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 Oakland-Macomb Interceptor Drain Drainage Dist v Ric-Man Constr, Inc.,   reflects viewpoint no part of arbitration more important than selecting arbitrator.

Pre-award lawsuit concerning arbitrator selection  
     
 Oakland-Macomb Interceptor Drain Drainage Dist v Ric-Man Constr, Inc.,   reflects viewpoint no part of arbitration more important than selecting arbitrator. AAA did not appoint panel member who had specialized qualifications required in agreement. Plaintiff sued to enforce requirements. Circuit Court ruled in favor of defendant and AAA. COA in split decision reversed. Issue was whether plaintiff could bring pre-award lawsuit concerning arbitrator selection. Majority said courts usually will not entertain pre-award objections to selection. But, when suit is brought to enforce essential provisions of agreement concerning selection, courts will enforce mandates. When such provision is central, Federal Arbitration Act  provides it should be enforced by courts prior to arbitration hearing. Party may petition court before award if (1) arbitration agreement specifies qualifications arbitrator must possess and (2) arbitration administrator fails to appoint arbitrator who meets these qualifications. Court may issue order requiring arbitration proceedings conform to arbitration agreement. Majority awarded plaintiff Circuit Court and COA costs and attorney fees.

Judge Jansen dissents stating party cannot obtain judicial review of qualifications of arbitrators pre-award.

Offsetting decision-maker biases can arguably create neutral tribunal

White v State Farm Fire and Cas Co.  discussed whether MCL 500.2833(1)(m) appraiser who receives contingency fee for appraisal is sufficiently neutral. COA said courts have upheld agreements for arbitration conducted by party-chosen, non-neutral arbitrators, particularly when neutral arbitrator is also involved. These cases implicitly recognize it is not necessarily unfair or unconscionable to create effectively neutral tribunal by building in offsetting biases.

Complaint must be filed to obtain award confirmation

Jaguar Trading Limited Partnership v Presler. Complaint must be filed to obtain confirmation of award. Having failed to invoke Circuit Court jurisdiction under Michigan Arbitration Act by filing complaint, plaintiff not entitled to confirmation. Issue was whether plaintiff, as party seeking confirmation under MCR 3.602(I) and MAA was required to file complaint to invoke Circuit Court jurisdiction. COA held, because no action pending, plaintiff required to file complaint. Since plaintiff timely filed award with court clerk, matter remanded so plaintiff could file complaint in Circuit Court.

COA affirms Circuit Court that motion to vacate not timely filed

Vyletel-Rivard v Rivard. Defendant challenged Circuit Court denying motion to vacate DRAA award. COA affirmed because motion to vacate not timely filed. On March 28, 2008, defendant filed motion to vacate “awards” of November 13 and December 7, 2007. Party has 21 days to file motion to vacate in DRAA case. Lesson: Time periods are important. Ramifications of filing second post-award errors and omissions motion.

COA approves probate arbitration

In split decision, In re Nestorovski Estate  held probate proceedings are not inherently unarbitrable.

Michigan Court of Appeals–Unpublished Decisions

COA affirms Circuit Court confirmation

Carmen v Factory Steel and Metal Supply Co, LLC. Standard applied to arbitration decisions is not clear error. Legal correctness is not standard because arbitrators not necessarily trained in law and are individuals of varying ability and expertise. Reviewing court cannot engage in contract interpretation, which is issue for arbitrator to determine.

COA affirms Circuit Court confirmation of DRAA award

Gomaa v Sharafeldin. H challenged “piecemeal” approach used by arbitrator. Circuit Court held arbitrator did not commit any errors permitting court to invade award, and entered JOD consistent with arbitrator’s orders. COA affirmed.

COA affirms Circuit Court confirmation of award

Garza v Estate of Gutierrez. COA affirmed Circuit Court order confirming award giving plaintiff seven days to cure his $150,000 default on parcel of property he was buying from defendant, or to surrender property to defendant.

COA affirms Circuit Court confirmation of DRAA award

Mann v Whitefield. COA affirmed Circuit Court confirmation of DRAA award. Domestic violence protocol was not done and appellant argued this invalidated award. COA stated “… MCR 3.216(H)(2) indicates [domestic violence protocol] applies to mediators during mediation, not arbitrators during arbitration. … We found no authority applying the domestic violence screening requirement of a mediator under MCR 3.216(H)(2) to arbitrators.”

COA affirms Circuit Court confirmation

UHG Boca, LLC v Medical Mgt Partners, Inc. Plaintiff moved to vacate award arguing arbitrator improperly applied wrongful conduct rule. Plaintiff also argued arbitrator improperly applied adverse inference rule when arbitrated concluded, on basis of adverse inference, parties were conducting illegal enterprise. Circuit Court disagreed and confirmed award. COA affirmed Circuit Court.

COA affirms Circuit Court confirmation of DRAA award

Maczik v Maczik. COA affirmed Circuit Court denial of motion to vacate DRAA award because motion to vacate filed late even though arbitrator did not meet requirements to be DRAA arbitrator.

COA affirms Circuit Court denying arbitration in dentist non-compete case

Paine v Godzina. Appellants argued Circuit Court erred because plain language of contractual agreement required arbitration of dispute regarding non-compete clause. Based on word “and” in arbitration agreement, COA affirmed Circuit Court’s denial of motion to compel arbitration. COA agreed with Circuit Court that language, “[a]ny dispute, controversy or claim between the Associate and the Employer concerning questions of fact arising under this Agreement and concerning issues related to wrongful termination … shall be submitted … [AAA],” means arbitration is required for cases that involve both questions of fact arising under Agreement and issues related to wrongful termination.

COA affirms Circuit Court confirming award

Clancy v Entertainment Managers, LLC. Advance for wedding reception. AAA administered arbitration under expedited proceedings pursuant to its Commercial Arbitration Rules. According to COA, defendant did not explain how it was prejudiced by use of expedited procedures such that award would have been “substantially otherwise” had arbitration been conducted differently.

COA affirms Circuit Court denial of motion to vacate DRAA award

Pascoe v Pascoe. COA affirmed Circuit Court denial of motion to vacate DRAA award. COA said review of awards extremely limited. Review of award by court one of narrowest standards of judicial review in jurisprudence. Award may be vacated in DRAA case when arbitrator exceeded powers. Party seeking to prove arbitrator exceeded authority must show arbitrator (1) acted beyond material terms of arbitration agreement or (2) acted contrary to controlling law. Reviewing court may not review arbitrator’s findings of fact, and any error of law must be discernible on face of award. Powerful outline of law concerning deference to arbitration awards.
             __________

Lee Hornberger is a member of the National Academy of Arbitrators, the Professional Resolution Experts of Michigan (PREMi), and a Diplomate Member of The National Academy of Distinguished Neutrals. He is a former Chair of the Alternative Dispute Resolution Section of the State Bar of Michigan, Editor Emeritus of The Michigan Dispute Resolution Journal, a former member the SBM Representative Assembly, a former President of the Grand Traverse-Leelanau-Antrim Bar Association, and a former Chair of the Traverse City Human Rights Commission. He has received  the Distinguished Service Award, the George N. Bashara, Jr. Award, and Hero of ADR Awards from the SBM ADR Section.

This article is the first of two parts reviewing selected Michigan Supreme Court and Court of Appeals cases concerning arbitration.    

Introduction

This article is the first of two parts reviewing selected Michigan Supreme Court and Court of Appeals cases concerning arbitration.     

Michigan Supreme Court Decisions

Waiver of right to arbitration via case management order

Nexteer Auto Corp v Mando Am Corp.i  Party waived right to arbitration when it stipulated in case management order that arbitration provision did not apply. In dissent, Justice Markman agreed COA correctly held party claiming opposing party had expressly waived contractual right to arbitration and does not need to show it will suffer prejudice if waiver not enforced. Markman said COA erred by holding defendant expressly waived right to arbitration by signing case management order which contained checked box next to statement: “An agreement to arbitrate this controversy ... exists ... [and] is not applicable.” He would have reversed COA on express waiver and remanded for consideration of whether defendant’s conduct gave rise to implied waiver, waiver by estoppel, or no waiver.

Lesson: Be careful when checking boxes.

Not all artwork invoice claims subject to arbitration

Beck v Park West Galleries, Inc,ii considered whether arbitration clause in invoices for artwork purchases applied to disputes arising from prior purchases when invoices for prior purchases did not refer to arbitration. MSC held that arbitration clause contained in later invoices cannot be applied to disputes arising from prior sales with invoices that did not contain clause. MSC reversed part of COA judgment that extended arbitration clause to parties’ prior transactions that did not refer to arbitration. MSC recognized policy favoring arbitration of disputes arising under CBAs but said this does not mean arbitration agreement between parties outside collective bargaining context applies to any dispute arising out of any aspect of their relationship.

Arbitrator can hear claims arising after referral to arbitration

Wireless Toyz Franchise, LLC v Clear Choice Commc’n, Inc,iii  reversed COA and reinstated Circuit Court order denying defendants’ motion to vacate award and confirming award. Dissent in 303619 (May 31, 2012), said stipulated order intended arbitration includes claims beyond those pending because it allowed further discovery, gave arbitrator Circuit Court powers, and award would represent full and final resolution. Claims not pending at time order entered not outside scope of arbitrator’s powers. Lesson: Order to arbitrate language important.

Parental pre-injury waivers and arbitration

Woodman ex rel Woodman v Kera LLC,iv five (Justices Young, Hathaway, Kelly, Weaver, and Cavanaugh) to two (Justices Markman and Corrigan) decision authored by Justice Young, held parental pre-injury waiver unenforceable under common law.

MK v Auburnfly, LLC.v Parental indemnification agreement violated public policy as found in Woodman.

In 2011, Michigan Legislature enacted MCL 700.5109 which states:

(1) Before a minor participates in recreational activity, a parent or guardian of the minor may release a person from liability for economic or noneconomic damages for personal injury sustained by the minor during the specific recreational activity for which the release is provided.

(2) This section only applies to a recreational activity sponsored or organized by a nongovernmental, nonprofit organization. … .

Ex parte submission to employment arbitration panel inappropriate

Gates v USA Jet Airlines, Inc,vi vacated award and remanded case to Circuit Court because one of parties submitted to arbitration panel ex parte submission in violation of arbitration rules. Submission may have violated MRPC 3.4(c) (knowingly disobeying an obligation under the rules of a tribunal) and 3.5(b) (prohibiting ex parte communication regarding pending matter). Lesson: Do not make ex parte submissions in arbitration.  

Failure to record DRAA hearing

Kirby v Vancevii in lieu of granting leave, reversed COA (278731) and held DRAA arbitrator exceeded authority when arbitrator failed to adequately tape record arbitration proceedings. Circuit Court erred when it failed to remedy arbitrator’s error by conducting its own evidentiary hearing. Supreme Court remanded for entry of order vacating award and ordering another arbitration before same arbitrator. Lesson: Make sure recorder is working.

Formal hearing format not required in DRAA arbitration

Miller v Miller.viii DRAA does not require formal hearing concerning property issues similar to that which occurs in regular trial proceedings.

Michigan Court of Appeals – Published Decisions

COA reverses Circuit Court order asking question of arbitrator in prior case

Mahir D Elder, MD, PC v Deborah Gordon, PLC.ix Plaintiff sued former employer for wrongful termination and received large monetary award from arbitration proceeding. Award stated plaintiff should receive compensation as calculated by Chart B, but award then listed lower monetary amount from Chart A. Plaintiff’s attorney in termination action did not notice discrepancy and confirmed award.
Prior case was then dismissed. When original plaintiff sued his attorney for legal malpractice, Circuit Court decided to send question to arbitrator to determine whether arbitrator meant to award plaintiff amount stated in award. Plaintiff appealed. COA reversed. “After you have reviewed the materials, please confirm whether you intended to award Dr. Elder $5,516,907 in back pay, front pay and exemplary damages, or some other amount?” MCL 691.1694(4) precludes “any statement, conduct, decision, or ruling occurring during the arbitration proceeding.” This prohibits compelling arbitrators from giving evidence as a witness regarding statements, conduct, decisions, or rulings that it may have made during arbitration proceeding. Lesson: Read award carefully.

Pre-dispute arbitration agreement in legal malpractice case

Tinsley v Yatoomax involved pre-dispute arbitration provision in legal malpractice case. COA held under MRPC 1.8(h)(1) and EO R-23 arbitration provision enforceable because client consulted with independent counsel. COA: “We suggest contemplation by the State Bar of Michigan and our Supreme Court of an addition to or amendment of MRPC 1.8 to specifically address arbitration clauses in attorney-client agreements.”

Michigan Rules of Professional Conduct, Rule 1.19, effective Sep 1, 2022, says,
Rule 1.19. Lawyer-Client Representation Agreements: Arb Provisions

A lawyer shall not enter into agreement for legal services with client requiring that any dispute between lawyer & client be subject to arb unless client provides informed consent in writing to arb provision, which is based on being:

(a) reasonably informed in writing regarding scope & advantages & disadvantages of arb provision, or

(b) independently represented in making agreement.

Lesson: Study RPC Rule 1.19 before entering into arbitration agreement with client.

DRAA award partially vacated

Eppel v Eppel.xi COA held arbitrator deviated from plain language of Uniform Spousal Support Attachment by including profit from ASV shares. Deviation held substantial error which resulted in substantially different outcome. Deviation readily apparent on face of award.

Pre-arbitration hearing email submission of exhibits

Fette v Peters Constr Co.xii Michigan Arbitration Actxiii controlled; not Uniform Arbitration Act.xiv Record did not support plaintiffs’ contention arbitrator considered exhibits defendant electronically shared before hearing in making award determination. Even if award against great weight of evidence or not supported by substantial evidence, COA precluded from vacating award. Allowing parties to electronically submit evidence prior to hearing did not affect plaintiffs’ ability to present evidence they desired. Lesson: Consider ramifications of emailing exhibits to arbitrator and whether exhibits are in evidence or not.

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i500 Mich 955; 891 NW2d 474, 153413 (2017), lv den from 314 Mich App 391; 886 NW2d 906 (2016).
ii499 Mich 40; 878 NW2d 804 (2016), partially reversed COA 319463 (2015).
iii493 Mich 933, 825 NW2d 580 (2013).
iv486 Mich 228; 785 NW2d 1 (2010).
v___ Mich App ___, 364577 (Dec 17, 2024).
vi482 Mich 1005; 756 NW2d 83 (2008),
vii481 Mich 889; 749 NW2d 741 (2008),
viii474 Mich 27; 707 NW2d 341 (2005).
ix343 Mich App 388, 359225 (Sep 22, 2022).
x333 Mich App 257, 349354 (Aug 13, 2020), lv den.
xi322 Mich App 562 (2018).
xii310 Mich App 535; 871 NW2d 877 (2015).
xiiiMCL 600.5001 et seq.
xivMCL 691.1681 et seq.

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Lee Hornberger is a member of the National Academy of Arbitrators, the Professional Resolution Experts of Michigan (PREMi), and a Diplomate Member of The National Academy of Distinguished Neutrals. He is a former Chair of the Alternative Dispute Resolution Section of the State Bar of Michigan, Editor Emeritus of The Michigan Dispute Resolution Journal, a former member the SBM Representative Assembly, a former President of the Grand Traverse-Leelanau-Antrim Bar Association, and a former Chair of the Traverse City Human Rights Commission. He has received the Distinguished Service Award, the George N. Bashara, Jr. Award, and Hero of ADR Awards from the SBM ADR Section.

In the ongoing clash over President Trump’s reluctance to extend security assurances to Ukraine to protect the country against an aggressor like Russia, one “minor” detail has received little, if any, attention.

In the ongoing clash over President Trump’s reluctance to extend security assurances to Ukraine to protect the country against an aggressor like Russia, one “minor” detail has received little, if any, attention.

Such assurances already exist -- at least on paper -- but have escaped public examination and analysis. Even Ukraine has only referred to them obliquely in its ongoing confrontation with the U.S. president.

So, let’s visit a little history on this subject.

In 1991, when the U.S.S.R. collapsed and Ukraine won its independence, the Soviets left thousands of nuclear weapons entrenched on Ukrainian soil. Those weapons made Ukraine the third most powerful nuclear nation in the world.

Ukraine inherited 130 UR-100N intercontinental ballistic missiles with six warheads each, 46 RT-23 Molodels ICBMs with 10 warheads each as well as 33 heavy bombers. The total? About 1,900 nuclear warheads.

With Western powers seeking to avoid nuclear proliferation, Ukraine was urged to return the weapons to Russia which would disassemble them.

After extended negotiations, Ukraine signed the Declaration of State Sovereignty of Ukraine (known as the Budapest Memorandum). Ukraine agreed not to accept, acquire, or produce nuclear weapons and its government declared that Ukraine would be a non-nuclear-weapon state.

Along with Ukraine, the Budapest Memorandum was signed December 5, 1994 in Budapest, Hungary by the, U.S., the United Kingdom and Russia. France and China signed a separate document but the assurances given Ukraine were basically the same. The pact also covered Belarus and Kazakhstan.

The agreement promised none of these nations would use force against Ukraine and respect its sovereignty. However, if the agreement were violated, the signatories would seek immediate action by the United Nations Security Council.

Ukraine believed that it would not be left alone should its independence be threatened by outside forces and, by 1996, Ukraine had returned all the nuclear weapons to Russia and became a party to the Non-Nuclear Proliferation Treaty.

We now, of course, know what has happened. In 2014, Russia’s President Vladimir Putin, calling the agreement null and void, invaded and annexed Crimea. In response, the U.S., U.K. and France provided Ukraine with military and financial assistance and imposed economic sanction on Russia, but ruled out a “direct confrontation with Russia.”

Sadly, in the present war, the U.S. seems to have forgotten entirely about the memorandum. It would not be unfair to speculate that President Trump does not even know about it. He isn’t exactly a student of history -- nor one to keep promises and commitments.

President Trump has charged that Ukraine started the war, called Ukraine President Volodymyr Zelensky a “dictator,” has paused $1 billion in military arms assistance for Ukraine, voted against a U.N. resolution condemning Russia as the aggressor in the war, temporarily stopped some intelligence sharing, and is “blackmailing” Zelensky by demanding rights to Ukraine’s valuable minerals.

Surely, many Ukrainians probably now regret having surrendered the nuclear weapons.

In December 2024 at a NATO foreign ministers’ meeting in Brussels, Ukraine’s Foreign Minister Andrii Sybiha held up the Budapest Memorandum and stated, “This document failed to secure Ukrainian and trans-Atlantic security and we must avoid repeating such mistakes.”

Noteworthy: President Clinton, who pressured Ukraine to sign the agreement, expressed regrets for his decision in an interview in April 2023.

“I feel a personal stake because I got them (Ukraine) to agree to give up their nuclear weapons. And none of them believe that Russia would have pulled this stunt if Ukraine still had their weapons,” Clinton said.  

He continued: “Kyiv was afraid to give them up because of a belief that a nuclear stockpile was the only thing to offer protection from an expansionist Russia.

"When it became convenient to him, President Putin broke it and first took Crimea and I feel terrible about it because Ukraine is a very important country."

Now, there is no way of knowing what would have happened had Ukraine kept possession of the nuclear arsenal.

While Ukraine may not have used the nukes in the present war, the weapons might have served as a deterrent; Russia may not have wanted to risk a nuclear exchange with Ukraine.  Also, Ukraine may have been able to use some of the weapons in conventional, non-nuclear operations.

There are many “what ifs” in this story, none of which can be answered with any certainty.

But one result is unquestionable: Democracies around the world know that it is risky to trust that the U.S. will keep its commitments.

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Berl Falbum is a longtime political journalist and author of several books.

In 1947, the Bulletin of Atomic Scientists, a Chicago-based nonprofit organization, created the Doomsday Clock to symbolize how close they believed the Earth was to human extinction.

In 1947, the Bulletin of Atomic Scientists, a Chicago-based nonprofit organization, created the Doomsday Clock to symbolize how close they believed the Earth was to human extinction.

At the time, the clock was set at 11:53 p.m., seven minutes to midnight.

Through the years, the scientists shortened the time period and in January 2025, they set the clock at 89 seconds -- 89 seconds, a second less than in January 2023 and January 2024, the closest they believe the world has been to “global catastrophe.”

In making their judgment the scientists consider a variety of factors: nuclear war threats, global warming, water and food shortages, biological dangers, and disruptive technologies like artificial intelligence.

But, as I have written in these articles, scientists throughout the world believe we face human extinction from the climate crisis alone.

And, sadly, there are no signs that we will leave the path to “final destruction.” Why? Because we face huge political and economic hurdles that cannot be overcome. The failure “to do anything” at the 29 annual international summit conferences we mentioned in one article prove the point.

The “solutions” on the table presently do little, if anything, to solve the crisis.

Electric cars: The vehicles use lithium-ion batteries that require cobalt and nickel, leading to mining and the destruction of some of the most pristine areas in the world.

Recycling: Not everything can be recycled, particularly almost all plastics. Many recycling operations use poisonous chemicals and some emit dangerous fumes. Finally, recycling, even if successful, may slow some contamination; it does not eliminate it.

Solar energy: The panels use hazardous materials and large projects need huge swaths of land, and disposal of the panels create enormous problems.

Wind: The turbines invade bird habitats, and create noise pollution and tremor issues on land and, if located on water, in the seas. Also, large projects require significant acreage.

Then there are suggestions on what all of us can do to save the planet, like not opening refrigerators too often, or using an old T-shirt instead of a sponge to clean a counter, or walk, bike, or take public transit.

Yup, we are on the brink of disaster and we are advised that using a T-shirt to clean a counter can help. The other recommendations fall into the same category.

So, what to do? One word defines what needs to be done: We need to sacrifice. And I mean really sacrifice.

As I stated in the introduction, I am a layperson, not an environmental scientist, but here are examples of what I believe we should do. If you believe any of them have even a remote chance of being adopted, contact me.

--Population growth. We need not only to control population but we need to reduce it, perhaps as much as 50 percent. It’s pure logic that if the population continues to grow, we will need more food, water, energy and land on which to expand. Growth will prove deadly. The Earth’s resources are, ultimately, finite.

--We must create a worldwide economy that does not depend on growth. Unless we create a financial system that makes saving the environment profitable, there is little reason to hope that the world will respond effectively. We live by the god of profits. We are ruled by the dollar, ruble, shekel, peso, euro, kopeck, dinar, franc. I would be more hopeful if the international conglomerates and corporations began offering stock in environmental protection programs.

--We need to consider the crisis not in term of decades, but in hundreds and thousands of years. Presently, we propose solutions with target dates of 2030, 2050, etc. What about 500 years from now, or 1,000 years (only 35 to 40 generations). I hear the response already: Who cares? Well, we are talking about saving humanity and hundreds of years is just a blink of an eye in the history of humanity on the planet.

--Drive cars that get 200 to 300 miles a gallon or more and have maximum speeds of, let’s say, 50 miles an hour. That would help. In 1973, after OPEC initiated an oil embargo, the auto industry built smaller cars. But, given that manufacturers considered profit margins unsatisfactory, they sold the public on SUVs.

--Reduce the number of flights daily from 100,000 in half or more.  Remember, aviation emits one billion tons of CO2 every year. And opening your refrigerator less frequently will not help.

--Stop ravaging rain forests which are essential to our survival because they absorb CO2.  Every hour forests the size of three footballs fields are cut down.  Studies project that by 2030, only 10 percent of the world’s forests will remain standing.  

--We must reduce cattle farming because cattle release methane gases which are more deadline than CO2.

--Starkly reduce both commercial and residential construction.

 --We must cut back, drastically, on logging, mining, fishing, farming, the use of pesticides, etc.  

Then there is plastic. We need -- must -- must, cut back or even eliminate its use. Indeed, it is probably impossible to repair the damage plastics have already done.

I cite these few examples only as illustrations of the kind of commitment that is needed to assure a habitable planet. But regrettably that will never happen because no community in the world will ever adopt projects that eliminate jobs, or temper the insatiable appetite for profit. The politics and economics are insurmountable.

Twenty-seven countries have levied “carbon taxes” on manufacturers emitting CO2 hoping the financial burden will reduce contamination. Of course, that does not solve the problem; many just pay the tax.

Former vice president, Al Gore, for all his fine work with his book and movie “An Inconvenient Truth,” in discussing possible solutions, does not mention one that requires sacrifice -- from halting population growth to curbing air traffic. (In 2007, he shared the Nobel Prize for his work on the environment with the Intergovernmental Panel on Climate Change.)

The optimists and climate deniers tell us not to worry. The Earth is very resilient.  True.  But to give the Earth a chance to recover we must stop the assault. We are using resources faster than they can be replenished.

To conclude: I finished this series on a beautiful day. I went outside, scanned a blue cloudless sky and then realized that we are polluting space as well. Yes, space.

In what is called the low Earth orbit (LEO), there are 6,000 tons (12 million pounds) of “junk” -- paint from spacecrafts, rocket parts, “dead” satellites -- flying around the planet at 18,000 miles per hour.

I went to NASA’s website to see what it says about this, expecting it to be defensive since it is the country’s space agency. But it wasn’t.” It called the LEO the “world’s largest garbage dump,” posing threats to manned and unmanned flights.

“The space around the planet is filled with rubbish,” because, NASA adds, it is too expensive to clean up the mess -- just like on Earth.

“It’s time to take out the trash!” NASA says.  

Yes, but where do we put it?

So, the Doomsday Clock will steadily continue its countdown on when the Earth will become inhabitable. But it’s not the symbolic one we have to worry about.

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This is the fifth and concluding column in a series of articles on the environment.

There has been significant buzz around the progression of legislation aimed at restricting minors’ use of social media.

Bhashit (Sheek) Shah and Marisa K McConnell
Varnum

There has been significant buzz around the progression of legislation aimed at restricting minors’ use of social media. This trend has been ongoing for years but continues to face resistance. This is largely due to strong arguments that all-out bans on social media use not only infringe on a minor’s First Amendment rights but, in many cases, also create an environment that allows for the violation of that minor’s privacy.

Although companies subject to these laws must be wary of the potential ramifications and challenges if such legislation is enacted, these concerns should be integrated into product development rather than driving business decisions.

Design-Code Laws

A parallel trend emerging in children’s privacy is an influx in legislation aimed at mandating companies to proactively consider the best interest of minors as they design their websites (Design-Code Laws). These Design-Code Laws would require companies to implement and maintain controls to minimize harms that minors could face using their offerings.

At the federal level, although not exclusively a Design-Code Law, the Kids Online Safety Act (KOSA) included similar elements, and like those proposed bills, placed the responsibility on covered platforms to protect children from potential harms arising from their offerings. Specifically, KOSA introduced the concept of “duty of care,” wherein covered platforms would be required to act in the best interests of minors under 18 and protect them from online harms. Additionally, KOSA would require covered platforms to adhere to multiple design requirements, including enabling default safeguard settings for minors and providing parents with tools to manage and monitor their children’s online activity. Although the bill has seemed to slow as supporters try to account for prospective challenges in each subsequent draft of the law, the bill remains active and has received renewed support from members of the current administration.

At the state level, there is more activity around Design-Code Laws, with both California and Maryland enacting legislation. California’s law, which was enacted in 2022, has yet to go into effect and continues to face opposition largely centered around the law’s alleged violation of the First Amendment. Similarly, Maryland’s 2024 law is currently being challenged. Nonetheless, seven other states (Illinois, Nebraska, New Mexico, Michigan, Minnesota, South Carolina and Vermont) have introduced similar Design-Code Laws, each taking into consideration challenges that other states have faced and attempting to further tailor the language to withstand those challenges while still addressing the core issue of protecting minors online.

Why Does This Matter?

While opposition to laws banning social media use for minors has demonstrated success in the bright line rule restricting social media use, Design-Code Laws not only have stronger support, but they will also likely continue to evolve to withstand challenges over time. Although it’s unclear exactly where the Design-Code Laws will end up (which states will enact them, which will withstand challenges and what the core elements of the laws that withstand challenges will be), the following trends are clear:

There is a desire to regulate how companies collect data from or target their offerings to minors in order to protect this audience. The scope of the Design-Code Laws often does not stop at social media companies, rather, the law is intended to regulate those companies that provide an online offering that is likely to be accessed by children under the age of 18. Given the nature and accessibility of the web, many more companies will be within the scope of this law than the hotly contested laws banning social media use.

These laws bring the issue of conducting data privacy impact assessments (DPIAs) to the forefront. Already mandated by various state and international data protection laws, DPIA requirements compel companies to establish processes to proactively identify, assess and mitigate risks associated with processing personal information. Companies dealing with minor data in these jurisdictions will need to:

- Create a DPIA process if they do not have one

- Build in additional time in their product development cycle to conduct a DPIA and address the findings.

- Consider how to treat product roll-out in jurisdictions that do not have the same stringent requirements as those that have implemented Design-Code Laws.

As attention to children’s privacy continues to escalate, particularly on the state level, companies must continue to be vigilant and proactive in how they address these concerns. Although the enactment of these laws may seem far off with continued challenges, the emerging trends are clear. Proactively creating processes will mitigate the effects these laws may have on existing offerings and will also allow a company to slowly build out processes that are both effective and minimize the burden on the business.

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Varnum partner Bhashit (Sheek) Shah advises clients on data privacy best practices and regulatory compliance. With experience in global privacy frameworks and laws including GDPR, CCPA and COPPA, he helps businesses build and implement compliance programs and manage data breaches. Associate Marisa K. McConnell focuses on litigation and data privacy, with a focus on children’s privacy issues, regulatory and compliance challenges in the mobility sector, commercial business disputes and general litigation matters.

What if there were a non-divisive public policy change that would save the country billions and benefit the average American worker? Well, there is one, and it is ripe for action: The enactment of legislation that restricts how Social Security Disability Benefits may be used by private insurers to “offset” their own financial obligations.

When most of us think of Social Security, we think of retirement benefits. The Social Security Act is a Depression-era law whose original purpose was to protect widows and children when the family’s provider died.

Over time, Social Security’s scope of coverage expanded. It became a primary retirement plan while continuing to provide death benefits to minor children. It also expanded to protect workers who became permanently disabled with the creation of the Disability Insurance Benefits program, known as SSDI. It is this SSDI coverage that has been exploited by the disability insurance industry.

Here’s how:

The typical employee with disability insurance is often covered through their employer’s group long-term disability plan, often an ERISA-qualified plan. If this employee becomes seriously ill or is hurt, they can file a claim with the employer’s disability insurer. When a claim is filed, the insurer sends the employee a packet of forms that includes a contract requiring them to file a claim with Social Security and simultaneously claim disability benefits from the federal government.
The insurer will condition the payment of benefits on the claimant’s filing an application with Social Security and pursuing all avenues of appeal. Some insurers will even provide the disabled employee with legal representation to pursue a Social Security claim. This is done right when the claim is filed.

The problem is that, in most cases, Social Security’s legal standard of disability is much stricter than what a private disability contract requires. A private disability contract may pay a benefit if an employee cannot do their own job. Social Security requires proof of an inability to perform any job in the national economy.

So, already, the private disability insurer is forcing an employee to file a claim for benefits paid by the federal government when that same employee has a private contract of insurance. And, worse still, the insurer is requiring the filing of an SSDIB claim when the employee may not yet be eligible.

The reason for this is that the private disability insurer receives a dollar for dollar offset (or credit) for any monies paid by Social Security.

To illustrate this point, take the case of a 40-year-old female with two minor children earning $75,000 per year. If the employer’s disability contract pays her a benefit equal to 60% of her salary, she would be entitled to a monthly payment of $3,750 per month or $45,000 per year.

If she were required to apply for SSDI, and her monthly Social Security benefit was $1,600 and $750 for each of her two children, the government would be paying her $3100. If she is awarded that amount from Social Security– voila – the insurance company’s responsibility drops to $650 per month.

During the period of “own occupation” benefits, typically two years, the insurer’s $90,000 obligation drops to $15,600, and the U.S. Taxpayer is now responsible for paying the claimant $74,400, even though, in our example, the employee had private insurance.

Given the original purpose of the Social Security Act, even with its subsequent amendments, it seems inappropriate to require the U.S. Taxpayer to pay for a benefit where a person has private insurance and may not even qualify for SSDI.

There are, of course, exceptions. In the case of a seriously injured or ill person or the victim of, for example, a stroke, an early claim seeking Social Security benefits is entirely appropriate. And Social Security claimants also received Medicare benefits. So, there are other considerations. But in those cases where an individual’s illness or injury has not yet risen to the level of a permanent disability, this practice seems to benefit no one but the insurance industry.

So, what can be done?

State insurance commissioners have been ineffective at combatting this practice, so the Social Security Act or the ERISA statute could be amended and updated to curb these practices. Here are three suggested reform propositions that could be added:

1) A disability insurer could not require a disabled employee to file a claim for Social Security Disability benefits any earlier that the first 36 months of continuous disability unless the employee wishes to do so voluntarily.

2) A disability insurance company would not be permitted to take an offset for Social Security for any period where the insurer denied a claim for disability benefits; and

3) If a private disability claim in “approved” status is later terminated and then reinstated, no Social Security offset could be claimed for any period where the private contract benefits were not paid.

These are common sense reforms that would bring about real and meaningful change in the lives of the occupationally disabled worker. They would save the federal government billions in actual benefit and administrative costs. And, as a bonus, these changes would clean up questionable claims-handling practices within the disability insurance industry.

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John Joseph (J.J.) Conway is an employee benefits and ERISA attorney and litigator and founder of J.J. Conway Law in Royal Oak.