THIS ISSUE'S HEADLINES

Equal Access to Justice Act Determined to be Inapplicable to Non-Parties

Pros and Cons of RWI in Merger and Acquisition Transactions

What’s Next in Rhode Island’s Ever-Evolving Cannabis Industry?


EQUAL ACCESS TO JUSTICE ACT DETERMINED TO BE INAPPLICABLE TO NON-PARTIES

The Equal Access to Justice for Small Businesses and Individuals Act (“EAJA”) is a legislative enactment whose purpose is to “mitigate the burden placed upon individuals and small businesses by the arbitrary and capricious decisions of administrative agencies made during adjudicatory proceedings, as defined in the act.” Taft v. Pare, 536 A.2d 888, 892 (R.I. 1988). EAJA accomplishes this purpose by providing for an award of attorney’s fees and other reasonable litigation expenses to a prevailing party. See G.L. 1956 § 42-92-3. This incentive seeks to eliminate the financial burden for those who are forced to defend against unjustified governmental action and seeks to deter the unreasonable exercise of governmental authority.

In a recent Superior Court decision, a non-party litigant sought to reap the benefits of EAJA. In that matter, Preston v. Town of Hopkinton et al., C.A. WC-2017-0470, the Plaintiff sought litigation expenses for her successful challenge of the decision of the Hopkinton Zoning Board that permitted her neighbor to keep alpacas on the neighbor’s property. The Plaintiff was not a party to the underlying decision of the Zoning Board, but rather, was able to challenge the decision as an “aggrieved party.” After obtaining a favorable ruling from the Rhode Island Supreme Court, the Plaintiff argued that she was a prevailing party pursuant to EAJA and should be awarded her reasonable litigation expenses. The Superior Court disagreed, determining that EAJA is not applicable to non-parties, like the Plaintiff in this matter, because EAJA sought to protect those whom the government may “proceed against.” Plaintiff, the court determined, voluntarily “entered the arena” and thus, created a “scenario with which the Legislature was [not] concerned when it enacted the EAJA.” The ruling clarifies that EAJA is only applicable to parties whom the government brings an action against, and not parties who may intervene to protect their own interests. For further information on this decision or related legal issues, please contact Attorney Patrick J. McBurney at 401-824-5100 or email pmcburney@pldolaw.com.

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Representation and warranty insurance (“RWI”) has been around for some time. Historically it was most commonly used in large transactions, often involving publicly traded companies. However, in recent years it has become much more common in smaller, private, “middle market” transactions. As the name implies, RWI provides insurance protection to a party (either the buyer or seller) in the event the representations of the seller in an asset purchase agreement, stock purchase agreement or merger agreement are breached and the buyer suffers damages as a result of such breach. In some cases, it may also provide protection for the buyer in the event of outright fraud by a seller.

Predictably, there are pros and cons to RWI that must be carefully weighed by both buyer and seller. Furthermore, that process needs to start early because the decision to seek RWI will impact negotiation of the purchase or merger agreement.

PLDO partner and business attorney, William F. Miller, describes RWI benefits and what the insurance does not typically cover in his latest advisory, The Pros and Cons of Representation and Warranty Insurance in Merger and Acquisition Transactions. He also offers practical and financial considerations to help organizations make informed decisions. If you have questions about RWI or other business matters, please contact PLDO Partner William F. Miller at 401-824-5100 or email wmiller@pldolaw.com.

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The U.S. cannabis industry is booming. Nearly every state has implemented a medicinal marijuana program for patient use and several states have decriminalized recreational use of marijuana by adults. This year’s marijuana sales across the nation are estimated to be worth over $16 billion, according to BDS Analytics latest research reported in its 7th edition of The State of Legal Cannabis Markets. The economic impact that this nascent industry is having on state coffers is formidable, including in Rhode Island, which first legalized the use of marijuana for certain qualifying medical reasons in 2006, but has not yet permitted recreational use of the drug.

To help people gain insight into what the future may hold for Rhode Island in this ever-evolving industry, PLDO Partner Benjamin L. Rackliffe, a leading authority and advisor to cannabis industry business owners, cultivators and investors, will join a panel of experts at the “2020 Business of Cannabis Summit” on Wednesday, February 26, 2020 from 8:30 a.m. to 10:30 a.m. at the Providence Omni Hotel, 1 West Exchange Street in Providence. The event is sponsored by Providence Business News and open to the public. To register, visit https://pbn.com/event/2020-the-business-of-cannabis-summit/#buy-tickets.

Among the topics to be discussed include the evolution of the cannabis industry in Rhode Island, the financial costs, benefits and/or negative impact of expanding legalization for adult recreational use in the state, and the business challenges facing marijuana grow facility owners, cultivators and emerging ancillary companies in this highly regulated industry.

Attorney Rackliffe has been at the forefront of advising businesses on state and federal cannabis law and policy landscape in both medical and recreational markets throughout New England and elsewhere. He has advised approximately two dozen licensed cultivation companies through real estate, licensing, regulatory compliance and investment related matters within Rhode Island. He routinely advises dispensary and cultivation operators, including the owner of the largest outdoor cannabis cultivation on the east coast, as well as a publicly traded Canadian company, on diverse corporate matters. In addition, he advises investors on risk mitigation measures within the cannabis space. His experience also includes representing clients in the nation’s burgeoning hemp industry. If you have questions or need legal counsel regarding business matters in the cannabis industry, please contact Attorney Rackliffe at 401-824-5100 or email brackliffe@pldolaw.com.

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