. There are friendly jurisdictions and not-so-friendly ones. That is why parties sometimes file MDL motions preemptively – to try to steer the case to a receptive judge if transfer seems inevitable. Parties also try to influence the Panel by proposing, when they can, a single, consensus choice for the transferee court, or at least one offered by all plaintiffs and one by all defendants.

In ruling on an MDL motion to transfer, the Panel should not consider whether the proposed transferee courts will be more or less favorably disposed to particular rulings, or which

state’s law each court is likely to apply. Instead, the Panel will consider other practical issues, such as geographical conve-nience: Where are the parties located? Where are the documents and witnesses? Where was the product manufactured? How hard is it for out-of-towners to get to the courthouse?

The Panel also will review the current status of the litiga-tion. Where was the first case filed? Where are most lawsuits pending? Do any courts already have specialized knowledge or experience? Are any familiar with the facts of the case? How advanced are the competing lawsuits? What is the condition of each court’s docket and available courtroom technology?

weighingtheprosandconsAlthough an MDL sounds complicated, it provides ben-

efits, both economic and strategic. First, an MDL promotes efficiency. Instead of 10 or 30 or 100 cases pending in differ-ent courts across the country, the litigation is coordinated in a single forum. It proceeds in an orderly fashion in a manner that saves the parties attorneys’ fees and costs.

An MDL also should reduce the disruption to the parties’ business. Without an MDL, key employees could be deposed repeatedly, and a corporate defendant could spend hundreds or thousands of hours responding to similar sets of document requests, interrogatories and requests for admission. In an MDL, however, discovery is coordinated, staged and limited. Most witnesses are deposed only once, with the transcripts and videos made available for use in all related cases. Written

To be eligible for an Mdl, a group of lawsuits must involve one or more common questions of fact. The Judicial Panel on Multidistrict litigation, consisting of seven appellate and district court judges all from different circuits, decides by majority vote whether to create an Mdl and where to send it.

� Trust the Leaders SGRLAw.com

discovery on common issues is limited as well. And discov-ery already completed in some cases might be used in others. These advantages allow the corporate defendant to keep its eye on the ball – making money for its shareholders – and mini-mize the distraction of litigation.

Another advantage of an MDL is consistency. Most important decisions are made by a single judge, who is, or will become, an expert of both the facts and relevant law. Without an MDL, a defendant might win certain battles in some courts and lose the same battles in other courts. That inconsistency increases a defendant’s exposure and could make it difficult for it to develop a unified discovery or defense strategy. An MDL should provide the defendant with a fuller understand-ing of the nature and scope of the claims. That in turn should put it in a better position to consider settlement, which it can tackle globally. In many respects, an MDL should make a defendant’s life easier.

But there are disadvantages, too. First, coordination reduces overall delay, and delay can be a defendant’s friend.

Second, the publicity of an MDL may attract other law-suits. Some lawyers may run television, radio, print or Internet ads seeking potential plaintiffs to represent or refer to other firms for a fee. This is not to say that these new claims would be frivolous (although some might be). But many new claims would not be brought without the prodding of commercials. And the more lawsuits the defendant faces, the greater its exposure and the more pressure it will feel to settle.

Third, the combination of claims in a single forum will increase the plaintiffs’ leverage by permitting counsel to pool their resources and to work for the plaintiffs’ “common benefit.”

Imagine 100 Prolonga cases, each worth $100,000. Each $100,000 recovery might generate a contingent fee of between $30,000 and $40,000. This means that the lawyer handling a single case could spend no more than 120 to 160 hours in total to earn $250 per hour. That’s not much time when you consider all that must be done. In some complex cases, it might be reasonable to spend 120 to 160 hours preparing for and taking the deposition of a single, key expert witness alone. Then there are the litigation costs – for factual investigation, expert analysis and testimony, depositions, document pro-duction, travel, etc. A lawyer handling a single $100,000 case could only spend $10,000 to $30,000 to generate a recovery that made economic sense.

But with 100 or 1,000 coordinated cases, the plaintiffs can share common expenses, achieve economies of scale and pro-duce a better work product. Cumulatively, for example, with tens or hundreds of millions of dollars at stake, it would be easy to justify paying $750 per hour to hire the world’s lead-ing expert from Harvard.

An MDL also might give the plaintiffs an organizational advantage. Without an MDL, it might be difficult and time consuming to coordinate dozens or hundreds of plaintiffs’ lawyers from across the country, agree on leadership and litiga-tion strategy, and equitably allocate both the work assignments and the work product. The scope of that effort alone might discourage some from even trying to organize voluntarily.

theplaintiffs’steeringcommitteeBut in an MDL, organization is court imposed and partici-

pation is required. One of the first things, in fact, that a transferee court should do is appoint a plaintiffs’ steering committee (PSC). While the leadership structure varies from one MDL to another, the PSC’s purpose remains the same: to represent effectively and efficiently the common interests of all MDL plaintiffs.

For (fictitious) Prolonga and other products liability cases, there will be factual and legal issues common to all plaintiffs. Did the defendant, for example, act reasonably in marketing the drug? Were its warnings adequate?

Under the supervision and direction of the PSC, volunteer lawyers and paralegals will review documents, take deposi-tions, write briefs, and develop and prosecute the common aspects of the litigation. Ultimately, they will prepare and distribute to all MDL plaintiffs a trial package consisting of “hot documents,” deposition transcripts and videos, research


memoranda, briefs and other materials that a lawyer might need to try the general causation issues in a case. With much of the proof prepackaged, a trial lawyer can focus solely on issues that are unique to his or her client: what did the plain-tiff know about the risks of the drug and when? How did the plaintiff ’s medical condition affect the outcome? What is the appropriate measure of compensatory damages?

Overall, because of the coordination and economies of scale, the defendant could wind up settling weaker cases that it otherwise could have successfully defended.

Nor is there ever a shortage of volunteers willing to serve on a PSC. Most PSC members have their own individual cases, sometimes quite a few. A PSC position permits a law-yer to protect his clients by ensuring that all common issues are well litigated. PSC membership also can provide negotiat-ing leverage during settlement discussions. Lawyers choose to serve on a PSC to protect their clients’ claims and their own fee interests in those cases.

Plaintiffs’ lawyers also can make money in an MDL with-out a single client. The transferee court typically collects a “tax” or assessment of four to eight percent of each gross recovery from all parties that have cases in the MDL or that rely on MDL work product. That assessment is used to compensate those who perform “common benefit work,” and usually is deducted from the attorneys’ fee portion of individual recov-eries. In large MDLs, the common benefit fund could total tens of millions of dollars, which would motivate lawyers to join the MDL team.

classactionsDistinguishedFor mass tort defendants, an MDL is often better than a

class action, in which a single plaintiff represents numerous others who are similarly situated. Depending on the size of the class, the potential liability could be enormous. Fortunately, the claims likely to be faced in a typical mass tort situation are too case specific to be “classable.”

Before a court can certify a class action, it must find that “there are questions of law or fact common to the class” and that “the claims or defenses of the representative parties are typical of the claims or defenses of the class.” In most litiga-tion involving pharmaceuticals and medical devices, however, there are unique (i.e., uncommon and atypical) issues of law and fact that preclude class certification. Each plaintiff, for example, has his or her own distinct medical conditions. How one patient tolerates Prolonga might be very different from how another patient does. A class action would be appropriate in only very limited circumstances.

With many mass torts, there is little to discuss. There are so many parties, so many cases, and so much at stake, the question is not whether the claims should be MDL’d, but how, when and where. With Prolonga, where the number of law-suits should be relatively small, it’s a much closer call.

Back to The Call:

“We need not decide today whether to request or oppose an MDL. For now, we should interview our key employees and outside experts, and learn the case inside and out. We also must preserve all documents and data relating to Prolonga; there is a lot of it and we need to know what’s there. With all the e-mails, memos, reports and correspondence generated in today’s business world, plaintiffs’ lawyers always seem to find something.”

The author is a former managing partner of a national plaintiffs’ mass tort and class action law firm.

edkoniecznyCounsel

Products Liability and Health Care Litigation Practice Group

[email protected]

* * *


employerservicesgroup

What’s New in employment Law?


nationalDefenseauthorizationactsignificantlyexpandsfmla

The first major revision to the Family and Medical Leave Act (FMLA) was signed into law January 28, 2008, effective immediately. The 2008 National Defense Authorization Act (NDAA) extends FMLA coverage to family members of those in the armed forces by providing two new categories of protected leave. 1. up to12weeks toattend toa“Qualifyingexigency”: The

NDAA allows eligible employees up to 12 weeks of FMLA leave per year “because of any qualifying exigency arising out of the fact that the spouse, or a son, daughter, or parent of the employee” is on or has been called to active duty in the armed forces in support of a “contingency operation.” Significantly, while the NDAA defines “contingency operation” (generally defined as a war, national emergency or other combat operation), it has not defined “qualifying exigency.” Rather, the NDAA calls on the Secretary of Labor to create regulations that define “qualifying exigency,” thereby leaving employers in the untenable position of determining what circumstances satisfy this condition to ensure their compliance with the Act.

2. up to26weeks tocare for an injuredservicemember: The NDAA permits up to 26 weeks of protected leave to an eligible employee who is the spouse, son, daughter, parent or next of kin of a covered service member, to care for an injured or ill ser-vice member. The NDAA defines a covered service member as

uscisissuesnewi-9formOn November 7, 2007, U.S. Citizenship and Immigration Services

(USCIS) announced the release of a revised Form I-9, Employment Eli-gibility Verification. An official notice about the new form was published in the Federal Register on November 26, 2007. The revised form contains changes to the list of acceptable documents for employment eligibility veri-fication. As of December 26, 2007, use of the new form is mandatory, and employers who fail to use the new form may be subject to fines and other penalties. The new Form I-9 can be identified by the revision date printed on the lower right corner of the form that reads “(Rev. 06/05/07)N.” The new form can be downloaded from the USCIS Web site at http://www.uscis.gov/files/form/i-9.pdf. A revised set of instructions, the M-274 “Handbook for Employers, Instructions for Completing the Form I-9,”

can be downloaded at http://www.uscis.gov/files/ nativedocuments/m-274.pdf.

— Anton Mertens [email protected]

one who “is undergoing medical treatment, recuperation, or therapy, is otherwise in outpatient status, or is otherwise on the temporary disability retired list, for a serious injury or ill-ness.” Notably, this provision expands coverage to include a service member’s “next of kin” (defined as nearest blood rela-tive). Moreover, this provision greatly expands the duration of available leave under the FMLA from 12 to 26 total weeks. An employee’s available leave is capped, however, at 26 weeks in a single year. In other words, an employee cannot take 26 weeks of leave to care for an injured service member and then expect an additional 12 weeks – even if he/she has an other-wise FMLA-qualifying circumstance – in the same year.

be aware of your responsibilities and rights. This expansion of the Family and Medical Leave Act will have a considerable impact on employers across the country. The Department of Labor has pledged to issue its regulations in an expeditious manner. Until then, employers are encouraged to comply with the provisions described in section 1 of this article, and are required to comply in good faith with the pro-visions described in section 2 of this article. Please also note that, although the Department of Labor issued proposed regu-lations to the FMLA on February 11, 2008, those proposals do not address the NDAA but simply state that the NDAA will be addressed in the yet-to-be-issued final regulations. If you have any questions regarding your responsibilities and rights under these and other provisions of the FMLA, consult any member of the SGR Employer Services Group.

— Colin Thakkar [email protected]

erisapreemptionandstatelawmandatesMany employers sponsor ERISA-governed group

health plans. In general, the provisions of these health plans are established by the employer and, through the opera-tion of ERISA, preempt state law mandates. This structure allows employers to maintain uniform, nationwide health plans for their employees in the United States.

However, in the past several months, a new trend has been developing. States such as Vermont and Mas-sachusetts, and municipalities such as San Francisco, have passed health care mandates that threaten the ERISA preemption concept mentioned above. For example, in Vermont, an employer must pay a tax for any employee who is not covered by the employer’s health plan. In Mas-sachusetts, employers must establish a cafeteria plan, allow employees (even certain part-time employees) to pay pre-tax for health coverage, and pay a certain amount of the employees’ health care cost either directly, or through the Commonwealth. Beginning in January of 2008, employ-ers with offices in San Francisco must make health care expenditures equal to a percentage of employee’s pay or be required to pay such amounts to the city. In December 2007, a federal district court ruled that San Francisco’s law was preempted by ERISA and could not be enforced. However, the Ninth Circuit Court of Appeals granted the City of San Francisco’s request for an expedited appeal and allowed the city to begin enforcement of the new law pending the outcome of this appeal.

Employers now have to consider carefully the poten-tial interplay between state and federal law on health plan issues.

— Laura Andrew [email protected]



changesinperformance-basedcompensationofpubliccompanies

Recent rulings issued by the Internal Revenue Service (IRS) could impact the performance-based compensation arrangements sponsored by public companies and their finan-cial reporting. The IRS announced a significant shift in its interpretation of Section 162(m) of the Internal Revenue Code relating to the performance-based compensation excep-tion to the $1 million limitation on compensation paid by publicly held companies in Private Letter Ruling 200804004 (published on January 25, 2008) and Revenue Ruling 2008-13 (published on February 21, 2008).

Analogizing to death, disability or a change in control, previous private letter rulings determined that performance-based payments made as a result of involuntary terminations by the employer without cause or by the executive for good reason would qualify as 162(m) performance-based compen-sation. This meant that the performance-based payment was still deductible under 162(m), even though the performance goal had not been met at the time of payment for these types of events (e.g., a bonus that is automatically paid upon termi-nation for good reason, regardless of actual performance).

According to the new guidance, however, this rationale is no longer being used by the IRS in analyzing perfor-mance-based compensation. The new guidance states that if performance-based pay could become due under a plan or

agreement upon an involuntary termination by the employer without cause or by the executive for good reason, and would be payable regardless of whether performance goals are met, then any pay from such plan or agreement does not qualify as 162(m) performance-based compensation and is not eli-gible for exclusion from the 162(m) $1 million compensation limit, regardless of whether the pay actually becomes payable as a result of a termination without cause or for good reason.

The IRS has provided a grandfathering provision protect-ing those arrangements whose performance period begins on or before January 1, 2009, and those employment con-tracts in effect on February 21, 2008. However, if any such arrangement or employment contract is amended, modified or renewed (even if such renewal is automatic, e.g., an ever-green provision), the grandfathering protection may be lost. In addition, any arrangement adopted after February 21, 2008 will need to comply with the new requirements.

The full effects of this change in IRS position remain to be seen, and we expect that further guidance may be issued. We will promptly provide updates to those clients on our Benefits Alert list if additional IRS guidance is issued. If you would like to receive more information, or be added to our Benefits Alert list, please contact our Employee Benefits Practice Group.

— Laura Andrew [email protected]


You are the owner of Widget Co., a small business that imports and distributes toy widgets intended for children ages 3 and under. You have seen the recent news coverage regarding the discovery of hazardous substances in consumer products, particularly toys. Last year, toy giant Mattel recalled millions of toys in just four weeks. These popular recalled toys – which included some mod-eled after “Sesame Street” characters and Nickelodeon’s “Dora the Explorer” – were removed from consumers’ homes and the mar-ketplace due to the excessive amounts of lead-based paint used on the toys. And lead-based paint is not the only concern for toy dis-tributors. Recently, horrified parents discovered that the popular toy known as Aqua Dots is coated with a chemical that, when metabo-lized, turned into GHB, better known as the “date rape drug.”

Amidst the warnings and recalls, how do you, a toy distribu-tor, make sure that your customers are safe? Further, how do you protect yourself from liability while continuing to run a profitable business? And if you must initiate a recall, at times a highly pub-licized event, what then happens to the recalled products?

The U.S. Consumer Product Safety Commission (CPSC) works to protect consumers from harm caused by consumer products. These consumer products may pose fire, electrical, chemical or mechanical hazards or cause injury to children. The CPSC determines whether a product poses a hazard to consumer safety and provides a mechanism for the voluntary recall of unsafe products. The CPSC derives its authority from the Federal Hazardous Substances Act (FHSA), which gives the CPSC authority to ban products containing haz-ardous substances where the issuance of warnings would be insufficient to protect consumers.

Many recent recalls have resulted from the presence of lead in children’s toys. According to the Centers for Disease Control and Prevention (CDC), lead exposure and ingestion produce a wide range of adverse health effects in children, including learning disabilities and behavioral problems, and can be fatal at high levels.

CPSC regulations ban toys and other articles coated with

When consumer products threaten public safety and health

timbumann,Josiekrauseandlorileonardo

Recallof anatomyA

SGRLAw.com Trust the Leaders 1�

lead-containing paint and intended for use by children. But while the regulations provide a fairly clear pathway for sellers of children’s toys coated with lead-based paint, sellers of products on the fringes of these regulations face harder recall decisions. Problems arise when a product is not a toy but is intended for use by children, or when a product contains lead from a source other than paint. The CPSC regulates these other potentially hazardous products on a case-by-case basis by examining the total amount of lead in the product, the bioavailability of the lead, the accessibility of the product to children, the age and foreseeable behavior of the children exposed to the product, the duration of exposure, and the marketing of the product. To date, the CPSC has identified particular products, such as vinyl mini-blinds and metal jewelry, as presenting a risk of lead poisoning to children from sources other than paint. Some of these products are not specifically intended for use by children, but are common household objects to which chil-dren are exposed. Sellers of such products must analyze the above-mentioned factors and past decisions of the CPSC to determine the level of risk posed by their products.

While recalls are not performed on CPSC-regulated prod-ucts alone, if a manufacturer/distributor/retailer is concerned about whether its product complies with CPSC regulations, the first step is to turn to the CPSC Web site for guidance.

Fearing that Widget Co. could be exposed to liability, you decide to test the toy widgets for the presence of lead-based paint. The tests come back positive for the presence and bioavailability of lead in the yellow paint coating the toy widgets. Given the test results and the widgets’ intended use (by children), Widget Co. stops selling the toy widgets and decides to voluntarily recall them from the marketplace.

When structuring a voluntary recall, a company must look to the CPSC regulations. The goal of a voluntary recall is to get as many products out of the marketplace as possible to minimize danger to the consumer as well as to minimize the company’s exposure to future lawsuits. When deciding how to structure a recall, the seller is not alone and can work with the CPSC to structure the recall. No two recalls are the same. The parameters of the recall depend on the severity of the hazard posed by the product.

The most drastic recalls reach through the entire distribution chain and into the consumer’s home, requiring the consumer to return the product to the manufacturer/distributor or to the merchant. This type of recall requires the seller to immediately

stop selling the product, contact retailers and advise them to stop selling the product, identify all customers or customer bases that potentially purchased the item, draft a press release, and set up a toll-free number for consumer questions. It also requires the seller to address the logistics of retrieving and dis-posing of a mass of unusable products from the marketplace.

Now that you have decided to recall the Widget Co. toy wid-gets from the marketplace, you must decide how Widget Co. will gather and dispose of the recalled widgets.

No matter what regulatory body (if any) has jurisdiction over a product’s configuration or formulation, recalled prod-ucts often become waste and due care must be paid to whether disposal of the waste may cause environmental risks.

Before implementing a recall plan, a seller should study the hazardous waste management regulations promulgated by the U.S. Environmental Protection Agency (EPA) pursu-ant to the Resource Conservation and Recovery Act (RCRA). The hazardous waste management regulations will inform the decisions a seller should make in structuring a recall.

natomyTo date, the CPSC has identified particular products, such as vinyl mini-blinds and metal jewelry, as presenting a risk of lead poisoning to children from sources other than paint. Some of these products are not specifically intended for use by children, but are common household objects to which children are exposed.

1� Trust the Leaders SGRLAw.com

The most drastic recalls reach through the entire distribution chain

and into the consumer’s home, requiring the consumer to return the product to the manufacturer/

distributor or to the merchant.

While federal law sets forth the framework, most states develop and manage their own hazardous waste programs. The goals of hazardous waste regulations are to reduce or eliminate the generation of hazardous waste. When a recall involves hundreds of thousands or more products containing lead-based paint or other hazardous substances, EPA’s goal is often in tension with CPSC’s goal, which is to pull as many products back from the marketplace as possible.

The testing a seller must perform to comply with the CPSC regulations differs from the testing a company will need to conduct to determine if the product is hazardous for envi-ronmental purposes. A product that is hazardous to consumers under CPSC regulations is not necessarily hazardous to the environment under EPA regulations. According to EPA, waste is hazardous if it exhibits any of the following characteristics: ignitability, corrosivity, reactivity or toxicity. For example, lead, a heavy metal, exhibits characteristics of toxicity, and thus appears on EPA’s list of common hazardous wastes.

Because the toy widgets contain lead, which is hazardous, Widget Co. must determine whether the toy widgets pose a threat to the environment. Widget Co. then must determine how to dis-pose of the recalled toy widgets.

The Toxicity Characteristic Leaching Procedure (TCLP) test is the industry standard test for toxicity. The TCLP test determines the mobility of the hazardous waste in an effort to simulate the amount of hazardous waste that will leach into the environment when the products are placed in a land-fill. A product failing the TCLP test is subject to regulation upon disposal.

After determining that waste is in fact hazardous and subject to regulation upon disposal, a seller must determine

the amount of waste generated. In the context of product recalls, following hazardous waste regulations requires a company to enter uncharted territory. The hazardous waste regulations originally were developed in the 1970s to deal with hazardous waste by-products of industrial manufactur-ing processes. Before that time, the dumping of hazardous waste by-products was largely unregulated. Because of their deep roots in industry, hazardous waste regulations speak in terms of hazardous waste “generation.” But an importer or distributor of products later characterized as hazardous waste does not fit cleanly into the traditional concept of a “genera-tor.” The question then becomes, at what point in the life cycle of a product that has been imported, distributed and later recalled is waste “generated”? The answer is unclear.

As applied to the recalling importer/distributor, generation likely occurs at the point of receipt of the recalled products. If a company generates less than 220 pounds of hazardous waste per month, it is exempt from regulation. A generator that generates between 220 and 2,200 pounds per month is a “small-quantity generator” subject to regulation. A “large-quantity generator,” also subject to regulation, generates more than 2,200 pounds per month. A large-quantity generator has to do a more thorough job of checking and inspecting the local waste storage facility before the hauler picks up the waste, as well as have a contingency plan in place for potential spill/release of the waste.

It should also be noted that an exemption exists for household waste, even if it would otherwise be considered hazardous. In other words, products already in the hands of consumers can be thrown away by the consumer because the products qualify for the household waste exclusion.

If subject to regulation, hazardous waste generators must meet specific testing, tracking and record-keeping requirements.


The generator must work with an approved waste hauler that hauls the waste to a permitted treatment/storage/disposal facil-ity (TSDF). The TSDF then chemically or physically treats the toxic waste before disposal. Additionally, the generator must fill out a one-page form to obtain a hazardous waste generator identification number and then use the number to fill out a manifest as a generator. The waste hauler will haul the waste and sign and take a copy of the manifest noting the disposal. The TSDF also signs and keeps a copy of the manifest and then mails the manifest back to the generator. This procedure is referred to as “cradle-to-grave tracking.”

Moreover, as hazardous waste generation is site specific, a hazardous waste generator cannot move waste around to “dilute” or “treat” it outside of the regulations. Thus, because “generation” likely occurs at the point of receipt of the recalled products, the recalling generator should consider where its recalled products will be received.

Widget Co. has two warehouses, one located in the Southeast and the other in the Midwest. Widget Co. also determines that, during the recall period, it will receive 40,000 widgets per month from consumers’ homes located throughout the United States. The widgets weigh 0.1 pounds each, so the total weight of recalled widgets equals 4,000 pounds. You decide that Widget Co. should structure the recall to avoid receiving high volumes of products at any one location. Instead of directing consumers to mail the widgets back to its Midwest warehouse only, Widget Co. decides to make the addresses of both of its warehouses available to consumers.

In the foregoing example, if Widget Co. receives half of its recalled widgets at its Southeastern warehouse and half at its Midwestern warehouse every month, Widget Co. will be a small-quantity hazardous waste generator at each of those locations, receiving 2,000 pounds of widgets at each loca-tion. Otherwise, if Widget Co. decided to receive recalled widgets at its Southeastern warehouse only, Widget Co. would receive 4,000 pounds of widgets per month at that warehouse and qualify as a large-quantity hazardous waste generator at that location. In smaller volume recalls, struc-turing a recall as in the foregoing example could make the difference between total exemption from, and mandatory compliance with, the hazardous waste regulations and the burdensome cost and paperwork associated with treatment and disposal.

Charles MacPherson, owner of Atlanta-based Peachtree Environmental, a hazardous waste engineering and consulting

firm, encourages creativity when dealing with the intersec-tion between consumer products and hazardous waste laws. A consumer product may still have value even though not fit for its intended use. MacPherson encourages companies with consumer products waste to look for the “reclamation value” of the product. For example, companies can derive monetary value from recycling the materials or components within a product. Most importantly, MacPherson urges these compa-nies to entertain opinions about environmental stewardship in all sectors of the business.

planningaheadToday’s consumers are sophisticated enough to know that

a recall is not necessarily a “bad” thing, nor the seller of a recalled product a “bad” company. Sellers should be aware that recalling a product does not just mean complying with CPSC guidelines. If a product is recalled due to some problem with its formulation, or due to contamination, as opposed to a hazard caused by its configuration, sellers should look at the potential for environmental pollution issues to arise in the disposal process and account for compliance with envi-ronmental regulations on the front end when structuring a voluntary recall.

The authors wish to thank SGR attorney Phillip Hoover for his contribution to this article.

lorileonardoAssociate

Litigation Practice Group

[email protected]

timbumannPartner

Litigation Practice Group

[email protected]

JosiekrauseAssociate

Environmental Practice Group

[email protected]

Georgia lost its upper hand in the tri-state water wars in February when a federal court of appeals in Washington, D.C., placed the state on an equal playing field with Florida and Alabama.

The court invalidated a 2003 agreement between Georgia and the U.S. Army Corps of Engineers, which provided that 25 percent of the water in Lake Lanier would be managed as water supply for the metro Atlanta area, ruling that such a realignment of the purposes of Lake Lanier literally requires an Act of Congress.

For nearly two decades, Georgia, Alabama and Florida have been feuding over water rights in two river basins: the Apalachicola-Chattahoochee-Flint (ACF) and the Alabama-Coosa-Tallapoosa (ACT) river basins. Georgia wants to have enough water to allow the state to continue its exponential growth, while Alabama and Florida – and other downstream users in Georgia – want to keep enough water flowing to ensure their own well-being.

Critics in all three states blame Georgia for not adequately planning for the impact of the state’s growth on water issues. It is apparent that Georgia has not tied growth and develop-ment to its water resources. Instead, the state seemed content to rely on the water within Lake Lanier – water which is now less obtainable – to supply the five million people in metro Atlanta, projected to grow to six or seven million by 2030.

“A volatile time is before us,” said Georgia’s Director of the Environmental Protection Division Carol Couch during a recent speech.

Meanwhile, under a law passed by the Georgia General Assembly in 2004, the State Water Council, chaired by Dr. Couch, had been preparing Georgia’s first State Water Plan. The process had good beginnings, involving stakeholders and inviting comments from around the state. One of the principal benefits of the initial drafts of the Plan was that for the first time it would require planning according to where the water comes from – that is, plans would be prepared for each of Georgia’s river basins. However, late in 2007, the Plan was revised to require planning according to politically drawn existing economic districts, which have little to do with river basins. The Plan was presented to the General Assem-bly as required by law for approval, and the legislature hastily approved the Plan on January 14, 2008.

The Plan is now touted by state officials as an exemplary step by Georgia to do something its neighbors have not done – adopt a statewide water plan. But does the Plan accomplish actual results to deal with the water crisis? The answer is that the Plan is really no more than a plan to plan: it calls for three

Does the State Water Plan Hold Water?

steveo’DayJessicaleereece

APlantoHavePlana



years of assessments to measure Georgia’s water supply and demand, and creates regional water planning districts and councils that will draft water plans for each area.

A few weeks later, Georgia legislators adopted resolutions to further address the water situation. Their solution? To move the Georgia state line slightly north. The lawmakers argue that an 1818 survey erroneously placed the border 1.1 miles far-ther south than what Congress had established. Why bother? Because the new line would place the Georgia state line directly in a bend in the Tennessee River, allowing the state to suck bil-lions of gallons of water out of the river for use in Atlanta.

Unsurprisingly, Tennessee was not amused.But neither are Georgians. The water situation is no laugh-

ing matter and residents are facing the most severe drought in decades. Will the Statewide Water Plan be enough to support sustainable urban growth and a fair distribution of our most vital resource?

Maybe … but not until much work is done. Unfortu-nately, Georgia missed a golden opportunity to include in the State Plan provisions that would have had an immedi-ate impact on conservation of our scarce water resources, and therefore on allowing wiser use of those resources.

Georgia Comprehensive Statewide Water Management Plan

2

Forecast Needs for Water & Assimilative

Capacity

1

Water Resources Assessment and

Monitoring

3Identify

Management Practices to

Meet Needs & Protect Water

Resources4

Implement & Evaluate

Management Practices

Current Statutes &

Rules

Statewide Water Policies

Water Quality Management

Water Quantity Management

Source: Georgia Comprehensive Statewide Water Management Plan

roomforimprovementIn order to be truly effective, the state must take a pro-

active stance and require certain minimum standards and requirements of its residents.

The current water plan is essentially a plan to have a plan, not an actual solution to the crisis. It is littered with color-ful language and lofty aspirations. And while the document encourages the state to analyze current water use and formu-late strategies, it does not contain any specific, enforceable requirements to address current problems. Further, its goals will not be implemented for years – and that presupposes the plan is fully funded by the legislature.

Perhaps the most troublesome aspect of the Plan is that it places the bulk of the responsibility for water management on 11 regional water planning districts. Yet, these districts are drawn principally according to “service areas” established by the state Department of Community Affairs, only loosely based on actual watersheds.

Drawing the boundaries based on political lines creates nothing short of a recipe for disaster. In many cases, several water planning districts will be competing for the same water. Instead of establishing planning according to the natural dis-tribution of water supplies – river basins – the Plan again subjects water resource planning to political and economic considerations. Unless a more cooperative attitude toward water sharing arises, the Plan will result in numerous mini “water wars,” increasing political controversy rather than solv-ing water problems. The better policy would be to organize the districts based completely on river basins. Such a plan would reduce conflicts and ensure a common goal among the members of each planning council.

By far the largest water planning district is the Metro-politan North Georgia Water Planning District. But, that district already has a plan, and its 16-county metropolitan Atlanta region is exempt from the requirements of the State Plan. Thus, planning districts that must draw water from the same bodies utilized in the metro area will be faced with a fait accompli – the already existing Metro Water Plan, which controls either the headwaters or an impounded lake for four of the five rivers that flow within its counties.

Also curious, the Metro District is the only district the State Water Plan permits to grow: if a county shares a bound-ary with a county currently within the district, that county can join the Metro Water District. This could lead to the Metro District taking control of additional rivers.


Georgia missed a golden opportunity to include in the State Plan provisions that would have had an immediate impact on conservation of our scarce water resources.

Water Planning Regions

Source: Georgia Comprehensive Statewide Water Management Plan



addressingwaterconservationAdditionally, actual water conservation measures are

absent from the State Water Plan. The Plan recognizes that water reuse and water conservation are “effective and efficient” methods and encourages the state Environmental Protection Division to take water conservation measures into consider-ation in its permitting decisions. There is no reason for the State Water Plan to ignore the urgent need to more efficiently use water now. That omission postpones for many years the proven benefits of conservation measures that range from sim-ple and inexpensive to more elaborate and costly.

In 2006, an independent study of the Metro District water plan was conducted by The Pacific Institute, a leading center for assessing water conservation and efficiency potential in

the country. The study found that even the Metro District plan, which requires the most far-reaching water conservation measures in the state, leaves significant untapped potential for reducing water use by not incorporating methods proven effective in other areas of the country. The Institute found that if the Atlanta Plan adopted all the available conservation efficiency measures, then recycling and reuse efforts could be expanded to meet future demand and reduce the need to develop new supply sources. The study found that adoption of 19 water conservation measures having positive cost-benefit results (i.e., benefits exceed the costs) – 10 measures included in the Metro District plan and nine not included in the Plan – would reduce metro Atlanta water demand in 2030 by an additional 132 million gallons a day, almost 20 percent of cur-rent water demand. The conservation measures include such steps as conservation pricing (increased rates with increased usage), retrofits of older buildings with water-saving toilets and appliances, and rain-sensor shutoffs for irrigation systems, all of which were to be implemented under the Metro District Plan. The State Water Plan ignored this “low-hanging fruit.” That omission postpones for years any benefit the Water Plan will have for the state’s water resources.

In Georgia, there are more than 70,000 miles of streams, 400,000 acres of lakes and 4,500,000 acres of freshwater wet-lands. Water, while not limitless, is readily available. If the State Water Plan were modified to include adequate imple-mentation of cost-effective conservation and reuse measures, the state could then legitimately make the claim that it is correcting current wasteful water practices. Real action then would likely lead to our neighbors being more amenable to a negotiated solution to the 20-year-old Water War.

An abbreviated version of this article appeared in the Atlanta Business Chronicle on March 28, 2008.

JessicaleereeceAssociate

Sustainability Practice Group

[email protected]

steveo’DayPartner

Sustainability Practice Group

[email protected]


Some are referring to building information modeling, or “BIM,” as “revolutionary” to the construction industry. This may be hype. The technology that Building Information Modeling relies upon is not

new, as it has been used in the manufacturing industry for product design since the 1980s. BIM will, however, precipitate meaningful change in the construction industry as it becomes more commonly used as a method of project delivery.

This article will introduce in simple terms the BIM tech-nology, highlight the key human ingredient to the successful use of BIM, point out some of its advantages while also not-ing some obstacles in practice to its implementation, and provide some general ideas on how those in the construction

industry can better protect themselves from assuming greater risk through their participation in projects that use a building information modeling process.

what is BIM?When using BIM, project participants – owners, develop-

ers, designers, contractors and subcontractors – change the way they work with one another, theoretically making a shift from working sequentially in their own core competencies to a more collaborative approach on the front end of a project. The promise of BIM is alluring, but it is important not to permit its allure to distract from the fact that in many ways BIM involves a continuation of current industry practices, the risks of which

Building Information Modeling:what’s Ahead for Contractors

markdest.aubinscottcahalan


the parties already understand and deal with every day. Cer-tainly, BIM enhances the collaborative effort. Over the past 10 to 15 years, however, there has already been a strong trend toward greater collaboration among the project participants, as contractors and subcontractors have increasingly provided preconstruction services, such as constructability reviews, bud-geting advice and value engineering, to aid in the design process of a project. Unless a firm already possesses more than one competency, such as design-build, greater collaboration during the design phase, whether through BIM or preconstruction services, can result in an unintentional shifting of the tradi-tional risk allocations among owners, developers, designers, contractors and subcontractors, despite efforts to stay within their core competencies.

If the traditional risk allocations are maintained, the col-laborative effort that goes into BIM will allow the project stakeholders to make better decisions during the design of the project that will affect both the time and cost of construc-tion, and the long-term use of the project, including financial performance, maintenance requirements, energy efficiency, sustainability and operations decisions. Both public and pri-vate owners have demanded that project participants use BIM, but the ultimate success of BIM will depend greatly upon whether the project participants buy into the collaborative effort required to make BIM function to its full potential.

The Technology It is worth taking a quick look at the technology underlying

BIM. Compare building information modeling to the current method of building, which is often termed the “paper centric” approach to construction. Conventional design and construc-tion typically rely on drawings and specifications, whether in hard copy or electronic form, to depict design intent and the construction materials, methods and management needed to build projects. There are, however, major limitations to using drawings and specifications to depict three-dimensional buildings. Chuck Eastman, Director of the AEC Integration Laboratory at the Georgia Institute of Technology, has suc-cinctly noted two of those limitations. First, using drawings requires multiple views to depict a three-dimensional build-ing in adequate detail for construction, making the drawings redundant and thus susceptible to errors. Second, these drawings, commonly known as contract documents, are not interpretable by computers.

To understand building information modeling, focus on the word “information.” The BIM technology has at its core a digital database that can be used to create a three-dimensional model of the building, but the real power of BIM’s technol-ogy lies in its ability to capture massive amounts of data about a building in one location accessible to the various project participants simultaneously. In addition, the technology auto-matically coordinates changes made to one component of the building model that affect separate, but related, components, which allows for an iterative analysis of design changes.

Undoubtedly, however, owners have become enamored with BIM technology because it permits information about the building to be captured and manipulated prior to the start of construction. The ability to model a building in 3-D, which is linked to a content-rich database containing infor-mation about cost, schedule, materials, spatial relationships, furnishings, procurement, work sequence, site logistics and other types of information, all of which can be tweaked and reconfigured in a time- and cost-efficient manner, makes BIM irresistible to owners. Owners often believe that these same functional capabilities benefit the design and contracting par-ties to a project as well, which is in some ways true. Before construction starts, the model can be used for clash detection within the design, substitution of materials and equipment, value engineering, construction detailing, estimate checking, and efficient execution and the coordination of design and construction. It bears repeating: all of this can happen before the first bucket of dirt has been turned on the site.


Challenges Presented by BIM Those technological advantages, by themselves, certainly

sound “revolutionary.” As a means of project delivery, and not just a technology tool, the key ingredient for successful BIM implementation is collaboration.1

But collapsing the fragmented process of design, estimat-ing, scheduling, bid packaging, buyout, shop drawing review and revision, procurement and execution into the design phase of the project requires that architects, engineers, con-struction managers, contractors and subcontractors all come together in a collaborative effort as never before.

These various parties have always been well advised to play it safe and do only that required by their particular scope. Designers are told to avoid specifying the means and methods of construction, and contractors are told to avoid taking on design responsibilities. Yet to have a successful use of BIM, these same parties now have to join hands, trust each other and collaborate, often in a condensed period of time. It has been said of BIM that its successful implementa-tion will be 10 percent technology and 90 percent sociology. The balance here becomes very delicate: how are these firms with different skills going to work together without taking the risk of being held liable for the work, or the specialty, of another party?

Advantages of BIM for Project Owners

Owners reap numerous benefits from the BIM process, including, among others, the following:

• creation of numerous design alternatives, instantly showing the effect on cost, aesthetics and building life-cycle issues in a way that would normally be prohibited by time and cost constraints under the paper-centric approach to reviewing design intent.

• reduction in the time and cost for preparing budgets, schedule, design coordination and submittals.

• reduction of errors, inconsistencies and coordination problems with design for which the owner is typically held responsible.

• potential for highlighting design omission.• facilitating the retrieval of accurate information by field-

level personnel.• providing owner’s facilities personnel and subsequent

contractor firms with accurate, readily accessible as-built data for more cost-efficient maintenance and less costly building repairs and upgrades.

Real-world Obstacles Again, the collaborative effort will be required primarily of

the design and construction firms; and while that is a worth-while goal, the business realities behind the conventional methods of delivering projects will not change overnight, pre-senting BIM proponents with numerous challenges:

• Contractors, and their subcontractors, will want owners and designers to warrant the accuracy of the BIM design, or “product”; owners and designers will be reluctant to take responsibility for those results, particularly to the extent the results were achieved through a collaborative process.

• Contractors, and their subcontractors, may not buy a sched-ule that is generated by the information found in a building information model, rather than by field-coordinating the available flow of labor, equipment and materials.

• Contractors, and their subcontractors, could be left with a false sense of security as to lead times, estimates and the absence of conflicts without manually checking assump-tions contained in the building information model.

• Contractors, and their subcontractors, may not provide accurate proprietary information, including estimated production rates and actual costs, out of a real or per-ceived concern that this information may be used to reduce their profit margins on changes or contingencies or to create unfair competition.


• Owners and architects may include in building informa-tion models assumptions regarding means, methods and sequencing of the work that are different from what is actually used by the field personnel on the project.

• Many contracting and subcontracting firms do not have the massive reserves of data necessary to provide reliable infor-mation for the building information model on a particular project during the design phase of the project, particularly as that information relates to estimating and productivity.

Lead, Follow or Get Out of the wayDespite these risks and pitfalls, owners are pushing ahead,

requiring that their designers and contractors be BIM capable, even if the added risks and unknowns of using BIM have not been fully addressed in their contracts. In fact, the U.S. Army Corps of Engineers has publicly stated that it is aware that BIM forces the parties into uncharted territory with respect to com-pensation, risk allocation, etc., but nevertheless it has begun to adopt BIM solutions as requirements on certain projects. The largest building owner in the country, the General Ser-vices Administration, mandated effective for fiscal 2007 that new buildings designed through its Public Building Service use building information modeling in the design stage.2

Keep in mind, however, that with few exceptions, the key ingredient for successful BIM solutions – “collaboration” –

leaves a lot of room for shifting the blame in the event that a BIM project does not go as planned.

In particular, the project participants need to be sure that the contracts they sign spell out clearly the difference between their role in the building information process and those parts of the design and construction process for which they accept responsibility. For example, contractors may agree to provide recommendations and information in connection with the building information model in their capacity as construction professionals, and not as design professionals, disclaiming any responsibility for design adequacy, completeness or coordination. Contractors may also agree to load pricing data in the building information model with the disclaimer that the contractor does not warrant the accuracy of the BIM-generated prices, and that the actual cost of construction will be determined by competi-tive bids. Contractors may also include contingencies in their pricing to account for uncertainty in the BIM process.

Owners have a lot of reasons to push the implementation of BIM. It makes buildings better-performing assets. Others in the construction industry may lose their enthusiasm with BIM, however, if it results in their unfairly accepting liability for the results of the BIM. BIM is a not just new technol-ogy, but in many respects a new method of project delivery, even though some of the attributes of BIM have been used for years. While the use of BIM should be encouraged, it should also be approached with thoughtfulness and with care given to avoid non-traditional allocations of risk.

endnotes1 Although other methods of integrated delivery, such as design-build, have been successfully

implemented on numerous different types of projects, only a BIM approach will cause a type of “collapse” in the fragmentation of design development and construction.

2 Michael Hardy, GSA Mandates Building Information Modeling, Federal Computer Week, Nov. 20, 2006, at 45.

scottcahalanPartner

Construction Practice Group

[email protected]

markdest.aubinPartner

Construction Practice Group

[email protected]


legal BriefsFrom our offices

Denwebb,marcieernstandchadtorri of SGR’s Land Use and Litigation Practice Group co-authored the annual survey of Zoning and Land Use Law in Georgia for the recently pub-lished Mercer Law Review: Annual Survey of Georgia Law, June 1, 2006-May 31, 2007, 59 Mercer L. Rev., No. 1 (Fall 2007).

Joyceklemmer has been selected as a member of the Rochester Institute of Technology’s President’s Roundtable. Roundtable members provide the school’s President with insight and coun-sel on a number of issues affecting RIT such as strategic research and sustainability initiatives, student relations and alumni programming. The roundtable’s other 22 members include senior executives from Fortune 100 companies such as East-man Kodak, Xerox and Blockbuster. Joyce is an alumna of RIT, having received her B.S., with honors, from RIT in 1978.

Davidburge has been elected to the board of directors of the Atlanta Area Council, Boy Scouts of America, the governing body for the Boy Scouts in the metropolitan Atlanta area.

scottmanning recently co-authored an articled entitled “Mur-phy v. IRS: Taxation of Personal Injury Awards,” which was published in the Winter 2008 edition of The Practical Tax Law-yer. The article examines the distinction between the taxation of damages awarded for personal physical injuries and those awarded for non-physical injuries such as emotional distress.

timbumann has been appointed a municipal court judge by the City Council of Monticello, Ga. Tim’s duties in this posi-tion will include signing warrants and conducting hearings and bench trials.

Daily Report employment roundtable participants (clockwise from top left): Valencia Porter, Vice President and Employment Counsel, Waffle House Inc.; SGR’s Matt Clarke and Lisa Ballentine; Loral Blinde, Vice President, Human Resources, AirTran Airways Inc.; and Janet Taylor, Vice President and General Counsel, Havertys Furniture Companies Inc. Photo courtesy of the Daily Report.

The Daily Report, which cov-ers legal issues in the Atlanta area, recently included a special supple-ment featuring an employment law roundtable sponsored by SGR. Pan-elists spoke about off-duty conduct, religion in the workplace and sec-ond-generation sexual harassment. The roundtable moderator was SGR’s matt clarke, and panelists included SGR’s lisa ballentine, Loral Blinde of AirTran Airways, Valencia Porter of Waffle House and Janet Taylor of Havertys.


Following a 3-1/2-week trial in Jacksonville, steveo’Day and Davebrecher recently capped a 4-1/2-year legal battle with a jury verdict of $1.967 million in a mold contamination case. SGR’s client owns a valuable beachfront home in Ponte Vedra Beach, Fla. The jury agreed with SGR’s argument that the plaintiffs’ home was damaged by the defendants’ construction activities, and that the damage caused moisture intrusion and rampant toxic mold growth, which forced the plaintiffs’ fam-ily from their home for more than five years. Also assisting in the case were andythompson and Jessicaleereece, and paralegals gailthomas and Donnasmith.

Before joining SGR last fall, Drewslone served as a volunteer in Cape Town, South Africa, with Think Twice, an HIV/AIDS education organization that promotes prevention education

through improving self-esteem. At home in Atlanta, Drew has focused her community service efforts on the women of Atlanta by volunteering with local women’s health organiza-tions and completing the Women on Board course sponsored by the Atlanta Women’s Foundation.

suzannahsundby has been elected to the board of directors of Women in Bio, and serves on its Fundraising Committee. Women in Bio is an organization of more than 500 professionals committed to fostering and encouraging entrepreneurship and career development of women active in the life science industry.

After two trips to the Supreme Court of Georgia, a team of attorneys in SGR’s Environment and Natural Resources Law Practice Group, headed by steveo’Day, prevailed in their rep-resentation of Murray County, Ga., its county commissioner

Jim monacell has been named a Fellow of the Ameri-can College of Bond Counsel. The College was formed in 1995 to recognize lawyers who have established repu-tations among their peers for their skill, experience and high standards of professional and ethical conduct in the practice of bond law. Nominees for membership must demonstrate substantial experience in bond counsel prac-tice and scholarship.

For the second consecutive year, kathyZickert, Chair of the SGR Land Use and Litigation Practice Group, co-chaired the two-day “Land Use Growth in Georgia” seminar sponsored by California-based Law Seminars International. She also presented at the seminar on trends in Georgia case law and the “ins and outs” of permitting. Kathy will be chairing other similar seminars around the state for the balance of the year.

Beginning in October 2006, SGR client AirTran Airways sought to purchase Midwest Air Group.

Private offers were rejected by the Mid-west board, and AirTran decided to take its case to the Midwest shareholders by way of a hostile tender offer and, even-tually, a proxy fight. However, Midwest was incorporated in Wisconsin, and obtaining the list of shareholders was difficult under Wisconsin law.

After surveying its options, AirTran settled on a novel approach under New York law. Most state statutes limit requests for a shareholder list to corpora-tions incorporated in the state.

But in New York, a New York resident shareholder can obtain the shareholder list of any foreign corpora-tion doing business in New York.

There were two initial problems: first, AirTran was not a New York resident; and second, AirTran did not own any shares of Midwest. AirTran solved the residency problem by form-ing a New York company, AirTran NY,

LLC, which promptly bought 100 shares of Midwest stock. AirTran NY then demanded a shareholder list. After Midwest refused the demand, an expe-dited hearing was held. The trial court declined to enforce AirTran NY’s statu-tory right to a shareholder list, holding that Midwest Holdings, the parent of Midwest Airlines, was not doing busi-ness in New York of a kind and character required to be subject to the shareholder list statute. This was a narrow reading of the statute and a novel question of law.

AirTran appealed, arguing a liberal construction of the statute. The case turned on the construction of the term “doing business.” The trial court had held that as Midwest was not required to register in New York as an out-of-state corporation, it was not subject to the statute. AirTran argued that the statute required only minimal contacts with New York, just enough to satisfy the due process clause of the United States Constitution.

The case was argued to the First

Department, Appellate Division of the New York Supreme Court, one of the intermediate appeals courts, which ruled unanimously for AirTran in an unusu-ally detailed published opinion. The decision’s reasoning adopted AirTran’s position, and the court said that AirTran was entitled to the shareholder list.

Although one well-known New York mergers and acquisitions lawyer called the decision “short-sighted,” AirTran’s General Counsel, Richard Magurno, was more optimistic, saying that the opinion “clarifies the law for those who come after us.” The prec-edent established will facilitate future hostile corporate auctions by enabling the suitors to communicate more easily with the target’s shareholders.

The opinion in the case, AirTran NY, LLC v. Midwest Air Group, Inc., 46 A.D.3d 208, 844 N.Y.S.2d 233 (1st Dept. 2007) can be found at http://www.nycourts.gov/reporter/3dseries/2007/2007_08021.htm.

— John Despriet


Case in Point: AirTran’s Proxy Fight

and manager in a complex dispute over a 398-acre solid waste landfill proposed to be located in northwestern Georgia. [See Trust The Leaders, Issue 17, p. 33] The high court affirmed an order of the Murray County Superior Court finding that the county properly denied verification that the proposed land-fill was consistent with the county’s solid waste management plan, thus ending the efforts to build the landfill in Murray County. The case represents a significant change in the way

courts have dealt with the determination by a county as to whether a proposed landfill is consistent with the county’s solid waste plan, expanding the factors that a county may con-sider in making the consistency determination to include any factor appropriately considered in preparing the solid waste plan. The case reestablishes significant powers of counties to exercise planning and regulatory authority over the handling and disposal of solid waste within their borders.


John and Jeanette Murphy, of Morrow, Ga., have adopted 23 “special needs” children over the years, 17 of whom still reside with them. These children, currently ranging in

age from 6 to 39, are challenged by conditions such as Down syndrome, cerebral palsy, mental retardation, brain damage and heart defects.

SGR has been retained on a pro bono basis to assist the Mur-phy family with several important planning initiatives, including estate-planning documents that will provide for the lifetime care of those of their 17 special needs children who survive them. SGR attorneys will draft testamentary and inter vivos special needs trusts that will enable these children to maintain their ongoing eligibility for Medicaid, SSI and other means-tested government programs for which they are eligible as a result of their significant disabling conditions. SGR also will implement a workable guardianship process to assure that designated per-sons have legal authority to make health care decisions for the children, both after the death of John and Jeannette and during their lifetime if they should become incapacitated and unable to continue to care for their disabled children.

Secondly, the Atlanta-based Keenan’s Kids Foundation has undertaken a fundraising program during the past several years

to help finance a new dormitory-style home for the Murphys that will better accommodate all of their children, both as minors and as the older children attempt to develop indepen-dent living skills. SGR has been asked to determine the most practical mechanism to secure the independent oversight of the construction of the new home with the donated funds, as well as to make recommendations for the ultimate ownership and management of the home once completed, in a manner that will enable the special needs children to maintain their eligibility for means-tested benefits.

Finally, SGR has assembled a team of other allied pro-fessionals to supplement our legal work, including Robert Hammond with Northwestern Mutual and the life care plan-ners of Crawford Care Management, all of whom are working on a pro bono or reduced-fee basis to help secure the future of the Murphy children.

The Murphy family was prominently featured in the November 2006 issue of Points North, as well as the August 22, 2005 edition of People magazine. The Discovery Health Chan-nel produced a documentary on the Murphy family several years ago, and local television stations continue to highlight the ongoing challenges and successes of the Murphy family.

Big Hearts, Big Home

kristenlewis

2007 Christmas photograph of the Murphy family. Jeanette and John stand at the far right in the back row.


client Profile

Have Rod,Will Travel

FishQuest!

Scott Swanson wakes up each morning with a dilemma most executives can only dream about: where to go fish-ing? The fantasy job is managing director of FishQuest,

a specialized tour company based in Hiawassee, Ga.From this sleepy little mountain town, Swanson directs

his company’s fishing adventures around the world. Any given day may find customers casting lines in the Amazon, Alaska, Africa, Australia or any one of 50 other international fishing destinations.

In 2008, the company expects to handle about 1,000 clients – at least half of which will head south to the Amazon, the company’s niche destination. With most trips starting around $3,000, it’s no surprise FishQuest clients are gener-ally well heeled. Many are aging baby boomers, who, having acquired homes, cars, boats and other material assets, are now spending money on quality travel experiences.

Customers include a host of celebrities, professional ath-letes and corporate leaders. But most are just regular guys and gals who are just hooked on fishing.

The company has developed a series of trips designed specifically for couples. In October, FishQuest is traveling to southern Africa on a 14-day fishing and game-viewing safari. Its glossy “Lions Roar, Tigerfish Soar” brochure depicts a high-end trip with upscale accommodations and plenty of activities for anglers and non-anglers alike.

As a booking agent, FishQuest neither owns nor operates the lodges and fishing charters it represents. This arrange-ment allows it to better serve its customers by being able to shift programs to new destinations and better operations. The focus on front-end service pays off in the form of repeat book-ings and word-of-mouth referrals. Another day at the office: landing a peacock bass in the Amazon.

�0 Trust the Leaders SGRLAw.com

SGR handles trademark and related work for FishQuest, which came to SGR’s Kate Rowe (an avid fly fisherman) for help when other companies tried to trade on FishQuest’s good name and Web exposure.

In Hiawassee, Swanson’s office routine includes staying in touch with tour operators, developing marketing projects, and consulting with clients about how to select and prepare for upcoming trips. It’s here that his first-hand overseas expe-rience pays off.

Swanson spends up to 15 weeks a year monitoring cur-rent fishing destinations – and scouting new ones. While not the largest fishing tour operator, FishQuest has the most extensive destination portfolio. The company has strategic partnerships with top-tier lodges and other fishing operations spread across six continents. FishQuest leans toward exotic destinations that offer a flavor of adventure. Mongolia, Papua New Guinea, Congo and Thailand are just a sampling of the company’s wilder adventures.

Swanson’s own passion for travel has led him to 52 coun-tries. While many customers travel to fish, Swanson admittedly

fishes to travel. Over the past decade he’s packed a rod to all seven continents. (He admits to getting “skunked” during a short trip to Antarctica.)

He’s particularly intrigued by the unique cultures along the way, such as Yanomami Indians in Venezuela or Long-Neck tribeswomen in Thailand. In addition to his native English, Swanson speaks fluent Spanish, passable Portuguese and is learning Thai.

Swanson cautions that, like many businesses, there’s a less-glamorous side of the fishing-travel coin. “Airline strikes, political strife and unpredictable weather account for many of the gray hairs on my head,” he notes. And no one was waiting in line for his job the day after 9/11, when most travel busi-ness came to a screeching halt.

Swanson’s supportive wife, Lynn, is a high-school Spanish teacher. She occasionally travels with him, along with their sons Eric, 23, and James, 18.

How does one wind up peddling fishing trips? Swanson’s career path has meandered like a winding river. He grew up in Minnesota, land of 10,000 lakes, where he fished often at his grandfather’s cabin. The childhood pastime went on hiatus as he pursued a journalism path to South America in 1981, which eventually landed him an executive post at the Venezu-elan-American Chamber of Commerce in Caracas.

Five years later he set off on his own to found Lost World Adventures, an ecotourism and special-interest travel firm devoted to South America. An Amazon trip rekindled his pas-sion for fishing, and he parlayed his excitement into a separate angling division, which later served as the spin-off springboard for FishQuest in 1996.

Co-founder and strategic partner Gary Schumacher brought to the table experience from a career transforming World Travel Partners into one of America’s largest corporate travel agencies. He also developed TerraQuest, a ground-breaking Internet project, which linked home-based “virtual adventurers” with live expeditions around the globe via the Web. A resident of Jacksonville, Fla., Schumacher is an avid fly and light-tackle angler. He is a longstanding member of Inter-national Game Fish Association and The Billfish Foundation.

The new company’s mission is to provide a “one-stop shop” of quality sportfishing adventures around the world, developing lifelong relationships with its clients while respect-ing the people and places they visit.

Gary maintains that the fishing tour business is essentially about relationships: family bonding, camaraderie among pals, cementing business ties and cross-cultural exchange. Indeed,

Commuting to work in Thailand.

SGRLAw.com Trust the Leaders �1

after a week in the wilderness, FishQuest staff and clients often wind up becoming close friends.

“We are not just selling trips, we’re creating memories,” says Schumacher. “The return on investment in those is greater than any stock, CD or real estate portfolio.”

Today, the FishQuest team combines over 100 years of professional angling travel experience, and a worldwide net-work of carefully selected lodges, guides and deepwater fleets.

Cindy Henry is operations manager, handling reservations, travel logistics and other administrative functions. She joined the team in 2004, relocating from Atlanta, where she was an accounting manager in the bottled water industry for 16 years. International Sales Director Judith Weible was born in England and spent nine years traveling throughout the world working on private yachts. Longtime Florida fishing guide Alan Zaremba leads many of FishQuest’s Amazon trips.

Since first opening shop in 1986, Swanson has seen major technological improvements with the advent of cell phones and the Internet. It doesn’t seem that long ago that he was hauling fax machines down to South America just to have reliable communications with his local contacts. These days, staffers will e-mail clients and outfitters in a dozen different countries all before lunch. The company’s main Web site, FishQuest.com, and sister sites (such as peacock-bass.com and canada-pike.com) work 24-7 to promote its freshwater and saltwater trips around the world.

FishQuest has hosted a number of prime-time televised fish-ing shows, most recently Trevor Gowdy’s “Quest for the One” program on the Versus sports network. Last July, Swanson led

a National Geographic TV crew into Brazil’s jungles to shoot a show called “Monster Fish of the Amazon.”

Several years ago, the company launched a merchandise division, QuesTackle, which outfits anglers with equipment, lures, clothing and other merchandise. While providing value-added service to FishQuest’s own travel clients, the company has also found the online tackle shop to be great for prospect-ing new travel customers.

FishQuest also has devoted energies and experience to several environmental and community projects. It was a consultant to the Georgia Aquarium on travel logistics for col-lecting exotic fish from Asia and South America. Its Mission Fishin’ project provides educational, medical and other needs to remote Amazon Indian villages.

More recently, FishQuest has teamed up with the National Geographic Society to help conserve the world’s largest freshwa-ter fish species. The Megafish Project favors catch-and-release sportfishing as a means of reducing commercial fishing pres-sure on these unique creatures, while helping local economies.

Swanson’s personal “megafish” highlights include landing an 80-pound Goliath tigerfish in the Congo and a 104-pound redtail catfish in Suriname. Last December in Venezuela, he landed a world-record peacock bass.

At 51, Swanson is just starting to look at the concept of retirement – and is scratching his head. He feels he’s already been living the golden years for the past two decades. But when he’s finally ready to escape day-to-day office chores, he hopes to pass the rod to a younger protégé, while organizing his extensive photo archives and returning to his journalistic roots to write a few books.

Don’t expect his passport to get dusty though – he’s still got a few special places left on his worldwide “bucket list.”

FishQuest!Quest! Global Angling Adventures, LLCwww.fishquest.com, (888) 891-3474

While many customers travel to fish, Swanson admittedly fishes to travel. Over the past decade he’s packed a rod to all seven continents.

A Mission Fishin’ dentist examines a patient in the Amazon.

�2 Trust the Leaders SGRLAw.com

The Finish line

My name is Bobby Schwartz. Since 1979, I have been a lawyer in the Corporate Department of Smith, Gambrell & Russell.

Now I am a rock star.

Let me explain. Two and a half years ago I started playing the guitar. Actually, it would be more accurate to say that I restarted playing the guitar, having initially played that instru-ment from the time I was 10 years old until I graduated from high school. In those days I played the guitar as a member of various garage bands. As many of you may recall or have heard depending upon your age, the 1960s was an era in which rock ‘n’ roll music increased in nationwide prominence principally as a result of the so-called British invasion bands starting with The Beatles. As a high school student keenly interested in enhancing my social life, I was very motivated to be a member of a band and perform rock ‘n’ roll music.

After I went to college, then to law school, I aban-doned music for more “career”-oriented diversions like hunting, fishing and golf. However, as the inconveniences of the aging process became more apparent to me, I decided to look for an activity that is fun, requires cere-bral dexterity and is not terribly stressful on my body.

So, after a 37-year layoff, I started playing

guitar again – and I was rusty. I had, however, kept in touch with a couple of my band mates from high school, and I asked one of them for advice on regaining some of my long-dor-mant playing skills. He suggested that I take lessons and referred me to a lesson studio maintained by a local guitar retailer. I began interviewing a

couple of teachers that my friend had recommended and discovered by chance that one of my law partners, Pete Barlow (who has recently left to become general counsel of one of our firm’s aviation cli-ents), had been taking guitar lessons in

the same studio from one of the teachers there. I asked Pete about his experience with

his teacher. Based on Pete’s recommendation, I began taking lessons from the same teacher. This

continued for six months. As I became more confident in my playing

abilities, I began searching for an outlet to showcase my redeveloping guitar prowess other than giving impromptu performances for my wife, Terry, and our Labrador Retriever, Charger. Pete and I began to get together from time to time and teach each other songs. Eventually, those sessions developed into short jam sessions accompanied by chitchat

* * *

about who else at the firm played musical instruments. Pete, being substantially younger than I, had new and fresh infor-mation about others in the firm who are musically inclined. I learned that my partner, Anton Mertens, is an accomplished guitarist who had been trained in his native land of Belgium to play classical guitar, but had learned to play American rock ‘n’ roll when he moved over here. I learned that a first-year associate, Lindsey Magurno, was a music composition major in college and had performed professionally as a singer/gui-tarist. I was reminded that my partner, Lisa Ballentine, had been in a band with one of our former partners years ago and had also performed professionally as a solo performer and as a member of a bluegrass band prior to becoming a lawyer. So, it occurred to me to invite Anton, Lindsey and Lisa, to join me at Pete’s house to have a session to see if we might have some synergy that could lead to the formation of some sort of group. A meeting time and date were arrived at and we all congregated at Pete’s house. I suggested that the format be that each of us play something that we liked in order to dem-onstrate the level of skill we had on our instrument and the type of music we enjoyed. To break the ice, I started off with a short rendition of the Chuck Berry song, Johnny B. Goode. I did not get two bars into the song when Anton began filling in, and before I knew it we were jamming along with ease. That is when it occurred to me that the formation of a band was possible and would be huge fun. From time to time for the next several weeks, I roamed the various floors of our law firm talking to lawyers who, rumor had it, possessed musical talent. As it turns out, there are a lot of them.

Through a process of elimination, a core group of nine firm lawyers emerged and became a rock band named No Appeal. Those lawyers were Lisa Ballentine on bass guitar and lead vocals, Dana Richens on keyboards and vocals, Anton Mertens on guitar and vocals, Dennis Doherty on lead guitar, Alex Clay on drums, Lindsey Magurno on vocals, Pete Barlow on rhythm guitar, Tom King on percussion, and me on rhythm guitar and vocals. In February 2007, we moved a mountain of gear into Pete Barlow’s guesthouse, and I purchased more gear. We were becoming a real rock band – or so it appeared.

It was fascinating to me to see how far technology had advanced during the 37-1/2 years that I had been absent from the band scene. State-of-the-art sound systems, amplifiers and instruments were purchased. We began to practice two days each week. After a while we not only looked like a real band but started sounding like one. So much so that I convinced my wife, who heads up our firm’s Corporate Department, that

we should give a party for our summer associates, as a subter-fuge for showing off the talents of our band. In July 2007, No Appeal debuted in front of approximately 125 firm lawyers and summer associates and their spouses or significant others. The reviews were favorable – and I had the time of my life.

Flush with success, we located and rented a rehearsal stu-dio to become the headquarters of No Appeal (just like “real” rock bands do) as we continued to hone our musical craft. Along the way, the band experienced some attrition. We now count six lawyers in the firm as members (including Ballen-tine, Richens, Doherty, Mertens, Clay and me), all of whom (except me) are accomplished musicians.

Our next gig was at our firm’s holiday party in December 2007 in front of more than 250 guests. Once again, the perfor-mance was greeted with favorable reviews.

No Appeal has continued to practice two times a week at our rehearsal studio. We plan to record some songs in a format that would allow the recordings to be accessible on the firm’s Web site. We also are planning to entertain all of the firm’s lawyers at our annual retreat in April.

Two and a half years ago, I started playing the guitar (again). Now, I’m a rock star!

SGRLAw.com Trust the Leaders ��

The shirt says it all – Anton Mertens rocks!

Preso

rted

stan

da

rd

Us Po

stage

Paid

Perm

it n

o. 7

ma

riet

ta, ga

All Dried Up? - SGR · PDF fileAll Dried Up? Analyzing Georgia ... when a product is recalled? Tim Bumann, Josie Krause and Lori ... SGR construction attorneys Mark de St. Aubin and

Documents