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PublicationsTHE HOWE & HUTTON REPORT PAGE ONE ARTICLE ANOTHER RED CROSS CEO IS OUSTED - The American Red Cross seems to have more CEO turnover than the worst major league baseball team. The latest CEO has resigned after six months on the job at the request (read "direction") of the ARC Board of Directors when the board confirmed the CEO was having an "inappropriate relationship" with a subordinate staff member. ‘Nuff said. ANOTHER BASIC REMINDER TO PROTECT YOURSELF AGAINST ID THEFT - USA Today recently reported on "typo squatting," a technique involving websites based on minor misspellings of well-established names. The typo squatter purports to be the established website, and asks for sufficient information to get at your accounts at worst or at least lead you to advertising messages related to the misspelled entry. USA Today asked an anti-virus service to run checks on variants of well-known credit reporting firms, and it found hundreds of websites passing themselves off to obtain information or to lead users to advertising messages. Many of these typo squatter websites look like the real thing. Be extra cautious when asked for account, credit and other personal information. MIT EXPANDS FREE ACCESS TO ALL COURSES - H&H Report Update: Massachusetts Institute of Technology ("MIT") has expanded free access to its entire curriculum of approximately 1,800 undergraduate and graduate courses. You only need Internet access and a Web browser. MIT is offering the courses with syllabuses, reading and reference materials, even exams including some with answers, and some lectures on video. Some three of five users are from outside the U.S. Nearly a third of the courses have been translated into other languages. The project has been largely underwritten by foundations. MIT is not alone in offering free on-line access to courses. More than 150 other universities around the world have similar programs providing limited access to courses, even if not on the grand scale provided by MIT. Is this something associations should be considering as an opportunity or possible threat? NOT-FOR-PROFIT LAW DEVELOPMENTS UNUSUAL TWIST ON CHALLENGE TO ENFORCING $1.5 MILLION PLEDGE - An Illinois appellate court affirmed a trial court's ruling that the estate of a deceased donor was obliged to fulfill a $1.5 million pledge to Rush University Medical Center in Chicago. The donor, a prominent inventor and manufacturer who had served as director of biomedical research at Rush-Presbyterian St. Luke's Medical Center, made the pledge in 1995. In 1996 he declared it irrevocable and payable at his death, at a dedication ceremony for a facility bearing his name. In February 2005 he was treated for breathing problems at Rush but the diagnosis missed lung cancer, discovered at another medical center later that month. He changed his will in March 2005 omitting the pledge, and died in April 2005. Rush filed a claim against his estate for the pledged amount. The estate argued Rush should not benefit by its negligent diagnosis which possibly led to the donor's premature death. The trial court rejected the estate's argument and granted summary judgment to Rush. The appellate court agreed, saying the pledge was irrevocable and unconditional, and was relied on by Rush in building the facility named after the donor. The appellate court also said that a 2007 malpractice suit filed by the estate against Rush and other parties was not relevant to the validity of the pledge. The appellate court rejected any implied condition (such as an accurate diagnosis or absence of negligence by the hospital) in upholding the pledge, noting that it was declared irrevocable by the donor and the reliance by the hospital. Those making pledges should expect to be bound by their words and recipients entitled to rely on the donor's expressed intent. ASSOCIATIONS MOST LIKELY TO HIRE SOMEONE FROM THE INDUSTRY - According to CEO Update, trade associations are more likely than other nonprofits to hire a CEO who does not have previous nonprofit executive experience. CEO Update reports this occurs about 40% of the time. Associations hire CEOs from within the industry, from government and from academia. Professional societies hire CEOs with nonprofit experience about 80% of the time. These contrasting numbers provide food for thought for executives contemplating their next careers. REGULATORY LAW DEVELOPMENTS FTC ASKED TO SUPPORT "DO-NOT-TRACK" LIST FOR ONLINE MARKETERS - Nine privacy advocacy organizations have submitted a proposal to the Federal Trade Commission ("FTC") asking the FTC to protect people against having their online activities tracked by marketers. Among the advocacy groups are the Privacy Rights Clearinghouse, the Consumer Federation of America, the Center for Democracy and Technology and several others. The concept is said to be similar to the "Do-Not-Call" registry blocking telemarketing phone calls to consumers. The groups claim that an effort by online marketers to regulate themselves through the "Network Advertising Initiative" has not provided protection. Their proposal is to make it much easier for consumers to opt out of online tracking by marketers. The ball is now in the FTC's court. If the push to bar online tracking goes along the lines of efforts to block telemarketing calls, there will be a time lag, but this may eventually come to pass. One difference is that consumers were immediately aware of telemarketers because their telephones rang night and day. Online tracking is much more subtle and consumers may not be as aware of it or care as much about it. Depending on how things go, this could also affect nonprofits that engage in tracking activities. EMPLOYMENT LAW DEVELOPMENTS DO YOUR EMPLOYEES UNDERSTAND THEIR BASIC HEALTH BENEFITS? - Business consultant Watson Wyatt recently surveyed U.S. employees to see if they understand how their health coverage actually works and to determine their familiarity with healthcare vocabulary. In a survey of 2,100 workers, nearly half found it difficult to understand what their health plan actually covers. And even fewer could describe common healthcare benefit terms including co-pay and deductibles. Fewer than one in four could describe health savings accounts, co-insurance and other terminology. What this indicates is the need for employers, including associations, to work with their employees so they really understand what their health plans cover and provide education on the most basic terms. A number of consultants, very frequently brokers, are glad to work with employers to provide this basic education to employees to cut down on errors in filing and to reduce complaints about what is and is not covered. EMPLOYER WINS ON CUSTOMER'S SEXUAL ASSAULT ALLEGATIONS - A federal court in New York City has ruled the owner of a café was not liable for an employee's sexual attack on a woman customer who was at the café after closing hours to celebrate the birthday of the café's manager. The assault occurred while the employee, a dishwasher, was leading her out of the café by a back entrance. She sued the café owner for emotional distress, false imprisonment, negligent hiring and retention, supervision and training. All her claims were dismissed. The court said there was no basis that the employer knew or should have known of the dishwasher's propensity to commit a sexual assault, and nothing in the record before the court indicated that a background investigation as opposed to a reference check would have shown the dishwasher's propensity to commit a sexual assault. Just how far does an employer have to go to investigate the background of a new hire? A reference check may not provide much information, particularly with employers commonly inclined to verify period of employment and salary only, and provide very little other information even when asked in more detail. It would be more prudent for an employer to dig deeper if possible for employees who may have contact with the public or for employees in positions of trust. MEETING & TRAVEL LAW DEVELOPMENTS ONE MONTH TO START OF NEW REQUIREMENTS FOR TRAVEL ID - The U.S. Customs and Border Patrol ("CBP") recently issued a reminder that effective January 31, 2008 U.S. citizens entering the U.S. from Canada, Mexico or the Caribbean by land or sea will be required to present proof of citizenship, the same as travelers arriving by air. Citizens 19 and over must carry a passport or other proof such as a U.S. birth certificate and separate government-issued photo identification such as a driver's license. Those 18 and under may use a school photo ID plus birth certificate. Preschoolers will only need a birth certificate. Travelers arriving by air need passports. Military ID is also acceptable for entry. Non-U.S. citizens will have to carry valid passports or other forms of government-issued photo identification to enter. For now the government has backed down on requiring passports from everyone but that may still come about within a year or so, especially if many of the states continue to balk at enhanced driver's licenses or other such tamperproof ID. The governments of Canada and Mexico and officials from U.S. states bordering Canada and Mexico will also weigh in what should be required for tamperproof ID, so the January 31, 2008 requirements are an interim step and by no means the final word. E-MAIL AND INSTANT MESSAGING COMING TO AN AIRLINE NEAR YOU - JetBlue has announced that it will offer free e-mail and instant messaging using Yahoo on one of its planes starting in December. Browsing and sending or receiving attachments is not included. The initial application is experimental and intended to work out some of the kinks before JetBlue makes it available more broadly. American has announced it intends to test such service early next year. At this time, JetBlue is testing a very limited service, but the trend for airlines to provide at least some in-flight Internet access is pretty clear. So far cell phone service is not on the table for in-flight use in the U.S. So far…. TAX DEVELOPMENTS SMALL TAX-EXEMPT ORGANIZATIONS' 2008 FILING REQUIREMENTS - The Internal Revenue Service has announced that, beginning next year, small tax-exempt organizations that were not previously required to file returns may be required to file an annual electronic notice, Form 990-N, also known as the e-Postcard. Organizations that do not file the notice risk the loss of their tax-exempt status. The new filing requirement applies to tax periods beginning in 2007. Small tax-exempt organizations whose gross receipts are normally $25,000 or less are not required to file the Form 990 or Form 990-EZ. Under the Pension Protection Act of 2006, these organizations are now required to file Form 990-N with the IRS annually. Exceptions include organizations that are included in a group return, private foundations required to file Form 990-PF, and IRC § 509(a)(3) supporting organizations required to file Form 990 or Form 990-EZ. The requirement does not apply to churches, their integrated auxiliaries, and conventions or associations of churches. The IRS is developing an electronic filing system (there will be no paper form to be filed) for the e-Postcard and will publicize filing procedures when the system is completed and ready for use. The new law requires the IRS to revoke the tax-exempt status of any organization that fails to meet its annual filing requirement for three consecutive years. If your organization meets the criteria, be ready to file the new electronic "form." It is available on the IRS website, www.irs.gov. IRS MILEAGE RATE TO INCREASE TO 50.5 CENTS PER MILE AS OF 1/01/08 - The Internal Revenue Service has announced the 2008 optional standard mileage rates used to calculate deductible costs of operating an automobile for business, charitable, medical or moving purposes. Business miles can be expensed at 50.5 cents per mile, up from 48.5 in 2007. Medical or moving miles can be expensed at 19 cents per mile, down from 20 cents in 2007. Miles used in charitable activities can be expenses at 14 cents per mile. The rates are intended to reflect the cost of operating a vehicle including fuel costs, insurance and other operating expenses. Associations and other entities which reimburse auto expenses may wish to change to the higher figure for expense reimbursements for staff, members and others in 2008. They are not obliged to use the new rate, but should not exceed it. Taxpayers may use the new rates for their personal taxes. DON'T BE SURPRISED IF YOUR 2007 TAX IS UP OR REFUND DELAYED - As we go to press, Congress and President Bush are still at loggerheads over a way to avoid the Alternative Minimum Tax ("AMT") being applied to as many as 25 million taxpayers this year. The tax was originally aimed in 1969 at wealthy families, about 155 in number, who avoided income taxes due to their many deductions. Since then, upper bracket taxpayers have had to compute their tax liability two ways to determine if the AMT should apply. The AMT was never indexed to inflation, and each year more and more American taxpayers have come within the AMT tax formula, even though they would hardly be described as upper bracket taxpayers by today's standards. In 2006 the AMT applied to some four million taxpayers, a far cry from the original wealthy target population. That number could increase to an estimated 25 million for 2007. The problem with doing away with the AMT completely or simply "fixing it" one year at a time so it falls on fewer taxpayers is the major loss of tax revenues. House Democrats insist the revenues lost be recovered from some other source; the Senate has passed a bill without such revenue recovery; and the President is threatening to veto any tax increase. Meanwhile the deadline to print 2007 tax forms has passed, and the IRS needs about seven weeks to do the necessary programming and testing of whatever formula Congress imposes for the 2007 AMT "fix." While the House, Senate and White House argue, the likelihood of 2007 refunds being delayed, especially for early tax filers, is increasing. The Congressional Joint Committee on Taxation estimates that about half of taxpayers with adjusted gross incomes in the $75,000-$100,000 range and up are facing AMT tax payments, and the Secretary of the Treasury estimates those paying the AMT will face a $2,000 tax add-on. Millions of taxpayers are looking at overpaying and then having to file amended returns. Another fiasco brought to you by the folks we all elected. INTELLECTUAL PROPERTY & COMPUTER LAW DEVELOPMENTS SCHOOL ASSOCIATION VERSUS PUBLISHERS AND THEIR ASSOCIATION - The Illinois Press Association ("IPA") and some of is newspaper member publishers sued the Illinois High School Association ("IHSA") over rights to sell photos of high school championship athletic contests. The IHSA has a contract with a commercial photography company giving it exclusive rights to state championship photos for sale to the public, and barred newspaper photographers from covering championship games if they refused to agree to not sell their photos. The IHSA has filed a countersuit for a declaratory judgment saying the IHSA can establish what use may be made of photos of IHSA championship games, and asking for $50,000 or more in damages. In return for exclusivity on sale of championship game photos, the IHSA receives an extensive library of photos the IHSA can use for promotional purposes. So the IPA and its members claim a First Amendment right to take photos at IHSA championship games and use them as their own property as they see fit, while the IHSA says it can decide what uses may be made of photos taken at championship games. Interesting question - are photos part of a game's news story? The IHSA says no. Both associations have something at risk here - access to championship games for IPA members and a potential reduction of news coverage by IPA members if the IHSA position is upheld. Either way it could be a Pyrrhic victory for the association that prevails…. OTHER ISSUES, TRENDS & DEVELOPMENTS HOW LONG TO SORT OUT THE NY FLIER BILL OF RIGHTS LAW? - The Air Transport Association ("ATA"), representing U.S. airlines, is off to federal court in Albany, NY to try to block a New York state law imposing requirements on airlines to address problems of passengers facing hours of delay waiting to depart, or stranded on taxiways and unable to move because of airport congestion due to weather or other delays in other cities. The new statute, effective January 1, 2008 and the first of its kind, requires airlines to provide passengers with water, food and functional toilets after their airplane is delayed more than three hours, or face substantial state-imposed fines. Other states have also been looking at similar laws. The ATA says New York's law should be overturned because only federal authorities can regulate airline service. The ATA has apparently beaten down recent federal efforts to reduce the number of flights in the NYC-Newark metropolitan area even though the airlines routinely schedule more flight departures and arrivals than the three area airports can handle. Throw in adverse weather or a hiccup elsewhere backing up flights in New York, and delays can last for hours. So is access to food, water and decent sanitation on planes within the scope of "airline service" or not? Is a lawsuit the best way to decide this or the only way, given the parties' inability to settle it? And how long to reach a final decision including the inevitable appeals? H&H DEVELOPMENTS During December, Barbara F. Dunn covered the topics of vendor contracts, intellectual property, risk management and general and advanced contract issues for various meeting planning groups around the U.S. Sam Erkonen spoke to a large multinational insurance company's legal department regarding hospitality contracts and at Association Forum on the revised 990. Layton Olson made a presentation to Illinois Governor's Broadband Deployment Council on city-regional-multi-state cooperation on integrated Information Infrastructure for safety-health-transport-logistics-TV as part of Chicago's 2016 Olympic bid. We congratulate Nathan J. Breen on becoming a Partner here at Howe & Hutton, Inc. Having known him since he was a law student and clerk at Howe & Hutton, we are all delighted. His work regarding trademarks and intellectual property has been invaluable to our clients. We welcome Josh W. Peterson to Howe & Hutton, Inc. We are very pleased that he was willing to follow in his father's footsteps here at the firm. Contributors to this issue... This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or professional service through its distribution. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Past newsletters are available at www.howehutton.com by clicking on “Publications.” Howe & Hutton, Ltd.: Washington Office: St. Louis Office: E-Mail: hh@howehutton.com ©Copyright 2007. Howe & Hutton, Ltd. Chicago, Illinois, Washington D.C., and St. Louis, Missouri, U.S.A. |
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