In a landmark legal battle, Mothering Justice, Michigan One Fair Wage, Michigan Time to Care, and other advocacy groups challenged the legislative actions concerning 2018 initiative petitions. These groups sponsored the Improved Workforce Opportunity Wage Act (the Wage Act) and the Earned Sick Time Act, both of which aimed to enhance worker rights and benefits in Michigan. Despite collecting the required signatures and having their proposals adopted by the Legislature in 2018, the initiatives were adopted and then meaningfully amended within the same legislative session. This adopt-and-amend tactic sparked a contentious debate about the constitutionality of such legislative maneuvers, ultimately leading to a series of court battles that have profound implications for the democratic process in Michigan.

The controversy surrounding the adopt-and-amend process began when the Michigan Legislature adopted the initiatives proposed by Michigan One Fair Wage and Michigan Time to Care, only to amend them significantly during the lame duck session. This legislative action was initially supported by then-Attorney General Bill Schuette’s opinion, which contradicted a previous opinion from 1964. As the amended laws went into effect, advocacy groups, backed by then-newly-elected-Attorney General Nessel, argued that these amendments violated the state constitution, specifically Article 2, § 9, which outlines the powers reserved for the people in proposing and enacting laws. The ensuing legal battles culminated in a significant ruling by the Michigan Supreme Court, which provided clarity on the limits of legislative power in the context of voter initiatives.

The Legislative Background

In 2018, two significant initiative petitions emerged in Michigan: the Improved Workforce Opportunity Wage Act (Wage Act) and the Earned Sick Time Act. Sponsored by advocacy groups such as Michigan One Fair Wage and Michigan Time to Care, these initiatives aimed to address critical issues regarding minimum wage increases and guaranteed sick leave for workers. The process began with the collection of the requisite number of voter signatures, a demonstration of widespread public support for these measures. Once the signatures were gathered and verified, the petitions were submitted to the Michigan Legislature, which adopted the proposed acts without change on September 5, 2018. This initial adoption was a crucial step that prevented the proposed laws from appearing on the ballot for a public vote in 2018.

Adopt-and-Amend

The dispute erupted after the Michigan Legislature adopted the initiatives, by then meaningfully amended them within the same legislative session. This practice, known as “adopt-and-amend,” and was initially supported by an opinion from then-Attorney General Bill Schuette, which contradicted a 1964 opinion by former Attorney General Frank Kelley. Schuette’s opinion allowed the Legislature to amend the adopted initiatives during the lame duck session, leading to the enactment of 2018 PA 368 and 2018 PA 369. These amendments effectively altered the original intent and provisions of the Wage Act and the Earned Sick Time Act, prompting backlash from the advocacy groups that had championed these initiatives.

Legal Proceedings

In response to the legislative amendments, advocacy groups filed a lawsuit in the Michigan Court of Claims. The plaintiffs argued that the adopt-and-amend tactic violated Article 2, § 9 of the Michigan Constitution, which reserves specific powers for the people in the legislative process. The Court of Claims ruled in favor of the plaintiffs, declaring that the Legislature’s actions were unconstitutional and that the original 2018 PA 337 and 2018 PA 338 should remain in effect. This decision was based on the interpretation that the Legislature could not adopt and then amend an initiative in the same session.

However, the state appealed the decision, and the Michigan Court of Appeals reversed the lower court’s ruling. The Court of Appeals held that the Constitution did not explicitly prohibit the Legislature from adopting and amending an initiative proposal within the same session, thus upholding the amended laws. This reversal prompted the plaintiffs to seek further review from the Michigan Supreme Court, which ultimately granted their application for appeal.

Implications of the Supreme Court Ruling

The Michigan Supreme Court’s ruling in favor of the plaintiffs returns supreme legislative power to the citizenry. The court held that Article 2, § 9 of the Michigan Constitution provides the Legislature with three options upon receiving a valid initiative petition: enact the law without change, reject the law, or propose a different measure alongside the original. The court found that the adopt-and-amend process violated the people’s right to propose and enact laws through the initiative process, rendering 2018 PA 368 and 2018 PA 369 unconstitutional. Consequently, the original provisions of 2018 PA 337 and 2018 PA 338 were reinstated, set to take effect 205 days after the court’s opinion on July 31, 2024.

This ruling underscores the importance of maintaining the integrity of the democratic process and preventing future lame-duck legislatures from adopting-and-amending. For employers in Michigan, this means preparing for compliance with the reinstated wage and sick time provisions, while employees stand to benefit from enhanced protections and rights. The case also sets a critical precedent, emphasizing that legislative power must be exercised within the constitutional framework.

Conclusion

While the Michigan Supreme Court’s ruling in favor of the advocacy groups represents a pivotal moment in workers’ rights, it is a meaningful shift in favor of citizen legislation through ballot initiatives. By declaring the adopt-and-amend tactic unconstitutional, the court identified the importance of the people’s reserved legislative powers. This decision not only reinstates the original provisions of the Improved Workforce Opportunity Wage Act and the Earned Sick Time Act but also sets a precedent that preserves voter-initiated laws intact, during the legislative session.

The ruling has far-reaching implications for both employers and employees across Michigan. Employers must now prepare for the reinstated wage and sick time provisions, which are set to go into effect in early 2025, ensuring compliance with the newly revived laws. For employees, this decision promises enhanced protections and benefits, aligning with the original intent of what may have been a voter-supported initiative. In the very least, the case underscores the necessity of safeguarding the democratic process, had the legislature not adopted the law, it would have preceded to the ballot, which may or may not have passed. Instead, the legislature used the adoption as a means to circumvent citizen legislation.

The Federal Trade Commission (FTC) has made a significant move toward enhancing worker mobility and fostering a more dynamic economy by finalizing a rule that bans noncompete agreements nationwide. This decision, was passed with a narrow 3-2 vote. It marks a pivotal shift in employment law, which aims to protect corporate rights to hire whomever they wish, as well as permit employees start new ventures freely. Set to take effect in 120 days from its publication in the Federal Register, this rule is expected to reshape the landscape of workforce management and competitive practices across various industries.

The Federal Trade Commission’s decision to eliminate noncompete agreements comes after a meticulous review of their impact on the labor market and broader economic implications. Historically, these clauses have been criticized for stifling competition and innovation by limiting workers’ (particularly experienced workers) ability to move freely between jobs. In industries ranging from technology to healthcare, noncompetes regularly prevent employers from hiring skilled and experienced workers, which suppresses innovation and profitability.

Under the new rule, noncompete clauses are deemed an unfair method of competition pursuant to Section 5 of the FTC Act. Employers, particularly those in sectors where competition for skilled labor is intense, are soon to be free to attract and retain talent. And the inability to enforce noncompete agreements will likely lead to a greater emphasis on creating attractive employment packages and fostering workplace environments that encourage long-term commitment from employees. This could include everything from offering better professional development opportunities to enhancing workplace benefits and improving company culture.

Senior Executives.

Despite the sweeping ban on noncompete agreements, the FTC’s rule makes a notable exemption. According to the new rule, existing non-competes with senior executives can remain in force. This group, defined by specific income thresholds (~151k) and roles (final authority) within an organization, will still be subject to existing noncompete clauses under certain conditions. The rationale for this exemption lies in the unique position these executives hold, often having access to critical strategic information and influential in shaping the company’s direction and competitive strategies..

Conclusion.

As the FTC’s new rule on noncompete agreements takes effect, corporations stand to gain significantly from a revitalized hiring landscape. Freed from the constraints of noncompete clauses, employers can now recruit seasoned talent without the looming threat of legal repercussions against prospective employees. This not only broadens the pool of available talent but also places a positive onus on employers to foster a work environment that naturally encourages loyalty and retention. Companies are further incentivized to invest in their workforce through enhanced benefits, opportunities for advancement, and a collaborative culture that values each employee’s contribution. By shifting from a restrictive, punitive approach to one that emphasizes mutual growth and respect, businesses are likely to see not just a more stable and committed workforce, but also an overall increase in innovation and competitive edge. This new rule not only liberates workers but also empowers employers to build stronger, more agile teams that can thrive in an open market.

Final Comment: It appears as though any pending litigation about this subject matter will likely not be dismissed as the cause of action accrued prior to the date this rule becomes effective.

Excerpt Definitions:

The Stage:

As reported, a recent settlement agreement in Burnett et al. v. The National Association of Realtors et al. (4:19-cv-00332); Moehrl v. National Association of Realtors (1:19-cv-01610)’ and analogous lawsuits, aims not only to resolve longstanding litigation but also to provide a clearer, more competitive path forward for the real estate industry. By apparently altering how broker compensation is negotiated and communicated, the settlement seeks to increase transparency, enhance competition, and potentially lower costs to consumers. It reflects the National Association of Realtors’ (NAR) effort to address industry practices that have come under scrutiny while emphasizing its commitment to preserving consumer choice and ensuring the accessibility of professional representation in the real estate market.

The settlement’s impact on the industry can be summarized as follows:

• Increased Transparency: Clearer communication about broker compensation.
• Enhanced Competition: More competitive practices in broker services.
• Potential Cost Savings for Consumers: Lower brokerage fees as a result of heightened competition and transparency.

This agreement marks a significant moment in the real estate industry, offering insights into future directions for antitrust enforcement and the ongoing evolution of market practices.

The Genesis of Antitrust Law: A Prelude to Change

Spanning roughly two decades (beginning in the late 1970s) the political landscape and with it antitrust practices began to shift, and quickly (break up of AT&T). Prior to this shift United States was far more likely to engage in “trust busting.” The judiciary exercised a comparatively broad interpretation of the Sherman Act. That era was marked by a strong governmental inclination to regulate and dismantle monopolies that threatened the competitive market. Enforcement actions were not solely confined to the protection of consumers but extended to preserving competition itself, under the philosophy that a free yet diverse marketplace was inherently beneficial to society at large.

The Bork Transformation: A New Orthodoxy

Enter Robert Bork, whose “lively” work “The Antitrust Paradox” became the highly influential for a reevaluation of antitrust policy. Bork posited that the original intent of antitrust laws was the maximization of consumer welfare, primarily interpreted as keeping prices low, rather than maintaining competition for its own sake. This interpretation pivoted the focus of antitrust enforcement towards economic efficiency and away from its earlier, broader concerns, effectively narrowing the criteria for regulatory intervention. Bork’s influence ushered in an era where the aggressive pursuit of market share was often given free rein unless direct harm to consumers could be demonstrated. Therein set the stage for the consolidation (reformation of AT&T) of industries and the emergence of dominant players.

The Subject:

The NAR’s Century-Long Grip on Real Estate

Well over 100 years ago the National Association of Realtors (NAR), by a different name, was founded. NAR arose at a time when many of its contemporaries were busted Northern Securities Co. v. United States, 193 U.S. 197 (1904); Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1910)); United States v. American Tobacco Company, 221 U.S. 106 (1911), with few exceptions United States v. United States Steel Corp., 251 U.S. 417 (1920).

Over the century following its formation NAR’s lobby dollars grew, its influence and  power grew. And, whether by design or by coincidence, the appearance is that those lobby dollars were well spent. The government has made only minor pushes into antitrust litigation against NAR. Meaningful change required a private lawyer to take antitrust enforcement into plaintiff’s litigation.

Some of the ways that NAR exerted its influence led to a practical requirement that every real estate agent must become a member: member lockboxes  (SentriLock), automatic split commissions, opaque MLS, and various contract provisions in purchase agreements that give special privilege to members. Indeed DocuSign too, which NAR owns a controlling share of, became the de facto method of selling a home. By instituting these policies, some have argued NAR dictated the terms of competition and entry into the market. And, It appears as though, in the past potential competitors such as upstart tech companies, were quickly sued by NAR in what could be interpreted as anti-competitive and unfair market dominance. There are certain policies like “the 6% commission” that NAR disputes as “negotiable,” the openness about the negotiability historically hasn’t been expressed by an influential portion members of NAR. Even still in the month of March 2024, agents at brokerages have refused to negotiate (naturally the lawyer’s advice is to find another broker). A single seller’s broker who refuses to negotiate, affects at least two parties in the sale.

The commission the seller’s agent obtained from the seller, is transparent to the buyer’s agent. But that same commission is opaque to the buyer.

Skewed: Imagine two similar homes: Home Blue, priced at $100,000 with a 4% commission ($4,000), and Home Red, priced at $90,000 with a 6% commission ($5,400). Both homes are in similar neighborhoods, of similar age, and of similar quality. When a buyer asks their agent—”which home should I choose?”—it’s not hard to imagine that many buyers’ agents might lean towards recommending the home that offers a $5,400 commission over the one that offers $4,000. What if they were both priced at $100,000? Would these agents change their recommendation if they were aware of significant advantages that made Home Blue a far better option, such as its being significantly closer to the buyer’s place of work, family, and schools? What if the buyers’ agents were hired for different purposes and paid on a different model of motivation?

The Cost of Influence: Market Saturation and the Consumer Dilemma

The policies and practices endorsed by NAR arguably  stifled competition and may have also led to an oversaturation of realtors, keeping membership fees high, but wages low. So while the industry was insulated from competition, the saturation became a cost on the real estate profession: some could argue, the dilution of expertise and the perpetuation of a system that benefitted the institution over the individual. In the aggregate, sellers and buyers were pushed into a market that offered little practical flexibility. In Michigan, like other States, NAR’s influence reached into the legislative arena, such as the removal of certain real estate education and oversight requirements.

A New Horizon: The Settlement’s Promise

The recent settlement against NAR represents a shift, reminiscent of the early days of antitrust’s broad ambitions. By dismantling longstanding real or implied rules the door to competition is opened. The settlement as reported by NAR, challenges the status quo that NAR fought hard to preserve. This change promises to invigorate the real estate market with new models of buying and selling, perhaps mirroring the transformation seen in the travel industry with the advent of the internet.

As we stand on the cusp of this new era, the settlement is not merely a rebuke of past practices but a beacon of future possibilities. It heralds a market where innovation is not stifled by the whims of a dominant player but flourished in a competitive landscape. For agents, it means the dawn of meritocracy over mediocrity; for buyers and sellers, the promise of a market that serves their interests through diversity and choice.

In the aftermath of the settlement, the real estate industry finds itself at a crossroads. One path leads back to the familiar terrain of centralized control and uniformity; the other, into uncharted territory where innovation, competition, and consumer choice reign supreme. The direction we take will not only redefine the business of buying and selling homes but also reflect our collective commitment to the principles of a free and fair marketplace.

Selling a Home is a Valuable Skill

Doug Miller was quoted by NBC News “Now you can hire an attorney for $1,500, instead of paying a $50,000 commission [to a realtor].” It is true that it is exceedingly uncommon for any residential home transaction to reach anywhere near $50,000 in legal fees. And limited engagement have opened the door to even lower legal fees narrowed to specific purposes. But, lawyers are part of an adversarial system. And it’s not controversial to say: lawyers are generally not ‘good’ salespersons. How Much do Real Estate Brokers Add? A Case Study.

Adjusted for inflation since 1940 the median home value has over quadrupled (by a factor of 4.3). The median value of homes in the United States rose from $65,124 in 1940 (approximately $2,938 in 1940’s dollars) to $281,900 in 2022. And across this eight decade space the median home value, at its low still increased beyond 8.2 percent in the 1980s and beyond 43 percent in the 1970s. Adjusted for inflation between 1940 and 2022, 6% commission has grown from $3,907.44 to $16,914. To a person, for comparison that means roughly 14% of the typical annual income would be spent on the sale of a home in 1940, but over 22% in 2022.

Technology, title companies, and specialization have helped keep the costs of lawyers in residential real estate transactions comparatively low. In 1940, the choice between hiring a lawyer hourly or risking it with a broker who receives a commission might have been pretty obvious. One could pay a lawyer roughly $3,500 for each transaction, successful or not, adjusted for inflation, or a broker $4,000 but only if the property sells. Legal fees on average residential real estate transactions have not risen and seem to have fallen when adjusted for inflation. This trend has led some to suggest that lawyers should assume a larger role in real estate transactions. Following this settlement by NAR, a typical buyer might pay a lawyer between $500 and $4,500 to close on a residential home, compared to paying real estate brokers $17,000.

This does not take into account many factors, including suggestions that the commission in 1940s was closer to 2.5% and not 6%.

In what may prove to be a rapidly evolving real estate market, the role of brokers may be undergoing a significant transformation, moving towards a model that places a premium on marketing prowess. The brokers who thrive in this new market may be the most adept at showcasing homes in a trustworthy and fair light. As consumers become weary of hype-marketing, the future of home marketing may require more. The skillful broker can navigate these demands, ensuring that homes do not only reach a wide audience but also appeal to the right demographic.

Brokers: Facilitators of Connection

The core of a broker’s value lies in their ability to bring buyers and sellers together. In a market where consumers are inundated with options and information, the broker’s skill in making a property stand out, in an honest manner, can make all the difference. By understanding the needs and preferences of both parties, brokers can facilitate connections that might not otherwise have been made, ensuring that sellers get the best possible price for their homes while buyers find their ideal property.

Unlike the travel industry, which was eager to eliminate travel agents’ fees from the transactions between airlines and travelers, the real estate sector operates differently. Even though real estate brokers may take a $17,000 haircut as a result of this settlement, selling a home remains the highest-liability and most expensive transaction the average person will ever engage in. Therefore, brokers still possess valuable skills and play a crucial role in selling a home. Lawyers, title companies, and home inspectors should not engage in property marketing. In contrast, platforms like Zillow are not suited to the assembly and marketing of unique and compelling listings; brokers are.

On the litigation front, this new model might change motivations. Making brokers more concerned with quality. Some may be more inclined to require the seller to pay for an inspection prior to listing. Problem areas of a home can be highlighted, improving reputation, and reducing the risk of fraud-based lawsuits. The broker can further reduce their risk by pointing the parties toward a title company to insure title. They may resist allowing a buyer to purchase the house sight-unseen. They may require a seller to hire an inspector/contractor to avoid fraud. And they may point buyers and sellers toward lawyers when making modifications to the contract.

A savvy broker may consider the difference between used car sellers. Caravna that highlights defects versus the typical used-car salesperson to redevelop their image and reputation modeled after Carvana. Where a listing highlights the good, but also identifies the defects. A listing could tell buyer’s something valuable; and, a buyer may be reluctant to buy a home for full price that a seller’s broker won’t list.

In the age of ever-expanding digital connectivity and surveillance capabilities, the line between private and public life is becoming increasingly blurred. Rewind to the 80s, legislation aimed to protect individual privacy rights emerged as counterbalances to the collection of data in video rentals. Fast-forward to today, and Michigan’s Preservation of Personal Privacy Act (PPPA) has been applied as an attempt to salvage personal privacy from an encroaching tide of data breaches and privacy exposures.

Introduced in 1988, Michigan’s PPPA was enacted in response to investigation into politician’s VHS rental history. The PPPA is designed to protect individuals from unwanted intrusions into their privacy by persons looking to collect, disseminate, or monetize personal information. Essentially, it prohibits the unauthorized disclosure, use, or sale of records that contain personal details about an individual’s buying or borrowing habits.

The PPPA initially arose from a privacy concern related to the sale and use of video rental records, but it has since grown to encompass records from bookstores, video rental stores, and various other businesses. The law had been a beacon of privacy protection, ensuring Michiganders maintain control over their personal information.

The PPPA’s fundamental purpose is laudable, it aims to protect citizens from potential exploitation in a society growing more reliant on personal data every day. It bestowed individuals with a legal shield to guard against intrusive practices by businesses.

However, as we step into the age of digital transformation and big data, this nearly 35-year-old law poses intriguing challenges. Given the law’s broad language and definitions, one can interpret that it could apply to online retailers, digital platforms, and potentially even social media companies. However, today it may have limited application to the internet. Deacon v. Pandora Media, Inc. (2016) 885 N.W.2d 628, 499 Mich. 477. The Court’s interpretation might provide a loophole for digital-only businesses to bypass PPPA’s regulations.

On the one hand, the PPPA had enabled Michiganders to enjoy a level of privacy unmatched in many other states, however it seems as though it has largely become obsolete. Legal scholars and policy-makers are encouraged to reconsider, adapt, and modernize laws like PPPA to ensure that privacy protections keep pace with the rapidly evolving technological landscape.

Politicians in the 80s reacted to the investigation by journalists into their video rental histories by passing the act. And Michigan’s Preservation of Personal Privacy Act represented a significant legislative move toward safeguarding privacy rights in an era where such rights are under threat. However, to ensure that it remains effective in the age of big data and digital commerce, the legislation needs to undergo thoughtful revision and modernization. And it appears as this particular moment politicians are uninterested in closing the digital hole in privacy.

In a world increasingly entwined with towering skylines and sprawling infrastructures, construction is as integral to our landscape as the grandest natural wonder. Yet, beneath the towering steel and glass edifices, and behind the hum of the machinery, lies a complex web of legal intricacies that can give rise to construction litigation. It’s an area of law as multi-layered as the structures it governs, and one we ought to navigate with care.

Construction litigation can arise from disputes at any stage of a project, involving a pantheon of characters as diverse as the architectural styles adorning our skylines. Owners, contractors, architects, suppliers, insurers, workers – they all have a role to play, and their interests can sometimes clash on the legal stage.

Enter the Lawyer. Perhaps the most well-trodden pathway to the courtroom is the breach of contract claim. From delays in the project schedule to disputes over the quality of work or materials, contractual disagreements are as much a part of the construction landscape as steel beams and concrete. Construction contracts are often complex documents, teeming with clauses that can spark contention if not carefully interpreted and executed.

Another common area of dispute lies in the realm of construction defects. These can range from structural issues that threaten the integrity of a building to aesthetic discrepancies that veer from the original blueprint. In these cases, questions arise about who is responsible, and what remedy is appropriate.

Safety is another cornerstone of construction litigation. The construction industry is rife with hazards, from falls to equipment-related injuries. When accidents occur, they can lead to personal injury claims or even workers’ compensation disputes, adding another layer to the legal complexity of construction.

Then, there is the issue of non-payment or mechanics’ liens. When a contractor or subcontractor is not paid for work performed or materials provided, they may have the right to place a lien on the property, potentially stalling further construction until the dispute is resolved.

The terrain of construction litigation, is an area of law is not just about resolving disputes, but also about preventing them. Mitigation strategies often begin with contract drafting and review. By clearly defining the obligations and expectations of all parties, many disputes can be avoided before the first brick is laid.

Additionally, effective communication can go a long way in preventing litigation. Regular meetings and progress reports can help all parties stay aligned on project expectations and promptly address any potential issues.

Despite these precautions, construction litigation may sometimes be unavoidable. When disputes arise, parties often turn to alternative dispute resolution mechanisms such as mediation to avoid the costs and public exposure of a court trial.

In the end, construction litigation, like the projects it oversees, is about crafting something enduring out of conflict and chaos. It’s about finding a balance between the various interests at play and building a legal framework as solid and as intricate as the structures it governs. As our cities reach ever higher into the sky, so too will the demand for legal expertise in the complex, ever-evolving world of construction litigation.