VBA• • THE OFFICIAL PUBLICATION OFNews THE VIRGINIA BAR ASSOCIATION • JournalVOL. XXXIII, NO. 3 • JULY/AUGUST 2007

Legal Focus: Construction and Public Contracts Law You still have time to fulfill those resolutions... 2007! 2006 2005 My New Year’s Resolutions for 2004 — · Evaluate Life Insurance for Family Needs · Compare Health Insurance Plans · Start College Funding · Review Long Term Care as part of Retirement Strategy · Protect Income if sick or injured with Disability Insurance · Purchase Life Insurance to fund Partners Buy/Sell Agreement · Contact Virginia Barristers Alliance, your insurance subsidiary of The Virginia Bar Association, for all of the above! To start our conversation, please complete this form and fax it to us at (804) 762-4192 or 1-800-947-2796. Without obligation, I would like to receive more information about products and services available to members of The Virginia Bar Association. Item(s) of special interest: ______. Here’s how you can reach me: Name: ______Address: ______E-mail: ______Area Code ( ) Phone: ______Day ____ Evening Virginia Barristers Alliance, Inc. THE INSURANCE AGENCY SUBSIDIARY OF THE VIRGINIA BAR ASSOCIATION Dean Hardy and Howard DiSavino Jr. • 4880 Sadler Road, Suite 110, Glen Allen, Virginia 23060 (804) 290-8720 direct line • 1-800-358-7987 toll-free • (804) 762-4192 fax • email: [email protected] THE VIRGINIA BAR ASSOCIATION VOLUME XXXIII, ISSUE 3 VBA• • JULY/AUGUST 2007

701 East Franklin Street, Suite 1120 Richmond, VA 23219 (804) 644-0041 FAX (804) 644-0052 News Journal E-mail: [email protected] Web: www.vba.org 4 • VBA 411: President News from around the Commonwealth Glenn C. Lewis, Washington, D.C. President -elect Legal Focus/Construction and Public Contracts Law G. Michael Pace Jr., Roanoke Chair, Board of Governors John D. Epps, Richmond 6 • Electronic Discovery and Record Retention Immediate Past President in Construction and Public Contracts Disputes William R. Van Buren III, Norfolk Michael L. Sterling Law Practice Management Division Chair David H. Sump, Norfolk 10 • Working with the Multi-Employer Policy Young Lawyers Division Chair Matthew E. Cheek, Richmond Randall H. Wintory Young Lawyers Division Chair-elect E. Livingston B. Haskell, Toano 15 • False Claims in Virginia: Charting the Unknown Course Board of Governors Kelley C. Hauser and W. Stephen Dale The Officers and Prof. Margaret I. Bacigal, Richmond Stephen D. Busch, Richmond Legal Focus/Government Regulation of Contractors in Virginia Hon. Rodham T. Delk Jr., Suffolk C. Thomas Ebel, Richmond Cheshire I. Eveleigh, Virginia Beach 19 • Life After the Death of Immigration Reform Hon. Robert Hurt, Chatham Is it business as usual for contractors? William R. Mauck Jr., Richmond Karen Turner McWilliams, Reston William J. Benos Steven R. Minor, Bristol J. Lee E. Osborne, Roanoke Stephen C. Price, Leesburg 22 • The Back Page: Richard C. Sullivan Jr., Falls Church Tips and tidbits of useful information Lucia Anna Trigiani, Tysons Corner Robert C. Wood III, Lynchburg 23 • VBA Membership Application: Recruit a Colleague! Member of ABA House of Delegates E. Tazewell Ellett, Alexandria Legislative Counsel 24 • Calendar of Events Hon. Anthony F. Troy, Richmond Hon. Robert B. Jones Jr., Richmond Anne Leigh Kerr, Richmond On the Cover: Interior of the James City Courthouse of 1770, Duke of Gloucester Street, Williamsburg; photograph by John O. Peters. One hundred Executive Director Guy K. Tower forty photographs of Virginia courthouses are contained in Virginia’s Historic Courthouses, written by John O. and Margaret T. Peters with a foreword by Assistant Executive Director the late Justice Lewis F. Powell Jr.; photographs by John O. Peters; published Brenda J. Dillard by University Press of Charlottesville; and sponsored by The Virginia Bar VBA News Journal Editor Association. To order the book, call the VBA at (804) 644-0041 or 1-800-644- Caroline B. Cardwell 0987.

OUR MISSION The Virginia Bar Association is a VBA NEWS JOURNAL, the official publication of The Virginia Bar Association (ISSN 1522- voluntary organization of Virginia lawyers 0974, USPS 093-110), is published six times per year (January/February, March/April, May/ committed to serving the public and the June, July/August, September, October/November, December). Membership dues include legal profession by promoting the highest the cost of one subscription to each member of the Association. Subscription price to others, standards of integrity, professionalism, $30 per year. Statements or expressions of opinion appearing herein are those of the and excellence in the legal profession; authors and not necessarily those of the Association, and likewise the publication of any working to improve the law and the advertisement is not to be construed as an endorsement of the product or service unless administration of justice; and advancing specifically stated in the advertisement that there is such approval or endorsement. collegial relations among lawyers. Periodicals postage paid at Richmond, VA 23232. POSTMASTER: Send address changes to The Virginia Bar Association, 701 East Franklin Street, Suite 1120, Richmond, VA 23219. “In just the first year of this statewide competition we raised News from enough food to provide more than • • 530,000 meals to the less fortunate in around the our Commonwealth,” remarked VBA Attorney General McDonnell. Commonwealth “I am pleased by this result and by the incredible demonstration of 411 generosity and compassion by the Virginia legal community. I congratulate McGuireWoods, Attorney General McDonnell recognizes Vandeventer Black, and Regent University for their accomplishments, Legal Food Frenzy winners and organizers and for their support of the Southeastern Virginia Foodbank. I 2008 statewide competition will run March 31-April 11 hope this is the start of the Statewide ‘Legal Food Frenzy’ becoming a tradition in the Virginia legal community, and I look forward to next year’s event.” “McGuireWoods LLP was proud to work with Attorney General Bob McDonnell and the Foodbank of Southeastern Virginia to address the needs of the hungry in our community,” said Norfolk managing partner John Padgett. “I am proud of every member of the Norfolk office of McGuireWoods LLP who generously gave of their time and resources to ensure that the Foodbank can adequately serve our community.” The first Statewide “Legal Food Shana Jones, Food Frenzy coordinator for McGuireWoods LLP in Norfolk, and Frenzy” ran April 2-13, with 169 McGuireWoods managing partner John Padgett receive the “Attorney General’s Cup” participating law firms raising from Attorney General Bob McDonnell at the Southeastern Virginia Foodbank in 679,000 pounds of food, exceeding the Norfolk. target goal of 500,000 pounds — Attorney General Bob McDonnell winners: Vandeventer Black LLP won enough food to provide 121 Virginia traveled to the Southeastern Virginia in the “Large Firm” category for most families of four with three meals a Foodbank in Norfolk on August 23 to food collected at 377.35 pounds per day for an entire year. award the “Attorney General’s Cup” person, and Regent University Law The Attorney General offered to McGuireWoods LLP of Norfolk, in School won the “Law School Attorney special thanks to the co-chairs of the recognition of the firm’s victory in the General’s Cup” for collecting the most “Legal Food Frenzy” Committee of the First Statewide “Legal Food Frenzy.” total pounds and pounds per capita VBA Young Lawyers Division, Katja The firm collected the most pounds of by a Virginia law school. Hill of LeClair Ryan and Chris Gill of food per capita of any law firm in the The Virginia Bar Association Christian & Barton LLP, and to VBA/ state, raising 1338 pounds of food per partnered with the Attorney General YLD Chair Matt Cheek of Williams employee. and the Federation of Virginia Food Mullen, for their leadership in this The Attorney General also Banks for the statewide food/fund effort. presented awards to two other drive. The Attorney General also thanked the Norfolk and Portsmouth Bar Association for initiating the YLD continues its winning streak at ABA meeting Hampton Roads “Legal Food Frenzy” It’s an August tradition, right up there with the “dog days” and the tax-free in 1990 and providing guidance for weekend: the VBA Young Lawyers Division takes top honors in the American the first statewide effort this year. Bar Association Awards of Achievement Competition! At the recent ABA Annual The Second Statewide “Legal Food Meeting in San Francisco, the VBA/YLD received first place in Division IC for its Frenzy” will be held March 31-April Comprehensive application, first place for Service to the Bar (Attorney Mentor 11, 2008. An early goal of raising one and Referral Network), and second place for Service to the Public (Legal Food million pounds of food has been Frenzy). Thanks to Awards of Achievement Chair Lucas Hobbs, who compiled established. Watch for competition the multi-volume entry materials, and to the entire Young Lawyers Division! details online at www.vba.org.

4/THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL JULY/AUGUST 2007 IN MEMORIAM Nominate for ’08! Committee seeks candidates for VBA Board of Governors LIVER ILL O W. H Under The Virginia Bar Association’s Bylaws, an ad hoc Governance 1907-2007 Committee each year presents candidates for open Board positions. The Immediate Past President chairs the Committee, and the President-Elect, Chair of the Board, and three other VBA members appointed by the President and approved by the Board serve as committee members. The 2007 Governance Committee is commencing its work, and input from all VBA Burke, Kneedler members is invited. Nominations are sought for the VBA Board of Governors Class of 2008, honored by peers which will consist of one member from the Blue Ridge Region (Judicial Circuits 16, 20, 25 and 26), one member from the Tidewater Region (Judicial Circuits Two veteran Association members 1, 2, 3, 4, 5, 7 and 8) and two at-large members. The regional and at-large are in the national and international members will be elected to three-year terms. spotlight. In considering potential nominees, helpful attributes include leadership C. Thomas Burke, Washington track record and potential; high professional standing; VBA involvement, representative for Kawasaki Kisen including section/committee/division work, CLE participation, other bar Kaisha (K Line America Inc.) and chair organization activity, public service activity; interest and experience in legislative of the VBA Transportation Law and public policy matters; collegiality and “people skills”; and financial acumen. Section, will be a featured speaker at Diversity of all types, whether personal, geographic or by practice type/size, is the 2007 Global Transportation and encouraged. Supply Chain Conference, October 21- Suggestions may be sent to Guy Tower, VBA Executive Director, at 22 in Dubai. His topic will be the [email protected]. critical issues of global port security and the need for all stakeholders to work together to prevent future inducted into the International its Drafting Committee to Revise the disruptions in the flow of Maritime Hall of Fame at the United Model State Administrative Procedure international trade. Nations in 2003. Act. He also chaired the Since 1997, Burke has served as H. Lane Kneedler, a partner at organization’s Drafting Committee senior advisor to the president and Reed Smith LLP in Richmond and a to Revise the Uniform Partnership CEO of K Line America, Inc. He was former chair of the VBA Criminal Act, which has been adopted in the elected chairman of the National Law Section, has been elected to a majority of the states. Maritime Security Discussion second two-year term as secretary Prior to joining Reed Smith, where Agreement in 2003 and serves on the of the Uniform Law Commission he is a member of the firm’s regulatory boards of the U.S./Panama Business (ULC). litigation practice group, Kneedler Council and the Center for Oceans Kneedler serves on the ULC was a professor and associate dean at Law and Policy at UVA. He was Conference Executive Committee and the University of Virginia School of

Law and is a former chief deputy ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○

○○○○○○○○ attorney general of Virginia. ‘Jogging’ T-shirts available to boosters The VBA Community Service Program’s first benefit 5K walk/run, Upcoming meeting “Jogging for Justice,” drew approximately dates announced 25 walkers and runners (and a small but enthusiastic cheering section) during the With the advent of fall, The Virginia Association’s Summer Meeting in Hot Bar Association’s “meeting season” Springs. Proceeds of the event, which gets underway in earnest. Save-the- were buttressed by the generosity of date cards have already been mailed boosters’ donations, will benefit Blue for several conferences, while Ridge Legal Services, Inc. schedules and speakers are being “Jogging for Justice” T-shirts, black on finalized. A calendar of events light blue in both adult and youth sizes, are available in limited quantities regularly appears on the back cover from the VBA office. For a donation of at least $15, one can be listed as a of the VBA News Journal, and the “Jogging for Justice” booster and receive a shirt. Checks may be made payable online calendar of events at to the VBA Foundation and sent to the VBA at 701 E. Franklin St., Suite 1120, www.vba.org contains more details, Richmond, VA 23219, along with the size(s) requested. including links to agenda and “Jogging for Justice” followed the VBA/CSP’s successful winter clothing registration forms as they are made drive for Avalon and FISH at the Annual Meeting in January. Program leaders available. Check it out! hope to establish a tradition of holding a service activity at each VBA meeting. JULY/AUGUST 2007 THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL/5 LEGAL FOCUS Construction and Public Contracts Law Electronic Discovery and Record Retention in Construction and Public Contracts Disputes BY MICHAEL L. STERLING The astonishing capabilities of I. The Rules Although the Rules of the Virginia modern technology have changed and Supreme Court currently do not continue to change the way that A. New Federal Rules specifically address electronic today’s corporations do business. In 2006, the Federal Rules of Civil discovery, they conceivably might be Computers, cell phones, personal Procedure were amended to updated in the future to address these digital assistants, and other electronic address the challenges posed by issues in the same manner that the devices enable businesses to operate electronic discovery. The rules Federal Rules of Civil Procedure have efficiently, providing for quick emphasize communication and been revised.7 Although the Virginia communication and voluminous early identification, disclosure, and Rules do not streamline electronic recordkeeping.1 However, modern production of electronically stored discovery the way that the amended reliance on technology can be a information. In order to limit federal rules do, the Virginia Rules double-edged sword when it comes uncertainty and delay caused by still are applicable to all types of to litigation. On one hand, technology electronic discovery, new discovery, including electronic can assist in the location of relevant amendments, such as those to Rules discovery. Attorneys and clients evidence; the ease with which 16(b), 26(a)(1)(b), and 26(f) require therefore should look to the Federal computer programs can save, that litigants address these issues Rules of Civil Procedure for guidance organize, and locate data can result promptly.4 As such, the amendments in creating an electronic document in substantial savings in both time make it necessary for attorneys to retention policy. Moreover, Virginia and man-hours during discovery.2 discuss electronic discovery issues has long recognized the obligation of On the other hand, if not handled including organization and attorneys and clients to prevent properly, electronic discovery may preservation early on or even before spoliation of evidence.8 well be a litigant’s Achilles heel. the outset of the litigation process. As in many industries, the use of The central ideas that underlie the III. Creating a Document and electronic data is pervasive in the amendments are a desire to discuss Data Retention Policy construction and public contracts and deal with electronic discovery Because the amended Federal Rules fields.3 Because every construction early in the litigation process and a possess more stringent requirements project is a feat of multitasking with need to balance discovery needs than Virginia state rules, this section numerous parties involved at every with the cost of production. Even will focus primarily on strategies that stage, it is increasingly important for though these rules apply only to will best serve attorneys and their these businesses to develop and the federal courts, non-federal client under those rules. Although the implement effective strategies for litigators should be familiar with concept of electronic discovery may record retention and organization. them as well, both because many seem daunting due to the vast This has become especially true in state courts look to them for amounts of information, various the wake of recent changes to the guidance and because the types of technology, and Federal Rules of Civil Procedure, underlying motivations also will organizational hurdles, those who which specifically address the exist at the state level.5 best implement well-planned challenges and issues litigants face electronic discovery practices will be where electronic discovery is B. Virginia Rules better equipped to deal with concerned. Particularly important are The rules of electronic discovery document and electronic data review the new rules concerning spoliation in Virginia State Courts are not as and production with efficiency and of evidence. The best strategy to clear as they are under the Federal lower costs.9 ensure that technology works for, and Rules of Civil Procedure. In Virginia, not against, an organization during the rules of court control discovery A. Duty of Preservation litigation is to develop an proceedings. The rules of court are, The duty to preserve potential understanding of the issues that exist, in many respects, identical to the evidence exists when a party learns both for attorneys and their clients, Federal Rules of Civil Procedure that litigation has begun or when and to plan accordingly. prior to the new amendments.6 litigation becomes reasonably 6/THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL JULY/AUGUST 2007 foreseeable.10 Creating and implementing a plan to preserve ABOUT THE AUTHOR electronically stored information Michael L. Sterling is a partner in Vandeventer Black LLP where he chairs the prior to such an event will help ensure Construction and Public Contracts Department. This article was prepared with the able that a party is able to comply with assistance of Megan Brooks, a law student at the University of Richmond. the new electronic discovery rules with relative ease.11 The first step in developing a workable pre-litigation strategy is to gain a thorough understanding the burdens and costs Failing to do so, even for a short understanding of the laws regulating associated with discovery requests. amount of time, may raise spoliation electronic discovery. Changes in In order to acquire a thorough issues. Although halting a recycling technology happen so quickly that understanding of the client’s systems, program may be costly and sometimes it is hard to keep up. it may be useful to draw on the disruptive, the new federal rules Luckily, the laws regarding electronic technical expertise of IT personnel. allow parties to address this problem discovery have not adopted a These individuals likely will serve as through the requirement to discuss similarly blistering pace, making valuable resources in the formulation electronic discovery at the outset of 20 understanding and keeping up with of a document retention policy. litigation. changes in laws concerning E- discovery a manageable task.12 B. Email D. Metadata The next step in effective planning Email is one of the most important Metadata refers to items of data is to work with clients to implement areas to address in formulating a that are incorporated into and stored reliable document retention document retention policy. Often less with a file to identify, among other programs. Key concerns that should formal than regular correspondence, things, its source, author, and date of be addressed by a document retention carelessly sent emails have a way of creation.21 Metadata is often not policy include: (a) whether data is becoming the “smoking guns” upon visible or apparent to the user of the subject to automatic deletion; (b) which cases pivot.15 Educating software or file. Metadata is generally what, if any, backup methods are employees regarding the proper use discoverable.22 The importance of available to preserve data; and (c) the of email and blind copies, however, metadata to a particular form of length of time that different varieties may help companies avoid many of electronically stored information often of data are and should be the problems generated by careless depends on the level of the application’s maintained.13 This can be a tricky emails. Employees should be interactivity.23 Metadata is somewhat process where construction and cautioned that email is not inherently like electronic DNA with respect to public contracts are concerned due to “private” or “confidential.” Careless, its value in determining the true facts the number of programs and systems embarrassing, or derogatory surrounding a document.24 It can that are employed. In addition, there statements in emails, even if made in allow savvy litigants to determine are numerous laws, regulations, and jest, can and will be discovered in the authenticity of a document or contract clauses applicable in litigation and used against your client. determine whether it has been back- particular to public contracts that A good policy is to advise employees dated or fabricated.25 mandate retention policies for certain not to put anything in an email that types of information.14 they wouldn’t put in a formal letter, IV. Avoiding Spoliation The construction industry’s ever to be signed by a company officer. In the event of litigation, expanding use of technology results Email use and retention also should communication between attorney in a variety of electronically stored be formally addressed.16 If email is and client, as well as with the client’s information. This may include email, subject to automatic deletion unless employees, becomes extremely PDAs, accounting software, backup saved, one option may be to have users important. Some jurisdictions have tapes, metadata, “thumb drives,” save emails to project files. Most found that attorneys have a duty to employee records, digital photographs, importantly, employees should be promote “continued preservation of project management databases, instructed to save all relevant emails potentially relevant evidence” by document databases which store once notified of potential litigation to issuing litigation hold letters and documents of all types, as well as data avoid any spoliation issues.17 communicating with persons named files tucked away in laptops, field in initial disclosures concerning tablets and electronic instruments C. Backup Tapes evidence preservation, reissuing like electronic survey equipment and Backup tapes and other types of litigation hold letters to employees diagnostic tools. All of these kinds of backup media are also an important on a periodic basis, and instructing data are discoverable. Attorneys element of a document retention employees to produce relevant should understand their client’s data policy.18 If backup tapes are routinely materials.26 In a construction context, storage and retrieval systems in recycled after a set amount of time, it this may require frequent order to comply with Rule 26 is particularly important for the communication among contractors, disclosure requirements. Failing to do document retention policy to contain subcontractors, and other employees. so may result in adverse consequences procedures to halt such activity Additionally, construction companies for clients during litigation. This immediately upon realization that and their counsel should keep an knowledge also is essential to litigation is or may be pending.19 eye on changing regulations to make

JULY/AUGUST 2007 THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL/7 sure that their document retention that parties do their best to alter their 70 percent of that data never makes it into policy complies with current routine systems to prevent such hard copy form. Steven C. Bennett, Electronic Materials and Other Discovery statutory requirements. Knowing the losses, showing why a document Considerations, in INSURANCE COVERAGE 2006, at applicable statute of limitations, with retention policy, litigation holds, and 111, 117 (PLI Litigation and Administrative regard to various types of effective communication at all levels Practice, Course Handbook Series No. 8412, information, also will help ensure that are so crucial. 2006). The result is that in nearly every 27 litigation situation, electronic discovery will spoliation does not occur. Virginia courts also impose be a factor. Failure to retain and produce sanctions when evidence is lost 2. See Bennett, supra note 2, at 117 (discussing relevant electronically stored during pending litigation if the loss is potential discovery cost savings); see also Ann information can result in sanctions, the result of intentional or negligent Cohen, The Data Boom: Can Law Firms Profit?, including a variety of penalties.28 The conduct.30 Although not specifically LAW.COM-LEGAL TECHNOLOGY, May 18, 2007, http:/ /www.law.com/jsp/legaltechnology/ duty to avoid spoliation, however, addressing the problems of electronic pubarticlelt.jsp?id=1179392701422. does not require that attorneys or discovery, the standards for lost 3. The construction industry’s special clients acquire technical expertise to electronic evidence in Virginia operate characteristics have given rise to an entire rival computer experts. Increasingly, much like those under the federal industry of unique software applications that create cost estimates, generate bids, aid in the gadgets, programs, and systems standards. In Virginia, the design, quality testing, accounting, project required to run a company work unintentional or non-negligent loss management databases, drawing CAD files, regardless of—and perhaps in spite of electronically stored information BIM’s (data included in Building Information of–how well their operators likely would not result in sanctions, Modeling databases) and scheduling understand them. Amended Rule 37(f) assuming that the party had acted in programs such as Primavera’s©, Timberline, 31 Master Builder, and Pertmaster Project Risk. of the Federal Rules of Civil Procedure good faith. Thus, under Virginia law, Other frequently used programs include takes into account the sometimes a document retention policy is just as email systems, native and scanned baffling features inherent to important as under the federal documents programs, spreadsheet technology. For example, some standard because it works to show programs, powerpoint, digital photo and video programs. programs automatically overwrite good faith and to disprove findings of 4. The Amendment to Rule 16(b) provides information or change metadata or negligence. that the judge who enters the Scheduling discard files after inactivity. Rule 37(f) Order may include “provisions for disclosure provides that, notwithstanding V. Conclusion or discovery of electronically stored exceptional circumstances, courts information.” FED. R. CIV. P. 16(b). The The amended Federal Rules of Civil Amendment to Rule 26(a) requires each party should not implement sanctions Procedure require litigants to address to provide to the other a copy or description against parties when they fail to electronic discovery very early in the of all electronically stored information produce electronically stored litigation process. Implementing a without waiting for a discovery request. FED. information that was lost due to document and data retention policy R. CIV. P. 26(a). The Amendment to Rule 26(f) 29 provides that parties must address issues routine computer operations. This and educating employees on the related to electronically stored information “safe harbor” provision, however, importance of the policy will help to at their initial conference. FED. R. CIV. P. assumes that good faith was exercised ensure that, in the event of litigation, 26(f). in preserving the information. The construction clients will be able to 5. Virginia courts have recognized that where requirement of good faith requires state law does not adequately address a comply easily with the new particular discovery issue, federal law may requirements. To ensure that a client’s be instructive. See, e.g., Staples Corp. v. electronic discovery process is both Washington Hall Corp., available at 1988 WL efficient and financially feasible, 972092, at *2 (Va. Cir. Ct. 1998). What makes attorneys must work closely with 6. The rules were revised to conform with the last set of Amendments to the Federal Rules lawyers successful? employees such as IT personnel and of Civil Procedure; however, the last update record keepers, as well as company prior to December 2006 was July 1970. 6A How do you define success? What have policy makers, to devise an electronic Michie’s Juris. Discovery § 2 (1999). been your greatest accomplishments? document retention policy. The policy 7. Va. Sup. Ct. R. 4:1, 4:9. What values do you hold in highest regard? should ensure that documents that 8. See Gentry v. Toyota Motor Corp., 252 Va. Name one of your heroes. What is your 30, 34, 471 S.E.2d 485, 488 (1996). must be retained are properly 9. For an in-depth discussion of helpful biggest concern about life on the planet? organized and easily searchable. electronic discovery practices, see Virginia What is fun? What especially galls you? Llewellyn, Electronic Discovery Best Practices, What do you want to make sure you Additionally, the procedures necessary to institute a litigation hold 10 RICH. J.L. & TECH (2004), available at http:/ accomplish before you die? Read answers /law.richmond.edu/jolt/v10i5/article51.pdf. to these and a dozen more questions should be clear and understood by 10. See Thomas Y. Allman, Managing designed to give you a look at what makes all employees. Planning and Preservation Obligations After the 2006 a lawyer successful in the upcoming communication between attorney Federal E-Discovery Amendments, 13 Rich. edition of TCL. and client can help to ensure that, J.L. & Tech. 9, 11 (2007), available at http:// law.richmond.edu/jolt/v13i3/article9.pdf should it be necessary, electronic (discussing the duty to preserve in depth). discovery will be manageable. 11. It is important to pay attention to the timing of any new document retention policy NOTES or modification to a pre-existing one in order virginia.thecompletelawyer.com 1. In fact, estimates suggest that over 90 to avoid questions as to the motives for the percent of all data is created electronically. change. Make sure that any changes are TCL is a collaborative effort made while there is no potential litigation on of The Virginia Bar Association in cooperation with DAVID SHUB, A HANDBOOK FOR RESPONDING TO ELECTRONIC the horizon. See MARGARET M. KOESEL & TRACY L. The Complete Lawyer, LLC, Copyright 2007 DISCOVERY REQUESTS 1 (2003). Additionally, nearly 8/THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL JULY/AUGUST 2007 TURNBULL, SPOLIATION OF EVIDENCE: SANCTIONS AND REMEDIES FOR DESTRUCTION OF 18. See AAB Joint Venture v. United States, 75 Fed. Cl. 432, 439-40 EVIDENCE IN CIVIL LITIGATION 11-12 (Daniel F. Gourash ed., American Bar (2007) (discussing the discoverability of backup tapes). Association 2000) 19. See SHUB, supra note 2, at 3-4. 12. The University of Richmond Law School’s Journal of Law and 20. If the parties were to agree that the information was unlikely to Technology publishes an annual issue solely concerned with electronic be responsive to the issue, the obligation to preserve that information discovery, which can be found online. See Richmond Journal of Law could be discharged and regular recycling could resume. See Fed. R. and Technology, available at http://law.richmond.edu/jolt/index.asp Civ. P. 26(b)(2)(B) (Comm. Note) (“It is often useful for the parties to (follow E-Discovery Archives hyperlink) (last visited June 12, 2007). discuss this issue early in discovery.”). 13. DISCOVERY DESKBOOK FOR CONSTRUCTION DISPUTES, 134 (Buckner Hinkle, Jr., 21. Metadata is often referred to as “data about data” and it can take W. Alexander Mosely & Richard F. Smith eds., 2006). many different forms. Although a user can create metadata, by 14. For example, there is no statute of limitations on state contract choosing a file name for instance, generally computers and other claims, so documents related to performance of those contracts electronic devices generate metadata on their own. See Microstrategy should be preserved indefinitely. Where federal contracts are Inc. v. Li, 268 Va. 249, 253, 601 S.E.2d 580, 583 (2004). concerned, records such as time and attendance records, labor cost 22. See The Sedona Guidelines: Best Practice Guidelines and distribution cards, paychecks, receipts for wages paid in cash or Commentary for Managing Information and Records in the Electronic other evidence of payment for services rendered by employees, Age (The Sedona Group Workshop Series, Sept. 2005 Series, available petty cash records, and requisitions for materials, supplies, at www.thesedonaconference.org). equipment, and services should be kept for at least three years. 23. Williams v. Sprint/United Management Co., 230 F.R.D. 640, 647 Records evidencing contract negotiation, administration, and audit (D. Kan. 2005). requirements should be preserved for at least three years after final 24. Philip J. Favro, A New Frontier in Electronic Discovery: Preserving contract payment. Records relating to invoices, orders, inspection, and Obtaining Metadata, 13 B.U. J. SCI. & TECH. L. 1, 4 (2007). production, quality control, payroll sheets, and tax withholding 25. Id. at 12. statements should be preserved for at least four years. Finally, 26. MARGARET M. KOESEL & TRACY L. TURNBULL, SPOLIATION OF EVIDENCE: SANCTIONS records related to work compliance with contract requirements, AND REMEDIES FOR DESTRUCTION OF EVIDENCE IN CIVIL LITIGATION 11-12 (Daniel F. including subcontract agreements and purchase orders for materials, Gourash ed., American Bar Association 2000). quality control documentation, test reports, photographs, and daily 27. See Reingold v. Wet ‘N Wild Nevada, Inc., 944 P.2d 800 (Nev. reports, should be kept indefinitely. See generally GUIDE TO RECORD 1997) (holding that the destruction of first aid records before the RETENTION REQUIREMENTS (CCH Incorporated 2006). statute of limitations had run amounted to suppression of evidence). 15. See id. at 134-35. 28. Thomas Y. Allman, Managing Preservation Obligations After the 16. Company email accounts often have a limit on the amount of 2006 Federal E-Discovery Amendments, 13 RICH. J.L. & TECH. 9, 34 (2007), data that can be stored on the server. To keep emails beyond these available at http://law.richmond.edu/jolt/v13i3/article9.pdf. limits often requires that the user save to an archive file on their 29. FED. R. CIV. P. 37(f). computer. DISCOVERY DESKBOOK FOR CONSTRUCTION DISPUTES, supra note 15, at 30. Ward v. Texas Steak, Ltd., available at 2004 U.S. Dist. LEXIS 134-35. 10575 (W.D. Va. May 27, 2004). 17. See Zubulake v. UBS Warburg L.L.C., 220 F.R.D. 212 (S.D.N.Y. 31. See Gentry v. Toyota Motor Corp., 471 S.E.2d 485 (Va. 1996) 2003) (discussing affirmative preservation obligations relating to (noting that neither plaintiffs nor their attorney had acted in bad faith email); Thomas Y. Allman, Managing Preservation Obligations After when evidence was destroyed by an expert without their knowledge the 2006 Federal E-Discovery Amendments, 13 RICH. J.L. & TECH. 9, 34 or consent). (2007), available at http://law.richmond.edu/jolt/v13i3/article9.pdf.

JULY/AUGUST 2007 THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL/9 LEGAL FOCUS Construction and Public Contracts Law Working with the Multi-Employer Policy

BY RANDALL H. WINTORY 1. What is the Multi-Employer Worksite Policy? In many work places, particularly construction sites, there are multiple employers that may control all or a part of the worksite and/or expose employees to safety hazards. The multi-employer policy imposes a responsibility on an employer who controls all or a part of the worksite, and/or may be responsible for correcting a safety hazard to protect the safety of all employees, not just its own employees. Under the policy, an employer may be cited for a safety hazard even if that employer did not create the hazard or its own employees are not exposed to the hazard.4 The multi-employer policy rests on the presumption that safety is a shared responsibility, so the more employers responsible for safety, the safer the worksite.5 Under the multi-employer worksite policy, employers may fall into four categories or roles: · Creating employer: the employer responsible for creating the safety hazard. This employer will receive a citation whether or not its own employees are exposed to the hazard. No area of the construction industry may be more · Exposing employer: the employer whose employees regulated by the government than that of worksite safety. are exposed to a safety hazard. This employer may receive The photograph above depicts a commonly-occurring a citation even if the employer did not create the hazard safety hazard: working on a scaffold more than 10 feet and is unable to correct the hazard. There are many above ground without guardrails or fall protection. Which instances where an employer may lack authority or employer(s) may be cited for this hazard other than the ability to correct a hazard, or is prohibited from correcting employer whose employee is exposed to it? It will be no the hazards by worksite or trade rules. In such instances, surprise that citations would be issued to the the employer is expected to take reasonable steps to protect subcontractor who put up the scaffolding and/or employed its employees, among other duties. this worker. It may come as a surprise, though, that even · Controlling employer: the employer who has if their own employees were not exposed to the hazard, supervisory control of the site or portion of the site and/or citations could also be issued to the general contractor, has the ability to correct safety hazards or require others other subcontractors, the project architect or engineer, or to correct them. Such control can be established by the construction manager.1 contract or by the exercise of such control at the worksite. The basis for such citations is what is known as the · Correcting employer: the employer engaged in a multi-employer policy.2 For many years, the common undertaking with the exposing contractor who, Occupational Safety and Health Administration (OSHA) by contract or practice, is responsible for installing or and the Virginia Occupational Safety and Health Program maintaining safety measures on the project.6 (VOSH) enforced this policy as if it were a regulation, even An employer may receive a multi-employer citation if though it did not have the binding force of a regulation. it falls into one or more of these categories or roles. The Recently, there have been changes affecting the multi- prime example is the general contractor on a multi- employer policy under OSHA and VOSH. This article employer worksite, who could receive three types of provides a brief explanation of the OSHA and VOSH multi- citations for a safety hazard that it did not create: as a employer policies, the recently-adopted multi-employer controlling, exposing and/or correcting employer. In most regulation in Virginia, the recent decision affecting the instances, the general contractor has sufficient control OSHA policy, and the actions contractors should consider and supervisory capacity over the entire worksite and taking to avoid a multi-employer citation.3 other employers on the worksite to give rise to a duty either to comply fully with the standards or to take the 10/THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL JULY/AUGUST 2007 necessary steps to assure compliance by the other employers.7 ABOUT THE AUTHOR The multi-employer policy primarily impacts Randall H. Wintory is a construction lawyer in the Richmond controlling employers. However, only an estimated one office of Sands, Anderson, Marks & Miller PC. He is currently percent or fewer of the more than 3,000 VOSH inspections Chair of the Construction and Public Contracts Law Section of annually involve the application of multi-employer policy The Virginia Bar Association, and is a member of the Virginia to controlling employers.8 VOSH estimates that multi- State Bar’s Construction Law and Public Contracts Section; the employer citations result in penalties totaling Associated General Contractors of Virginia, Richmond District; approximately $47,000 in fines per year for all of the and the Richmond Area Municipal Contractors Association. He citations issued to general contractors based on current received his law degree from the College of William and Mary’s violation trends.9 Marshall-Wythe School of Law.

2. Bases for the Multi-Employer Policy The multi-employer policy originated with OSHA. While some projects in Virginia may be governed by multi-employer policy has been the lack of statutory or OSHA, most will be governed by VOSH.10 VOSH closely regulatory authority to cite an employer for worksite follows OSHA’s standards, guidelines and interpretations. hazards that the employer did not create and to which its For these reasons, understanding the multi-employer employees are not exposed. Challenges to OSHA’s multi- policy in Virginia involves looking at the policy under employer citations on the basis that they were issued without the sanction of a formerly-adopted regulation, both OSHA and VOSH. The following is a brief overview 19 of the bases for OSHA’s and VOSH’s enforcement of the have met with mixed success. Recently, however, in Secretary of Labor v. Summit multi-employer policy, and recent events affecting the 20 policy are discussed below. Contractors, Inc. , the Occupational Safety and Health Review Commission21 (Review Commission) held that a. OSHA Multi-Employer Policy OSHA lacked the proper authority to issue multi-employer OSHA enforces multi-employer policy as just that – a citations to a non-creating, non-exposing general policy. The policy is not embodied in any formally adopted contractor. Summit had been cited as a result a statutes, regulations or standards. So what is the statutory subcontractor’s use of scaffolding without proper fall or regulatory source of the multi-employer policy? Under protection. It was undisputed that Summit had not the Occupational Safety and Health Act11 (OSH Act) an created the hazard, nor were its employees exposed to the employer has two duties. One is a general duty to provide hazard. The Review Commission concluded that 29 C.F.R. a safe work place for the protection of his employees.12 The § 1910.12(a) limits an employer’s obligations to comply second duty is to comply with all regulations, standards with the construction safety standards to “his employees,” and rules adopted under the OSH Act.13 In accordance precluding issuance of a citation to a general contractor with the OSH Act, OSHA promulgated safety and health whose own employees are not exposed to the hazard. regulations or “standards.” Some of these standards are This decision is currently on appeal to the Eighth Circuit applicable to all workplaces14 and some are applicable to Court of Appeals. specific workplaces, such as construction worksites.15 OSHA relies on the second duty in the OSH Act as the b. The Virginia Multi-Employer Policy basis for the multi-employer policy, which it interprets States are permitted to opt out of OSHA by adopting their own safety regulations that are at least as effective to extend an employer’s duties to include protecting any 22 employees on the worksite.16 There is an inconsistency, as the Federal standards. Virginia has done so by however, between OSHA’s interpretation of the second adopting the Virginia Occupational Safety and Health Act (VOSH Act)23 and promulgating regulations and duty and the regulations promulgated under the OSH 24 Act. On the one hand, the second duty requires an employer standards. For its construction standards, VOSH adopted the substantive portions of the OSHA safety standards to comply with all regulations, which is not limited to an 25 employer’s employees. On the other hand, the regulation applicable to construction worksites. Prior to 2006, VOSH had not promulgated a regulation incorporating the construction standards, 29 C.F.R. § 26 1910.12, provides that an employer is responsible for providing for the issuance of multi-employer citations. protecting the employment and places of employment of Instead, VOSH followed OSHA’s lead and issued multi- his employees.17 employer citations based on its interpretation of the clause in the VOSH Act requiring employers to comply with all This inconsistency is not resolved by an express 27 provision in any of the many statutes, regulations and rules and regulations promulgated under the VOSH Act. standards promulgated by OSHA, which pertain to VOSH set out its policy in its Field Operation Manual (FOM). In the FOM, safety inspectors are directed to issue construction worksites. Instead, OSHA simply relies on 28 its interpretation of the OSH Act as the source of its multi-employer citations. authority to issue multi-employer citations, pursuant to Like the OSHA policy, VOSH’s policy was nothing more which the Secretary of Labor issued a directive (OSHA than an internal guideline, without the force of law of a Directive),18 in which OSHA sets forth its multi-employer formally adopted regulation. This was the conclusion reached by the Virginia Court of Appeals in Davenport v. policy. 29 The multi-employer policy has not gone unchallenged Summit Contractors, Inc., in which it struck down VOSH’s by the construction industry. The main challenge to the policy of issuing multi-employer citations to non-creating, non-exposing general contractors. In Davenport v. Summit,

JULY/AUGUST 2007 THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL/11 the Virginia Court of Appeals concluded that there was receiving a multi-employer citation, and take appropriate no statutory or regulatory basis to support VOSH’s multi- steps to avoid one. To that end, the general contractor employer policy. should have a written safety program that it distributes In response to Davenport v. Summit, VOSH amended its to its employees and subcontractors, who should regulations to codify its multi-employer citation policy.30 acknowledge receipt of it in writing and agree to comply Along with this new multi-employer citation regulation, with it in writing.37 Then the general contractor must VOSH adopted as part of the regulation what is commonly enforce the program with written notices of violations referred to as the “multi-employer defense.” This provision and increasing levels of penalties, including termination. sets out the criteria for an exposing employer to avoid or The general contractor should also address defeat a multi-employer worksite citation.31 responsibility for multi-employer citations in its the subcontracts. For example, the subcontract should 3. Understanding the Multi-Employer Policy and provide, among other things, that: Steps to Take to Avoid a Citation · Subcontractors must correct hazards they create, VOSH published the FOM to provide guidelines and report hazards they discover, have their own safety suggested procedures that its inspectors are to follow in program that they distribute to, and enforce against, their performing inspections and issuing citations. The FOM employees and sub-subcontractors. specifically states that if an exposing employer establishes · The general contractor has the power under the all of the defenses to a multi-employer citation, the subcontract to correct safety violations the subcontractor employer shall not be cited.32 The OSHA Directive fails to correct and the right to backcharge the provides similar guidelines, plus several helpful examples subcontractor for such corrective action. to illustrate when employers may or may not be cited for · The subcontractor must indemnify the general a safety hazard under the multi-employer policy. The contractor for any fines, penalties or citations resulting FOM and OSHA Directive are useful tools for from the subcontractor’s work.38 understanding (a) when a multi-employer citation may be issued, and (b) what actions employers should take to c. Appropriate steps to take to avoid a multi-employer avoid or defeat a multi-employer citation. citation after work begins. VOSH and OSHA will look beyond the terms of the a. Understanding when a citation may be issued contracts to the actual practices at the worksite, such as VOSH and OSHA use a two-step analysis to determine whether the employer exercised any supervisory whether to cite one or more employers under the multi- authority, the degree of supervisory authority, the nature employer policy for safety hazards found at the worksite: of the violation and the nature and extent of the (1) what role the employer played at the worksite (i.e., precautionary measures taken.39 As a result, a general creating, exposing, controlling or correcting employer); contractor will find it difficult to eliminate all possibility and (2) what actions did the employer take to satisfy the of VOSH or OSHA determining that the general contractor obligations appropriate for that role.33 The different is a controlling employer. Accordingly, during the project employer roles, discussed above, dictate the actions the the general contractor should consider taking the employer should take to avoid a citation. Some of these following actions: actions should be taken before work on a project begins, · Holding regular safety meetings and requiring 40 while the other steps must be taken during the life of the subcontractors to do so. project and when a safety hazard is created. · Conducting regular safety inspections and requiring subcontractors to do the same. b. Appropriate actions to take to avoid a multi-employer · Enforcing its safety program with progressive penalties citation before work begins. for violations. First, general contractors and controlling employers · Documenting everything – this may be one of the must address safety responsibilities in their contracts. most important actions – keep good records! VOSH and OSHA will look at an employer’s contractual When a safety hazard is created, the key to avoiding obligations — both upstream and downstream — in the citation is to take appropriate actions, which depend, determining whether an employer has sufficient in part, on the role(s) that the employer may fall into for supervisory authority over all or a part of the worksite to the purposes of a multi-employer citation. Although not be a controlling employer.34 exhaustive, the chart on page 13 shows actions that would Some form contracts between the owner and general be appropriate to take for each of the four employer roles. contractor place responsibility for project safety on the general contractor.35 Also, form subcontracts give the 4. Conclusion general contractor authority to impose or demand safety The multi-employer policy seems to be here to stay. As measures on the subcontractor.36 Unless modified, these a result, contractors and the other employers at provisions are sufficient to establish supervisory control construction worksites need to learn to work with the to make the general contractor citable for a subcontractor’s policy, so they can avoid citations they might otherwise safety violation. receive. This may involve reviewing and revising their General contractors, however, may have difficulty contracts, changing some worksite procedures to prevent absolving themselves of liability for a multi-employer safety hazards from being created, being diligent in citation by means of their contracts. As a result, the better discovering hazards, and taking appropriate actions after approach may be to simply accept the possibility of safety hazards are discovered.

12/THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL JULY/AUGUST 2007 ROLE OF EMPLOYER ACTIONS EMPLOYER MUST TAKE TO AVOID A CITATION FOR SAFETY HAZARDS

Creating Employer If authorized or able to correct hazard, must: correct hazard Normally cited whether or not own employees are exposed If not authorized or able to correct hazard, must: • Ask Controlling Employer to correct hazard • Take reasonable steps to protect its employees and other employees

If in control of worksite or specific area, phase Exposing Employer or practice and able to correct hazard or require If knows or could know that it be corrected, must: Correct hazard Normally cited, unless of hazard by exercise of establishes all 7 elements reasonable diligence, of defense under 16 VAC then — If no control of worksite or specific area, phase or § 25-60-260(G) practice and/or unable to correct hazard or require that it be corrected, must: • Notify creating, controlling and/or correcting employers of the hazards • Ask creating/controlling employer to correct hazard Controlling Employer • Inform its employees of hazard Normally cited whether or not • Take reasonable alternative means to protect own own employees are exposed If knows or could know employees, including, in extreme circumstances, of hazard by exercise of removing its employees from project reasonable diligence, Correcting Employer then — Normally cited if responsible Must: correct hazard or ensure that hazard is for installing, maintaining or corrected, if possesses authority through contract If knows or could know or actual practice correcting hazards for exposing of hazard by exercise of employer whether or not own reasonable diligence, employees exposed then — Must: correct hazard

The author wishes to thank Robert Feild, Senior Staff Attorney at subcontractor to abate hazard and abide by safety standards). See, the Department of Labor and Industry for his kind assistance with generally, Walter B. Connolly, Jr., Donald R. Crowell, II, A Practical Guide to the Occupational Safety and Health Act, §§ 6.03 and 8.01 this article. Any errors in the information presented are solely those (2004); Mark A. Rothstein, Occupational Safety and Health Law, 168 (4th of the author and not of Mr. Feild. ed.). 5. Charles N. Jeffress, Speech on Construction Safety to 10th Annual NOTES Construction Safety Council (Feb. 16, 2000) (available at www.osha.gov). 1. See 16 V.A.C. § 25-60-260(F)(2)(B), providing that citations may be 6. See OSHA Directive No. CPL 2-0.124, Multi-Employer Citation Policy, issued to an employer who is not a general contractor, but is responsible (Dec. 10, 1999) (available on the OSHA website: www.osha.gov); 16 by contract or through actual practice for safety conditions at the work V.A.C. 25-60-260; VOSH Field Operations Manual (FOM) Ch. III.B.7, site and authority to correct safety hazards. See, e.g., Sec. of Labor v. available at www.dli.state.va.us/infocenter/publications/ Kulka Construction Management Corp., 1992 WL 224824 (O.S.H.R.C.), voshmanuals.html or www.townhall.state.va.us. 15 O.S.H. Cas. (BNA) 1870, 1992 O.S.H.D. (CCH) ¶ 29,829 (Aug. 28, 1992) 7. See, e.g., Sec. of Labor v. Anning-Johnson Co., 4 OSHC (BNA) 1193, (construction manager was properly cited for OSHA safety violations, 1199, 1975-76 OSHD (CCH) ¶ 20,690, p. 24,784 (No. 3694, 1976) 1976 finding that manager exercised substantial supervisory authority over WL 5967 (O.S.H.R.C.) (May 12, 1976) (articulating rule for multi-employer construction work); Sec. of Labor v. Bertrand Goldberg Assoc., 4 O.S.H. worksites); Sec. of Labor v. Grossman Steel & Aluminum Corp., 4 OSHC Cas. (BNA) 1587 (1976) (architectural firm); Sec. of Labor v. Bechtel (BNA) 1185, 1188, 1975-76 OSHD (CCH) ¶ 20,691, p. 24,791 (No. 12775, Power Corp., 4 O.S.H. Cas. (BNA) 1005 (1976) (construction manager). 1976), 1976 WL 5968 (O.S.H.R.C.) (May 12, 1976) (articulating rule in Cf. Sec. of Labor v. v. Simpson, Gupertz & Heger, Inc., 15 O.S.H. Cas. affirming citation issued to subcontractor for safety hazard its employees (BNA) 1851 (1992); Sec. of Labor v. Skidmore, Owings & Merrill, 5 O.S.H. were exposed to, but it did not create or control). Cas. (BNA) 1762 (1977) (construction standards did not apply to 8. See Final Regulation Agency Background Document, at “Issues” architectural firm). See also OSHA Standard Interpretation Letter on (March 13, 2006) available at www.townhall.state.va.us. determining the controlling employer (Dec. 13, 2001) (available at 9. See 22 Virginia Register of Regulations, Issue 7 at 2-3 (Dec. 12, 2005). www.osha.gov). For subcontractors, see, e.g., Extent of Duty of 10. See 29 U.S.C. § 653 (OSH Act applies to all workplaces in a State or Subcontractor, Under Provisions of Occupational Safety and Health Act in certain U.S. territories); and see 29 U.S.C. § 667 (providing for (29 U.S.C.A. §§ 651et seq.), to Protect Its Employees From Hazardous approved state plans). Conditions Which It Did Not Create And Over Which It Has No Control, 65 11. 29 U.S.C. §§ 651 et seq. A.L.R. Fed. 926. 12. See 29 U.S.C. § 654(a)(1). The multi-employer policy does not apply 2. Also referred to as the multi-employer worksite doctrine or multi- to violations of the so-called “general duty” violations under 29 U.S.C. § employer worksite citation policy. 654(a)(1), referred to in OSHA decisions as a “Section 5(a)(1)” violation. 3. Note: while the focus of this article is limited to the construction 13. 29 U.S.C. § 654(a)(2), referred to in OSHA decisions as a “Section worksites, the multi-employer policy is not. Rather, it applies to “all 5(a)(2)” violation. covered industries” where there maybe multiple employers, although 14. 29 C.F.R. §§1910, et seq. some issues will be limited to construction worksites. 15. See 29 C.F.R. §1910.12, incorporating by reference the safety 4. Universal Const. Co., Inc. v. Occupational Safety and Health Review standards promulgated under the Contract Work Hours and Safety Com’n, 182 F.3d 726 (10th Cir. 1999) (general contractor liable under Standards Act applicable to federal construction projects. The OSHA “multi-employer worksite” doctrine for subcontractor’s violation of OSHA standards, however, specifically exclude 29 C.F.R. § 1926 Subparts A safety standards, where contractor had control over worksite and could and B, which impose multi-employer obligations on the general have corrected hazard, even without subcontractor’s consent, or directed contractor at 29 C.F.R. § 1926.16. See 29 CFR 1910.12(c).

JULY/AUGUST 2007 THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL/13 16. See, e.g., Anning-Johnson Co., 4 OSHC (BNA) at p. 1199, 1975-76 the proposed amendments were, among other things, in response to OSHD (CCH) at p. 24,784; Grossman Steel, 4 OSHC (BNA) at p. 1188, Davenport); and see Agency Background Document (March 13, 2006) 1975-76 OSHD (CCH) at p. 24,791. (providing statements of purpose, substance, issues with proposed 17. 29 C.F.R. § 1910.12, providing that “[e]ach employer shall protect amendment and summaries of the public comments to the proposed the employment and places of employment of each of his employees amendments from Kenbridge Construction and the AGC of Virginia and engaged in contraction work by complying with appropriate standards agency responses). The Virginia Register of Regulations is available at: described in this paragraph.” (Emphasis added.) www.townhall.state.va.us. 18. See OSHA Directive No. CPL 2-0.124 (clarifying OSHA’s Multi-Employer The new multi-employer worksite citation regulation provides as follows: Citation Policy by, among other things, providing steps and examples for F. On multi-employer worksites for all covered industries, citations determining when to cite a general contractor with “control”). shall normally be issued to an employer whose employee is 19. See Anning-Johnson Co., 4 OSHC (BNA) at p. 1199, 1975-76 OSHD exposed to an occupational hazard (the exposing employer). (CCH) at p. 24,784; Grossman Steel, 4 OSHC (BNA) at p. 1188, 1975-76 Additionally, the following employers shall normally be cited, OSHD (CCH) at p. 24,791; and see Sec. of Labor v. Centex-Rooney whether or not their own employees are exposed: Construction Co., 1994 WL 682931, 16 OSHC 2127 (Dec. 2, 1994) 1. The employer who actually creates the hazard (the creating (employer is responsible for violations of other employers where it employer); could reasonably be expected to prevent or detect and abate the 2. The employer who is either: violations due to its supervisory authority and control over the worksite, a. responsible, by contract or through actual practice, for safety the floor openings and missing or defective guardrails were in plain and health conditions on the entire worksite, and has the authority view, they had existed for a significant period of time before the for ensuring that the hazardous condition is corrected (the inspection and the GC could have ascertained their existence through controlling employer); or the exercise of reasonable diligence). But see Anning-Johnson Co. v. b.responsible, by contract or through actual practice, for safety OSHRC, 516 F.2D 1081, 1088 (7th Cir. 1975) (subcontractors could not and health conditions for a specific area of the worksite, or be held liable for penalties for non-serious violations to which their specific work practice, or specific phase of a construction project, employees were exposed that the subcontractors neither created nor and has the authority for ensuring that the hazardous condition is were responsible for abating under their contracts); Brennan v. Gilles & corrected (the controlling employer); Cotting, Inc., 504 F.2d 1255, 1262 (4th Cir. 1974) (vacating OSHA 3. The employer who has the responsibility for actually correcting citations issued to general contractor following scaffold collapse that the hazard (the correcting employer). killed two of a subcontractor’s employees, holding that the general 31. 16 V.A.C. § 25-60-260(G), which provides: contractor should not be held responsible jointly with a subcontractor G. A citation issued under subsection F. to an exposing employer for the safety of the latter’s employees, but remanding for determination who violates any VOSH law, standard, rule or regulation shall be on issue regarding general contractor’s employees); Southeast vacated if such employer demonstrates that: Contractors, Inc. v. Dunlop, 512 F.2d 675 (1975) (general contractor is 1. The employer did not create the hazard; not responsible for acts of his subcontractors or their employees, 2. The employer did not have the responsibility or the authority to therefore the general contractor was not responsible for injuries caused have the hazard corrected; by subcontractor’s employee while backing up a truck at the site). 3. The employer did not have the ability to correct or remove the 20. OSHRC Docket No. 03-1622 (April 27, 2007) (decision available at: hazard; www.oshrc.gov/decisions/decisions.html; briefs available at 4. The employer can demonstrate that the creating, the controlling www.oshrc.gov/foia/foia_reading_room.html). OSHA has petitioned the and/or the correcting employers, as appropriate, have been Eighth Circuit Court of Appeals to review this decision. specifically notified of the hazards to which his employees were 21. The Review Commission is an independent Federal agency created exposed; to decide contests of citations or penalties arising from OSHA inspections. 5. The employer has instructed his employees to recognize the The Review Commission is an administrative court and renders decisions hazard and, where necessary, informed them how to avoid the by its Administrative Law Judges. The Review Commission’s procedures dangers associated with it; provide for two levels of adjudication, one before an ALJ and the second 6. Where feasible, an exposing employer must have taken is a review of ALJ decisions. appropriate alternative means of protecting employees from the 22. See 29 U.S.C. § 667 and 29 C.F.R. § 1902.37(b)(4). hazard; and 23. Va. Code § 40.1-44.3 et seq. 7. When extreme circumstances justify it, the exposing employer 24. See Va. Code § 40.1-44.1 et seq. (the VOSH Act); and see 16 V.A.C. §§ shall have removed his employees from the job. 25-60-10 et seq. (VOSH regulations, also set forth in the VOSH 32. VOSH FOM Ch. III B.7.d. Administrative Regulations Manual or “ARM” available at 33. See OSHA Directive CPL 2-00.124, which VOSH follows in its application www.dli.state.va.us/infocenter/publications/voshmanuals.html). of the multi-employer policy. 25. See 16 VAC 25-175-1926. 34. VOSH FOM Ch. III B.7.f.; and see, e.g., Sec. of Labor v. Summit 26. See 16 V.A.C. 25-60-260 effective March 1, 2003. Contractors, Inc., 2004 WL 1729465 (O.S.H.R.C.A.L.J.), OSHRC Docket 27. VOSH Act at Va. Code § 40.1-51.1(A). No. 03-1622 (July 26, 2004) at *6 (administrative law judge looked to the 28. VOSH Field Operation Manual, Ch. III B.7 (last revision March 1, provisions of Summit’s subcontract and safety manual given to 2003). subcontractors, as well as Summit’s prime contract and determined that 29. 45 Va.App. 526, 612 S.E.2d 239 (2005). The Court of Appeals Summit was a controlling employer). reasoned that: 35. See, e.g., AIA A201-1997 General Conditions of the Contract for We have no quarrel with the policy judgments underlying VOSH’s Construction, §§ 10.1 and 10.2 (making General Contractor responsible finely balanced treatment of general contractors and its admixture for initiating, maintaining and supervising all safety precautions and of both statutory and common law principles to achieve the goal programs in connection with the performance of the Contract and shall of worker safety. Our only objection is that not a word of it can be providing reasonable protection to prevent damage, injury or loss to, found in the VOSHA or any “rules and regulations promulgated among other things, employees and other persons who may be affected under this title.” Code § 40.1-51.1(A). None of these promulgated thereby). “rules and regulations” address the liability interplay between 36. See, e.g., AIA A401-1997 Standard Form Agreement Between general and subcontractors, much less the imputation of a Contractor and Subcontractor, § 4.3. subcontractor’s statutory defaults to a general contractor under a 37. 16 VAC 25-60-260(B)(2). tort-based reasonable care standard. And the only federal 38. See Sec. of Labor v. Summit, 2004 WL 1729465 at *6 (quoting regulation addressing the subject of general contractor liability indemnity provision in Summit’s subcontract). for subcontractor defaults, 29 C.F.R. § 1926.16(b), was specifically 39. VOSH FOM Ch. III B.7.f. See also, Virginia Department of Labor and omitted from the list of regulations incorporated into Virginia law. Industry, Amendment to Administrative Regulations for the VOSH Program, Davenport v. Summit, 45 Va.App. at 533, 612 S.E.2d at 243 (emphasis Final Regulation Agency Background Document at “Public Comments” added). section (March 13, 2006) (agency response to public comments explaining 30. See 16 V.A.C. § 25-60-260(F). See also 22 Virginia Register of facts that are looked at in determining which employers may receive Regulations, Issue 7 at 2-3 (Dec. 12, 2005) (acknowledging that VOSH citations, available at www.townhall.state.va.us). regulations are silent as to multi-employer citations and explaining that 40. 16 V.A.C. 25-60-260(B)(1).

14/THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL JULY/AUGUST 2007 LEGAL FOCUS Construction and Public Contracts Law False Claims in Virginia: Charting the Unknown Course BY KELLEY C. HAUSER AND W. STEPHEN DALE

Since 1986, when Congress increased the penalties funds and state projects has currently split the United associated with violations of the Federal False Claims Act States Circuit Courts with respect to application of the (FCA)1 and removed any requirement of specific intent to FCA. This split focuses primarily on the presentment defraud, FCA litigation has exploded. In fact, since 1986, question, namely, must the false claim actually be the U.S. Department of Justice has open more than 9,300 presented to the federal government in order to implicate “new matters” pursuant to the FCA, recovering more the FCA, or is federal funding alone adequate to invoke than $18 billion in settlements and judgments on behalf FCA penalties. of the United States,2 and at least 18 states, 3 including the In the presentment camp, in U.S. ex rel. Totten v. Bombardier Commonwealth of Virginia, and several cities, including Transportation Corp., 380 F.3d 488 (D.C. Cir. 2004), the U.S. New York City, Washington, D.C., and Chicago, have Court of Appeals for the D.C. Circuit read a presentment enacted some form of False Claim Act statutes. These state requirement into all subsections of the False Claims Act, and federal acts, which generally provide for treble concluding that a false claim must actually be presented damages, litigation costs, and stiff civil penalties, have to a federal officer or employee to be actionable under any formed the basis for some staggering verdicts against portion of the FCA.4 In Totten, a relator brought a qui tam government contractors, often finding the contractor liable action alleging that the contractors who contracted with for several times the total value of the original contract. Amtrak to supply new toilet systems for the Amtrak’s Of more importance to the contractor and to counsel trains violated, inter alia, subsection (a)(2) of the FCA. The navigating these issues, is the fact that, while the reach violation, as argued by the relator, constituted delivering and scope of some of these Acts have been dramatically defective rail cars and then submitting invoices for those expanded by state and federal courts, other states, rail cars to Amtrak for payment from an account that including Virginia, have not enjoyed the occasion to fully included federal funds. Id. at 490. On appeal, the D.C. interpret or apply these measures to projects or claims. Circuit held that dismissal of the relator’s suit was proper, Accordingly, the precise breadth and reach of many of insisting that FCA liability did not apply where a claim these state acts, as well as the interplay between state and was presented only to Amtrak because Amtrak was not a federal acts, have not been fully defined. federal agency.5 Id. at 502. The court reasoned that by This article will address some of the major factors adding the phrase “by the Government” to subsection driving this expansion of the FCA and the uncertainty (a)(2) of the FCA, Congress intended to refer back to the regarding its application to state projects. First, this article presentment requirement in subsection (a)(1), and thus, will discuss the debate over the issue of presentment and presentment is also required for claims arising under examine the potential impact to Virginia contractors subsection (a)(2). Id. To conclude otherwise, the court should the Fourth Circuit find that FCA liability may asserted, would allow subsection (a)(2) to swallow arise even in the absence of actual presentment to a subsection (a)(1) and render the plain language of government official. Next, this article will discuss the subsection (a)(1) meaningless. provisions of the Virginia Fraud Against Taxpayers Act In contrast, in United States v. Allison Engine Co., Inc., 471 (VFATA), and will highlight some of the recent trends in F.3d 610 (6th Cir. 2006), the Sixth Circuit held that under state FCA litigation in an attempt to forecast issues that subsections (a)(2) and (a)(3) of the FCA, liability can arise are likely to arise in Virginia in the near future. without direct presentment to a government official, provided the government can show that federal funds FCA Issues in Virginia Federal Courts were ultimately used to pay the false claim. In Allison Arguably the most pressing FCA issue currently before Engine, a whistleblower asserted that Allison Engine, a Virginia federal courts is whether a contractor that subcontractor on a naval ship construction contract, submits a false claim in connection with a state (or private, withheld cost or pricing data and submitted invoices to or quasi-private) project involving federal funds may be the prime contractor for payment, despite knowing that liable to the federal government under the FCA, even its work did not conform to contract specifications or where the allegedly false claim is not presented directly to with Navy regulations. Id. at 612. Relying heavily upon a federal entity. Resolution of this divide between federal the D.C. Circuit’s presentment analysis in Totten, the

JULY/AUGUST 2007 THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL/15 684. The court therefore set aside the verdict. ABOUT THE AUTHORS Assuming that the Fourth Circuit decides the issue of W. Stephen Dale is a partner and Kelley C. Hauser is an associate presentment, it is likely that the court will construe the at the Vienna, Virginia, law firm of Smith Pachter McWhorter, provisions of the FCA broadly and refrain from reading a P.L.C. presentment requirement into all sections of the FCA. Like the Sixth Circuit, the Fourth Circuit has long insisted: The False Claims Act is ‘intended to reach all types of district court concluded that FCA liability did not apply fraud, without qualification, that might result in because the defendants’ claim for payment was presented financial loss to the Government. The Court has only to the prime contractor and not to the government. consistently refused to accept a rigid, restrictive Id. at 615-16. The Sixth Circuit, however, found the Totten reading’ . . . Thus, any time a false statement is made court’s analysis of the FCA to be contrary to both the in a transaction involving a call on the U.S. fisc, False plain language and the purpose of the Act “to protect the Claims Act liability may attach. public fisc.” Id. at 622. Moreover, the Sixth Circuit Harrison v. Westinghouse Savannah River Co., 176 F.3d maintained that United States Supreme Court has 776, 788 (4th Cir. 1999) (quoting United States v. Neifert- continually insisted that the False Claims Act (FCA) is a White Co., 390 U.S. 228, 232 (1968)) (citations omitted). remedial statute and should be construed broadly. Id. at Perhaps more importantly, unlike the clear and 618. Accordingly, the court concluded that, as long as it unambiguous presentment requirement in subsection can be proved that government funds were ultimately (a)(1), the plain language of subsection (a)(2) does not spent to pay a false or fraudulent claim, liability under specifically include presentment as a prerequisite for subsections (a)(2) and (a)(3) of the FCA can arise even liability. Instead, the language of that provision focuses where there is no evidence that the fraudulent claim was simply on the payment or approval by the federal actually presented to a government official. Id. (citing United government of a knowingly false claim. Reading the tea States v. Kitsap Physicians Serv., 314 F.3d 995, 1003 (9th Cir. leaves, and looking to prior decisions of the Fourth Circuit, 2002)). that court will likely rely on its formulations of basic This same presentment issue is currently before the canons of statutory construction, namely that “to discern Fourth Circuit on appeal from United States ex rel. DRC, congressional intent, [the Court must] begin, as always, Inc. v. Custer Battles, LLC, 444 F. Supp. 2d 678 (E.D. Va. with the plain text of the statute. . . . And when the words 2006) (Custer Battles II). In Custer Battles II, the U.S. District of a statute are unambiguous . . . this first canon is also the Court for the Eastern District of Virginia set aside a last: judicial inquiry is complete.” United States v. Pressley, jury verdict in an FCA qui tam action, in part because 359 F.3d 347, 349 (4th Cir. 2004) (internal quotation marks the Court found that the relators did not provide and citations omitted). For the Fourth Circuit to adopt the evidence of presentment of a false claim directly to a reading shared by Totten and Custer Battles II, it would be government official. In the underlying case, the relators forced to tread beyond its customary approach to alleged that the defendants violated subsections (a)(1), statutory interpretation and to adopt a strained reading (a)(2), and (a)(3) of the FCA when they presented falsely of the “approved by the Government” language of inflated invoices from fictional subcontractors to the subsection (a)(2), thereby inferring a requirement that is Coalition Provisional Authority (CPA) in Iraq. United States not present in the plain language of the clause. ex rel. DRC, Inc. v. Custer Battles, LLC, 376 F. Supp. 2d 617, Moreover, both the Fourth Circuit and the U.S. Supreme 618 (E.D. Va. 2005) (Custer Battles I). Following trial, a Court have long relied on the maxim expression unius jury returned a verdict in favor of the relators, finding exclusion alterius when interpreting statutory language. In the defendants jointly and severally liable for that regard, “where Congress includes particular language approximately $3 million in damages to the United in one section of a statute but omits it in another section of States. Custer Battles II, 444 F. Supp. 2d at 680. In response, the same Act, it is generally presumed that Congress acts the defendants moved to set aside the verdict and intentionally and purposely in the disparate inclusion or sought judgment as a matter of law pursuant to F.R.C.P. exclusion.” Duncan v. Walker, 533 U.S. 167, 173 (2001) 50(b) arguing, inter alia, that the relators did not establish (internal quotation marks and citations omitted); Bd. of presentment to a government official because CPA Trs. v. BES Servs., 469 F.3d 369 (4th Cir. 2006) (adding that personnel were acting in their CPA capacities, not in this maxim “is especially true when the disparate exclusion 6 official U.S. capacities, at the time they received the claims. and inclusion are only lines away from each other.”) Id. at 682. Proceeding on the defendants’ Rule 50(b) (internal quotation marks and citations omitted). Because motion, the court found that the CPA was not in fact a Congress expressly included a presentment requirement U.S. entity, despite the contrary position of the in subsection (a)(1) but did not expressly include 7 government. Id. at 689. Accordingly, following the logic presentment in subsection (a)(2), it is unlikely that the of the Totten decision, the district court concluded that Fourth Circuit will read such a requirement into this the relators had not established presentment to a subsection. government official. The court declared: “[I]t cannot be Should the Fourth Circuit refrain from reading a that the presentment requirement is satisfied as long presentment requirement into all sections of the FCA, as a false claim is presented to a person who happens to such a decision would have a tremendous impact on be an employee of the United States government, government contracting across the Commonwealth of without respect to whether that person is acting in his Virginia. Virginia contractors who contract with state or her capacity as a U.S. government employee.” Id. at or private or quasi-private entities would be exposed 16/THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL JULY/AUGUST 2007 to potential FCA liability any time a Virginia area which then submitted a request for reimbursement to the project involves federal funds, in addition to its already Federal Aviation Administration (FAA). Id. In 2004, a existing exposure under the Virginia Fraud Against relator filed a qui tam suit against the defendants in federal Taxpayers Act. Of equal importance, the Fourth Circuit court under both the federal and California FCAs, alleging, cannot resolve the split among the circuits with respect inter alia, that the invoices submitted to the County to the presentment issue. Even if it resolves the question contained false and misleading information. Id. Shortly within the circuit, the final outcome, and therefore the thereafter, the County filed a Complaint in Intervention, limits of FCA liability, cannot be fully discerned without alleging overcharges totaling $1.5 million in violation of guidance from the Supreme Court.8 the California FCA and other state laws. In denying a motion to dismiss filed by the defendants, the court The Virginia Fraud Against Taxpayers Act determined that the relator had standing to sue The VFATA, signed into law on April 17, 2002, went simultaneously under both the federal and California into effect on January 1, 2003.9 Patterned after the FCA, FCAs, and that the County had standing under the the VFATA prohibits any person or entity from California FCA. Id. at 1148-49. Moreover, the court presenting, or causing to be presented, a false claim to the concluded it had jurisdiction over all claims in both state government for payment. The VFTA also extends complaints11 and therefore that the defendants faced liability to those that are complicit in the submission of potential liability on each of the claims. 12 Id. at 1148-55. false claims, and prohibits assistance or ancillary acts involved in presenting a false claim. Similar to the federal What Constitutes a ‘False Claim’ FCA, a party that violates the VFATA may be liable to the Under State FCA Statutes? Commonwealth for a civil penalty of $5,500 to $11,000 Another issue that will almost certainly be tested in per claim, treble damages sustained by the Virginia state courts is what information constitutes a Commonwealth, and the costs of a civil action brought to “false claim” under the VFATA. The impact of this issue is recover any penalty or damages. § 8.01-216.3(a). Further, demonstrated in Fassberg Construction Co. v. Housing like the federal FCA, the VFATA allows private citizens to Authority of Los Angeles, 151 Cal. App. 4th 267, 273 (Cal. Ct. bring suit on behalf of the Commonwealth in qui tam suits, App. 2007). In Fassberg Construction Co., the contractor and provides a powerful incentive to individuals to bring appealed judgment from the Superior Court of Los Angeles such suits, permitting private individuals to receive 15- County, in which a jury found that a contractor 25 percent of the recovery if the government intervenes knowingly submitted 2,983 “false claims” to the Housing and takes over the case and as much as 25-30 percent of Authority of the City of Los Angeles, causing the Housing the recovery in cases where the government does not Authority to suffer $1,104,000 in breach of contract intervene. § 8.01-216.7. damages and $455,000 in damages from false claims.13 Id. at 272. The court trebled the false claim figure to $1,365,000, State FCA Issues imposed civil penalties of $500 per false claim totaling Given the VFATA’s similarity to the FCA, one might $1,491,500, and awarded the Housing Authority a total of expect that Virginia courts have experienced a similar $3,960,500 on its cross-complaint. Id. explosion of false claims cases or similar construction of The underlying case involved a $12,863,690 contract to the act by Virginia courts. To date, however, Virginia build 156 dwelling units of low-income housing. Id. at state courts have not published any decisions interpreting 273. As part of the terms of payment, the contractor was the scope and limits of the VFATA.10 Accordingly, Virginia required to submit weekly payroll reports setting forth practitioners will need to search for guidance in other the classification of and hourly wages paid to each worker, jurisdictions, including both federal FCA jurisprudence and certify that the information provided was complete as well as that from other state acts. For example, California and accurate and that each worker was paid in accordance courts have issued an overwhelming number of reported with applicable wage rate and benefits. Id. at 274. After decisions interpreting the California False Claim Act the completion of work, the Housing Authority refused to (CFCA). As the VFATA is largely identical to the CFCA in release any part of the retention proceeds on the grounds most respects, California case law provides insight into that it was entitled to a credit for changes in the scope of the false claims issues likely to arise in Virginia state work. Id. at 276. When the contractor filed suit alleging courts. breach of contract, the Housing Authority filed a cross- complaint alleging, inter alia, the contractor violated the Parallel State and Federal FCA Claims California False Claims Act by knowingly presenting false One issue currently under consideration in California claims for payment, including change order proposals, state and federal courts is whether projects that are requests for partial payment, and certified payroll records. financed by a combination of federal and state funds Id. at 277. At trial, the Housing Authority alleged 2,964 allow for parallel FCA claims under both federal and incidents of underpayment of wages reflected in payroll state laws. In United States ex rel. Sialic Contractors Corporation records, 948 incidents of “questionable charges” stated in v. Sequel Contractors, Inc., 402 F.Supp.2d 1142, 1148-49 change order proposals, and 47 incidents of overstatement (C.D.Cal. 2005), a California District court confirmed that of the percentage of work completed stated in requests for projects that are financed by a combination of federal and progress payments, asserting that each of these incidents state funds do allow for parallel FCA claims. In this case, was a “false claim” under the CFCA. Id. defendants submitted invoices for work done at the John On appeal, the California Court of Appeals affirmed the Wayne Orange County Airport directly to the County, judgment denying relief on the contractor’s claim, but

JULY/AUGUST 2007 THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL/17 reversed the judgment on the cross-complaint by the the Armed Forces of the United States a false or fraudulent Housing Authority. First, the court held that the CFCA claim for payment or approval; (2) knowingly makes, uses, or causes to be made or used, a distinguishes a “claim” from a “record or “statement.” Id. false record or statement to get a false or fraudulent claim at 282. Thus, while the CFCA authorizes an award of paid or approved by the Government; treble damages for knowingly presenting either a false (3) conspires to defraud the Government by getting a false or claim or a false record or statement, it only authorizes a fraudulent claim allowed or paid; (4) has possession, custody, or control of property or money civil penalty for each false claim. Because weekly payroll used, or to be used, by the Government and, intending to reports submitted in support of requests for payment defraud the Government or willfully to conceal the property, were not “claims,” but rather were merely false records delivers, or causes to be delivered, less property than the or statements, these statements did not support a civil amount for which the person receives a certificate or receipt; penalty. Id. at 284. Likewise, the court concluded that the (5) authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, contractor’s change order proposals were not claims under intending to defraud the Government, makes or delivers the the CFCA, declaring: receipt without completely knowing that the information on the A change order proposal is not a ‘request or demand receipt is true; for money, property, or services’... but rather is a (6) knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the ‘record or statement’ made or used ‘to get a false Government, or a member of the Armed Forces, who lawfully claim paid or approved’.... A false change order may not sell or pledge the property; or proposal can support a civil penalty only in (7) knowingly makes, uses, or causes to be made or used, a conjunction with a ‘false claim,’ and in those false record or statement to conceal, avoid, or decrease an circumstances the civil penalty is for “each false obligation to pay or transmit money or property to the Government; is liable to the United States Government for a claim’ rather than for each “false record or statement civil penalty of not less than $5,000 and not more than $10,000, to get a false claim paid or approved. plus 3 times the amount of damages which the Government Id. at 287 (internal citations omitted).14 The court sustains because of the act of that person. . . therefore reversed the trial court’s award of $1,491,500 in 2. Department of Justice statistics, provided by the Taxpayers Against Fraud Education Fund, available at http://www.taf.org/stats-fy2006.pdf. civil penalties and remanded the case for a new trial to 3. These states include: Arkansas; California; Colorado; Delaware; determine the number of false claims, if any, and the Florida; Hawaii; Illinois; Indiana; Louisiana; Massachusetts; Michigan; appropriate civil penalty. Id. at 288. Montana; Nevada; New Hampshire; New Mexico; Tennessee; Texas; Virginia. Conclusions 4. The majority opinion in Totten was authored by then-Circuit Judge, now Chief Justice of the U.S. Supreme Court, John Roberts. The uncertainty which surrounds false claims litigation 5. While the Court acknowledged that Amtrak was heavily subsidized by on the state level makes it particularly important that the federal government, the Court reasoned that because Amtrak had contractors and counsel navigate the field carefully. The the autonomy to pay or reject claims without government involvement dearth of jurisprudence in Virginia with respect to the or approval, the false claim at issue was in fact paid by Amtrak, not by the government. Id. at 502. VFATA itself, as well as the current split regarding the 6. While government elected not to intervene in the suit, it did accept the reach of the federal government into federally funded invitation to file a brief, taking the position that the FCA applies to claims state contracts, creates a minefield for the unwary. This presented to the CPA, and later, following a direction from the Court, minefield carries with it real penalties which can devastate responded that the CPA was indeed a U.S. instrumentality solely for the limited purposes of the False Claims Act. Id. at 633-634. a project and ruin the reputation of contractors. 7. See supra, n.7. Accordingly, although contractors and counsel may look 8. Presumably without the participation of Chief Justice Roberts, author for guidance to federal courts and other states, they must of the majority opinion in Totten. take special care in the preparation and submission of 9. VA Code §§ 8.01 - 216.1, et. seq. documents and records to any public entity in order to 10. The only reported decision involving the VFATA is United States ex rel. Rost v. Pfizer, Inc., 446 F. Supp. 2d 6, 8 – 9 n.2 (D. Mass. 2006), in avoid becoming the next test case. which a relator brought a qui tam action against defendants under the FCA and various state statutes, including the VAFTA, alleging that the NOTES defendants submitted false claims to federal and state health insurance 1. The Federal False Claims Act, 31 USC §§ 3729(a) provides that any programs through off-label marketing of the drug Genotropin. The court person who: dismissed the plaintiff’s complaint on the grounds that it failed to (1) knowingly presents, or causes to be presented, to an officer identify any actual false claims that were submitted to the government or employee of the United States Government or a member of for the reimbursement. Id. at 27-28. While the plaintiff’s complaint was based in part on the VFATA, the Court does not engage in a substantive discussion of the VFATA except to note the similarities of the various state acts with the FCA. Id. 12 n.13 and n.17, 21 n.48, 25 n.120, 26 n.125. 11. With regard to the state claims, the court concluded it had jurisdiction pursuant to both the basic principles of supplemental jurisdiction (same [email protected] transaction or occurrence) and under 31 U.S.C. § 3732(b) of the FCA, which expressly authorizes federal jurisdiction over state law claims that arise from the same scheme of false claims as a federal FCA. The VBA Law Practice Management Division has an agreement 12. Ultimately, the defendants settled the lawsuit in April 2006 for $2.5 with the American Bar Association to sell ABA books to all million. Jean O. Pasco, 2 Firms Will Pay $2.5 Million to Settle O.C. Airport Virginia Bar Association members at a 20% discount. Go to Lawsuit, Los Angeles Times, April 8, 2006, at B3. www.vba.org, click on the Book Program link, choose your 13. The jury also found the contractor liable for intentional books, and print an order form to send to the VBA with your misrepresentation and awarded the Housing Authority $1,559,000 in payment. NOTE: ALL books published by the ABA are available compensatory damages and $1.2 million in punitive damages. with the 20 percent discount. You must, however, place your 14. In contrast, the court concluded that each request for progress payment was a “claim” under the CFCA and, on remand, could provide order through the VBA office to receive the discount. the basis for civil penalties. Id. at 284. 18/THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL JULY/AUGUST 2007 LEGAL FOCUS Government Regulation of Contractors in Virginia Life After the Death of Immigration Reform Is it business as usual for contractors? BY WILLIAM J. BENOS, © 2007 Earlier this year, the prospect of immigration reform subcontracted labor. The risks may be significant for ignited a significant and passionate debate in the United contractors, especially those which engage in projects States. Immigration reform had previously occurred in with the federal government. For contractors that engage 1986 and 1996, and appeared to be due to occur again, in projects with the federal government, such contractors almost as if on a regular ten-year cycle, in 2006-07. The should be concerned about potential debarment from most recent debate ranged widely from issues relating to future projects as a result of immigration compliance the granting of some form of “amnesty” to persons violations.4 currently in the United States unlawfully to enhancing In connection with worksite raids, contractors should border protection to better controlling the employment be concerned that, in addition to inspecting more sites for of persons without appropriate authorization. With the civil immigration compliance violations, ICE has started defeat of the recent immigration bill in Congress1 on June working with Special Assistant U.S. Attorneys to bring 28, 2007, the debate was put on hold…at least for criminal prosecutions against management-level now…and employers seem to have been left with the personnel. Management-level personnel typically come status quo, at least until after the 2008 elections. Where under fire if there is some indication that they have does this leave employers/contractors and what is the “constructive knowledge” of immigration violations. Such status quo? actual knowledge may, for example, be gained when the Under current law, the status quo is that it is illegal for employer is found to control the conduct of its contracted an employer to hire, recruit or refer for a fee someone not (or subcontracted) labor to such an extent that those authorized to work in the United States.2 Employers, workers are deemed to be under the effective control of including contractors, are required to complete and retain the employer. Form I-9 – Employment Eligibility Verification, and, by Start by Auditing Your Own Records Now. doing so correctly and in conjunction with the employee, such employers gain the protection of a “safe harbor”.3 What should a contractor be doing…or doing The Form I-9 is the document that has been in place since better…during this time of greater enforcement? 1986 which every employer is required to complete for Contractors should take steps to eliminate/mitigate each and every worker, U.S. citizen or not, within three problems before they arise by first conducting an audit of days of the date of hire. The subject matter of this article their own I-9 records. It is better to identify and correct I- will go beyond the dry basics of I-9 compliance, and, 9 errors and address irregularities proactively than to do instead, focus on the recent trend of increased federal so in connection with a random ICE audit. In certain enforcement. This article will also discuss a contractor’s circumstances, contractors may also be well advised to new potential exposure, namely the potential immigration require/request contractual assurances from their irregularities of its subcontractors, and recommend action subcontractors that the workers employed by such steps for staying within “safe harbors” and minimizing subcontractors are also employment authorized in the risks. United States. Contractors have become more vulnerable The recent trend of greatest concern to contractors (and in cases of worksite raids because ICE has often extended other employers for that matter) is the trend of ongoing/ the scope of its investigation and enforcement, where increased enforcement by Immigration and Customs applicable, beyond the worksite owner to include the Enforcement (ICE) of existing immigration law that entire chain of contractors who may render services at prohibits the employment of illegal aliens in the United the worksite. States. Recent raids on work sites and employer locations In cases of work site raids, ICE has, in some cases, by ICE have not only been newsworthy events, but sought to maximize its return from its worksite indicators of a posture of more aggressive enforcement enforcement efforts. ICE has not hesitated to go up the that should be of concern to contractors, both large and chain and seek to sanction a contractor for immigration small. The environment of increased enforcement puts a compliance violations of the subcontractor. ICE has premium on contractors complying with existing suggested that, in certain circumstances where the immigration laws. Of particular note is a recent focus on “independence” of the subcontractor is in question, the imputing responsibility and liability to firms that use general contractor was under an obligation to review the

JULY/AUGUST 2007 THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL/19 which affirmatively require the subcontractors to observe ABOUT THE AUTHOR applicable immigration laws. Dealings with William J. Benos is a partner in the law firm of Williams Mullen, and subcontractors are discussed in greater detail below. heads the firm’s Immigration Group. He teaches immigration law as The contractor should also coordinate its immigration an adjunct professor at the University of Richmond School of Law, compliance program with its document retention serves as Honorary Consul of Canada, and is also a member of the protocols. Many employers retain their I-9 Forms longer Illegal Immigration Task Force of the Virginia State Crime Commission. than required — and do not organize them where they Mr. Benos may be contacted at (804) 783-6402 or can be easily accessed and re-verified. It is prudent to [email protected]. segregate immigration compliance documentation from other personnel records so that it may be easily and quickly accessed in case of an ICE audit. Contractors have I-9 documentation of the subcontractor. The greatest risk the option of copying documents presented as proof of lies in situations where the contractor is not truly identity and employment authorization. Either way, the “independent.”5 An independent contractor is one which employer should follow one approach in a consistent carries on an independent business, contracts to do a manner. One argument in favor of retaining copies is that piece of work according to its own means and methods, the contractor can better determine its corrective action and is subject to control only as to results. Independence after it conducts an internal audit. If no copies are retained, is determined, among other things, by who supplies tools/ management should ensure that its staff reviews I-9 materials, whether work is done for multiple clients at documentation in a consistent manner. By reviewing the same time, whether there is an opportunity for profit documentation in a consistent manner, the employer can or loss as a result of the labor, and who determines the have a factual basis to rebut allegations by illegal order and time work is done.6 In short, a contractor/ employees that they were not asked for proper employer should therefore be mindful to always remain documentation when they were initially employed. Illegal independent of its subcontractors and to clearly document aliens have been known to attempt to make such claims, such independence. hoping for leniency when caught by ICE agents. Another trend of concern for contractors is that ICE is Contractors should be concerned that, in certain situations, soliciting and receiving increased cooperation from local ICE has been known to send workers undercover to gain law enforcement. Those who have either entered the evidence of incomplete, improper or illegal immigration United States illegally or those who have lost their lawful activities. By implementing and following an immigration status by virtue of having overstayed their permitted compliance policy and by insisting on consistent stays or by having otherwise violated the law (illegal immigration compliance practices, such risks can aliens), now stand a better chance of being turned over by hopefully be minimized. local police departments to ICE for deportation/removal. Contractors should also take note that federal In such instances, it appears that ICE not only seeks to enforcement authorities are looking to additional means deport/remove the illegal alien, but now also inquires to identify areas of potential immigration violations. about where the illegal alien may have been working, Employers, both large and small, have, for some time and, furthermore, what documents may have been now, been receiving Social Security ‘No-Match’ letters reviewed by the employer when the illegal alien was from the Social Security Administration advising them of 7 hired. This makes it even more important for employers Social Security number mismatches or no-matches. to audit their records to ensure that such records are in Social Security ‘No-Match’ letters are generated by the order and that they have preserved their affirmative “safe Social Security Administration when employers file their harbor” defenses. quarterly and/or annual tax reports (W-2s) which reflect that certain employees have non-existent or incorrect Implement a Compliance Policy and Follow It. Social Security numbers. Employers which receive such What immigration compliance (I-9) practices should a letters and do not respond to them properly or in a timely contractor observe most vigilantly? Given the trend of manner risk being perceived as possibly having greater ICE enforcement, the first goal of a contractor “constructive knowledge” that some of their workers may should be to make sure that its own house is in order from lack proper employment authorization.8 an immigration perspective. The contractor should do so Given that Social Security ‘No-Match’ letters can be to by conducting a systematic internal audit of its demonstrate “constructive knowledge” on the part of an immigration compliance (Form I-9) documentation to find employer, contractors should be advised to treat them and correct any irregularities. The audit should be seriously. ICE regulations currently being enforced in the repeated on a periodic basis. The contractor should also field give the employer time deadlines to act upon receipt develop and implement an immigration compliance policy of a No-Match letter. The employer must act within 14 and program to supplement the “safe harbor” defense it days to address a Social Security number discrepancy gains when I-9 Forms are properly completed by its staff. with the employee. If the discrepancy is not resolved by An effective compliance policy and program for a the employee within 63 days of the date of the No-Match contractor ensures that the I-9 process is completed letter, the employer should terminate employment to consistently and in a timely manner. A contractor will avoid jeopardizing its “safe harbor” defense. gain some protection if it follows a compliance program in a consistent manner. Contractors which engage subcontractors should have written contracts in place

20/THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL JULY/AUGUST 2007 Effective Cooperation Between General and article, it is beyond the scope of this article. Suffice it to say Subcontractors. that contractors should prepare for such potential visits, As has been previously stated, contractors may become and the preparation should include the maintenance of liable for immigration violations of the subcontractors complete and accurate I-9 records, the implementation of an they engage. It is common practice for contractors to use immigration policy and the completion of periodic internal subcontractors for several levels of work for projects that audits. In anticipation of an ICE visit, appropriate I-9 are undertaken. In the past, as long as a contractor did not records should be readily locatable for timely disclosure control the work of the subcontractor and/or its and review, and site managers (such as project managers employees, the contractor was not held accountable for and site superintendents) should be educated on the basics immigration violations of its subcontractor. Recently, of interacting with ICE officials and the importance of with more aggressive enforcement, ICE has sought to courteous cooperation.9 impute “constructive knowledge” to the contractor of the What does the ‘Crystal Ball’ show as being in immigration violations of its subcontractors, even in cases store for the future? where complete control has not been exercised. The Although immigration reform is currently stalled, doctrine of “constructive knowledge” is used to ascribe Congress is likely to revisit worksite immigration liability to employers which either ignore the apparent compliance when immigration reform comes up for debate immigration violations of a subcontractor or which should again. The burden of immigration compliance is likely to have known or “recklessly disregard” the fact that the remain on the shoulders of employers. Congress will likely subcontractor is using illegal workers. seek to implement additional and enhanced electronic To mitigate such liability, a contractor should seek to verification initiatives for future immigration compliance. include clauses in its contracts with subcontractors that Such enhanced compliance may include requiring national require the subcontractor to certify/ensure that it: (1) participation in a version of the Basic Pilot Verification complies with I-9 requirements as a condition to receiving Program. For the time being, contractors should expect progress payments; (2) verifies the Social Security continued enhanced enforcement of existing immigration numbers of new hires; (3) does not/will not knowingly compliance laws, and should take steps to preserve employ illegal aliens; and (4) will indemnify the contractor available “safe harbor” protections that are currently for sanctions imposed for immigration violations. If a available. The first line of defense for contractors should contractor does not use a standard form of contract with be strict adherence to internal immigration policies and such protective provisions, it should consider doing so. procedures, periodic training and self-audits, diligent Some owners and developers require contractors to follow up on Social Security ‘No-Match’ letters, careful implement compliance programs for the subcontractors management of subcontractor relationships, and possible they use and have been known to ask that contractors participation in exiting verification programs. review the I-9 documentation maintained by subcontractors. Whereas implementing a carefully NOTES structured compliance program may be helpful, 1. S. 1639 - A bill to provide for comprehensive immigration reform and reviewing the I-9 documentation of subcontractors is not. for other purposes. Such a review is not required and only creates new/ 2. INA §274A(a)(1), 8 U.S.C. §1324a(a)(1). The “hiring” of a person means additional risks for the contractor because it potentially the commencement of employment for wage or other remuneration, puts the contractor in the position of gaining actual and includes the use of a contract or subcontract. See 8 C.F.R. §§274a.1(c), 274a.5, 1274a.1(c), 1274a.5. knowledge of a subcontractor’s immigration non- 3. Form I-9 was most recently “rebranded” and reissued on June 21, compliance and having either to compel the subcontractor 2005. Good faith compliance with the current verification system is an to remedy such non-compliance or not use the affirmative defense (i.e., a “safe harbor”) to sanctions for unauthorized subcontractor on the project. hiring. See INA §274(A)(3), 8 U.S.C. §1324a(a)(3); 8 C.F.R. §§274a.4, 1274a.4. Other Protective Measures. 4. The President can order that the federal government may not procure What other protective/proactive measures can be taken goods and services from an employer which violates immigration laws pursuant to Executive Order 12989 (Feb. 13, 1996), 61 Federal Register by a contractor? A contractor may consider enrolling in 6091, reprinted in 73 No. 8 Interpreter Releases 225, 242 (Feb. 26, what is known as the Basic Pilot Verification Program 1996). Debarment may be ordered for one year and thereafter extended and the IMAGE program to further establish that it is for one-year increments. See 48 C.F.R. §§9.406-2(b), 9.406-4(b). entitled to “safe harbor” protection. Under the Basic Pilot 5. For purposes of employer sanctions, a person is not considered an employee if he/she is an independent contractor as defined under 8 Verification Program, the contractor checks the C.F.R. §§274a.1(j), 1274a.1(j). immigration status and social security number of each 6. 8 C.F.R. §§274a.1(j), 1274a.1(j). new hire on the Internet. Georgia, North Carolina and 7. Social Security ‘No-Match’ letters are known as SSA Code V Colorado already require use of the Basic Verification letters. Pilot Program for certain contractors and state agencies. 8. See Memo, Virtue, Gen. Counsel INS (Apr. 12, 1999), posted on AILA InfoNet at Doc. No. 01061431. The good faith defense for the The IMAGE program goes one step further and provides violation of INA §274A(A)(2) (continuing to employ an unauthorized for mutual cooperation on immigration compliance alien) may not be available where an employer gains knowledge of matters with ICE. The use of such programs was cited as the person’s unlawful status. being helpful to avoid ultimate prosecution in the arrests 9. ICE is required to provide at least three days notice to the employer prior to inspection. See 8 C.F.R. §§274a.2(b)(2)(ii), that were made at Swift & Company and Smithfield plants. 1247a.2(b)(ii). The topic or dealing with ICE raids/visits is, of course, relevant to contractors, but, given that the handling of such raids/visits is complex should be the topic of another JULY/AUGUST 2007 THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL/21 Tips and tidbits Top 10 reasons to join the VBA of useful • • 10. Satisfy annual MCLE credit requirements with information timely programs led by well-known speakers. VBA 9. Build a professional network through participation in a substantive law section or a committee. the back page 8. Learn more about your area of legal practice. 7. Get more for your dues dollars. 6. Significant discounts on specific insurance products, in addition to other member benefits. VALS plans institute, meeting 5. Automatic membership in our Law Practice VALS ... the association for legal professionals will hold Management Division. its Fall Institute and the Peninsula Association for Legal 4. Promotion of the highest standards of integrity, SupportStaff will host the VALS Board of Governors professionalism and excellence. Meeting on September 22-23 at the Holiday Inn Select, 3. Legislative work is a key year-round activity. Koger Center South, in Richmond. 2. Public service underscores much of our programs. The Fall Institute consists of a full day of seminars 1. Collegiality is what the VBA is all about! followed by a leadership/membership workshop. Seminars include “Changes in Real Estate” presented by Interested? Please complete the application and return C. Grice McMullan Jr.; “Notary Changes,” presented by it to the VBA office. Already a member? Pass the word to

Secretary of the Commonwealth Betsy Anderson; colleagues and encourage them to join today! ○○○○○○○○○

“Highlights of the 2007 General Assembly” presented by ○○○○○○○○○○○○○○○○○○○○○○ the Attorney General’s Office; “The Truth About Wrongful Conviction,” presented by Shelia Martin Berry; Are you a recent graduate? “Environmental Law” presented by Brian Buniva; and Alleviate the burden of student loans “Returning to the Legal Field After Child and Elder Care,” presented by Joyce H. Lapsley. with VBA member benefits! Lunch is included in the registration fee. VALS honors Increase your financial savvy! There other certifications and offers the member registration are many short-term benefits in fee. The VALS Board of Governors Meeting will be held on consolidating your federal student Sunday, September 23. loans with SunTrust, such as the For more information, please visit www.v-a-l-s.org or following items: contact Linda Kelley, PLS, at [email protected] or Take the hassle out of paying back loans by making one (757) 552-6064. Information on VALS membership is monthly loan payment. Enjoy the simplicity and convenience of making a single monthly available upon request from VALS Vice President Robin student loan payment with one interest rate and one lender instead Ray Holbert at (804) 775-7337 or [email protected]. of several payments to multiple lenders, each with their own due dates and interest rates. The VBA News Journal offers classified advertising. Categories Lower your monthly payments substantially. available are as follows: positions available, positions wanted, By consolidating your Federal student loans with SunTrust you may books and software, office equipment/furnishings, office be able to lower your monthly payments by as much as 47%!* That space, experts, consulting services, business services, means you’ll have extra money at your disposal to put toward vacation rentals, and educational opportunities. other monthly expenses like car or rent payments — or you can even save for a larger purchase such as your first home. Rates are $1 per word for VBA members and $1.50 per word Improve your cash flow by extending your repayment terms.* for non-members, with a $35 minimum, payable at the time You can extend the term of your loan up to 30 years – meaning you of submission. Ad costs must be paid in advance. The VBA can reduce your monthly payment so you have more money at your News Journal reserves the right to review all copy before disposal. The maximum repayment term is based on your total publication and to reject material deemed unsuitable. outstanding loan debt, which is calculated from the eligible loans Professional announcements may be printed; the cost per you are consolidating as well as other eligible loans that you elect announcement is $15 and text may be edited for style and not to consolidate. Learn more about our repayment terms. space limitations. Deadlines are one month in advance of the Learn More or Apply Today! date of publication. Information is available online at Online at suntrusteducation.com/VABAR. www.vba.org, or call for details at (804) 644-0041. Or call us at 888.403.5027. Information about display advertising is available online at *Actual savings may vary. Extending the repayment period on your loans www.vba.org. A variety of sizes may be purchased and special will add to the total amount of interest paid over the term of your loans. rates are available for multiple insertions. As with other forms **Student loans advertised are offered in cooperation with SunTrust. of advertising, costs must be paid in advance. The VBA News Members receive enhanced borrower benefits due to the relationship Journal reserves the right to review all copy before publication between SunTrust and The Virginia Bar Association, and The Virginia Bar and to reject material deemed unsuitable. Association may receive a fee for each completed application.

The VBA offers many great benefits to our members! Visit www.vba.org/benefits.htm for details.

22/THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL JULY/AUGUST 2007 701 East Franklin Street, Suite 1120 Richmond, Virginia 23219 (804) 644-0041 • Fax (804) 644-0052 Web: www.vba.org Membership Application Email: [email protected] MISSION: The Virginia Bar Association is a voluntary organization of Virginia lawyers committed to serving the public and the legal profession by promoting the highest standards of integrity, professionalism, and excellence in the legal profession; working to improve the law and the administration of justice; and advancing collegial relations among lawyers. Name ______Title First Middle Last Suffix First/Call Name for Meeting Badge ______Email Address ______Firm/Organization Name ______Business Address ______Home Address ______City______State _____ Zip ______City ______State _____ Zip ______Business Phone ( )______Fax No. ( )______Home Phone ( )______Date of Birth ______Gender ____ Law School ______Year Graduated ______Original Virginia License Date ______Other State(s) & Date(s) Licensed ______

VBA MEMBERSHIP DUES (Check appropriate category) New Admittees — New admittees to the Virginia State Bar (June admittees are covered for balance of calendar year of admission; November admittees are covered for following calendar year). An application form must be returned to activate membership...... $0 G Regular and Young Lawyers Division Members — 1-5 years in practice calculated from original license date...... $150 G Regular and Young Lawyers Division Members — 6+ years in practice calculated from original license date...... $200 G Full-time Law School Faculty and Government/Public Service Attorneys ...... $100 G Fully Retired/Fully Disabled ...... $100 G Judicial Members and Life Members ...... $0 G Law Students — Currently enrolled in a fully accredited school of law...... $0 G Membership dues may be deductible as an ordinary and necessary business expense but are not deductible as a charitable contribution. The Association estimates that 12% of your A. TOTAL MEMBERSHIP DUES $______basic dues are used for lobbying expenses as defined by Section 13222 of the Revenue Reconciliation Act of 1993, and are therefore nondeductible as a business expense. VBA SECTION DUES (Elective) Administrative Law ...... $25 G Health Law ...... $25 G Bankruptcy Law ...... $25 G Intellectual Property and Information Technology Law ...... $25 G Business Law ...... $25 G Judicial (Judges only) ...... $25 G Civil Litigation ...... $25 G Labor Relations and Employment Law ...... $25 G Construction and Public Contracts Law ...... $25 G Real Estate ...... $25 G Corporate Counsel ...... $25 G Taxation ...... $25 G Criminal Law ...... $25 G Transportation Law ...... $25 G Domestic Relations ...... $25 G Wills, Trusts and Estates ...... $25 G Elder Law ...... $25 G Virginia Alternative Dispute Resolution Joint Committee ...... $25 G Environment, Natural Resources and Energy Law ...... $25 G B. TOTAL SECTION DUES $______

VBA FOUNDATION PATRON CONTRIBUTIONS (Elective) VBA Foundation Patron contributions shall constitute voluntary contributions to the VBA Foundation, an entity Leadership Patron (Gold) $500 and above G exempt from taxation under Section 501(c)(3) of the Internal Revenue Code. Such payments will be promptly transferred to the VBA Foundation by the VBA as its agent. Contributions to the VBA Foundation support its charitable activities Sustaining Patron (Silver) $250-499 G and will be deductible by the payor as charitable contributions. Patron (Blue) $100-249 G C. TOTAL PATRON CONTRIBUTIONS $______I understand that any member of The Virginia Bar Association whose license to practice law is suspended, revoked or surrendered will TOTAL MEMBERSHIP/SECTION/FOUNDATION automatically be removed from membership. DUES AND CONTRIBUTIONS Applicant’s Signature ______(Sum of A, B and C) $______Date ______Please charge my credit card. Check one: G VISA G MasterCard G AMEX G Please send me more information about becoming a VBA Community Servant or Pro Bono Servant. Card # ______Exp. Date ______12/06 November 6, 2007 CALENDAR OF EVENTS VBA Virginia Healthcare Practitioners' Roundtable Omni Richmond October 5-7, 2007 November 13, 2007 VBA/YLD Executive Committee & Council Meeting VBA Legislative Day Wintergreen Omni Richmond October 11-14, 2007 November 15-16, 2007 Southern Conference of Bar Presidents VBA Capital Defense Workshop Little Rock, Arkansas Richmond Marriott October 19-21, 2007 November 16-17, 2007 VBA Board of Governors Region IV National Moot Court Competition Hotel Stonewall Jackson, Staunton Omni Richmond October 23, 2007 November 30, 2007 VBA Corporate Counsel Fall Forum VBA Administrative Law Conference Omni Richmond Omni Richmond October 26, 2007 January 17-20, 2008 VBA Virginia Tax Practitioners’ Roundtable VBA Annual Meeting Farmington, Charlottesville Colonial Williamsburg October 26-27, 2007 July 17-20, 2008 Boyd-Graves Conference VBA Summer Meeting Hyatt Regency Reston The Homestead For more details on specific events, visit our website at www.vba.org or call the VBA office at (804) 644-0041. Mark these dates in 2008! VBA Annual Meeting, January 17-20, 2008, Colonial Williamsburg VBA Summer Meeting, July 17-20, 2008, The Homestead

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