Gravel & Shea PC

January 2020

Litigation Trends: Lawsuits Under Vermont’s Automatic Renewal Requirements for Consumer Contracts, 9 V.S.A. § 2454a

Last summer, Vermont’s automatic renewal statute—the most stringent of its kind in the nation—went into effect.  See 9 V.S.A. § 2454a, available here: https://legislature.vermont.gov/statutes/section/09/063/02454a

Vermont’s automatic renewal law requires that, in addition to accepting the contract, the customer must also take affirmative action to opt into automatic renewal provisions of the contract.  Subject only to carve outs for financial institutions and insurance companies, the law governs every contract between a consumer and a seller with an initial term of one year or longer that renews for a subsequent term that is longer than one month.  Any such contract may not automatically renew unless the seller satisfies several requirements set forth in the new auto-renewal law.  These requirements include, among others, that the terms of the automatic renewal provision be in bold-face type and that the seller provide written notice of the impending auto-renewal to the consumer between 30 and 60 days prior to the renewal.

9 V.S.A. § 2454a is a part of the Vermont Consumer Protection Act (the “CPA”) which provides that a plaintiff may seek damages from the seller, including the amount paid by the consumer, attorneys’ fees and, in some instances, exemplary damages of up to three times the plaintiff’s actual damages.  Thus, class actions under the CPA are very attractive to plaintiffs in Vermont.

In the six months since Vermont’s automatic renewal statute went into effect, it has been a significant source of class action litigation that has targeted a broad range of industries.  New cases are threatened or filed regularly.  In light of the mandatory attorneys’ fees provision and availability of treble damages, we expect to see continued interest in these class actions.

In the meantime, most subscription-based companies are faced with a difficult challenge—seeking to comply with Vermont’s automatic renewal law, as well as federal legislation and state laws in over twenty-five other states.

The lawyers at Gravel & Shea are experienced in defending businesses against suits alleging violations of the Vermont automatic renewal law.  We can also provide guidance and counsel to businesses regarding compliance issues.

For more information contact: 

Erin M. Moore, Gravel & Shea PC, 802-658-0220 Ext. 217, emoore@gravelshea.com

 

Research & Development Tax Credits That Can Help Food and Beverage Businesses Grow

 

Food and beverage companies continually develop their products and work to streamline operations to remain both profitable and relevant as consumer palates and markets change, ingredient prices or availabilities shift, and new processes or machinery become available. These evolutions are critical to success, but they can also be expensive. Fortunately, many product development efforts and factory upgrades may be eligible for state and federal research and development (R&D) tax credits, which reduce taxes more than applicable tax deductions would. These often-underused tax credits can free up cash for further investment as they directly lower food and beverage companies’ taxable income and lighten their tax burden.

The basic requirements for the federal R&D tax credit are:

  1. the expense is directly related to creating a new product or process, improving an existing product or process, or attempting to do so;
  2. there is some technical uncertainty about the best way to create or improve the product or process; and
  3. you are using science, engineering, or computer science to resolve technical uncertainty during development or production.

R&D tax credits may help you with more than your federal tax obligations. Many state tax authorities apply standards identical or similar to those of the IRS, and some states also exempt R&D-related materials from sales and use tax.  Learning which business operations fit the federal R&D tax credit standard may therefore help reduce your bottom line on multiple tax bills.

What qualifies? Much of the development that food and beverage companies do every day involves R&D.  For instance, if you want to expand the functionality of a piece of manufacturing equipment instead of buying new equipment for a specific task, the time you spend exploring your options, the supplies you buy for that effort, and any time and materials required to test and further refine the functionality of the adaptations count as R&D costs.

Food development expenses can qualify too.  If you make cookies and want to begin offering a vegan version of those cookies, and say, for example, you are unsure how the substitute ingredients will affect the cookie’s texture, the ingredients you buy to test new vegan cookie recipes count as R&D supplies because of the technical uncertainty as to whether they will produce a good cookie texture.

Did your attempts to create a new cookie, a new carbonation system or an improvement on your packaging system fail?  There is still good news.  Even abandoned or unsuccessful attempts to develop or improve a new product or process qualify for the federal R&D tax credit, as long as they satisfy the other R&D criteria.

Don’t sell yourself short when seeking R&D tax credits. In addition to the cost of supplies and the more obvious purchases, you can also count the portions of employees’ salaries directly attributable to the time they spend on R&D work and 65% of the money paid to outside contractors for R&D.  There are some limitations to what you can claim for contract research expenses, however, so speak to an R&D specialist before claiming them.

Of course, not all product or process developments qualify for R&D tax credits.  Routine maintenance, replacing parts, and quality control (QC) tests do not count as R&D when there is insufficient technical uncertainty involved.  A new version of an existing part should work the same way as the old version and QC is testing for known issues, not to resolve an unknown.  However, carefully documenting exactly what was involved in a particular equipment upgrade could demonstrate that it involved R&D after all, so don’t slack on keeping track of the time, expenses and goals even if you think a particular effort won’t qualify.

Accurate and timely documentation is key. To maximize access to R&D credits, document employee and contractor work accurately and ensure your accounting and asset management systems categorize R&D supplies separately from other parts and supplies.  Engineers, product development teams, and anyone involved in R&D work should write a brief description of each R&D project, taking care to highlight the technical uncertainty they sought to resolve and the work they did to develop the new product or process.

The best defense is a good offense, so consultation with an accountant or attorney who specializes in R&D tax credits will help you protect your company, maximize your allowable R&D savings, and even strategize how forthcoming developments will qualify.  Contact Cassandra Larae-Perez, Gravel & Shea’s Food and Beverage attorney to learn more.

 

Litigator Dan Martin Named Special Counsel

Burlington, Vermont (January 10, 2020): Gravel & Shea recently promoted litigator Dan Martin to Special Counsel. Dan joined the firm in 2016.

“Over the past four years at Gravel & Shea, I have had an opportunity to work with some of the most talented attorneys in the state on a variety of complicated and cutting-edge issues,” said Dan. “I look forward to continuing to collaborate with the Vermont legal community and to providing our clients with exceptional representation and creative solutions to unique challenges.”

Dan’s practice includes a range of civil litigation matters, with a focus on complex commercial disputes. Prior to returning to Vermont and joining Gravel & Shea, Dan worked in the securities litigation and corporate governance group at Weil Gotshal & Manges in New York City.

“We’ve been delighted to have Dan at Gravel & Shea for the past four years,” said Gravel & Shea Shareholder Navah Spero. “His exceptional litigation skills and stellar writing have been a real asset to the firm. And every client who works with Dan is impressed by his sharp analysis and depth of knowledge.”

Gravel & Shea is a full-service law firm in Burlington, Vermont, providing its clients legal services in a wide variety of disciplines, including commercial transactions, civil litigation, real estate, intellectual property, energy, land use and environmental regulation, estate planning, mergers and acquisitions, personal injury litigation, employment law, and family law.

 

Real Estate Attorney Jeff Polubinski Elected Shareholder

Burlington, Vermont (January 10, 2020): Gravel & Shea recently elected Real Estate Associate Jeff Polubinski to Shareholder. Jeff joined the firm in 2013.

“I have thoroughly enjoyed the last six — almost seven — years at Gravel & Shea,” said Jeff. “It’s been a pleasure to work with such a talented and collegial group. I look forward to the next stage of my career here as a shareholder.”

Jeff practices in the areas of real estate, land use development, and environmental law. Before attending and graduating from Vermont Law School, Jeff worked for more than seven years as a geologist at an environmental consulting firm. While there, he assisted developers and institutional clients with the remediation and regulatory compliance associated with the development of contaminated properties, and he worked with clients on the mitigation of indoor air contamination.

“Navigating Vermont’s land use and environmental laws requires particularized expertise,” says Gravel & Shea Shareholder Michelle Farkas. “Jeff’s environmental background and experience brings a depth to our real estate practice that has benefited our clients for nearly seven years. We are thrilled to welcome Jeff to our partnership.”

Gravel & Shea is a full-service law firm in Burlington, Vermont, providing its clients legal services in a wide variety of disciplines, including commercial transactions, civil litigation, real estate, intellectual property, energy, land use and environmental regulation, estate planning, mergers and acquisitions, personal injury litigation, employment law, and family law.

 

Tax and Estate Planning Attorney Livia DeMarchis Elected Shareholder

Burlington, Vermont (January 10, 2020): Gravel & Shea recently elected Associate Livia DeMarchis to Shareholder. Livia joined the firm in 2015.

“I am honored and excited to be a Gravel & Shea shareholder,” said Livia. “Growing up in Burlington, I’ve always had great respect for the firm. It’s a privilege to work with and learn from our talented attorneys and staff, and I love being part of such an excellent team. I look forward to a long career serving my clients as a Gravel & Shea shareholder.”

Livia’s practice focuses on tax and estate planning as well as probate and trust administration. She graduated from Yale Law School in 2010. Prior to joining Gravel & Shea, she completed a clerkship with the Honorable John Dooley at the Vermont Supreme Court and practiced for several years with a large law firm in Boston.

“Livia is a very talented attorney, with superior technical skills and a lovely, gentle manner with clients and their families,” said Gravel & Shea Shareholder Jeanne Blackmore.  “She is a cornerstone of our estate planning practice, and I’m proud to welcome her as a member of our firm.

Gravel & Shea is a full-service law firm in Burlington, Vermont, providing its clients legal services in a wide variety of disciplines, including commercial transactions, civil litigation, real estate, intellectual property, energy, land use and environmental regulation, estate planning, mergers and acquisitions, personal injury litigation, employment law, and family law.