Mark D. Walters
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Brief of 504 Law Firms in Support of Perkins Code

3/14/2025

 
Download Brief of 504 Law Firms in Support of Perkins Coie
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April 23rd, 2024

4/23/2024

 

Governor Inslee Signs Bill Updating Washington Noncompetition and Nonsolicitation Statute

3/14/2024

 
On March 13, 2024, Governor Inslee, signed a bill modifying Washington's statute governing Noncompeition covenants and nonsolicitation agreements. 

​What follows is a copy of the modified legislation.  Download a copy here.  

I will have more to say on this statutory update in the comping days. 
​
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Contractual Unconscionability Under Washington Law

2/22/2024

 
One defense to the enforcement of a contract, or parts of a contract, is that the contract is unconscionable.  

​Under Washington law, whether a contract is unconscionable is a question of law, and the burden of proving unconscionability “lies upon the party attacking it.” Tjart v. Smith Barney, Inc., 28 P.3d 823, 830 (Wash.Ct.App. 2001). The law recognizes two types of unconscionability: substantive and procedural. Id. Either type may be “sufficient to void a contract.” Gandee v. LDL Freedom Enters., Inc., 293 P.3d 1197, 1199 (Wash. 2013). Substantive unconscionability means “an ‘unfairness of the terms or results.'” Tadych v. Noble Ridge Constr., Inc., 519 P.3d 199, 202 (Wash. 2022) (quoting Torgerson v. One Lincoln Tower, LLC, 210 P.3d 318, 322 (2009)). Such unfairness arises when contract terms are “one-sided or overly harsh,” “[s]hocking to the conscience,” “monstrously harsh,” or “exceedingly calloused,” and interfere with “existing statutorily established rights and the policies underlying those statutory rights.” Id. (quoting Gandee, 293 P.3d at 1199). Procedural unconscionability is “the lack of meaningful choice, considering all the circumstances surrounding the transaction including the manner in which the contract was entered, whether each party had a reasonable opportunity to understand the terms of the contract, and whether the important terms were hidden in a maze of fine print.” Satomi Owners Ass'n v. Satomi, LLC, 225 P.3d 213, 231 (Wash. 2009) (internal brackets and quotation marks omitted) (quoting Zuver v. Airtouch Commc'ns, Inc., 103 P.3d 753, 759 (Wash. 2004)).
Rosskamm v. Amazon.com​, C22-1553JLR (W.D. Wash. Jan 24, 2024).

In Tadych v. Noble Ridge Construction, Inc., 529 P.3d 199 (2022), the Washington State Supreme Court reviewed a contract dispute that arose out of a contract that reduced the statutory 6-year statute of limitations to 1-year.   Here is how our State's High Court analyzed these facts under a contractual unconsionability lens: 
¶18 Here, the Tadychs are laypersons, and Noble Ridge drafted the contract, including the one-year limitation provision. No indication exists that this one-sentence provision was bargained for, negotiated, or any separate consideration paid. The limitation provision was included within one of three paragraphs on warranties, 10 pages into a 14-page contract. The waiver is in no sense prominent and has little, if anything, to do with a warranty. It operates as the opposite of what would be considered a warranty.

CONCLUSION

¶19 A contract provision becomes substantively unconscionable when it eliminates otherwise established statutory rights and is one sided, benefiting the contract drafter, is also not prominently set out in the contract, is not negotiated or bargained for, and provides no benefit to the affected party. Based on this, we hold here that this limitation provision is void and unenforceable. We further hold that under chapter 4.16 RCW, the Tadychs’ suit is timely. We reverse the Court of Appeals and remand for trial.
​

Tadych v. Noble Ridge Construction, Inc., 529 P.3d 199 (2022).

Elements of a Consumer Protection Act Claim and Public Interest Factors

2/12/2024

 
The five elements of a private Consumer Protection Act action include:
(1) an unfair or deceptive act or practice;
(2) in the conduct of trade or commerce;
(3) which impacts the public interest;
(4) injury to the plaintiffs in their business or property; and
(5) a causal link between the unfair or deceptive act and the injury suffered.

In a consumer transaction the following inquiries are relevant to establish public interest:
(1) Were the alleged acts committed in the course of defendant's business? 
(2) Are the acts part of a pattern or generalized course of conduct? (3) Were repeated acts committed prior to the act involving plaintiff?
(4) Is there a real and substantial potential for repetition of defendant's conduct after the act involving plaintiff?
(5) If the act complained of involved a single transaction, were many consumers affected or likely to be affected by it? 
No one of these five factors is dispositive, nor is it necessary that all be present. 

Extending the Statute of Limitations by Written Acknowledgment of the Debt

2/8/2024

 
There is a six year statute of limitations on claims to recover a debt under a written contract such as a promissory note.  Failure to file suit to collect the debt by this deadline results in the claim being time barred.  However, in some cases, this can be extended if the debtor acknowledges in writing the debt is owed before the six year statute of limitations has expired.   The following quote from a 2001 case explains how this works:

The Wengers next contend that their letters requesting an itemized bill are too vague and therefore not effective in tolling the statute of limitations. When a writing is made before the limitations period has expired, any acknowledgment of the obligation necessarily implies an agreement to pay, unless something in the acknowledgment requires a contrary conclusion. An effective acknowledgement must either expressly promise to pay or acknowledge that the obligation exists. Either is sufficient, but it need not contain both. If the writing contains the latter, it must express a clear admission of the debt. Moreover, it must be communicated to the creditor and not indicate an intention not to pay.

In Jewell v. Long Division Two of this court held that a deed of trust given on real property for a previously incurred debt constituted an effective acknowledgement because it was in writing, recognized the existence of the debt, was communicated to the creditor, and did not indicate an intent not to pay. In this case, the Wengers' letters stated in pertinent part:

"I am writing again to request an itemized billing from you for your services.... and would like to know how much we owe you...."
     
  and


"As stated many times by us, you will be paid for your expenses and your time spent on the case on an hourly basis...."

        On their face, these writings contain both an express promise to pay as well as an admission that an obligation to Fetty exists. The letters were signed by the Wengers and do not indicate an intent not to pay.
​

        * * * * * 

The Wengers' letters effectively acknowledged their attorney fee obligation to Fetty, thus extending the statute of limitations.

Fetty v. Wegner, 110 Wash. App. 598, 36 P.3d 598 (2001) (footnotes omitted; quotation marks added).

New Federal Reporting Requirement for Beneficial Ownership Information (BOI)

11/10/2023

 
Beginning on January 1, 2024, many companies in the United States will have to report information about their beneficial owners, i.e., the individuals who ultimately own or control the company. They will have to report the information to the Financial Crimes Enforcement Network (FinCEN). FinCEN is a bureau of the U.S. Department of the Treasury.  

Who Has to Report? 
Companies required to report are called reporting companies. Reporting companies may have to obtain information from their beneficial owners and report that information to FinCEN.   
Your company may be a reporting company and need to report information about its beneficial owners if your company is:
  1.  A corporation, a limited liability company (LLC), or was otherwise created in the United States by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe ; or
  2. A foreign company and was registered to do business in any U.S. state or Indian tribe by such a filing.

Who Does Not Have to Report?
Twenty-three types of entities are exempt from the beneficial ownership information reporting requirements. These entities include publicly traded companies, nonprofits, and certain large operating companies.  FinCEN’s Small Entity Compliance Guide includes checklists for each of the 23 exemptions that may help determine whether your company qualifies for an exemption. Please review Chapter 2.1 of the Guide for more information.
​
How to Report?
​Reporting companies will have to report beneficial ownership information electronically through FinCEN’s website: www.fincen.gov/boi
The system will provide the filer with a confirmation of receipt once a completed report is filed with FinCEN.

When to Report?
Reports will be accepted starting on January 1, 2024.
  • If your company was created or registered prior to January 1, 2024, you will have until January 1, 2025 to report BOI.
  • if your company is created or registered on or after January 1, 2024, you must report BOI within 30 days of notice of creation or registration.
  • Any updates or corrections to beneficial ownership information that you previously filed with FinCEN must be submitted within 30 days.
  • FinCEN cannot accept reports before January 1, 2024.

​Source: www.fincen.gov

The Litigation Privilege

6/26/2023

 
The “litigation privilege” is a judicially created privilege that protects participants—including attorneys, parties, and witnesses—in a judicial proceeding against civil liability for statements they make in the course of that proceeding. See, e.g., Mason v. Mason, 19 Wn. App. 2d 803, 830-31, 497 P.3d 431 (2021) review denied, 199 Wn.2d 1005 (2022); Deatherage v. Examining Bd.  of Psychology, 134 Wn.2d 131, 135-36, 948 P.2d 828 (1997). As applied to witnesses, the privilege is sometimes referred to as witness immunity, and under it, “[a]s a general rule, witnesses in judicial proceedings are absolutely immune from suit based on their testimony.” Bruce v. Byrne-Stevens & Assocs. Eng’rs,  Inc., 113 Wn.2d 123, 125, 776 P.2d 666 (1989).

Statements “are absolutely privileged if they are pertinent or material to the redress or relief sought, whether or not the statements are legally sufficient to obtain that relief.” McNeal v. Allen, 95 Wn.2d 265, 267, 621 P.2d 1285 (1980). But statements having “ ‘no connection whatever’ ” with the litigation are not privileged. Demopolis v. Peoples Nat. Bank of Wash., 59 Wn. App. 105, 110, 796 P.2d 426 (1990) (quoting RESTATEMENT (SECOND) OF TORTS, § 586, comment c (AM. LAW INST. (1977))). Thus, not every passing statement made in court avoids liability. But the determination of pertinency is not a high bar. As the Restatement (Second) of Torts indicates, a statement “need not be strictly relevant to any issue” so long as it bears “some reference to the subject matter of the . . . litigation.” RESTATEMENT § 586, comment c.
 
Litigation privilege therefore prohibits liability stemming from statements (1) made in the course of a judicial proceeding (2) that are pertinent to the litigation. Pertinency is a question of law reviewed de novo. Demopolis, 59 Wn. App. at 110.
 
The purpose of the litigation privilege doctrine is to encourage frank, open, untimorous argument and testimony and to discourage retaliatory, derivative lawsuits. As applied to attorneys, it furthers “ ‘a public policy of securing to [counsel] as officers of the court the utmost freedom in their efforts to secure justice for their clients.’ ” Mason, 19 Wn. App. 2d at 831 (quoting McNeal, 95 Wn.2d at 267). As applied to witness testimony, it preserves “the integrity of the judicial process by encouraging full and frank testimony.” Bruce, 113 Wn.2d at 126. The rule addresses the concern that a witness may either be reluctant to come forward to testify in the first place or shade their testimony “to magnify uncertainties, and thus to deprive the finder of fact of candid, objective, and undistorted evidence.” Briscoe v. LaHue, 460 U.S. 325, 333, 103 S. Ct. 1108, 75 L. Ed. 2d 96 (1983).

Source:  Young v. Rayan et al., Washington Court of Appeals, Div. 1, (No. 84426-1-I (06/26/2023).

City of Seattle - Independent Contractor Protections Ordinance

8/15/2022

 
On June 14, 2021, Seattle City Council passed SMC 14.34, the Independent Contractor Protections (ICP) Ordinance. This ordinance requires covered hiring entities to provide independent contractors with disclosures prior to entering a contract and at the time of payment. In addition, hiring entities must provide timely payment under the terms of a contract, the terms of the pre-contract disclosure, or within 30 days of contract performance. The ordinance goes into effect on September 1, 2022.

The ordinance requires commercial hiring entities to provide self-employed independent contractors with: 
  • A pre-work written notice that identifies the proposed terms and conditions of work and the terms and conditions of payment before starting work. 
  • Timely payment in accordance with the terms and conditions of the pre-work written notice or contract. 
  • If left unspecified, then provide payment within 30 days after the completion of services under the contract.
  • A written notice that gives specific itemized payment information each time that payment is made.   
Note: ICP does NOT require any specific terms or conditions for the pre-work written notice or contract. 
Who is Covered? 
Self-employed independent contractors who:  
  1.  have no employees, 
  2. perform any part of their work in Seattle for a commercial hiring entity, AND  
  3. will receive or may reasonably expect to receive at least $600 in total compensation from the hiring entity between January 1 and December 31 in a given year.  
Timeline for compliance 
  1. Hiring entities that have an independent contractor already working for them as of September 1, 2022 must provide the required notice of rights and pre-work written notice to the independent contractor either by September 30, 2022 or by the date of compensation, whichever date is sooner. 
  2. Hiring entities that hire an independent contractor after September 30, 2022, must provide the required notice of rights and pre-work written notice
  • before the independent contractor begins work for the hiring entity. 
  • Hiring entities must provide the required written notice
  • that gives specific itemized payment information
    1. each time payment is made to the independent contractor.
    Contact OLS  
    • Hiring Entities: Hiring Entities may contact OLS to request translation of model notices, assistance with compliance, or training via the Employer Inquiry form.  
    • Independent Contractors: Covered independent contractors have a right to make a complaint with OLS or file a lawsuit if a hiring entity violates this law. Independent contractors may file a complaint with OLS or ask a question via the Worker Inquiry form. 
    Workplace Poster and Other Resources: OLS provides multiple resources on this law, including: Notice of Rights workplace poster, Model Pre-Work Written Notice, Model Written Notice – Itemized Payment Information, and Fact Sheet. The most updated resources can found for download on this page or on our Resources page.  Many resources, including the Notice of Rights workplace poster and model written notices, will also be available in Spanish and multiple other languages on the Language Access pages. 
    Translations: ICP Fact Sheets are available in Amharic, Simplified Chinese, Japanese, Khmer, Korean, Punjabi, Somali, Spanish, Tagalog, Tigrigna, Vietnamese on the OLS Languages webpage.

Source:  City of Seattle Office of Labor Standards

Washington Employment Law Update:  Action Required

6/6/2022

 
Washington businesses and individuals who hire employees and independent contractors should be aware of the following notable change to Washington law and take the following recommended actions.    See RCW 49.44.211.

Effective June 9, 2022, employers may not include a provision in any contract with an employee or independent contractor that prohibits the employee or independent contractor from disclosing or discussing conduct, or the existence of any settlement involving conduct, that the employee or independent contractor reasonably believed under Washington state, federal, or common law to be illegal discrimination, illegal harassment, illegal retaliation, a wage and hour violation, or sexual assault, or that is recognized as against a clear mandate of public policy. Prohibited non-disclosure and non-disparagement provisions include those contained in employment agreements, independent contractor agreements, agreements to pay compensation in exchange for the release of a legal claim, or any other agreement between an employer and an employee.   


It is a violation of the new law for an employer to seek to enforce such a provision, for an employer to request or require an employee enter into such a provision, and for an employer to discharge, discriminate, or retaliate against an employee for disclosing or discussing conduct that the employee reasonably believes to be illegal conduct.

​An employer who violates this section after June 9, 2022, can be held liable in a civil cause of action for actual or statutory damages of $10,000, whichever is more, as well as reasonable attorneys' fees and costs.

Action Items: Update Employee Handbooks ASAP and issue notice to independent contractors with this or similar language:  

"The Company does not restrict or prohibit employees or independent contractors from disclosing or discussing conduct, or the existence of any settlement involving conduct, that the employee or independent contractor reasonably believes under Washington state, federal, or common law to be illegal discrimination, illegal harassment, illegal retaliation, a wage and hour violation, or sexual assault, or that is recognized as against a clear mandate of public policy. This includes such conduct that occurs at the workplace, at work-related events coordinated by or through Company, between employees, or between Company and an employee, whether on or off the employment premises."

Action Item: Update templates for Offer Letters, Employment Agreements, Non-Disclosure Agreements, Independent Contractor Agreements, Employee Separation and Release Agreements, and Employee Resignation Agreements to ensure complianc
e. 

Contact Mark D. Walters
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