Virgin Islands Law Blog

Virgin Islands Law Blog

U.S. Virgin Islands law & politics

Supreme Court Approves Use of Class-Action Waivers by Employers in Arbitration Agreements

Posted in Labor & Employment

On May 21, 2018, the United States Supreme Court ruled that employers may require employees to enter arbitration agreements that waive their rights to seek class-action claims against the employer. The split, 5-4 decision was authored by Justice Neil Gorsuch, rejecting the position held by the National Labor Relations Board (NLRB) that any of these types of class-action waivers violated employees’ rights to engage in “concerted activities” with regard to terms and conditions of employment, a protection afforded by the National Labor Relations Act (NLRA).

The ruling drew criticism from Justice Ginsburg, who voted with Justices Breyer, Kagan and Sotomayor as the dissenters and called the ruling “egregiously wrong.”

About the case

The case in question, Epic Systems Corp v. Lewis, actually featured three cases combined into one. In each of these cases, an employer and employee entered into a contract that required individual arbitration processes to settle labor and employment disputes.

As background, the NLRB ruled in 2012 that the NLRA essentially nullified the Federal Arbitration Act’s policy favoring enforceability of these arbitration agreements when any class-action waivers are involved in the case. At the time, the NLRB reasoned that any class-action claims related to employment disputes are a type of concerted activity protected under the stipulations of the NLRA. Since that ruling, courts have been split as to whether or not they must defer to this precedent set by the NLRB. The Supreme Court’s ruling clarifies the issue.

The impact

So what does this decision by the court mean moving forward for class-action employment cases?

Now, employers across the nation are allowed to include clauses in contracts or other arbitration agreements that make it mandatory for employees to resolve their employment disputes in individual arbitration proceedings rather than entering into class-action suits or other collective acts in cases where those agreements are governed by the Federal Arbitration Act.

Any clauses that require individualized arbitration allow employers to handle disputes in the workplace more efficiently on a one-on-one basis, and these employers are now protected from elevated risk of large judgments and major class-action suits.

It is expected that, moving forward, employers will be more likely to include mandatory arbitration agreements that have collective and class action waivers as a condition of employment. This means fewer class-action suits nationwide, less risk of employer liability for workplace disputes and less expense faced by employers in defending these types of cases.

For more information about how this case could impact businesses throughout the United States, get in touch with an experienced corporate planning attorney in the U.S. Virgin Islands today.

Ravinder S. Nagi is Assistant Managing Attorney and Chair of the Labor and Employment Practice Group at BoltNagi PC, a full service business law firm that serves the U.S. Virgin Islands.

How to Write an Effective Business Plan

Posted in Business

A strong, concise business plan is crucial when starting a new business. Not only will it give you a roadmap for how you will grow your business in its early years, but it will also be useful for investors, who want to see that you have a well-thought-out venture that has a good chance of being viable and sustainable before they invest their money into it.

Here is what you should include in your business plan:

  • An executive summary: This should sum up your entire business plan. What are the goals you have for your company? What do you hope to achieve? What are you looking for out of potential investors? Clearly state exactly what you’re looking for, and do not mince words.
  • Business description: Begin with a short description of the industry in which your business will operate, discussing the outlook for that industry at the present and in the future. Discuss any new products or other developments that could benefit or impact your business in any way.
  • Market strategies: Before you launched your business, you presumably (or at least should have) conducted some in-depth market studies, allowing you to familiarize yourself with all aspects of the market. In this section of your business plan you will identify your target market and properly position your company in a way that you can serve that market and garner sales.
  • Competitive analysis: Identify all of the competitors you have in your market, their strengths and weaknesses and strategies you have that will give you a distinct advantage over these competitors. As part of this, consider how your business will differ from your competitors, and any barriers you can develop to prevent potential future competitors from taking over your market share.
  • Operations and management plans: Describe how your business will operate on a day-to-day level. Your operational plan should include the responsibilities of your management team and all tasks assigned to the company’s various departments.
  • Design and development: If you’re selling a product, you should use this section to give potential investors a description of the design of that product. You should also be able to clearly map out how it’s been developed in the context of production and marketing. This section should also contain a development budget that will realistically allow you to achieve your goals.
  • Financial data: Keep financial data toward the back of the business plan, but still be as thorough as you can. Include any financial factors that could affect your company, as well as any financial backing you’ve already received for your venture.

These are just a few of the categories you’ll need to include in any business plan you prepare for your company. For more information, we encourage you to contact an experienced corporate planning attorney in the U.S. Virgin Islands.

Tom Bolt is Managing Attorney at BoltNagi, a respected and well-established corporate law firm, proudly serving entrepreneurs and business owners throughout the U.S. Virgin Islands.

How Creditors Can Protect Themselves During Bankruptcy Proceedings

Posted in Business

As a creditor, there’s always a chance you’ll receive an official notice in the mail at some point, alerting you that someone to whom you have loaned money has filed for bankruptcy. One of the primary reasons people file for bankruptcy is to discharge some of their debts.


You must act quickly if you are to protect the interests of your business. The following are some of the issues you should consider and the steps you should take when alerted that a client has filed for bankruptcy:

  • Attend creditors’ meetings: Have a representative attend the creditors’ meeting and debtor’s deposition. This gives you the chance to ask questions of the debtor while they are under oath and to take the debtor’s deposition. This can arm you with extremely valuable information that will assist you through the rest of the bankruptcy process. Attending the creditors meeting will also allow you to understand what led to the debtor’s bankruptcy filing, and, most importantly, the correct financial status of the debtor and priority of other creditors’ claims. Keep in mind that a bankruptcy filing does not necessarily mean that the debtor is completely insolvent. Oftentimes debtors have remaining assets that can be liquidated to satisfy debts, or the debtor may even be in a position to restructure or reorganize its operations and continue paying down their obligations.
  • File Notice of Appearance: When you file a Notice of Appearance with the bankruptcy court, you will be notified by the court about all of the debtor’s actions and appearances.
  • Proof of claim: As a creditor, you have the right to file a proof of claim to ensure you are included in the distribution of any funds that are not exempt. This could, for example, involve you sharing in any repayment plans created by the debtor.
  • Automatic stay relief: If you have an interest in property owned by or leased to the debtor filing for bankruptcy, you can file for relief from the automatic stay. Successfully doing so grants you the power to either begin or continue the foreclosure process, or recover property you had leased to the debtor.
  • Dismissal: If you have just cause to do so, you can seek to have the bankruptcy case dismissed entirely. Examples of scenarios in which the court will consider a dismissal include bad faith or qualification issues. This immediately returns both parties to their pre-bankruptcy standing and allows you more options in seeking the funds you are owed.
  • Review reports: You have the right as a creditor to review monthly reports under Chapter 11 bankruptcy that are sent to the U.S. Trustee after they’re filed with the bankruptcy court. These reports can provide some useful and illuminating information about the case.
  • Debt discharge objections: You can object to the discharge of any debts owed to you. You may also file a non-dischargeability complaint if any debts were incurred via fraud or false financial statements, or were incurred shortly before the debtor filed for bankruptcy. This complaint is due within 60 days after the creditors’ meeting.

For more information about how you can protect your interests when a debtor files for bankruptcy, contact an experienced U.S. Virgin Islands bankruptcy lawyer.

Nash Davis is an Associate Attorney in the Corporate, Tax and Estate Planning Practice Group at BoltNagi PC, a full service business law firm serving the U.S. Virgin Islands.

Five Safeguards You Should Add to Your Financial Power of Attorney

Posted in Tax & Estate Planning

When planning your estate, you can carefully craft your power of attorney documents to suit your own needs. However, there’s always the potential your chosen agent will misuse the powers granted to them. Even if you trust that person implicitly, building some safeguards into your power of attorney document can be quite helpful and give you some extra peace of mind.

Here are a few examples of such safeguards you might consider adding to your financial power of attorney.

  • Have another party handle some accounting: If you lose capacity to handle your own financial affairs, there’s a chance your power of attorney will lose all oversight. Therefore, it can help to have another person watching financial transactions as a sort of backup in case you become incapacitated. This person can be a professional accountant, an attorney or simply a trusted friend or relative—the idea is to provide extra accountability and oversight when it comes to the use of your money.
  • Establish an inventory of assets: Having an inventory of your assets prepared before your agent starts managing your assets will give you a baseline for comparison in the future. Share this inventory with your trusted party who will also act as an oversight for accounting matters.
  • Impose limits on changes to beneficiaries: By limiting changes to beneficiaries, you’ll make sure your wishes remain honored and that your chosen agent does not abuse his or her power by, for example, removing beneficiary status from a person he or she does not like. This includes limiting changes to rights of survivorship in bank accounts, or changes to any beneficiary designations in wills, insurance policies, trusts, retirement accounts, annuities and investment portfolios.
  • Set the agent’s abilities and limits regarding gifts: As a general rule, your safest option is to prohibit your agent from making any types of gifts. But if you have had a pattern of giving throughout your life and want that to continue even during your incapacitation, you can set limits regarding gifting. Do so by identifying only the recipients you wish to receive gifts, or classes of recipients you will allow, and by placing limits on the frequency and amounts of these gifts.
  • Add safeguards for large transactions: You could, for example, have a pair of co-agents to share the responsibility of managing your finances, so long as they are able to work together. You might also consider adding an extra step for particularly large transactions, requiring approval in the form of a signature from this third party. Such transactions could include major investments or purchases of a home or vehicle.

It is important you choose an agent you can trust to be responsible with your finances, but even then, there are never any guarantees that your agent will not abuse his or her power. Talk to an estate planning attorney in the U.S. Virgin Islands to learn more about how you can protect your estate by adding some safeguards into your power of attorney.

Nash Davis is an Associate Attorney in the Corporate, Tax and Estate Planning Practice Group at BoltNagi PC, a full service business law firm serving the U.S. Virgin Islands.

What Legal Duties do Directors and Officers of Nonprofit Organizations Have?

Posted in Nonprofit

Directors and officers of nonprofit organizations are often volunteers who receive no form of financial compensation. However, they still have a fiduciary duty to their organizations, and breaching that duty could result in them being personally liable for any damages they cause to the organization.

With this in mind, here are some of those legal duties owed by directors and officers to the nonprofit organizations they serve.

Acting in the best interest of the organization

This is the simplest duty these officers and directors have—they must always act in the best interest of the organization, and exercise reasonable care in performing all of their duties. The organization’s interests should be placed ahead of any other interests, including (and especially) their own.

Disclosing and avoiding potential conflicts of interest

It is extremely common for directors and officers of nonprofit organizations to have other interests outside of their organization. For example, a director might work for a commercial business that does some type of work with the nonprofit. In another example, a director could have an active role in another organization on the opposite side of certain policy members. These conflicts shouldn’t be a problem with regard to a director’s ability to serve on the nonprofit board, as long as those directors fully disclose those interests and are able to avoid potential conflicts.

The organization will still need to consider the possibility that a volunteer will be biased in certain types of decisions. It is the board’s right and responsibility to review these other interests and determine if there is a potential conflict and whether/how it can be mitigated.

Ability to be tight-lipped about organizational information

Directors of nonprofits have the duty to maintain the organization’s important information in confidence. This doesn’t only apply to information that has clearly been designated “confidential” by the organization, but also to any information the director would reasonably expect the organization would wish to keep confidential, even if it didn’t expressly designate that information as confidential.

Respecting various corporate opportunities

Directors have the duty to respect corporate opportunities as they arise. They are not allowed to appropriate any of these corporate opportunities, such as business prospects, ideas or investments related to the organization’s activities or programs. This tends to become a problem if corporate opportunities that arise for the nonprofit organization conflict with other interests held by the director outside of the organization.

This relates to the first duty discussed—that all directors must act in the best interest of the organization they serve. Standing in the way of corporate opportunities would certainly not constitute acting in the organization’s best interest.

For more information about the legal duties of directors and officers of nonprofit organizations, contact an experienced business planning attorney in the U.S. Virgin Islands.

Tom Bolt is Managing Attorney of BoltNagi PC, a full service business law firm located on St. Thomas, U.S. Virgin Islands.

How Nonprofit Directors Can Avoid Legal Liability

Posted in Nonprofit

There are some circumstances in which directors of nonprofit organizations can be held legally liable for acts they carried on behalf of the organization, or acts that could be construed as them representing the organization.

With the potential for legal liability constantly looming, it is imperative that the organization have a commitment at all levels to operating fully within the law. This will help prevent most cases in which legal liability would be an issue. Any time the law is unclear, directors (and the organization as a whole) should use a conservative approach and not attempt to press their luck regarding possible liability.

Here are some tips to help you avoid legal liability with your nonprofit organization.

  • A strong commitment to education: For your organization to stay in full legal compliance, you must commit to educating all directors (who are typically volunteers) of all the potential legal risks the organization faces. A good way to do this is to have orientation programs for all new directors that come aboard the organization. These programs should have sections that include information and training in various compliance challenges. Ongoing education can also help to provide reminders of these compliance issues and prevent any challenges from arising.
  • Constantly available legal counsel: You should have legal counsel that is always available to your organization and its directors. The organization’s attorney will monitor organizational policies and programs, as well as any external policies and regulations that could affect the organization. If issues that could lead to potential risk arise, the attorney can bring these issues to the attention of the directors.
  • Indemnified directors: Indemnification is a promise to pay for the legal defense (and any damages incurred) if the indemnified person is accused of legal wrongdoing while acting on the organization’s behalf, with the exception of cases involving gross negligence or fraud. By indemnifying directors, you help shield them from personal liability for organizational matters and give them a little extra incentive to act as directors in the first place.
  • Insurance: To give yourself a broader safety net, get liability insurance for your organization. These policies cover a wide range liability types, paying for any legal defense and resulting damages or settlements from claims of wrongdoing by the organization or its directors. Liability insurance has the added benefit of opening up potential new opportunities for the organization. Many businesses or organizations will not do business with nonprofits if they do not have liability insurance.

It’s important to take whatever steps possible to protect your volunteer directors from legal liability on behalf of the organization. To learn more about how you can shield your directors from legal liability, contact a knowledgeable attorney in the U.S. Virgin Islands.

Revocable vs. Irrevocable Trusts: A Comparative Analysis

Posted in Tax & Estate Planning

As you go through your estate planning process, it’s important you fully understand the options and tools available for you to accomplish your goals. For example, knowing the difference between revocable and irrevocable trusts is crucial to your estate planning success.

Here is a brief analysis of each type of trust and how they differ from each other.

Revocable living trusts

Revocable trusts can be changed at any time. If you ever have any second thoughts about provisions of those trusts for any reason, or simply want to change your beneficiary or trustee, you can easily modify the terms of that trust with an amendment, or revoke the entire thing and write it from scratch.

The clear benefit of such a trust is its flexibility. However, the downside is that any assets placed in a revocable trust will still be considered your own assets for estate tax and creditor purposes. If you are sued, those trust assets will not be protected from your creditors, and all assets will be subject to federal and state taxes upon your death.

There are several main reasons people use revocable trusts in their estate planning:

  • Planning for incapacity: An eventual mental or physical disability could prevent you from managing your own assets. Any assets you place in a revocable trust can be managed by your disability trustee, rather than a court-appointed guardian.
  • Avoid probate: Any assets placed in a revocable trust will bypass the probate process after your death, going directly to the listed beneficiaries.
  • Privacy: The contents of your revocable trust do not become public record, unlike the contents of a will.

Irrevocable trusts

As the name suggests, an irrevocable trust cannot be revoked after a certain point in time—usually upon your death. You can design it to break into several separate irrevocable trusts for the benefit of your surviving spouse or other beneficiaries, if you wish.

Irrevocable trusts do not, then, have the same flexibility that is characteristic of revocable living trusts. They do have several benefits, however:

  • Estate tax reduction: Any assets placed into the trust will not count toward the value of your estate, as they technically become property of the trust rather than you, the trust maker. If your estate is valued over the threshold for the estate tax, this can help you reduce your estate tax responsibility.
  • Asset protection: The trust assets in an irrevocable trust are no longer property of the trustmaker, which means creditors or other people taking legal action against you cannot touch those assets.
  • Charitable giving: You can set up irrevocable trusts specifically for leaving behind money or assets to charitable organizations. If you begin transferring assets into a charitable trust while you are still alive, you’ll receive charitable income tax deductions for the years in which you make those transfers. If the initial transfer does not occur until after your death, the estate as a whole will benefit from the charitable deduction.

For more information about irrevocable versus revocable trusts and which makes the most sense for you to use in your estate, contact an experienced U.S. Virgin Islands estate planning attorney.

Steven K. Hardy is an attorney in the Corporate, Tax and Estate Planning Practice Group at BoltNagi PC, a full service business law firm serving the U.S. Virgin Islands.

How to Respond to a Low Insurance Settlement Offer

Posted in Insurance

Any time you find yourself in a circumstance in which you’re waiting for an insurance company to issue you a settlement offer, don’t be surprised if the first offer you get seems rather low. The claims adjuster might believe you to be partially at fault for the situation, or if you were injured, the adjuster might conclude your injuries were not serious enough to justify the damages you sought in your demand letter.

However, you shouldn’t just accept the first offer you get from the insurance agency. While it’s understandable to want to get the claims process over with as soon as possible, accepting that initial offer could result in you leaving a lot of money on the table. The adjuster does not necessarily expect you to accept the first offer, but probably hopes you will.

Here’s an overview of how you can respond to an offer you think is too low.

The counteroffer

Whenever you reject a settlement offer and prepare to make a counteroffer, you should seek the assistance of an attorney, who can advise you through the process and maximize your chances of success.

To reject the first settlement offer from the insurance company, send a letter to the adjuster in charge of your case that includes the following:

  • A statement that you do not accept the initial settlement
  • Specific reasons why you deserve a higher settlement offer than the one made to you
  • A demand for a higher settlement offer

The amount of your counteroffer should be a little lower than the one you submitted along with your initial demand letter. This is a signal to your insurance adjuster that you are negotiating in good faith and are willing to make a compromise. However, reducing your settlement demand by too much could, again, result in you leaving money on the table.

How to determine a fair offer

There are some circumstances in which insurance companies will make fair initial settlement offers, though it is uncommon. Therefore, you should carefully weigh every offer you receive, even initial ones, just in case you can settle the case quickly without having to go through negotiations.

In doing so, weigh the initial offer made by the insurance company against the facts you’ve compiled in your case and the total amount of damages you sustained. This will help you determine whether or not your adjuster made a fair offer. Your attorney will be an invaluable resource to you as you evaluate the fairness of any offer you receive, as he or she has likely seen countless settlement offers throughout the course of his or her career.

You should also be careful not to be too demanding. If you decline a fair offer and go to court over your demands for more money, a jury could award you an amount below that which was offered initially by the insurance company.

For more information about how to proceed if you receive what you perceive to be a low or unfair settlement offer from an insurance company, contact a skilled attorney in the U.S. Virgin Islands.

Adam N. Marinelli is an attorney in the Civil Litigation Practice Group at BoltNagi PC, a full service business law firm serving the U.S. Virgin Islands.

Common Sense Strategies to Help Avoid Business Litigation

Posted in Business, Litigation

Just about all successful businesses will find themselves involved in a lawsuit at some point. However, there are many strategies you can employ to help you avoid unnecessary legal disputes and minimize the risks you face. This will help you save money and maintain your focus on your business rather than ongoing litigation.

Here are a few common sense strategies to help you avoid business litigation.

Always follow the golden rule

Whenever you have an interaction with another party that could potentially become hostile, be sure to follow the golden rule (treat others as you wish to be treated). This simple piece of advice can go a long way. You should consider what is objectively correct in the circumstance from a neutral perspective, and empathize with the other party’s situation. By seeking to understand the other party rather than dominate them, you can neutralize some potential arguments and reach agreeable settlements.

Always emphasize outstanding communication

Clear communication from the time a business relationship is formed through the final transaction is absolutely imperative to not just a strong relationship, but also to preventing litigation. You should carefully draft and read all contracts, letters of intent, purchase orders, terms and conditions and general forms of communication such as letters and email. Your business should also keep lines of communication open with the other party at all times so you can clarify issues as they arise. Litigation often occurs as a result of poor communication, so in theory you should be able to avoid it by being a good communicator.

Act as soon as you discover possibly threatening developments

You should aim to cut off business disputes in their early stages—don’t just sit and hope they will resolve themselves. Implementing a clear review procedure can help ensure you allocate the necessary resources to a dispute in its early phases, helping you avoid litigation. Examples of such review procedures could include:

  • Developing reporting procedures for your employees to report possible risks
  • Identifying risk stages and developing plans for risk evaluation
  • Ensuring follow-up after risks are reported
  • Identifying, interviewing and evaluating potential witnesses
  • Identifying and collecting relevant documents and information, as well as disputed and undisputed fact issues that could be an issue in the case

Maintain detailed records

Even just producing crucial documents can help you prevent expensive, time-consuming litigation. Emphasize outstanding record keeping so you can save money and time down the road and prevent litigation from upending your business.

Focus on positive outcomes for both parties

You can avoid a lot of potential litigation risk simply by only entering into agreements that will result in positive outcomes for both parties. If you care just as much about the outcome the other party to the agreement gets as you do the outcome for your company, you’ll almost certainly be able to avoid litigation.

For more information and strategies to help you avoid business disputes, contact our corporate planning attorneys in the U.S. Virgin Islands.

Ravinder S. Nagi is Assistant Managing Attorney of BoltNagi PC, a full service business law firm on St. Thomas, U.S. Virgin Islands.

What is the Difference Between a C Corporation and an S Corporation?

Posted in Business

If you’re filing articles of incorporation for a business, chances are you’ve done a lot of research on what type of business structure is going to best fit your plans. If you’re filing as a corporation, you’ve likely come across two very specific types of corporations: a C corporation and an S corporation.

If you’re confused, don’t worry—they’re two sides of the same coin. Understanding what makes them different, however, can help you make decisions about how you want to run your corporation.

Similar, yet different

C corporations and S corporations actually start out the same: as a C corporation. The default status of any corporation is C. A corporation only becomes an S corporation in the event that all shareholders vote to do so. And, after making the transition, the structure of the business stays relatively the same—the only real change involves the way the business is taxed and the flexibility of the ownership.

Taxation differentiations

One of the known drawbacks of a C corporation is in how it’s taxed. Because the business is taxed at the corporate tax rate and any dividends issued are further taxed at the personal income level, there’s a situation known as “double taxation.”

S corporations, on the other hand, are not taxed at a corporate level. Instead, profits and losses are distributed among shareholders and taxed as such at the personal income level. This strips the double taxation anomaly away and, in most cases, guarantees a lower taxation rate.

Structural stipulations

Because there’s such a dramatic difference in how C and S corporations are taxed, there are also stipulations in how these businesses can be structured as well. Some examples include:

  • C corporations are allowed to divvy up voting rights based on different classes of voting shares; S corporations are not and can only have a single share structure for equal voting rights across shareholders.
  • S corporations are not allowed more than 100 voting members, therefore, are not allowed to issue more than 100 shares of stock. Moreover, all shareholders must be U.S. citizens. C corporations, on the other hand, have no restrictions on the number of shares that can be issued and shareholders can be global.
  • There are also several types of business that are not permitted to file for S corporation status. These include insurance companies, banks and other financial institutions.

Understanding the pros and cons

As with any decisions made during incorporation, it’s important to think about the future of your business and what your ultimate goals are. If, for example, you’re planning on an IPO in the future, a general C corporation is the best option. On the flipside, if you’re looking to avoid double taxation and have a core group of shareholders, an S corporation filing may be the better decision.

When in doubt, consult with an accountant, attorney or business advisor on what your vision for your company is and which corporation type is best suited to help you achieve that reality.

Steven K. Hardy is an attorney in the Corporate, Tax & Estate Planning Practice Group at BoltNagi PC, a full service business law firm serving the U.S. Virgin Islands.