Five Coblentz partners have been recognized as Leading Lawyers by Chambers & Partners in the Chambers USA 2020 Guide. Real Estate partners Pamela Duffy and Harry O’Brien are listed as leading lawyers in the Real Estate: Zoning/Land Use – California category, Real Estate partner Alan Gennis is listed as leading lawyers in the Real Estate – Northern California category, Litigation partner Timothy Crudo is listed in the Litigation: White-Collar Crime & Government Investigations – California category, and Employment partner Fred Alvarez is listed in the Labor & Employment – California category.

Independent and objective, Chambers USA is carefully researched and widely considered to be the most reputable law firm directory in the world. Ranking criteria include technical legal ability, client service, commercial vision and business understanding, diligence, depth of the team, value for money, and other qualities most valued by legal clients.

Real Estate & Land Use

The Real Estate and Land Use practice at Coblentz Patch Duffy & Bass has again been awarded the highest ranking by Chambers & Partners USA 2020 Guide – Band 1 in the Real Estate: Zoning/Land Use category for California. Chambers notes that the Firm is a “prominent real estate practice offering particular strength in obtaining land use, zoning and environmental approvals for development projects” with an especially strong presence in the Bay Area. Clients described the team as “the premier zoning firm in town,” while another states, “they’re really excellent in land use.” Three Real Estate and Land Use partners received individual rankings.

Pamela Duffy is again ranked as a Leading Lawyer in the top tier, Band 1, in the Real Estate: Zoning/Land Use – California category. Pam has a highly-esteemed practice and is skilled at handling entitlements and land use issues and other transactions. Clients say she is “outstanding” and a “great lawyer who is well known and respected.” She has been recognized by Chambers since 2003.

Harry O’Brien is also again ranked as a Leading Lawyer in Band 3 in the Real Estate: Zoning/Land Use – California category. Harry is well respected for his handling of a wide spectrum of real estate matters, ranging from land use to transactional issues. He has significant experience advising clients on acquisitions, entitlements, and CEQA compliance. He has been recognized by Chambers since 2003.

Alan Gennis is ranked as a Leading Lawyer in Band 3, in the Real Estate – California category, and is recognized for his significant experience handling real estate transactions, such as acquisitions and joint ventures. He also advises on entitlements and due diligence, and his recent work has included providing counsel on mixed-use and office development projects. Alan has been recognized by Chambers since 2018.

Litigation

Litigation partner Timothy Crudo is again ranked as a Leading Lawyer, Band 4, in the Litigation: White Collar Crime & Government Investigations category for California. Clients consider him “patient and thorough” and appreciate his “excellent communication skills.” Tim has been recognized by Chambers since 2016.

Employment

Employment partner Fred Alvarez is recognized as one of seven Senior Statespeople in California in the Labor & Employment category. Chambers notes that Fred is “a much-admired employment law expert,” and he is described by one client as “one of the most respected labor and employment attorneys in California.” Another source notes he “has a wonderful manner when engaging with clients and he has a good understanding not just of the law, but on how it can impact his clients.”

On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (FFCRA), H.R. 6201, an emergency measure that directly imposes upon smaller employers both paid family leave and new paid sick leave obligations. After originating in the House late last week, the bill quickly passed both chambers of Congress and gained the White House’s approval. The measure will have a major impact on employers with fewer than 500 employees. Now that the legislation has been signed into law, its provisions become effective no later than 15 days after the Act is enacted and expire on December 31, 2020. Employers need to act swiftly to amend policies and train employees to ensure that employee leaves are administered in accordance with the new law.

Qualified Employers

• The bill applies to employers with 500 or fewer employees.
• The legislation provides a tax credit to small/medium businesses that provide benefits through the social security tax paid by employers.
• Companies with 50 or fewer employees must provide required benefits, but can apply for a hardship waiver with respect to Paid Family Medical Leave benefits only.  They must still provide paid sick leave without any waiver.

Emergency Sick Leave

The emergency paid sick leave is available for employees who are unable to work (or telework) due to: (1) a governmental quarantine or isolation order related to COVID-19; (2) advice from a health care provider to self-quarantine due to concerns related to COVID-19; (3) the employee experiencing symptoms of coronavirus and seeking a medical diagnosis; (4) a need to care for or assist an individual who is subject to categories (1) or (2) above; (5) a need to care for a child whose school or place of childcare is closed or unavailable due to coronavirus; or (6) the employee is experiencing any other similar condition to be specified by the Secretary of Health and Human Services.

As to the Emergency Paid Sick Leave, it is important for employers to be aware of the following provisions:

• Employers of employees who are health care providers or emergency responders may elect to exclude those employees from the emergency sick leave provisions.
• Full-time employees are to receive 80 hours of sick leave, and part-time workers are granted leave equivalent to their average hours worked in a two-week period, with the sick leave in either instance being available for immediate use regardless of the employee’s tenure at the employer.
• An employee may, but is not required to, first use any existing paid time off. Also paid sick time will not carry over from year to year.
• Workers taking leave for themselves will have to be paid at least their normal wage or the applicable federal, state, or local minimum wage, whichever is greater. Workers taking time off to care for family members must be paid at two-thirds of the foregoing rate. Sick leave is capped at $511 per day and $5,110 in the aggregate for leave taken in categories (1) through (3) described above (i.e., on one’s own behalf), and capped at $200 per day and $2,000 in the aggregate for leave taken in categories (4) through (6).
• Employers will be prohibited from (i) requiring workers to find replacements to cover their hours during time off; or (ii) discharging or discriminating against workers for requesting paid sick leave or filing a complaint against the employer related to such.
• Employers will have to post a notice containing information regarding the emergency sick leave provisions; the Labor Department is to create a model notice no later than 7 days after the Act is enacted.
• The Department of Labor will be authorized to issue regulations to (i) exclude certain health care providers and emergency responders from paid leave benefits, (ii) exempt small businesses with fewer than 50 employees from the paid leave requirements “when the imposition of such requirements would jeopardize the viability of the business as a going concern”, and (iii) ensure consistency between the emergency sick leave provisions and emergency family leave provisions described below.
• Workers under multiemployer collective bargaining agreements whose employers pay into pension plans will have access to paid emergency leave.
• Wages required to be paid under the emergency sick leave provisions will not be subject to the 6.2 percent social security payroll tax typically paid by employers on employees’ wages.

Emergency Family Leave

Private-sector employers with fewer than 500 workers, along with governmental entities, will have to provide up to 12 weeks of FMLA leave for employees who have been on the job for at least 30 days, and who are unable to work or telework because they have to care for a minor child if the child’s school or place of care has been closed, or if the child care provider of that child is unavailable due to a coronavirus emergency. An employer of an employee who is a health care provider or an emergency responder may elect to exclude the employee from the emergency family leave provisions.

Employers should be aware of the following provisions of the Emergency Family Leave:

• The first 10 days of leave can be unpaid (a worker could opt to use accrued vacation days or other available paid leave for those days). For subsequent days of leave, workers will receive a benefit from their employers equal to at least two-thirds of their normal pay rate. The paid leave is capped at $200 per day and $10,000 in the aggregate.
• Generally, the employee on leave must be restored to his or her prior position; however, this requirement does not apply to employers with fewer than 25 employees if the position held by the employee on leave no longer exists due to economic conditions or other changes in the employer’s operating conditions caused by the coronavirus pandemic, and the employer makes reasonable efforts to restore the employee to an equivalent position.
• Wages required to be paid under the emergency family leave provisions will not be subject to the 6.2 percent social security payroll tax typically paid by employers on employees’ wages.
• The Department of Labor will be authorized to issue regulations to (i) exclude certain health care providers and emergency responders from paid leave benefits, and (ii) exempt small businesses with fewer than 50 employees from the paid leave requirements “when the imposition of such requirements would jeopardize the viability of the business as a going concern.”
• Workers under multiemployer collective bargaining agreements whose employers pay into pension plans will have access to paid emergency leave.

The full text of the Act can be found here.

The Coblentz Employment team will continue to monitor this legislation and provide necessary updates. For further information or questions, contact any of our Employment lawyers: Fred Alvarez (falvarez@coblentzlaw.com), Stephen Lanctot (slanctot@coblentzlaw.com), Kenneth Nabity (knabity@coblentzlaw.com), and Hannah Jones (hjones@coblentzlaw.com).

[Updated March 20, 2020]

Federal / IRS

Individual Taxpayers.  On March 20, 2020, Treasury Secretary Steven Mnuchin announced that, at the President’s direction, “we are moving Tax Day from April 15 to July 15.”  While no formal notice has been issued, we expect that the Internal Revenue Service (“IRS”) will release a formal announcement shortly. This announcement comes following a notice released by the IRS on March 18, 2020 that postponed the due date for certain payments of income and estimated tax for 90 days (from April 15, 2020 to July 15, 2020). A copy of the full notice can be accessed here. Specifically, the due date for making up to $1 million of Federal individual income tax payments (including payments of tax on self-employment income) due on April 15, 2020, has been postponed to July 15, 2020. This includes both (a) tax payments due with respect to a taxpayer’s 2019 tax year and (b) estimated tax payments (including payments of tax on self-employment income) due in connection with a taxpayer’s 2020 tax year.

Corporate Taxpayers. The payment postponement operates in the same manner for corporate taxpayers with April 15, 2020 payment obligations, except that the limit on total income taxes for a consolidated group which may be postponed is $10 million.  Mnuchin’s announcement regarding extending the due date for filing federal tax returns to July 15, 2020 also applies to corporate taxpayers: “[a]ll taxpayers and businesses will have this additional time to file and make payments without interest or penalties[.]”

California

Governor Newsom’s March 12, 2020 Executive Order grants filing and payment extensions to June 15, 2020, but the California Franchise Tax Board (“FTB”) has announced an updated relief for California taxpayers, pushing back the filing date for California returns to July 15, 2020 in conformity with the federal extension. Currently, the FTB has postponed until July 15, 2020 the filing and payment deadlines for all individuals and business entities for:

• 2019 tax returns;
• 2019 tax return payments;
• 2020 first and second quarter estimated payments;
• 2020 LLC taxes and fees; and
• 2020 non-wage withholding payments.

Taxpayers do not need to claim any special treatment or call the FTB to qualify for this relief. These extensions will not affect the payment of refunds to taxpayers by either the IRS or the FTB, so if you expect your returns will generate refunds to you, you should proceed to file on your usual schedule.

For more information, contact Coblentz Tax attorneys Jeffry Bernstein, jbernstein@coblentzlaw.com, or Wendy Bleiman, wbleiman@coblentzlaw.com.

Coblentz’s international legal alliance, TAGLaw®, has again been recognized by Chambers & Partners as “Elite” for 2020—the highest ranking awarded to legal networks and alliances. This is the seventh time TAGLaw has received the distinguished “Elite” designation since Chambers & Partners began ranking legal networks and alliances in 2013.

In selecting networks and alliances for their “Elite” status, Chambers & Partners pays particular attention to the quality of the member firms, their global reach, and the value that the alliance provides to its member firms. Member firms have exceptional reputations for quality of service and client satisfaction, and strive to cooperate to provide resources and expertise as if they were right down the hall from one another.

As the Northern California law firm representative to TAGLaw, Coblentz is able to access a network of exemplary regional, national and international legal resources to help us better serve our clients. TAGLaw, with a global footprint in over 90 countries, has leading firms in over 160 jurisdictions providing legal services to companies ranging from the Fortune 5000 and leading SMEs to high net worth individuals. With expertise in dozens of practice areas and countless industry sectors, TAGLaw offers a substantial capability to its members’ clients. This capability is expanded by TAGLaw’s unique relationship with its sister alliance of accounting firms, TIAG, providing members and clients with the multidisciplinary expertise needed in today’s business world.

Coblentz partner Paul Tauber is a member of the Advisory Board of TAGLaw, assisting in reviewing prospective new members, offering feedback for the planning of international conferences and providing valuable guidance on future plans and initiatives.

San Francisco, CA January 1, 2020 – Coblentz Patch Duffy & Bass LLP is pleased to announce the election of Mark L. Hejinian, Robert B. Hodil, and Hons Yung to the firm’s partnership. These promotions are effective January 1, 2020.

“We are delighted to welcome these three exceptionally talented lawyers to the partnership,” said Sara Finigan, Co-Managing Partner of the firm. “Each of these partners embodies the values that distinguish Coblentz—exemplary client service, legal excellence, and a commitment to the firm and the community.”

The 2020 new partners are:

Mark L. Hejinian, Litigation.
Mark Hejinian focuses his practice on commercial litigation matters, ranging from consumer class action defense to intellectual property disputes to regional business disputes. He counsels clients in various businesses, including in the telecom, pharmaceutical, financial, and insurance industries. He also represents clients in white collar criminal investigations, and is a member of the firm’s White Collar Defense and Government Enforcement group. Mark is active in the firm’s pro bono efforts and a member of the firm’s Pro Bono Committee. He was awarded the Outstanding Volunteer in Public Service Award (2014, 2013) by the San Francisco Bar Association Volunteer Legal Services Program, and received the Wiley W. Manuel Pro Bono Services award for public service in 2014. Prior to joining the firm, he clerked for the Honorable Jan E. DuBois of the U.S. District Court for the Eastern District of Pennsylvania. Mark also clerked for the Honorable Judith Bartnoff of the Superior Court of the District of Columbia. Before attending law school, Mark was a U.S. Peace Corps volunteer in Guyana, South America. Mark earned his J.D., magna cum laude, from the Georgetown University Law Center. He earned his B.A., cum laude, from the University of Puget Sound.

Robert B. Hodil, Real Estate.
Robert Hodil focuses on land use entitlements and real estate development. He represents commercial and residential developers, hospitals, sports teams, and nonprofit entities in the process of acquiring and obtaining approvals to develop real property, and also represents a city in its review of a development proposal. Rob has experience with the California Environmental Quality Act, state and local planning and zoning laws and regulations, the California Subdivision Map Act, the California ballot initiative process, and other local, state, and federal laws affecting the development of real property. Rob is a member of the California State Bar and the Bar Association of San Francisco. Rob earned his J.D. from the University of California College of Law, San Francisco, where he served as Editor-in-Chief of the West-Northwest Journal of Environmental Law and Policy. He earned his B.A. from Brown University.

Hons Yung, Family Wealth.
Hons Yung counsels high-net-worth individuals, families, and closely held businesses with respect to tax, estate, and succession planning. He tailors advanced planning techniques to minimize estate, gift, income, and property taxes, and he is adept at presenting complex concepts clearly and concisely. Hons also represents fiduciaries and beneficiaries in trust and probate administrations, including assistance with federal estate and gift tax returns and the resolution of tax controversies with the IRS and state and local taxing authorities. Prior to joining Coblentz, Hons was an estate planning associate at Haas & Najarian, LLP, and began his legal career as a court clerk in the Probate Department of the Superior Court of California, County of San Francisco. Hons is a member of the State Bar of California. Hons earned his J.D. and LL.M. (Taxation) from Golden Gate University School of Law. He earned his B.A. in English, with a minor in Legal Studies, from the University of San Francisco.

San Francisco, CA – December 31, 2019 – Coblentz Patch Duffy & Bass LLP partner Pamela Duffy was chosen as the “Member of the Year” by the Golden Gate Chapter of Lambda Alpha International, an honorary land economics society. The award honors members who have advanced the field of land economics through their achievements and service to their profession, community, and chapter.

Pam was chosen for the honor, in part, for her generosity of spirit and active community engagement, noting her service on the Board of Directors of the National Advisory Council of the Institute of Governmental Studies at the University of California, Berkeley, and as a member of the Advisory Board of the College of Natural & Social Sciences at California State University, Los Angeles. She is also noted for being a gifted teacher and mentor, serving as a mentor to young lawyers at the firm and serving as a visiting lecturer at many law schools, universities, and professional organizations. The honor celebrates Pam as a legend in the industry and the go-to expert in the areas of commercial real estate, land use, and development.

“Pam’s imprint on San Francisco’s built environment is indelible and as impressive as the projects that she’s helped bring to life. From Yerba Buena and Mission Bay, to the Giants development of Oracle Park, the 49ers move to Levi’s Stadium in Santa Clara, and the Exploratorium’s relocation to Piers 15-17, she has guided some of the most iconic public/private developments in the San Francisco Bay Area,” said Matt Bove, Chair of Coblentz’s Real Estate Practice. “She’s a rare mix of skilled counselor, tireless advocate, patient teacher and jovial friend. We are thrilled to celebrate this incredible accomplishment with her.”

Pam has acted as lead counsel for numerous major development projects, including one of the largest rebuilding projects in San Francisco history, the $2.5 billion Sutter Health/California Pacific Medical Center, which includes five campuses and two new hospitals spread across the city. She is currently the lead counsel for the LA Clippers’ new 18,000-20,000 seat state-of-the-art basketball arena, event center, training facility, and associated community facilities and programs in Inglewood, California. Pam is unusually skilled at helping clients find elegant solutions to the challenges that arise in the development of complex public/private projects.

Lambda Alpha International is an honorary land economics society founded in 1930 to help promote and support the study of land economics. Membership in the society is a “Who’s Who in Land Economics,” as members have distinguished themselves in the many disciplines and activities related to the use and re-use of land.

Coblentz Patch Duffy & Bass was named to Benchmark Litigation’s 2020 list of “Recommended Firms” in California and the firm ranked in Tier 1 for San Francisco. These rankings are the result of Benchmark’s interviews with the nation’s leading private practice lawyers and in-house counsel.

In its analysis, Benchmark notes the firm’s growth and representation of DISH Networks, the Forty Niners SC Stadium Company, and its independent federal monitorship of the Utah Transit Authority. A peer notes that “Coblentz is a very successful boutique…and their ethos is a very civic-minded one.”

A number of Coblentz partners are listed as California State Litigation Stars by Benchmark: Richard Patch is listed for Antitrust, Class Action, General Commercial, and Telecommunications litigation; Jon Bass is listed for Antitrust, Appellate, and General Commercial Litigation; and Tim Crudo and Rees Morgan are listed for the White Collar Crime category. Cliff Yin is also listed as a California Future Star in the Labor & Employment and Real Estate litigation categories.

The California Office of Tax Appeals (“OTA”) recently issued a decision finding that a nonresident sole proprietor, who performed all services outside of California but performed such services for California customers, was operating a “unitary” business and was therefore subject to California’s apportionment rules.[i] The Bindley decision was rendered in late May 2019, but the OTA had until early September to decide whether the case would have precedential effect. On September 10, 2019, the OTA updated the decision’s status to precedential.

Bindley involved a self-employed screenplay writer who resided in Arizona and performed services for companies headquartered and registered in California. The California Franchise Tax Board (“FTB”) matched income records from other sources to identify that the taxpayer had received approximately $40,000 of income from California companies, but had no record of receiving the taxpayer’s return for the year in question.

Whether a nonresident is subject to California’s rules for apportioning income depends on whether (1) the taxpayer is carrying on a trade or business within California, outside of California, or a combination thereof; (2) the type of entity conducting the business; and (3) whether such business is unitary.[ii] In Bindley, the OTA found that the taxpayer’s business as a self-employed screenwriter was “carried on within and without the state” because he was a resident of Arizona, where he performed the services, and because he received income for such services from California customers. There was no question as to whether the taxpayer carried on his business as a sole proprietor. As to the third requirement for application of the apportionment rules to a nonresident—that the sole proprietorship be carrying on a “unitary” business—the regulations only describe what is not a unitary business.[iii] The regulations explain, with respect to a nonresident’s business conducted within and outside of California, that a business is not unitary where “the part within the state is so separate and distinct from and unconnected to the part without the state such that the respective businesses are not part of a unitary business[.]”[iv] From this language, the OTA reasoned that a nonresident’s business is unitary simply where “the part conducted within the state and the part conducted without the state are not so separate and distinct from and unconnected to each other to be separate businesses[.]”[v] By this reasoning, the OTA determined that the taxpayer’s business was unitary, and therefore subject to apportionment and the market-based sourcing rules.

Under California’s market-based sourcing rules, the income derived from the sales of services is sourced to the place where the benefit of the service is received.[vi] To determine the place where the benefit of the service is received, the regulations provide rules which look first to the contract and then, if the contract does not specify the location where the benefit is received, then the FTB or the taxpayer may “reasonably approximate” the location where the benefit is received.[vii] In Bindley, since both companies contracting with the taxpayer were located in California, the OTA concluded that it was reasonable to conclude that the companies received the benefit of the services in California.

By the OTA determining that its decision in Bindley would carry precedential authority, the FTB may now rely on its decision and reasoning in applying these rules to other taxpayers. In other words, the FTB may now require sole proprietors selling services to California customers to file California returns, even if such services are performed wholly outside of California and the sole proprietor otherwise has no connection to California.  For further information, contact Coblentz Tax attorneys Jeff Bernstein (jbernstein@coblentzlaw.com) or Jessica Wilson (jwilson@coblentzlaw.com).

[i] In the Matter of the Appeal of Blair S. Bindley, OTA Case No. 18032402 (May 30, 2019).

[ii] See 18 Cal. Code Regs. § 17951-4.

[iii] 18 Cal. Code Regs. § 17951-4(b).

[iv] 18 Cal. Code Regs. § 17951-4(b).

[v] Appeal of Bindley, OTA No. 18032402, at 6 (May 30, 2019).

[vi] Cal. Rev. & Tax. Code § 25136.

[vii] See 18 Cal. Code Regs. § 25136-2(c).