Five Stories That Matter in Michigan This Week – April 28, 2023

  1. Effort to Mandate Hands-Free Phone Use While Driving in Michigan Stalls

Michigan House Bill 4250, the first bill of a three-bill package, failed to gain majority support in the House this week. The proposed legislation would ban the use of hand-held electronic device for drivers.

Why it Matters: 57 House members voted against the bill. One of the major concerns cited is that the penalties proposed to be imposed under the bill would be punitive, including the possibility of a license suspension of up to 90 days for a habitual offender.


  1. Michigan Cannabis Sales Near $250 Million in March

Cannabis sales nearly hit $250 million in March, via the monthly report from the Michigan Cannabis Regulatory Agency. Michigan adult-use sales came in at $239,857,322.13, while medical sales came in at $9,816,894.70, altogether totaling $249,674,216.70.

Why it Matters: Marijuana sales remain strong in Michigan, particularly for recreational use. However, there still are significant concerns about profitability and market over-saturation that the industry is contending with.


  1. May 2023 Business Education Series Program

During the May Business Education Series, Emmie Musser will discuss the challenges faced by businesses in building trust and transparency in a hybrid world, and explore strategies to overcome them including the importance of clear communication and regular updates, as well as the need to establish and maintain strong relationships.

Why it Matters: We will share practical, evidenced based tips on policies, workplace communication norms, and technology that can be used to help mitigate some of the biggest pain points of a hybrid work environment. Learn more.


  1. Coverage Spoken Here

Commercial litigator and Chair of Fraser Trebilcock’s Real Estate Department, Jared Roberts, along with Shareholder and litigator Ryan Kauffman, successfully defended a mechanical contracting firm in an insurance coverage dispute initiated by its insurer.

Why it Matters: In this instance, in summary, the insurer argued that policy language excluded coverage for events of pollution or efforts by the insured at responding to it. Attorneys Roberts and Kauffman argued that, while some pollution-related events were clearly excluded under the policy here, the exact conduct of the insured in this case was covered, despite the exclusion. The Circuit Court agreed with the insured mechanical contractor and summary disposition was awarded in the contractor’s favor. Learn more.


  1. CRA Publishes March 2023 Data, Average Price Hovers

Per data released by the Cannabis Regulatory Agency, the average retail price for adult-use sales of an ounce of cannabis is $86.87, a tiny increase from $86.00 in February. This is still a large decrease from March 2022, where the average price was $190.65.

Why it Matters: While the prices of cannabis and cannabis-related products continue to decrease and make consumers happy, growers on the other hand are seeing profits decrease resulting in them seeking ways to halt new licenses to be granted in an effort to steady prices. Contact our cannabis law attorneys if you have any questions.

Related Practice Groups and Professionals

Cannabis Law | Sean Gallagher
Litigation | Jared Roberts
Litigation | Ryan Kauffman

Five Stories that Matter in Michigan This Week – July 22, 2022

  1. COVID, Force Majeure, and Frustration of Purpose

Courts have rejected COVID-related force majeure and frustration of purpose arguments on the reasoning that the pandemic and its effects were foreseeable. Now in its third year, disruptions related to the pandemic are no longer unforeseeable and businesses should take note.

Why it Matters: COVID-related frustration of purpose and force majeure are not cure-alls, and courts will not take these arguments at face value. However, with the right facts, frustration of purpose or force majeure arguments can be successful. Businesses should take positive steps to ensure that their interests are protected if/when COVID comes knocking again.


  1. Proposed Short-Term Rental Legislation Remains Stuck in Michigan House

Local communities will be limited in their ability to regulate short-term housing rentals if a bill passed by the Michigan House of Representatives, House Bill 4722 (“HB 4722”), becomes law. However, the bill remains on hold in the Michigan House, as powerful interest groups—local governments and Michigan realtors, in particular—remain at odds over the bill.

Why it Matters: The bill restricts local communities from adopting or enforcing zoning ordinance provisions that have the effect of prohibiting short-term rentals. On the one hand, local governments argue that the bill would undermine local control over zoning. On the other hand, realtors argue that the bill would dampen the real estate market. A lot is at stake, as Michigan homeownersreportedly made more than $250 million from Airbnb rentals alone in 2021.


  1. Decreased Costs Trending for Medical Marijuana Licenses

Last month the Cannabis Regulatory Agency (CRA) announced that medical marijuana facilities that need to renew their license or obtain a new license will pay less in fees for the upcoming fiscal year. Fees for each class and type of business have been reduced, a trend that started last year when the CRA reduced fees for this current fiscal year.

Why it Matters: As the number of medical licensees in the state continue to grow, associated costs of getting a new license or renewing are decreasing. If you have any questions or seeking to acquire a medical marijuana license, contact our cannabis attorneys.


  1. New Law Allows Non-Profit Corporation to be a Member of Limited Liability Company

Senate Bill 926 was recently signed into law by Governor Whitmer, which changes the definition of a person in the limited liability company act, allowing nonprofit corporations to be members of limited liability companies (“LLC”).

Why it Matters:  Michigan now joins other states that allow nonprofits to create LLCs that do not involve any financial gain or profit to perform certain functions while still maintaining their nonprofit status.


  1. Paid Sick Leave and Minimum Wage Laws Up in Air

Following the ruling by the Michigan Court of Claims recently, the “adopt and amend” strategy taken on by Michigan’s legislature in 2018 to find a compromise for two ballot initiatives which would have increased the minimum wage and enacted a paid sick leave law, was deemed unconstitutional.

Why it Matters: It is anticipated that the Michigan legislature will appeal the decision and request a stay. If the decision is not reversed, then changes will go into effect immediately. The state’s minimum wage will increase to $12 an hour, tipped employees will receive an increase, and nearly every size and type of business will receive 72 hours per year of paid sick time leave.

Related Practice Groups and Professionals

Litigation | Matthew Meyerhuber

Real Estate | Jared Roberts

Cannabis | Klint Kesto

Business & Tax | Ed Castellani

Labor, Employment & Civil Rights | Aaron Davis

Default: The Risk of Failing to Respond to a Lawsuit Brought Against You

The risk of failing to respond to a lawsuit against you is severe. Understanding what a default is, and the implications associated with a default judgment is important when having a lawsuit brought against you.

What is a default?

A default can occur when a party that has been sued fails to respond to the complaint or otherwise defend against the lawsuit in a timely manner. If you are found to be in default, the other side can then request a default judgment from the court. If the court enters this default judgment, you are automatically liable for the full amount requested in the suit, plus fees and costs.

What are the ramifications of a default judgment being entered?

The opposing party can begin collecting the judgment by garnishing your wages, bank accounts, and state tax returns. The opposing party can even seize your property to fulfill the judgment amount. Additional costs/fees/interest may also begin to accrue.

What can I do if a default judgment has been entered against me? 

When a default judgment is entered, the case is technically closed, so it is important to act quickly. A Motion to Set Aside the Judgment should be filed immediately, explaining why you failed to respond or defend against the suit.

The attorneys at Fraser Trebilcock have the experience and knowledge to help you set aside a default judgment that has been entered against you. Contact Amy, Emily, or your Fraser Trebilcock attorney.

Emily M. Vanderlaan is a litigation attorney at Fraser Trebilcock handling all aspects of personal injury and property litigation. Emily has had great success in Michigan and Colorado trial courts and in the Michigan Court of Appeals. You can reach her at (517) 377.0882 or at

Fraser Trebilcock attorney Amanda S. Wolanin specializes her practice in business and tax law, bankruptcy, family law, estate planning, litigation, and real estate law. You can reach her at (517) 377-0897, or at

Covid, Force Majeure, and Frustration of Purpose – Some Words of Caution

Courts generally show a pattern of skepticism toward force majeure and frustration of purpose arguments stemming from the Covid-19 pandemic. Here’s what businesses need to know to protect themselves.


First, we need to get our terminology straight. Frustration of purpose and force majeure, while related concepts, are distinct in some important ways. Force Majeure is an event mentioned explicitly in a contract that discharges the parties of at least some of their responsibilities. Frustration of purpose, on the other hand, is a contract defense alleging that the basic purpose of the contract being litigated has been frustrated by an event not reasonably foreseeable to the parties. Michigan Courts use a three-part test to assess frustration of purpose: 1) the contract must be at least partially executory; (2) the frustrated party’s purpose in making the contract must have been known to both parties when the contract was made; (3) this purpose must have been basically frustrated by an event not reasonably foreseeable at the time the contract was made, the occurrence of which has not been due to the fault of the frustrated party and the risk of which was not assumed by him. Molnar v. Molnar, 110 Mich. App. 622, 313 N.W.2d 171 (1981).

Primary issues: Causation and Foreseeability.

It’s hard to deny that the COVID-19 pandemic involved possibly the most significant disruption of global commerce since World War II. As of this writing, the WHO reports over six million lives have been lost to COVID-19. Sweeping restrictions on travel and trade across the globe have also come at an enormous and self-evident economic cost. So—why isn’t COVID persuasive as a force majeure or frustration of purpose event?

One issue is causation. It can be challenging to prove that the pandemic caused a disruption when intervening factors like government action come into play.

For example, Michigan saw strict government shutdown mandates related to COVID. Though these shutdowns may have saved numerous lives, they inarguably caused some markets to collapse overnight. Suddenly, college towns were empty; theaters, bowling alleys, and dine-in restaurants were shuttered. Did the pandemic cause this? Or did government action cause it? Alternatively, did a business decline for an entirely different reason? Was it already doomed, with a shutdown being only the final nail in the coffin? The same issue comes up with Covid-related supply chain disruptions. Did the pandemic cause it? Labor shortages and strikes? Both?

In a contract case where the defendant suffered a loss of business amid the COVID pandemic, causation issues might render their force majeure or frustration of purpose defenses ineffective. Whether initiating or defending a lawsuit, a party making a frustration of purpose or force majeure argument has a burden of proof to meet.

Another problem is that COVID-19 and its effects have arguably been foreseeable, negating frustration of purpose and force majeure arguments.

Erin Webb, a legal analyst writing for Bloomberg, noted in a November 2021 article titled ANALYSIS: No Longer Unforeseeable? Force Majeure and Covid-19 that courts have rejected Covid-related force majeure and frustration of purpose arguments on the reasoning that the pandemic and its effects were foreseeable.

“Since early 2021, with Covid-19 the new normal and the coronavirus feeling a lot less’ novel,’ courts have increasingly expected parties to have adjusted to pandemic-related issues—from supply chain disruptions to the challenges of remote work. So, for those still wishing to explore such defenses, careful factual research and analysis early in a case will be more important than ever,” writes Webb.

In short, with the pandemic being in its third year, disruptions related to the pandemic are no longer unforeseeable.

Another older version of this reasoning is that a decline in business, even if resulting from conditions such as a pandemic and stay-at-home order, is an inherent risk of doing business that the parties assume. “The tenant is not relieved from the obligation to pay rent if there is a serviceable use still available consistent with the use provision in the lease. The fact that the use is less valuable or less profitable or even unprofitable does not mean the tenant’s use has been substantially frustrated.” Mel Frank Tool & Supply, Inc. v. Di-Chem Co., 580 N.W.2d 802, 808 (Iowa 1998)

For a frustration of purpose argument to succeed, the entire basic purpose of the contract must be frustrated. This has happened in some cases. See, for example, Bay City Realty, LLC v. Mattress Firm, Inc., No. 20-CV-11498, 2021 WL 1295261 (E.D. Mich. Apr. 7, 2021). The case involved a frustration of purpose defense to the landlord’s breach of contract claim. The court found in favor of the tenant/defendant on the frustration of purpose issue, holding that the Governor’s order shuttering non-essential businesses frustrated the primary purpose of the Lease (retail sales of mattresses).

Force majeure clauses—should we use them for pandemics?

Paula M. Bagger, writing for the American Bar Association, covers this topic in greater detail in a March 2021 article titled The Importance of Force Majeure Clauses in the COVID-19 Era. Bagger warns that “we must not ignore the potential applicability of force majeure to our commercial agreements.”

Possible solutions are not as simple as slapping the word “pandemics” into a force majeure clause. For one, some courts may reason that the parties actually foresaw listed events, even though such reasoning goes somewhat against the logic of a force majeure clause, which lists potential unforeseen events.

Writes Erin Webb: “Some courts have found that the parties’ ability to name a risk—like a pandemic or a government shutdown risk—in a force majeure clause means that the risk was not only foreseeable at the time of contracting, but actually foreseen, defeating other defenses to nonperformance, such as impossibility of performance or frustration of purpose.”

This reasoning may be particularly applicable to Covid-19, given evidence that Covid-19 will be endemic to the human population in the future. If we expect Covid, we can no longer expect to use it as an excuse.

Furthermore, going back to causation, a force majeure clause mentioning a pandemic may not adequately address the issues accompanying the COVID-19 pandemic. More open-ended catch-all-type statements may be better.

However, it is essential to consider one’s own goals when drafting a force majeure clause. For example, if you’re a commercial landlord, you may not want a force majeure clause to encompass pandemics like COVID-19 – it could give a delinquent tenant ammunition in its efforts not to pay you. Conversely, if you’re a commercial tenant, you might want an out if business dries up.


COVID-related frustration of purpose and force majeure are not cure-alls, and courts will not take these arguments at face value. However, with the right facts, frustration of purpose or force majeure arguments can be successful. Businesses should take positive steps to ensure that their interests are protected if/when COVID comes knocking again. For all your business needs regarding frustration of purpose and force majeure clauses, the attorneys at Fraser Trebilcock can help.

Matthew J. Meyerhuber is an attorney at Fraser Trebilcock focusing on general litigation, cannabis law, environmental law, and real estate. Matthew can be reached at or 517.377.0885. 

Five Stories that Matter in Michigan This Week – June 3, 2022

Five Stories that Matter in Michigan This Week – June 3, 2022; Legal, Legislative, and Regulatory Insights

Michigan Senate Votes to Suspend Gas Taxes this Summer

  1. The Michigan Senate, in a bipartisan vote, passed a series of new bills that would temporarily pause gas taxes from June 15 to September 15. The bills pause collections on the 6% sales and use taxes on gas purchases and the 27 cent per gallon excise gas tax. According to AAA, the average price for a gallon of gas in Michigan as of June 1 was over $4.70.

Why it Matters: These bills reflect the sense of urgency—within both parties in Michigan and across the country—to address surging gas prices, as well as inflationary pressures more broadly, before the upcoming elections. According to reporting by Crain’s Detroit, Governor Whitmer, at the Mackinac Policy Conference, indicated her general support for the legislation, although she raised concerns about the impact of suspending tax collections that would otherwise be allocated for road repair.


Court of Appeals Rejects Michigan Public Body FOIA Exemption

  1. The Michigan Court of Appeals recently held that a public body in Michigan that is a plaintiff or defendant in litigation cannot deny a Freedom of Information Act request by the legal counsel to another party to the litigation based on a FOIA exemption for requests pertaining “to a civil action in which the requesting party and the public body are parties.” Learn more about this case here.

Why it Matters: MCL 15.243(1)(v) allows a public party to assert a FOIA exemption for requests pertaining “to a civil action in which the requesting party and the public body are parties.” However, as this case makes clear, the exemption will be strictly construed. If the FOIA requester does not meet the precise legal definition of a “party” in litigation, and instead is merely a friend, agent or legal counsel to a party, then the exemption will likely be denied. Accordingly, before asserting this or any other exemption, a public body should consult with legal counsel. Learn more about this case here.


Michigan Legislature Passes Bill to Fund Security Enhancements at Schools

  1. The Michigan House and Senate passed legislation that would provide $27 million in funding for safety and security assessments at public and private schools around the state. The legislation was passed in the wake of a mass shooting at an elementary school in Uvalde, Texas. The bill would also set aside nearly $10 million for additional support to the Oxford Community School District following the November mass shooting at the district’s high school.

Why it Matters: Expect an increase in legislation, from security enhancements at schools to “red flag” laws meant to identify potential threats, being debated in Michigan and across the country.


Full Principal Residence Tax Exemption Available Even if Portion of Home is Rented

  1. The Michigan Court of Appeals, in the case of Keith W. DeForge v. Township of Allouez, recently ruled that homeowners in Michigan can still claim 100% principal residence tax exemption even if the homeowner rents out a portion of their home.

Why it Matters: This ruling clarifies a tax question that impacts the rapidly increasing number of homeowners in Michigan who generate rental income from their homes using services such as Airbnb.


Michigan’s Movers and Shakers Meet on Mackinac Island

  1. Michigan’s Mackinac Policy Conference wrapped up this week, and from this year’s election for governor to healthcare to housing in Michigan, a wide range of important issues were discussed and debated.

Why it Matters: The Mackinac Policy Conference has always been the place to take the pulse of politics and business in Michigan. A group of Fraser Trebilcock professionals were in attendance this year, and next week we’ll be sharing some of the key takeaways from the conference.

Related Practice Groups and Professionals

Election Law | Klint Kesto
Litigation | Thad Morgan
Administrative & Regulatory | Michael Ashton
Taxation | Paul McCord

FOIA Exemption Denied When Requesting Party is not Party to Civil Litigation

If a public body in Michigan is a plaintiff or defendant in litigation, can the public body deny a Freedom of Information Act request by the legal counsel to another party to the litigation based on a FOIA exemption for requests pertaining “to a civil action in which the requesting party and the public body are parties”? According to the Michigan Court of Appeals in an unpublished opinion in the case of Jones Day v Dep’t of Environment, Great Lakes, and Energy, and at least as it relates to the facts of this case, the answer is no.

Background of the Case

The underlying litigation involves a lawsuit brought by the State of Michigan in state court against chemical companies alleging that the companies improperly released toxic synthetic chemicals called polyfluoroalkyl substances (“PFAS”), which found their way into Michigan’s water supplies.

The state lawsuit was transferred to federal court and combined with similar cases from other jurisdictions, and a case management order was entered that precluded participation in discovery.

Jones Day, a law firm representing a defendant company, proceeded to file a state FOIA request with the Department of Environment, Great Lakes, and Energy (“EGLE”) seeking documentation related to the Michigan PFAS Action Response Team.

EGLE denied the request, citing MCL 15.243(1)(v), the exemption cited above pertaining to parties to a civil litigation. Jones Day then filed a FOIA complaint in the Court of Claims, and the Court of Claims granted summary disposition in favor of EGLE. Jones Day appealed.

The Court of Appeals Decision

The Court of Appeals reversed the lower court decision. The Court of Appeals relied upon precedent from a previous case, Taylor v Lansing Bd of Water & Light, in which a friend of the plaintiff to a lawsuit against a public body made a FOIA request after the plaintiff’s own FOIA request was denied by the public body defendant on the basis of MCL 15.243(1)(v). In the Taylor case, the Court of Appeals ruled that the exemption could not be used where, as in the Jones Day case, the party making the FOIA request was not a “party.”

In the Jones Day case, the Court of Appeals, in reaching a similar result, explained that “the Legislature did not act to obviate the Taylor decision and prevent FOIA actions from being filed by best friends, counsels of record, or associates despite this Court’s recognition that a ‘distasteful’ result occurs without such a restriction of the term ‘party.’”

Accordingly, in light of this case, and the Michigan case law it relies upon, public bodies should be aware that the MCL 15.243(1)(v) exemption will likely be strictly construed. If the FOIA requester does not meet the precise legal definition of a “party” in litigation, and instead is merely a friend, agent or legal counsel to a party, then the exemption will likely be denied.

Morgan, Thaddeus.jpgThaddeus E. Morgan is a shareholder with Fraser Trebilcock and formerly served as President of the firm. Thad is the firm’s Litigation Department Chair and serves as the firm’s State Capital Group voting representative. He can be reached at or (517) 377-0877. 

Michigan Supreme Court Eliminates Mandatory Case Evaluation Requirement for Tort Cases, Effective January 1, 2022

The Michigan Supreme Court, by Order dated December 2, 2021, eliminated the mandatory case evaluation requirement for all tort cases in Michigan courts, effective January 1, 2022. This change, and others, are reflected in amendments to Michigan Court Rule 2.403.

Under the amended rule, the parties may stipulate to, and the court may approve, an alternative dispute resolution process, such as mediation or facilitation in the discovery plan. However, case evaluation remains the default method of dispute resolution.

The Supreme Court also did away with Michigan Court Rule 2.403(O), which outlines a party’s potential liability for costs to the extent it rejects a case evaluation award. According to the soon-to-be-deleted rule:

“If a party has rejected an evaluation and the action proceeds to verdict, that party must pay the opposing party’s actual costs unless the verdict is more favorable to the rejecting party than the case evaluation. However, if the opposing party has also rejected the evaluation, a party is entitled to costs only if the verdict is more favorable to that party than the case evaluation.”

As of January 1, 2022, there will be no liability for an opposing party’s costs when a party rejects the case evaluation and proceeds to trial, even if they do not prevail at trial or by way of motion.

The new rule also reduces the number of days in advance the parties must submit case evaluation materials from fourteen (14) to seven (7).

These changes will give parties to litigation and their legal counsel more control and flexibility over how they develop and execute their litigation strategies.

If you have any questions about these issues, please contact your Fraser Trebilcock attorney.

Morgan, Thaddeus.jpgThaddeus E. Morgan is a shareholder with Fraser Trebilcock and formerly served as President of the firm. Thad is the firm’s Litigation Department Chair and serves as the firm’s State Capital Group voting representative. He can be reached at or (517) 377-0877. 

Matthew J. Meyerhuber is an associate at Fraser Trebilcock focusing on general litigation, environmental law, and real estate. Matthew can be reached at or 517.377.0885. 

Federal Court Rules in Favor of Restaurant Group for Insurance Coverage Related to Loss of Business Income Due to COVID-19 Shutdown Orders

In one of a series of closely watched cases concerning the extent of insurance coverage available to businesses who have suffered damages as a result of the COVID-19 crisis, a federal district court recently ruled in favor of a group of restaurants that were ordered closed by government authorities.

The U.S. District Court for the Northern District of Ohio ruled in favor of the policyholders on cross-motions for summary judgment in Henderson Road Restaurant Systems, Inc., dba Hyde Park Grille, et al. v. Zurich American Ins. Co., No. 1:20 CV 1239, 2021 WL 168422 (N.D. Ohio Jan. 19, 2021). In the Henderson case, the court ruled that business interruption coverage was available to the restaurant group under a policy issued by Zurich American Insurance Company (“Zurich”).

The property policy at issue provided coverage for suspension of operations caused by order of civil authority or a government order that prohibited access to the covered premises. The policy required that the suspension result from “direct physical loss of or damage to” property located within one mile from the covered premises.

The parties disagreed as to whether such “direct physical loss of” or “damage to” the policyholders’ restaurants occurred under the circumstances. Ultimately, the court sided with the policyholders about the meaning of the phrase “direct physical loss of” the real property, construing what it found to be ambiguities in the language in the policyholders’ favor.

The policyholders argued that they “lost their real property” when state shutdown orders were issued that prevented the properties from being used for their intended purposes as dine-in restaurants. Since the policy language was susceptible to this interpretation, and ambiguities are strictly construed against the insurer in Ohio, the court ruled that Zurich was obligated to provide business income coverage since the policy language could be interpreted in the policyholders’ favor.

The court rejected Zurich’s argument that coverage shouldn’t be available because the restaurants could still conduct carry-out business, finding it unreasonable to expect that the restaurants, which previously relied almost exclusively on in-person dining, should be expected to shift their businesses to a carry-out model. The court also rejected Zurich’s assertion that the policy required a permanent loss.

Zurich next argued the applicability of two exclusions to coverage. First, Zurich argued that a microorganism exclusion precluded coverage. However, the court rejected the microorganism exclusion’s application, finding there was no coronavirus at the restaurants themselves and that “it was clearly the government’s orders that caused the closures,” not the coronavirus. Moreover, the court noted that the parties had stipulated that “none of Plaintiffs’ Insured Premises were closed as a result of the known or confirmed presence of SARS-CoV-2 or COVID-19 at any of the Insured Premises.”

Zurich also argued that the policy’s loss-of-use exclusion should exclude coverage. The court rejected this argument, as well, ruling that “the Loss of Use exclusion would vitiate the Loss of Business Income coverage.”

We will continue to monitor and provide updates on other court decisions happening across the country on the extent of insurance coverage for losses related to COVID-19. If you have any questions about these issues, please contact Thad Morgan, Fraser Trebilcock’s Litigation Department Chair.

Morgan, Thaddeus.jpgThaddeus E. Morgan is a shareholder with Fraser Trebilcock and formerly served as President of the firm. Thad is the firm’s Litigation Department Chair and serves as the firm’s State Capital Group voting representative. He can be reached at or (517) 377-0877.

Michigan House and Senate Pass Bills Imposing 45-Day Data Breach Notification Requirement

The Michigan House of Representatives recently voted to approve legislation that will impose a 45-day data breach notice requirement on Michigan businesses. House Bills 4186 and 4187, which were passed on December 16, 2020, will become law if signed by Governor Whitmer. Identical bills were passed by the Michigan Senate on December 10.

Data security is a major concern for many businesses across industries. A report issued by the FBI, Department of Health and Human Services, and Cybersecurity and Infrastructure Security Agency in October warns of “an increased and imminent cybercrime threat” to businesses, particularly those in the health care sector. Recent revelations of a sophisticated cyberattack on the U.S. government shows how vulnerable even the most secure systems are to a breach. This new legislation, if enacted, will impose new obligations on Michigan businesses when a data breach occurs.

Key Provisions of New Legislation

The legislation requires a “covered entity” to provide notice within 45 days to state residents whose “sensitive personally identifying information” (PII) was exposed in a data breach.

A “covered entity” includes an individual or a sole proprietorship, partnership, government entity, corporation, limited liability company, nonprofit, trust, estate, cooperative association, or other business entity, that has more than 50 employees and owns or licenses sensitive personally identifying information, or a franchisee of any of the foregoing.

The scope of PII that gives rise to an obligation to notify state residents in the event of a data breach includes a state resident’s first name or first initial, and last name, in combination with one or more of the following data elements that relate to that state resident:

  • A nontruncated Social Security number.
  • A nontruncated driver license number, enhanced driver license number, state personal identification card number, enhanced state personal identification card number, passport number, military identification number, or other unique identification number issued on a government document that is used to verify the identity of a specific individual.
  • A financial account number.
  • A state resident’s medical or mental history, treatment, or diagnosis issued by a health care professional.
  • A state resident’s health insurance policy number or subscriber identification number and any unique identifier used by a health insurer to identify the state resident.
  • A username or electronic mail address, in combination with a password, security question and answer, or similar information, that would permit access to an online account affiliated with the covered entity that is reasonably likely to contain or is used to obtain sensitive personally identifying information.

All covered entities and third-party agents are required to implement and maintain reasonable security measures designed to protect PII against a breach of security. The legislation lays out a long series of factors covered entities must consider in developing reasonable security measures, including the size of the covered entity and the amount of PII it maintains and processes.

If a covered entity determines that a breach of security has or may have occurred, the covered entity must conduct a good-faith and prompt investigation into the scope and extent of the breach.

If a covered entity determines that a breach has occurred, it must notify state residents whose PII was acquired in the breach, as expeditiously as possible and without unreasonable delay. Notification must occur within 45 days of a determination that a breach has occurred unless law enforcement determines that such notification could interfere with a criminal investigation or national security. Written notice must at least include the following:

  • The date, estimated date, or estimated date range of the breach.
  • A description of the PII acquired by an unauthorized person as part of the breach.
  • A description of the actions taken to restore the security and confidentiality of the PII involved in the breach.
  • A description of steps a state resident can take to protect against identity theft, if the breach creates a risk of identity theft.
  • Contact information that the state resident can use to ask about the breach.

A covered entity may provide substitute notice in lieu of direct notice, if direct notice is not feasible because of excessive cost or lack of contact information. Under the legislation, the cost of direct notification to state residents is considered excessive if it exceeds $250,000 or if notice must be provided to more than 500,000 state residents. Substitute notice must include a conspicuous notice on the covered entity’s website (if it has one) for at least 30 days, and notice in print and broadcast media.

Penalties for Noncompliance with Notification Requirements

A covered entity that fails to comply with the notice requirements set forth in the legislation faces potentially steep fines. Penalties may include a civil fine of not more than $2,000 for each violation, or not more than $5,000 per day for each consecutive day that the covered entity fails to take reasonable action to comply with applicable notice requirements. Aggregate liability for civil fines for multiple violations related to the same security breach shall not exceed $750,000.

This legislation is not yet law, but soon may be. This article touches upon many of the important provisions of the legislation, but there are additional details to be aware of. Businesses and other entities covered by this legislation should take steps to assess their preparedness to comply with the new obligations imposed by these bills. If you have any questions, or require assistance in planning for the implications of this legislation, please contact Fraser Trebilcock shareholder  Thad Morgan.

Morgan, Thaddeus.jpgThaddeus E. Morgan is a shareholder with Fraser Trebilcock and formerly served as President of the firm. Thad is the firm’s Litigation Department Chair and serves as the firm’s State Capital Group voting representative. He can be reached at or (517) 377-0877.

Michigan Court of Appeals Clarifies Athlete Concussion Liability Standards

On November 19, 2020, the Michigan Court of Appeals issued a decision in Randall v. Michigan High Sch. Athletic Association which clarifies the legal risks and obligations coaches and other covered adults face when they suspect a youth athlete has suffered a concussion.

The old playboook: standards were unclear

In 2013, Michigan enacted its concussion protection statute, codified at MCL 333.9156. It established requirements for coaches and other adult participants in organized youth sports events, providing in relevant part:

A coach or other adult employed by, volunteering for, or otherwise acting on behalf of an organizing entity during an athletic event sponsored by or operated under the auspices of the organizing entity shall immediately remove from physical participation in an athletic activity a youth athlete who is suspected of sustaining a concussion during the athletic activity. A youth athlete who has been removed from physical participation in an athletic activity under this subsection shall not return to physical activity until he or she has been evaluated by an appropriate health professional and receives written clearance from that health professional authorizing the youth athlete’s return to physical participation in the athletic activity.

MCL 333.9156

While the law established requirements to follow, it did not explicitly set out any penalties. Since the law’s enactment, most authorities agreed that an injured person could sue non-medical professionals under a common-law negligence theory. Common-law negligence occurs when a person has a legal duty to exercise reasonable care, the person breaches that duty, and the breach “proximately” causes an injury giving rise to damages. Laws such as the concussion awareness law can and do impose legal duties of care on covered adults. Stated plainly, reasonable care is the level of care a reasonably prudent person would take. It is an objective standard, so the decision is up to a judge or jury.

Even with existing common-law negligence theories, the lack of clarity from the statute and the lack of case law to clarify it created uncertainty among many coaches, referees, school administrators, and other adults involved in organized youth sports. For example, it was uncertain whether violating the terms of the statute would automatically put someone on the hook for damages.

How the Randall decision changes the game

In the Randall case, the plaintiff sued the MHSAA and numerous other entities connected to his youth hockey team after he endured two collisions in a game—the second of which came after he allegedly showed signs of a concussion and his coach had put him back in. The plaintiff’s theories of liability were that:

  1. The concussion protection statute created a private cause of action against non-medical professionals, meaning that the plaintiff would not need to prove the covered adult was negligent—and,
  2. In the alternative, a violation of the statute constituted negligence per se—meaning that a covered adult’s violation of the statute would automatically be negligent—and finally,
  3. Failing those two arguments, defendants were liable under a theory of ordinary negligence.

In its November 19 opinion, the Michigan Court of Appeals established that a violation of the statute neither gives rise to a statutory cause of action nor constitutes negligence per se.

“Our Legislature enacted the concussion-protection statute to protect youth athletes from the harmful effects of concussions. In doing so, the Legislature did not create, explicitly or by implication, a private statutory cause of action for violation of the statute. Rather, the statute creates negligence-based duties on the part of coaches and other covered adults, and a violation of the statute can be evidence of actionable negligence.” Randall v. Michigan High Sch. Athletic Ass’n, No. 346135, 2020 WL 6811661, at *12 (Mich. Ct. App. Nov. 19, 2020)

This does not mean that coaches, referees, and other covered adults are free from liability concerns. If the plaintiff can prove that a covered adult violated the statute by failing to pull an athlete suspected of sustaining a concussion, the covered adult will face a rebuttable presumption of negligence. In other words, covered adults who violate the statute are presumed “guilty” of negligence unless they can prove themselves “innocent.” (Note: negligence under this statute is not a crime, but negligence can become criminal if the negligence and resulting injury are serious enough).

Covered adults who face this presumption can avoid liability by proving (by a preponderance of the evidence) that their negligence did not cause an injury giving rise to damages.

It is also important to note that an athlete’s willingness to get back in the game does NOT protect covered adults from liability. The rule is that if covered adults suspect a concussion, they need to pull the athlete from participation until a qualified medical professional determines that they can safely get back in the game.

Play it safe

The best course of action is to follow the statutory requirements and exercise your judgment as a covered adult—whether you are a coach, referee, adult volunteer, or even a school administrator—conservatively. If you suspect a youth athlete might have suffered a head injury, it is likely in everyone’s best interests to play it safe. Remember that common-law negligence uses an objective standard—ultimately, if you run into a negligence suit, a judge or jury who lacks your background and experience in youth sports would decide whether your actions were reasonable. Furthermore—as we all know—in litigation and in life, hindsight is always 20/20.

Still, playing it safe is not always enough. Things can go wrong. If that is the case and you find yourself facing a lawsuit, the attorneys at Fraser Trebilcock are here to help.

Matthew J. Meyerhuber is an associate at Fraser Trebilcock focusing on general litigation, environmental law, and real estate. Matthew can be reached at or 517.377.0885.