Blockchain Contracts – A Binary Revolution of Agreements

Cryptocurrency has been a mainstream topic in the media for numerous years now. Its goal to digitize and make transactions private has spurred much debate. Many commercial transactions using cryptocurrency involve a blockchain contract, which operates like contracts that people enter into daily.

A blockchain is a database shared by all parties to a transaction. The blockchain for a given transaction is stored and accessed using the parties’ computers. The database uses mathematics and software to prevent the data from being tampered with, altered, or destroyed.

Blockchain contracts are best explained using the example of a vending machine. For instance, Justin owns a vending machine that sells soda for $1.50. Caleb agrees to pay $1.50 for Justin’s soda. After Caleb fulfills the condition of paying $1.50, the smart contract would automatically take the soda from Justin and give it to Caleb. Because the contract is set up through the blockchain using secure data, this cuts out the possibility that Justin would not give up the soda once Caleb paid $1.50. So long as the condition of paying $1.50 is met, Justin’s performance under the contract will automatically be executed. Simply put, the binary nature of whether a condition has been met makes blockchain contracts efficient to execute and successful at preventing breaches of contract.

Although blockchain contracts are relatively new to the courts, these agreements will fit into contract law that attorneys dispute on a daily basis. For example, because of its written nature, a blockchain contract will satisfy the statute of fraud. Furthermore, the entire body of code will be deemed part of the contract; therefore, it provides the court with a clear depiction of the “four corners” of the contract.

Blockchain contracts, on the other hand, can create unique procedural issues for attorneys. Blockchain contracts have a processing fee the initiating party pays to the agreement. In the crypto world, this processing fee is known as “gas,” which represents compensation paid to other computers to validate the contracts before they are given full legal effect. Technology glitches and power outages are especially prevalent due to Midwest weather. If a computer cannot validate a contract, this could cause the third party who runs the authorized computer to incur liability.

If programmed correctly, blockchain contracts lower liability and reduce legal costs. However, litigation can ensue if blockchain contracts are programmed incorrectly or fail to execute to the parties’ specifications. This will cause a shift in the type of work litigators encounter, requiring attorneys to understand and argue technology law, which is likely unsettled in the courts.

From a transactional law perspective, attorneys will need to quickly absorb information pertaining to technology law and be able to write contracts that protect their clients from future liability. Since blockchain contracts are formed electronically, attorneys will need to learn how to code their contract clauses so agreements can automatically execute as soon as their conditions are fulfilled.

Blockchain contracts will likely rise in popularity in the future. Attorneys, courts, and clients need to understand the risks but appreciate the efficiency and security these agreements can provide. Erickson Sederstrom Law stays current with the shifts and changes in contract law.

What Happens to Your Student Loans When You Die?

One question that often arises during discussions about financial planning and estate management is what happens to student loans when a borrower passes away. Understanding the implications for both federal and private student loans can help individuals, and their families better prepare for unexpected circumstances.

Federal Student Loans

Federal student loans are generally discharged upon the borrower’s death. This means that the remaining balance on the loan is canceled, and the borrower's family is not responsible for repayment. To initiate this process, a family member must provide the loan servicer with proof of death, such as an original or certified copy of the death certificate. Parent PLUS loans, which are federal loans taken out by parents on behalf of their children, are also discharged if either the student or the parent borrower dies.

Private Student Loans

The situation is more complex with private student loans, as each lender has its own policies. While many private lenders offer a discharge upon the borrower's death, this is not guaranteed and can vary based on the loan agreement. If a private student loan does not automatically discharge, the debt may become part of the deceased’s estate and could be paid from the estate's assets during probate. Additionally, if there is a cosigner on a private student loan, that person may be held responsible for the remaining balance unless the lender has a policy to release the cosigner upon the borrower's death.

Responsibility for Other Debts

When a loved one passes away, their estate typically goes through a process called probate, where outstanding debts are paid off from the estate's assets before any remaining assets are distributed to beneficiaries. It's important to note that most debts, including some private student loans, may need to be paid out of the deceased’s estate, but family members are generally not personally liable unless they are a cosigner, or the loan is held in a community property state.

Protecting Your Loved Ones

To protect loved ones from being burdened by student loans or other debts after one's death, consider the following options:

1. Life Insurance: A life insurance policy can provide a payout that helps cover any outstanding debts, including private student loans, ensuring that family members are not left with financial obligations.

2. Estate Planning: Creating a comprehensive estate plan, which may include a trust, can help manage how assets and debts are handled upon death, potentially keeping certain assets out of the probate process.

3. Review Loan Terms: Understanding the terms of any private loans and consulting with the lender can clarify what happens to the debt if the borrower passes away.

By proactively addressing these issues, individuals can help alleviate some of the financial burdens that might otherwise fall on their loved ones.

Article Sources:

1. Dori Zinn, What happens to student loans when you die? Investopedia (2024), https://www.investopedia.com/student-loans-when-you-die-8640572 (last visited Aug 30, 2024).

2. Ben Luthi, What happens to student loans when you die? Experian (2022), https://www.experian.com/blogs/ask-experian/what-happens-to-student-loans-when-you-die/ (last visited Sep 3, 2024).

3. Ben Luthi, What happens to student loans when you die? LendingTree (2022), https://www.lendingtree.com/student/what-happens-to-student-loans-when-you-die/ (last visited Sep 3, 2024).

Nebraska Supreme Court Affirms Summary Judgment in Bathtub Slip-and-Fall Case

Since 2016, McCook Hotel Group has operated a hotel in McCook, Nebraska. Ron Strahan stayed in this hotel in January 2019 while on business travel. One morning, while showering, he slipped and fell, sustaining injuries to his head, ribs, and wrist. He then filed a complaint in the District Court of Red Willow County alleging the bathtub was not equipped with slip-resistant materials and ‘the hotel either created the condition, knew of the condition, or, in the exercise of reasonable care, should have discovered the condition’ (317 Neb. 350). McCook generally denied any negligence and described its bathtubs as meeting the industry standard with a similar design to any other average hotel bathtub.

Approximately two years later, McCook Hotel Group moved for summary judgment. In opposition to the hotel’s motion, Strahan offered photographic evidence of the hotel bathtub in his room, multiple affidavits from himself and his friend, and an expert inspection of the tub. Strahan’s primary contention to the court was that McCook Hotel Group was negligent in creating or maintaining the hazard of a slippery bathtub. His evidence, however, was not enough to genuinely dispute whether the bathtub was unreasonably dangerous by being too slippery. This resulted despite Strahan offering an expert inspection of the tub. In the expert’s affidavit/report, he clearly stated the bathtub had a “raised truncated type slip resistant surface that is part of [its] construction” (317 Neb. 350). He also stated that the resistance felt similar in both dry and wet conditions (317 Neb. 350). The expert’s examination contradicted Strahan’s claims, highlighting to the District Court the speculative nature of Strahan’s claims. Considering that, the District Court applied the open doctrine to Strahan’s claims. The open and obvious doctrine frees the possessor of land from liability if the danger is something that an average person is expected to notice and avoid. Because the District Court applied the open and obvious doctrine, and since Strahan’s argument for the condition of the bathtub floor was based on speculation, the District Court granted summary judgment in favor of the hotel. If Strahan could have proven at least one of the elements of negligence, the District Court would not have been able to grant summary judgment. But he failed to do so.

With a timely appeal filed by Strahan, the Nebraska Supreme Court considered the grant of summary judgment. In such a review, a Nebraska appellate court will review the lower court’s decision “de novo,” meaning it will view the case and its information in a way most favorable to the nonmoving party, here the plaintiff Strahan. The Supreme Court

found no error in the District Court’s conclusion about the bathtub floor conditions. The Court more thoroughly examined the District Court’s application of the open and obvious doctrine. Part of Strahan’s appeal had claimed there was a genuine material dispute on the Court’s application of the open and obvious doctrine. For something to qualify as “open and obvious,” the initial assumption is that there exists a dangerous condition. In the case of a bathtub floor, the appellate court considered whether it was genuinely dangerous to take a shower.

As part of this analysis, the Court noted that in the 31 months that McCook Hotel was open and preceding Strahan’s complaint, there had been zero complaints about the bathroom, bathtubs, showers, etc. In January 2019, Strahan took a morning shower, turned around, slipped, and sustained injuries. In his appeal, he claimed that the absence of a slip-resistant bathtub is “unreasonably dangerous” and is not an “open and obvious” danger. Ultimately, though, the Supreme Court found that Strahan could not prove these claims. His evidence and affidavits provided nothing more than speculation, and “conclusions based on guess, speculation, conjecture, or a choice of possibilities do not create material issues of fact for the purposes of summary judgment.” (317 Neb. 350). Strahan could not show evidence that slipping in a shower—or taking a shower for that matter—supports the existence of an unreasonably dangerous condition. He could not show the shower being unreasonably slippery or having a low coefficient of friction. He could not show the shower failing to meet industry standards and regulations. He could not show any requirement for the bathtub to have a slip-resistant floor.

Thus, the Supreme Court found no error in the District Court’s grant of summary judgment in favor of McCook Hotel Group. In concluding this, the Court reviewed multiple premises liability cases, including some involving showers and bathtubs. The takeaway may be that it is difficult for claimants to win these cases, as the open and obvious doctrine will often protect against the liability of the property owners involved.

This article was prepared by ES Law Administrative Clerk John Boryca.

Employer Alert – Court Sets Aside FTC’s Non-Compete Rule; Rule Will Not Take Effect

As ES Law previously reported, the Federal Trade Commission issued a rule that would have taken effect on September 4, 2024 banning general non-competes nationwide. A federal court in Texas has now invalidated that rule. The court’s ruling applies nationwide; thus, the rule will not take effect. Many of our employer clients had been working to ensure their non-compete agreements would be compliant. We encourage employers to reach out to legal counsel to understand the full ramifications of this legal ruling and how the future landscape of this area is being shaped.

Nebraska Supreme Court Enforces Strict Statutory Deadlines in Perkins County v. Mid America Agri Products

In the recent decision, Perkins County Board of Equalization v. Mid America Agri Products/Wheatland Industries, LLC, The Nebraska Supreme Court dismissed a judicial review request from the Perkins County Board of Equalization (“the Board”), finding it lacked jurisdiction on the issue. The request followed an unfavorable outcome from a previous decision made by the Tax Equalization and Review Commission (TERC). The Board appealed TERC’s decision based on Neb. Rev. Stat. § 77-5019.

Wheatland owns real property in Perkins County that was improved with ethanol production facilities. In 2018, 2019, and 2020, Wheatland protested the valuations of the property set by the Perkins County assessor. The Board denied the original protests and Wheatland appealed the Board’s decision to TERC. In 2023, TERC reversed the Board’s original decision and lowered the Perkins County assessor’s valuation for each of the three years contested. Following TERC’s decision, the Board requested a judicial review of the administrative decision.

The Board filed the petition in the Court of Appeals on February 16, 2023. That same day, the Board paid the docket fee and filed a praecipe with the Court’s Clerk for a summons; the summons was issued the same day. The Board mailed the summons on February 22 and received a notification of the delivery taking place on March 29, forty-one days after the filing of the petition. Additionally, a courtesy copy of the summons was emailed to Wheatland’s counsel. On February 23, Wheatland’s counsel filed an appearance of counsel and a “Response to Petition for Review” addressing the allegations in the Board’s petition.

The Supreme Court considered whether a voluntary appearance can satisfy the statutory requirements of Neb. Rev. Stat. § 77-5019(2)(b). In general, for a judicial review of an administrative decision, the Court requires both personal and subject matter jurisdiction over the parties. Neb. Rev. Stat. § 77-5019 procedurally gives the Court personal and subject matter jurisdiction via the requirements explicitly stated in the statute. Here, the requirement at issue is found in § 77-5019(2)(b): “[s]ummons shall be served on all parties within thirty days after the filing of the petition in the manner provided for service of a summons in a civil action.” The question to the Court was then, whether the Court had subject matter jurisdiction, as service was made outside the statutory thirty-day deadline.

The Nebraska Supreme Court found it did not have jurisdiction over the parties because it lacked subject matter jurisdiction. Subject matter jurisdiction for a judicial review of an administrative decision under Neb. Rev. Stat. § 77-5019 is acquired through the proper service of summons to the defendant within thirty days of the filing of the petition for review. Additionally, the statute requires the summons to be provided in the same way as it would be in a civil action.

The Nebraska Supreme Court explained that the Board did not successfully meet the requirement of serving the summons within thirty days as the summons sent via certified mail reached Wheatland forty-one days after the filing of the petition. If the requirements for service of the summons are not met, then the Court lacks subject matter jurisdiction and ultimately has no authority over the issue. Furthermore, the Court explained that a voluntary appearance, like the one Wheatland’s counsel entered, only gives the court personal jurisdiction over the issue and does not serve as a substitute for the service requirement of Neb. Rev. Stat. § 77-5019.

As the Board did not meet the service requirements under Neb. Rev. Stat. § 77-5019 by serving the summons to Wheatland forty-one days after the filing of the petition, the Nebraska Supreme Court found it lacked subject matter jurisdiction and thus did not have authority over the issue. The Court’s opinion offers a new insight into the application of the requirements of Neb. Rev. Stat. § 77-5019 which could potentially influence future judicial reviews of administrative decisions.

Erickson Sederstrom Attorneys Make 2025 edition of Best Lawyers: Ones to Watch® in America

Erickson Sederstrom is excited to announce that two of our lawyers have been recognized in the 2025 edition of Best Lawyers: Ones to Watch® in America. 

 Best Lawyers: Ones to Watch in America acknowledges associates and other lawyers early in their careers for their exceptional professional excellence in private practice in the United States. 

 Lawyers recognized in Best Lawyers: Ones to Watch in America are categorized by geographic region and practice areas. Candidates can only be considered for one recognition at a time, either “Ones to Watch” or traditional Best Lawyers awards. All hopeful candidates must be nominated, vetted by their peers, and undergo an authentication process before they are recognized by Best Lawyers. The rigorous selection process ensures that recognition by Best Lawyers is considered a singular distinction. 

 Erickson Sederstrom is proud to congratulate the following lawyers recognized in the 2025 edition of Best Lawyers: Ones to Watch in America: 

• Matthew D. Quandt - Personal Injury Litigation - Defendants and Transportation Law 

• Matthew B. Reilly - Construction Law and Personal Injury Litigation – Defendants 

About Best Lawyers 

Best Lawyers is the oldest and most respected lawyer ranking service in the world. For 40 years, Best Lawyers has assisted those in need of legal services to identify the lawyers best qualified to represent them in distant jurisdictions or unfamiliar specialties. Best Lawyers awards are published in leading local, regional and national publications across the globe. 

Lawyers who are nominated for consideration are voted on by currently recognized Best Lawyers working in the same practice area and located in the same geographic region. Our awards and recognitions are based purely on the feedback we receive from these top lawyers. Those who receive high peer reviews undergo a thorough verification process to make sure they are currently still in private practice. Only then can these top lawyers be recognized by Best Lawyers. 

Erickson Sederstrom Attorneys Make 2025 Best Lawyers in America List

Erickson Sederstrom is pleased to announce the following lawyers’ inclusion in the 2025 edition of The Best Lawyers in America®. Since its first publication in 1983, Best Lawyers has become universally regarded as the definitive guide to legal excellence. 

 For more than 40 years, the rigorous methodology of Best Lawyers has ensured the integrity and esteem of our legal recognitions," said Best Lawyers CEO Phillip Greer. "It is with great pleasure that we continue to provide potential clients with the pinnacle measurement of credibility through our Best Lawyers awards as they search for counsel. This recognition is a testament to the professional excellence and dedication of the awarded lawyers, and we are proud to be associated with them. 

 Best Lawyers has earned the respect of the legal profession, the media, and the public as the most reliable, unbiased source of legal referrals. Its first international list was published in 2006 and has since grown to provide lists in more than 75 countries. 

 Lawyers on The Best Lawyers in America list are divided by geographic region and practice areas. They are reviewed by their peers based on professional expertise and undergo an authentication process to ensure they are in current practice and good standing. 

 Erickson Sederstrom would like to congratulate the following lawyers named to the 2025 The Best Lawyers in America list: 

• Bonnie M. Boryca - Appellate Practice and Commercial Litigation 

• Daniel I. Dittman - Trusts and Estates 

• William T. Foley – Corporate Law & Commercial Litigation 

• Matthew V. Rusch - Litigation – Insurance 

About Best Lawyers 

Best Lawyers is the world's oldest and most respected lawyer ranking service. For 40 years, It has assisted those needing legal services in identifying the lawyers best qualified to represent them in distant jurisdictions or unfamiliar specialties. Best Lawyers awards are published in leading local, regional, and national publications worldwide. 

Lawyers who are nominated for consideration are voted on by currently recognized Best Lawyers working in the same practice area and located in the same geographic region. Our awards and recognitions are based purely on the feedback we receive from these top lawyers. Those who receive high peer reviews undergo a thorough verification process to ensure they are still in private practice. Only then can these top lawyers be recognized by Best Lawyers. 

Nebraska Supreme Court Deems “Ministerial Exception” Applies to Priest's Defamation and Employment Claims

On August 6, 2024, the Nebraska Supreme Court relied on the Ministerial Exception to decide a case between a priest and his employer (See Syring v. Archdiocese of Omaha, 317 Neb. 195).

In 2013, an allegation was made against Catholic priest Andrew J. Syring of the Archdiocese of Omaha that Syring had taken part in sexual misconduct with a minor. After a thorough investigation by law enforcement and a retired federal agent, “no wrongdoing was identified.” Many evaluations were done on Syring in two different treatment facilities, which all concluded that Syring had a “normal” profile and that there was “no indication that he would want to hurt anyone.” It was also determined through testing that he was not a pedophile.

Syring kept his job as a priest for some time regardless of the 2013 allegations. However, in October 2018, the Archdiocese effectively fired Syring by removing him from public ministry. The church had been facing criticisms that spurned it to make personnel changes and to place a public list on the church’s website of those who had claims against them of conducting sexual abuse/misconduct. Syring attempted to get a new job as a chaplain for a private hospital that was religiously associated with the Archdiocese, but he failed. He was forbidden by the Archdiocese to work at the hospital due to the reasonable chance that he would interact with minors. Syring sued the Archdiocese in 2020 and alleged that it was liable for defamation, tortious interference with prospective employment opportunity, breach of fiduciary duty, intentional infliction of emotional distress, and other claims.

The district court dismissed each of Syring’s claims. Syring appealed, and his primary contention to the Nebraska Supreme Court was that it was wrong to dismiss his claims under the ecclesiastical abstention doctrine. The Supreme Court considered this along with the ministerial exception. The ministerial exception is a law developed by and deeply rooted in the US Supreme Court's jurisprudence on the First Amendment. That amendment, of course, protects churches' rights to select their own minister without government interference. The ministerial exception limits courts from interfering in the employment relationship between a religious institution and its ministers. If it were to force the church to hire Syring as a priest or force the church and hospital to hire Syring as a chaplain, the Supreme Court would be intruding upon the internal governance of the church. Therefore, the Supreme Court upheld the dismissal of Syring’s claims. To do otherwise would interfere with the church's religious operations, thereby violating part of the First Amendment.

This article was prepared by ES Law Administrative Clerk John Boryca.

Erickson Sederstrom Welcomes Stephanie Heinke as Firm Administrator

We welcome Stephanie Heinke to the Erickson Sederstrom law firm team. Stephanie is a dedicated and motivated legal professional with a wealth of experience from her 21-year tenure with the United States Air Force.

Stephanie's unique qualifications stem from her service as a U.S. Air Force Judge Advocate General's Corps paralegal. Her extensive experience in Military Justice, Administrative Law, Claims, Legal Assistance, and Legal Operations Management, coupled with her leadership as a Master Sergeant, make her a standout addition to our team.

As a Legal Operations Manager, Stephanie directed operations for large teams, managed compliance programs, oversaw budgets, and implemented training initiatives. Her expertise in audit and compliance, budget management, and team leadership will be invaluable to our firm.

Stephanie's dedication to her profession and her proven experience as an Air Force Veteran make her a valuable addition to our team. We are excited about the contributions she will bring to Erickson Sederstrom. Please join us in giving Stephanie Heinke a warm welcome!

Nebraska’s New Standard for Special Litigation Committee Investigations

On July 12, 2024, the Nebraska Supreme Court clarified the standard for special litigation committee investigations in derivative actions involving limited liability companies, an issue of first impression in Nebraska. A derivative action is one brought by shareholders on behalf of a corporation that asserts a wrong against that corporation.

Under Neb. Rev. Stat § 21-168, when a limited liability company (“LLC”) is involved in a derivative proceeding, the LLC may appoint a special litigation committee (“SLC”) to investigate the matter to determine whether pursuing the action is in the best interests of the LLC. The SLC has the burden of showing its investigation was conducted independently, in good faith, and with reasonable care. If the Court determines the SLC met this burden, it must enforce the SLC’s recommendation as to whether the litigation should continue or be settled out of court.

In Tegra Corp v. Boeshart, 317 Neb. 100 (Neb. 2024), the Nebraska Supreme Court found that the SLC appointed by Boeshart had failed to use reasonable care in investigating Tegra Corp’s claims of breach of fiduciary duty and misappropriation of corporate assets. In this case, both Tegra Corp and Patrick and Sandra Boeshart own interests in Lite-Form Technologies, LLC (the “LLC”). Tegra Corp brought a derivative action against the Boesharts on behalf of the LLC. Pursuant to § 21-168, Patrick Boeshart appointed Cody Carse as a single-member SLC. The district court was satisfied with the SLC’s investigation and dismissed all claims against the Boesharts according to the SLC’s recommendation. Tegra Corp appealed.

The Nebraska Supreme Court reversed the district court’s ruling on the grounds that the SLC’s investigation was not conducted with reasonable care. The Court cited other jurisdictions that emphasize that thoroughness is the cornerstone of SLC investigations. Courts have noted that SLC’s weigh legal, ethical, commercial, promotional, public relations, fiscal, and other factors to come to a decision regarding a derivative action. Courts have considered the “length and scope of the investigation, the use of experts, the corporation or defendant’s involvement, and the adequacy and reliability of information supplied to the SLC.”

In Tegra Corp v. Boeshart, the Nebraska Supreme Court found that the SLC’s investigation was not conducted with reasonable care because the SLC did not consider the relevant law, failed to include a cost-benefit analysis, and deferred to the LLC’s members for its recommendation. The Court noted that determining whether pursuing the action is in the best interests of the company necessarily involves consideration of the “likelihood that the plaintiff will succeed on the merits, the financial burden on the corporation of litigating the case, the extent to which dismissal will permit the defendant to retain improper benefits, and the effect continuing litigation will have on the corporation’s reputation.” The Boesharts’ SLC did not conduct a legal or cost-benefit analysis and could not have done so because Mr. Carse did not gather the necessary data. Mr. Carse testified that he did not believe legal analysis was part of his duties and that his financial analysis consisted of estimations he made in his own mind, relying on intuition. His recommendation was that the LLC’s members vote on what to do about alleged misappropriation of assets and breach of fiduciary duties. The Court held that deferring to the LLC’s directors is not an exercise of reasonable care.

Finally, the Nebraska Supreme Court also clarified that, contrary to Mr. Carse’s understanding, it was not Tegra’s responsibility to provide the SLC enough evidence to support its allegations. Rather, when breach of fiduciary duties is alleged, the burden of proof is on the party holding that duty to establish its action was not such a breach. The committee bears the burden of proof.

Businesses in Nebraska now face a stricter standard when appointing an SLC under § 21-168. This standard enhances transparency and protects shareholder interests, while underscoring the importance of robust corporate governance practices. SLC’s are a rare feature of American jurisprudence by which defendants can escape litigation by appointing a committee that can control the court. In the future, courts will not be bound to enforce recommendations of SLC’s that conducted vacuous, cursory, or otherwise deficient investigations.

Court of Appeals Partially Vacates Arbitration Award in Complex Construction Payment Dispute

The Nebraska Court of Appeals recently considered whether to sever and vacate part of an arbitration award in a dispute brought to arbitration by a property owner against a general contractor and plumbing subcontractor.

In February 2017, Lund-Ross Constructors and the Duke of Omaha agreed Lund-Ross would be the general contractor to build an apartment complex in Omaha. In turn, Lund-Ross subcontracted Raymond Plumbing to construct the plumbing at the apartments. Upon finishing construction of the apartments, the Duke withheld payment of $952,599 from Lund-Ross.

Consequently, Lund-Ross filed a demand for arbitration against the Duke. Lund-Ross also included Raymond as a respondent since Raymond was demanding payment from Lund-Ross for its plumbing work. After the arbitration hearing in January of 2023, Raymond requested to file a counterclaim against Lund-Ross for breach of contract, breach of implied covenant of good faith and fair dealing, and quantum meruit/unjust enrichment. The arbitrator permitted the counterclaim to be filed in the arbitration proceedings and ruled on it based upon the evidence at the hearing. Lund-Ross objected since it had not had the opportunity to respond the counterclaim, but the arbitrator maintained the award notwithstanding Lund-Ross’s objection.

The award: The Duke owed Lund-Ross $307,103 and Lund-Ross owed Raymond $215,508.31.

Thereafter, Lund-Ross moved to vacate or modify the arbitration award in a Nebraska district court. In its final order, the district court denied Lund-Ross's requested relief. Lund-Ross then appealed.

In its appeal, Lund-Ross claimed several errors, but the primary issue considered by the Court of Appeals was whether the arbitration was a fair proceeding or whether improper procedures prejudiced Lund-Ross during it, which are grounds for a court to vacate arbitration awards under the Federal Arbitration Act, 9 U.S.C §10(a)(3).

When Raymond filed a counterclaim against Lund-Ross, the arbitrator entered the award without giving Lund-Ross the chance to answer the counterclaim and develop its rebuttal evidence. Based upon federal precedent, the appellate court concluded that the arbitrator

had indeed not given Lund-Ross a chance to respond with its own evidence and rebut the allegations made by Raymond. This would constitute improper conduct in the arbitration that prejudiced Lund-Ross and supported vacating the award entered by the arbitrator for Raymond.

Thus, the $215,508.31 that the arbitrator ordered Lund-Ross owed to Raymond was invalidated.

That led to the next legal question in the appeal: Is partial vacatur of an award allowed under the FAA and Nebraska law? This presented a novel issue for the Nebraska appellate court; it therefore relied upon opinions of the Connecticut Supreme Court to determine if an arbitration award against multiple parties could be severed. The court further looked to law developed by the Second Circuit, which has similar case law interpreting 9 U.S.C §10 of the FAA. See Scandinavian Reinsurance v. Saint Paul, 668 F.3d 60, 71 (2d Cir. 2012).

In the end, the Nebraska Court of Appeals severed and vacated the portion of the award on the subcontractor’s counterclaim. This case addressed the novel question in Nebraska of whether an arbitration award may be partially modified, with the court concluding that one may be. This case will inform those practicing in arbitrations reviewable by Nebraska courts in the future.

Attorney Matt Quandt Named to the 2024 Great Plains Super Lawyers List

Erickson Sederstrom Law Firm is proud to announce that partner Matt Quandt was selected to the 2024 Great Plains Super Lawyers list. This exclusive list recognizes no more than the top five percent of attorneys in Nebraska, Iowa, South Dakota, and North Dakota. 

Super Lawyers, part of Thomson Reuters, is a research-driven, peer-influenced rating service of outstanding lawyers who have attained a high degree of peer recognition and professional achievement. Attorneys are selected from more than 70 practice areas and all firm sizes, assuring a credible and relevant annual list. The annual selections are made using a patented multiphase process that includes:

• Peer nominations

• Independent research by Super Lawyers

• Evaluations from a highly credentialed panel of attorneys

The objective of Super Lawyers is to create a credible, comprehensive, and diverse listing of exceptional attorneys to be used as a resource for both referring attorneys and consumers seeking legal counsel.

Please join us in congratulating Matt on his selection.

For more information about Super Lawyers, go to superlawyers.com.

Mental Health and Well-Being in the Legal Profession

Becoming an attorney offers significant career flexibility and provides numerous opportunities and choices regarding the type of law you practice and where you practice it. However, no matter what type of law you practice, the legal profession is renowned for its demanding nature and high-stakes environment. Lawyers often work long hours under significant pressure, face challenging cases, and attempt to meet high expectations. These pressures can take a toll on mental health and lead to anxiety, depression, substance abuse, and burnout.

Common Mental Health Issues in the Legal Profession

With the unique challenges posed by the legal profession, many lawyers struggle with their mental health. Anxiety and depression are the most prevalent mental health conditions among legal professionals. A John Hopkins study found that among over 100 occupations, lawyers have the highest rate of depression. This fact may be attributable to the skills and traits attorneys must possess in order to be successful.

According to Rachel Fry, a clinical psychologist in Birmingham, Alabama, who was recently quoted in an ABA Journal report, “Lawyers tend to score higher in pessimistic thinking, which often results in higher success rates and becoming a better lawyer. However, this type of thinking is also highly correlated with depression.” In other words, the qualities that make a person a good lawyer can also contribute to depression.

Additionally, substance abuse and addiction are significant issues within the legal community. A 2016 ABA and Hazelden Betty Ford Foundation Study revealed high rates of substance use within the legal community. The study stated that 21% of attorneys noted a significant rate of alcohol use problems, and 11% reported drug use issues.

Barriers to Seeking Help

One of the most significant barriers to seeking help is the stigma associated with mental health issues. Judgment from colleagues and superiors and worries about potential repercussions on their careers are variables that contribute to the stigma.

Another barrier is that many legal professionals lack awareness of mental health issues and the resources available to them. Mental health education and training can often be insufficient, which leaves lawyers ill-equipped to recognize and address their mental health needs.

Strategies for Improving Mental Health and Well-Being

Individual Approaches

Lawyers can take proactive steps to manage their mental health. Self-care practices like regular exercise, adequate sleep, and healthy eating are essential to stress management. These techniques can help reduce anxiety and improve overall well-being.

Additionally, as stressful as the legal profession can become it is always important to maintain a healthy work-life balance. Scheduling breaks during the day or week can prevent burnout while still allowing lawyers to accomplish their work.

Organizational Initiatives

Implementing healthy practices into the lawyer’s life is essential; however, law firms and legal organizations also play a critical role in supporting their employees' mental health. Policies and programs that prioritize mental well-being can help educate staff and reduce stigma. These initiatives can be as simple as a mentorship program where younger attorneys can gain advice from more seasoned professionals on managing their caseload and having a healthy work-life balance.

Legal professionals' mental health and well-being are critical to the profession’s overall success. By recognizing the unique challenges faced by lawyers and implementing effective strategies, individuals and organizations can foster a supportive environment that allows lawyers to maintain good mental health.

Navigating Copyright in the Age of AI

In 2023, the Copyright Office launched an initiative to explore the copyright issues created by AI-generated content, including whether AI-generated work is copyrightable. The Copyright Office announced their examination in the Federal Register in August 2023 and received thousands of comments in response. This year, the Copyright Office intends to release its interpretations of copyright law as it relates to the emerging technology in the realm of generative AI. As creators wait for the full report, many new developments in copyright law shed light on the relevant issues.

AI is powerful. It can reproduce copyrighted works, like music and digital art, replicate voices and likenesses, and generate material when prompted by a user. Further, AI is trained on a massive body of work, much of which is protected by copyright requiring licensing for commercial use. Federal Courts must decide how to enforce copyrights, protect artists, and promote innovation against the backdrop of constantly evolving technology.

For example, in late 2023, publisher and copyright-holder the New York Times brought suit against OpenAI, the owner of Chat-GPT, for copyright infringement. Specifically, the New York Times alleged that OpenAI used millions of its articles to train ChatGPT without obtaining a license for such use. Recently, OpenAI made a discovery request to the New York Times seeking reporter notes and memos related to each article to prove the publisher has a valid copyright in every single article in question. This ongoing case will have far-reaching implications for how AI models can be trained and to what extent AI companies owe damages to various copyright holders for their unauthorized use of materials.

Another court recently held that images created by the AI-powered Midjourney image generator for a comic book were not copyrightable material because the author of the comic book claiming the rights was not the author of the images. The court decided that Midjourney, not a human, created the images and thus has no author and deserves no copyright protection.

The Copyright Office, through which artists register their work for copyright protection, has stated it will not give copyright protection to "works produced by a machine or mere mechanical process that operates randomly or automatically without any creative input or invention from a human author." The Office was unpersuaded by the argument that the output of AI models depends on the creative input of the artist writing the prompt.

On this topic, the US Copyright Office says:

"Digital art, poems, and books generated using tools like DALL-E, Stable Diffusion, Midjourney, ChatGPT, or even the newly released GPT-4 will not be protected by copyright if they were created by humans using only a text description or prompt, USCO director Shira Perlmutter warned."

The Copyright Office further stipulates that AI-generated content may be valid subject matter for copyright protection if a human author contributed enough creative expression to create the content. This may include cases where the author modifies the AI-generated content

to such an extent that the human can be said to have authored it. The analysis will be fact-specific, and the question will be analyzed case-by-case.

Trucking Trial Success

Elisban Bazan v. Elite Fleet Hauling LLC & Eric Gonser

Cass County, Nebraska

Judge Michael Smith

CI 22-31

 Last week, Matt Quandt and Tom Culhane defended a trucking company and driver at trial in Cass County, Nebraska. The rearend accident occurred on Interstate 80 in January 2020.

 Plaintiff Bazan was represented by Pesek Law LLC. In discovery, they alleged $12,509,424 in total damages. They alleged a traumatic brain injury, chronic post-traumatic headaches, and a permanent neck injury. One week before trial, they proposed a $3,500,000-1,500,000 high-low agreement. At trial, Plaintiff’s counsel put on over two days of evidence, including four fact witnesses and three medical experts, and asked for over $2,010,000 million in closing.

 One week before trial, defendants offered $70,000. At trial, Matt and Tom admitted liability, put on less than two hours of evidence, and suggested $45,000.

 After only two hours of deliberation, the unanimous jury returned a verdict for only $100,000.

Nebraska Supreme Court Dismisses Judicial Review Request Due to Lack of Jurisdiction

In the recent decision, Perkins County Board of Equalization v. Mid America Agri Products/Wheatland Industries, LLC, The Nebraska Supreme Court dismissed a judicial review request from the Perkins County Board of Equalization ("the Board"), finding it lacked jurisdiction on the issue. The request followed an unfavorable outcome from a previous decision by the Tax Equalization and Review Commission (TERC). The Board appealed TERC's decision based on Neb. Rev. Stat. § 77-5019.

Wheatland owns real property in Perkins County that was improved with ethanol production facilities. In 2018, 2019, and 2020, Wheatland protested the valuations of the property set by the Perkins County assessor. The Board denied the original protests and Wheatland appealed the Board's decision to TERC. In 2023, TERC reversed the Board's original decision and lowered the Perkins County assessor's valuation for each of the three years contested. Following TERC's decision, the Board requested a judicial review of the administrative decision.

The Board filed the petition in the Court of Appeals on February 16, 2023. That same day, the Board paid the docket fee and filed a praecipe with the Court's Clerk for a summons; the summons was issued the same day. The Board mailed the summons on February 22 and received a notification of the delivery taking place on March 29, forty-one days after filing the petition. Additionally, a courtesy copy of the summons was emailed to Wheatland's counsel. On February 23, Wheatland's counsel filed an appearance of counsel and a "Response to Petition for Review" addressing the allegations in the Board's petition.

The Supreme Court considered whether a voluntary appearance can satisfy the statutory requirements of Neb. Rev. Stat. § 77-5019(2)(b). In general, for a judicial review of an administrative decision, the Court requires both personal and subject matter jurisdiction over the parties. Neb. Rev. Stat. § 77-5019 procedurally gives the Court personal and subject matter jurisdiction via the requirements explicitly stated in the statute. Here, the requirement at issue is found in § 77-5019(2)(b): "[s]ummons shall be served on all parties within thirty days after the filing of the petition in the manner provided for service of a summons in a civil action." The question to the Court was then whether the Court had subject matter jurisdiction, as service was made outside the statutory thirty-day deadline.

The Nebraska Supreme Court found it did not have jurisdiction over the parties because it lacked subject matter jurisdiction. Subject matter jurisdiction for a judicial review of an administrative decision under Neb. Rev. Stat. § 77-5019 is acquired through the proper service of summons to the defendant within thirty days of the filing of the petition for review. Additionally, the statute requires that the summons be provided the same way as in a civil action.

The Nebraska Supreme Court explained that the Board did not successfully meet the requirement of serving the summons within thirty days as the summons sent via certified mail reached Wheatland forty-one days after filing the petition. If the summons' service requirements are not met, then the Court lacks subject matter jurisdiction and ultimately has no authority over the issue. Furthermore, the Court explained that a voluntary appearance, like the one Wheatland's counsel entered, only gives the court personal jurisdiction over the issue and does not serve as a substitute for the service requirement of Neb. Rev. Stat. § 77-5019.

Despite the Board's diligent efforts, the Nebraska Supreme Court found that it did not meet the service requirements under Neb. Rev. Stat. § 77-5019 by serving the summons to Wheatland forty-one days after the filing of the petition. As a result, the Court found that it lacked subject matter jurisdiction and thus did not have authority over the issue. The Court's opinion offers a new insight into the application of the requirements of

The Nebraska Supreme Court's decision in this case, particularly its interpretation of Neb. Rev. Stat. § 77-5019, could potentially set a precedent and significantly influence future judicial reviews of administrative decisions. This underscores the importance of this case and its potential impact on the legal landscape.

D & M Roofing & Siding v. Distribution, Inc.

In the case of D&M Roofing & Siding v. Distribution, Inc., the Nebraska Supreme Court considered a procedural question on final judgments and appeals. D&M Roofing & Siding, the appellant, entered into a contract with Distribution, Inc., the appellee, to repair hail damage to the roof of a warehouse owned by Distribution. These repairs were subject to an insurance claim in which Distribution would pay D&M the approved claim amount. D&M alleged Distribution breached their agreement by canceling the contract and hiring a different company to repair the hail damage. This breach of contract led both parties to file a motion for summary judgment.

When a trial court grants summary judgment in Nebraska, the case is considered complete and adjudicated. The trial court awards rights and relief to the party whose motion for summary judgment is granted.

The trial court overruled D&M's motion for summary judgment and granted Distribution's motion for summary judgment in part. The court held that D&M was limited only to breach-of-contract damages stipulated in the contract. Although summary judgment was partially granted, the court's order did not express the parties' rights nor release any relief to the damaged party in a single document.

The Nebraska Supreme Court was presented with the issue of what constitutes a final judgment. Nebraska law requires that for there to be appellate jurisdiction, there must be a judgment rendered, a decree issued, or a final order from the trial court.

The Supreme Court explained a final judgment is proper when "the rights of the parties are concluded so that further proceedings cannot affect them." In other words, nothing must be left for the trial court to act on. On the other hand, the Supreme Court explained there is no final judgment when there is something of "judicial nature" the trial court must still act on.

Although the trial court denied D&M's motion and partially granted Distribution's motion, the trial court did not grant nor deny relief to D&M's breach of contract claim. To do this, as the Supreme Court explains, the trial court must sign a "single written document" containing the rights of the parties and the relief granted in the action. Until the written document is signed, the trial court still has a task of "judicial nature" which prevents a party from asserting its right to appeal.

Because the trial court did not sign a single written document containing relief and rights of the parties, there was no final judgment. Therefore, because there had yet to be a final judgment, D&M lacked the ability to appeal under Nebraska law. So, the Supreme Court did not have jurisdiction to hear D&M's other contractual claims. D&M Roofing & Siding v. Distribution, Inc. clarifies the requirements for appellate jurisdiction within Nebraska and prevents litigants from appealing a case before the trial court is finished ruling.

Chevron Overruled: Implications for Federally Regulated Businesses

On June 28, 2024, the United States Supreme Court ruled that courts must "exercise their independent judgment" when interpreting federal statutes and may no longer deference to agency interpretations simply because a statute is ambiguous. This ruling will substantially reduce the power of administrative agencies to exceed the boundaries of the authority granted to them by Congress and will ultimately reduce the regulatory burden on businesses and consumers alike.

The landmark rulings of Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce overruled the Chevron doctrine that had been the law since 1984. Under Chevron, if a statute's meaning is ambiguous, a court reviewing an agency's action must defer to the agency's interpretation so long as it is reasonable, even if the Court would have chosen an alternative interpretation. But, as Chief Justice Roberts notes in his opinion in Loper Bright, Chevron is based on ambiguity, which has always evaded meaningful definition.

Loper Bright involved the Magnuson-Stevens Act, a law passed to address rampant unregulated offshore overfishing. This Act gave the National Marine Fisheries Service (NMFS) authority to require observers on board certain fishing vessels to collect data and ensure compliance with regulations. As an exercise of this authority, the NMFS enacted regulations that required some fishing operations to host and pay for such an observer. In this case, the fisheries would be required to pay the observer a salary of about $710 per day.

The petitioners in Loper Bright, four small family-operated fisheries in New England, challenged the regulation. They argued the Magnuson-Stevens Act did not authorize the NMFS to impose such excessive fees, which, in their case, took up a substantial part of already thin profit margins on herring.

The lower Court applied the Chevron doctrine and found that the statute's language was ambiguous and the NMFS's interpretation was not unreasonable. As such, the Court deferred to the interpretation that the NMFS had the authority to require fisheries to pay for their own compliance observers.

The Supreme Court, however, struck down Chevron as unworkable, incoherent, and inconsistent with the history of the Administrative Procedure Act (APA), which outlines procedures for judicial review of agency actions. The Court noted that federal agencies have no particular expertise in interpreting statutes. The Court also held that the APA articulates the "elemental proposition reflected by judicial practice dating back to [this nation's founding], that courts decide legal questions by applying their own judgment."

The overruling of Chevron will substantially reduce overreach by the administrative state and cut off its power to interpret the law in its favor. This means operating any business, small or large, will entail a reduced regulatory burden and a higher likelihood of obtaining much-needed relief from overregulation.

A Week in the Life of a Law Clerk at Erickson Sederstrom

Life as a law clerk at Erickson Sederstrom varies greatly from day to day. From dense contractual conflicts to arcane procedural problems, the assignments I have been given challenge my legal abilities and communication skills.

By mid-morning on Monday, the clerks finish projects from the previous week or are given new projects to delve into. As the week progresses, attorneys will ask us to join them at hearings, site visits, or client consultations. Often, these activities lead to additional projects for us to work on. These are the most gratifying tasks to complete. Being able to meet clients and apply legal theory to real cases is one of the best parts of joining the Erickson Sederstrom team.

I learned early this summer the firm encourages an open-door policy. Associate and partner attorneys alike invite clerks to ask questions to tackle legal issues that will make a difference in our client’s cases. In addition, Erickson Sederstrom is not afraid to give difficult, nuanced questions to its clerks.

For example, within the first two weeks, I was asked to research claims we might have against a bank for withholding client funds. These claims changed depending on the jurisdiction we could sue in. I was asked to analyze the law in federal and state courts to determine which jurisdiction we would have the best chance to succeed in. The attorneys had me present my findings and discuss the pros and cons of filing suit in a particular jurisdiction. Clerks at Erickson Sederstrom are not just research assistants but rather strategists the attorneys rely on for an advantage in litigation.

In addition, clerks are encouraged to discuss our legal interests with the attorneys. In turn, we receive projects in those areas of interest. For example, as someone interested in complex commercial litigation, I have been working with an attorney for over a month on a case concerning contracts, property, business associations, commercial law, trusts and estates, and civil procedure. Being able to continually work on a single case throughout discovery and summary judgment has taught me the pace of litigation and expanded my understanding of these subject areas while helping our client win.

Through this experience in commercial litigation, I have been given the opportunity to draft and participate in several aspects of the pre-trial process. Along with memoranda, I have already drafted a motion and brief for summary judgment, objections to the opposing party’s expert witnesses, deposition reports, a brief in resistance to the opposing party’s motion for summary judgment, and a mediation statement.

I was also invited to mediation where I was encouraged by our partner attorney to present arguments to the mediator on topics I have researched. Not only am I producing documents the firm will use and rely on, but our partner attorney let me argue on behalf of our client. This

experience, without a doubt, helped me grow as a prospective commercial litigator. As a former athlete, being able to compete in that mediation was one of the most rewarding experiences I have been given this summer.

The attorneys expect a lot out of the clerks and we welcome that challenge. The attorneys provide us feedback on documents and trial strategies. We are never left in the dark wondering what we could have done better. In a competitive field like law, this feedback is what will help the next generation of attorneys at Erickson Sederstrom continue to provide top-notch legal services to our clients.

Erickson Sederstrom also cares greatly about their community. Within the first month, twice we assisted at the local foodbank to give back to our community. This fun teambuilding activity was a unique opportunity to get away from the office, work with each other on different projects, and help a greater cause.

Clerks are also encouraged to join the attorneys at networking events and firm outings. The firm holds annual outings and activities for the College World Series, Masters Golf Tournament, and holidays throughout the summer. Erickson Sederstrom cares far more than just the work we complete at the firm. The attorneys and legal staff at Erickson Sederstrom are a family and the clerks are invited to join that family.

A week in the life at Erickson Sederstrom varies greatly. That is one of the many reasons why this summer has been so exciting. Whether it is preparing drafts of documents, meeting clients, or throwing darts at a company outing, the summer clerkship at Erickson Sederstrom has been a first-class experience.

Understanding Inheritance Tax Allocation in Trusts: Insights from the Nebraska Supreme Court

In the case of "In re Michael Hessler Living Trust," the Nebraska Supreme Court interpreted directives concerning inheritance tax allocation as specified in a living trust formed by the decedent, Michael Hessler. The appellants, Hessler's children, contested the trustee's decisions regarding the distribution of the trust's assets and the payment of inheritance taxes, especially about a significant property granted to the decedent's girlfriend, Lori J. Miller.

Michael Hessler established a living trust in 2006, with subsequent amendments, notably one that explicitly bequeathed his residence to his girlfriend, Lori J. Miller, provided she lived there at the time of his death. Following Hessler's death in November 2020, disagreements emerged over who should bear the burden of inheritance taxes. Specifically, the dispute centered on whether these taxes should be equally apportioned among all beneficiaries or paid from the trust's residue as directed by the trust's provisions.

Hessler's children filed a petition against the trustee and Miller, asserting that inheritance taxes and administrative expenses related to the residence should be charged against Miller's share. The trustee moved the case to Scotts Bluff County, asserting that the trust was registered there, a move that the children later contested. Ultimately, the Court upheld the venue transfer.

The Nebraska Supreme Court addressed several critical issues in this case:

1. Venue Transfer: The Court upheld the venue transfer, stating it was within the trial court's discretion and justified by the trust's registration in Scotts Bluff County.

2. Inheritance Tax Apportionment: A central issue was the interpretation of the trust's language regarding the payment of inheritance taxes. The trust explicitly stated that all inheritance and estate taxes should be paid "from this trust," which the Court interpreted as a clear and unambiguous directive that superseded the default statutory provisions requiring equal apportionment among beneficiaries.

3. Jurisdiction and Admissibility of Evidence: The Court determined it had jurisdiction over the appeal and held that the lower Court did not significantly err in admitting extrinsic evidence to determine the settlor's intent. The Court stated that any such mistake was harmless as the decision rested primarily on the clear language of the trust and its amendments.

The Supreme Court affirmed the lower Court's decision, validating the trustee's actions in administering the trust according to the settlor's explicit instructions. The ruling clarified how trust documents concerning tax liabilities should be interpreted and reinforced the legal principle that clear and unambiguous language in a trust document or will must be adhered to. This decision provides crucial guidance on the administration of estates and the responsibilities of trustees.

This case underscores the importance of precise language in estate planning documents, especially concerning tax obligations. It illustrates the complexities of trust administration, particularly when substantial assets and tax implications are involved. Additionally, it highlights the judiciary's role in resolving disputes based on the interpretation of legal documents following the settlor's intent.

This decision serves as a critical reference for legal professionals involved in estate planning and trust administration. It emphasizes the need for clarity and specificity in drafting trust documents to ensure the settlor's wishes are accurately executed and legal conflicts are minimized. The ruling in this case is a vital reminder of the importance of meticulous estate planning and the impact of precise language in legal documents. Erickson Sederstrom Law Firm is here to help you you with all of your Estate Planning needs.