Archive for August, 2015

31
Aug

A recent study published by the U. C. Giannini Foundation of Agricultural Economics reports an increase in the number of agricultural employees in California.  Using data from the Employment Development Department, the authors conclude “since 1990, average employment in [California] agriculture rose 10%.”

To support their conclusion, the authors “extracted all SSNs reported by agricultural employers to EDD in 2007 and 2012, and tabulated their farm and nonfarm jobs in California.”

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The report states:

●    “Hired workers do most of the work in labor-intensive FVH agriculture.  According to the National Agricultural Workers Survey, over 85% of the state’s farm workers were born in Mexico.”

●    “Since 2010, average employment by crop support establishments has been rising by 10,000 a year.”

●    “Over 60% of crop workers employed on the state’s crop farms have been unauthorized for the past decade – 10 percentage points higher than the U.S. average of 50%.”

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Here’s the part that reminds you why we have persistent poverty in communities with an agricultural-based economy, such as Fresno County:

●    “Four counties – Kern, Fresno, Monterey, and Tulare – had over 40% of all primary farm workers”

●    “Average earnings for all workers with at least one farm employer were $18,000 in 2012,

●    “while average earnings for primary farm workers, defined as those who had their maximum earnings in agriculture, were $15,000.”

Brandon Hooker, Philip Martin, and Andy Wong, “California Farm Labor: Jobs and Workers,” in Agricultural and Resource Economics Update, July 2015 (U. C. Giannini Foundation of Agricultural Economics)

Category : Developments | Economics | Blog
21
Aug

The federal courts continue to narrow the circumstances in which a person can be denied relief in bankruptcy court based on breach of fiduciary duties.  In Double Bogey, LP v. Enea, ___ F.3d ___ (9th Cir. July 22, 2015), an unpaid creditor sought to invoke nondischargeability on the grounds that the debtor, as the alter ego of his corporation, owed fiduciary obligations to the unpaid creditor.

The Ninth Circuit disagreed, holding that “the mere fact that state law places two parties in a relationship that may have some of the characteristics of a fiduciary relationship does not necessarily mean that the relationship is a fiduciary relationship under 11 U.S.C. § 523(a)(4).”

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Explained the court, “partnership law clearly and expressly imposes trust-like obligations on partners, explicitly outlining partner’s fiduciaries duties and identifying the assets of the partnership as the trust res over which partners are fiduciaries.”

There is a different result with respect to corporations.  “California’s alter ego doctrine does not explicitly create a trust relationship, either by raising existing legal duties or otherwise … Instead of creating, enforcing, or expounding on substantive duties, California’s alter ego doctrine merely acts as a procedural mechanism by which an individual can be held jointly liable for the wrongdoing of his or her corporate alter ego.”

Thus, “A doctrine which merely supplies an additional judgment defendant after liability exists does not clearly and expressly impose trust-like obligations prior to the creation of that same liability.  Therefore, we cannot conclude, as a matter of federal law, that California’s alter ego doctrine establishes that a corporate debtor’s alter ego is a trustee in that strict and narrow sense required by the Code.”

As a result, the individual, despite a finding of alter ego liability under state law, was not denied his discharge in bankruptcy. “Common-law doctrines – like California’s alter ego doctrine – rarely impose the trust-like obligations sufficient to create a fiduciary relationship under Section 523(a)(4).  Indeed the kinds of trusts typically created by operation of law – constructive, resulting, or implied trusts – never satisfy Section 523(a)(4)’s rigorous requirements.”

Double Bogey, LP v. Enea, ___ F.3d ___ (9th Cir. July 22, 2015)

Category : Case law | Developments | Blog
13
Aug

Several categories of debt are excluded from relief under the Bankruptcy Code, meaning that a debtor cannot obtain a discharge for these debts.

In Bos v. Board of Trustees, ___ F.3d ___ (9th Cir. 2015), the Ninth Circuit considered whether an employer’s contractual requirement to contribute to an employee benefits fund made the employer a fiduciary of unpaid contributions.  The court held that there was no such relationship for purposes of bankruptcy law.

The case involved claims by the Carpenters’ Union against Gregory Bos and his corporation.  Mr. Bos agreed that his corporation would be bound by the Carpenters’ Master Agreement.  The employer was required to make monthly payments to the union’s trust fund based on hours of work.

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The essential facts were undisputed.  Mr. Bos had full control over the finances of his corporation.  Mr. Bos had the authority to determine whether payments were made to the union or to other creditors.  Even more, Mr. Bos signed a promissory note for the amount owed to the union.

Section 523(a)(4) of the Bankruptcy Code provides a debtor may not discharge debts due to “fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.”  Held the Ninth Circuit, “we have consistently held unpaid contributions by employers to employee benefit funds are not plan assets.”

Continuing with its “limited approach … in recognizing fiduciary status,” the Ninth Circuit held that unpaid contributions owed to the union were contractual obligations, not obligations arising from a fiduciary relationship involving control over property belonging to a third person.

The obligation to make payments “is in fact more appropriately classified as a contractual right to bring a claim against the employer for delinquent payments… Even if the language in the trust agreements in the promissory note sufficed to turn unpaid contributions into some form of plan assets, neither [the the corporation] nor [the individual debtor] had control over such asset prior to nonpayment.”

Therefore, the court held that the debtor did not act as a fiduciary under 11 U.S.C. section 523(a)(4).

Bos v. Board of Trustees, ___ F.3d ___ (9th Cir. 2015)

Category : Case law | Developments | Blog