Wednesday, March 15, 2017

Planning for death is more than writing a will.

Planning for your own death is more than writing a will and instructions on how you want doctors to treat you. You should take steps to provide information to your family and heirs to make administration of your estate easier. Anticipating potential problems can avoid problems and reduce the cost of administration of the estate.

Of course, the first steps in planning for your death is creation of an estate plan. The minimum step to be taken is creation of a Will. Some people may also need a trust to administer assets for the benefit of children or other incompetent heirs. When drafting a will you should also consider other end of life instruments such as a power of attorney, health care proxy (in some states a living will), and an anatomical gift document.

One of the most stressful events following a death is planning the funeral and burial. Funeral directors, like other sales people, may use high pressure tactics to increase the cost of the funeral. Funerals can be planned in advance and paid in advance. Cemetery plots can be purchased at any time. Pre-selection of the funeral plans will save money and stress to your loved ones.

Planning for death is similar to planning to evacuate for a hurricane. Gather your important papers and make sure your family knows where to find them. The following list is a start and should be individualized for your needs:
  1. List your date of birth and social security number
  2. If you don't live with relatives you should create a family tree with names and addresses so that the authorities and lawyers can contact the appropriate people.
  3. Your will and trust including the location of the original will
  4. Documents relating to your funeral and cemetery plot
  5. List of professionals that need to be contacted after death such as lawyer, accountant, religious leader, and funeral home
  6. Mortgage documents or rental agreements
  7. Homeowners, renters, and automobile insurance polices
  8. Life insurance policies
  9. List of bank accounts, retirements, and investments accounts. The list should include account numbers, institution names and phone numbers, and identification of any account managers or financial advisors.
  10. Stock certificates
  11. Tax records
  12. Records of money owed to you such as promissory notes or letters acknowledging the debt.
  13. Records of employee benefits owed to you like stock options
  14. List of any debts you owe to others. Include a list of all credit cards and account numbers
  15. The key to any safe-deposit box and the address of the bank.
  16. Appraisals of personal property
  17. Records of government benefits. Social security or veterans benefits may pay for funeral costs
  18. Records of litigation in which you are a party
  19. Marriage certificate and, if applicable, a copy of your divorce decree.
If you have social media accounts or other on-line accounts you may want to give your heirs the ability to post to these accounts to announce your death. While the social media accounts have limits on what can be done by heirs on your account, if you give your heirs access, then they can post consistent with the rules of the account. An example is that Facebook allows heirs to memorialize the account but not post on it as if they were the owner of the account. A list of on-line accounts and passwords can be helpful to your heirs.

All of these documents should be kept in one location and make sure your relatives know where to find the documents. They can be kept in a file cabinet, safe deposit box, or even a box in the basement or attic. Many of these documents can be scanned and stored electronically.

If you take these steps you will make the process of settling your affairs much easier on your survivors.





















Saturday, February 25, 2017

Don't give in to peer pressure bullying negotiations

Don't give in to peer pressure bullying negotiations.1

From the time that I started practicing law others have told me do act in a particular way or do things differently using the argument “that's how everybody else does it.” In most instances this advice was accompanied by an explanation based on law, facts, or logic. In many instances I accepted this advice and changed my behavior. If a logical argument exists to do things in a better way then I support the better way. In many instances the advice could be summed up as the difference between how things are taught in school and how they are done in the real world.

In a number of instances other lawyers have presented arguments to do something differently but without any basis in law, fact, or logic. I have always experienced these arguments in the course of trying to negotiate an agreement to resolve litigation. I have never accepted these arguments in the absence of logic. The argument of doing something because everybody else does it is usually a compelling argument. Nobody wants to be different because doing something differently creates a sense of inferiority. However, arguing that a lawyer should do something or include a particular concept in a settlement agreement because “everybody else does it” without logic should be viewed as an act of malpractice. If a lawyer is reluctant to change their position then the last reason they should do so is because all other lawyers do so.

I recently settled a divorce case and the negotiations almost failed because the opposing lawyer wanted to include an anti-bankruptcy clause. When I rejected this the other attorney argued that I should include it because everybody else includes it. I sent the other attorney legal research which indicated that this paragraph would violate bankruptcy law to which the other attorney responded “all other attorneys include it.” She never provided any law or logic to explain why this clause did not violate bankruptcy law. Instead, she repeatedly told me that everybody else does it. She even told me that the Judge will instruct me to include it if we ask the judge. In other words, because she had no basis in law to support her position she resorted to bullying.

This sort of bullying should have no place in legal negotiations. Lawyers should always negotiate in good faith complying with the law as it applies to the facts and the litigation and the ethics that govern lawyers. Arguing that everybody else does it has no place in good faith negotiations.





1  I thank my wife, Sheila g Pransky, M.S.W., L.I.C.S.W. who explained the offensive behavior as “peer pressure bullying.”

Monday, February 20, 2017

Separation agreements can't contract away bankruptcy protections

I recently negotiated a separation agreement in a divorce in which the opposing attorney insisted on inserting a clause that on its face prevented the parties from receiving the benefit of bankruptcy laws if one of them filed a bankruptcy petition in federal court. The clause that she tried to insert was as follows:


"Each Party agrees that neither shall attempt in any way to discharge any obligations contained in this Agreement in bankruptcy proceedings, and that in the event that s/he does, any discharge in bankruptcy for any such obligations shall have no effect upon his/her responsibility as contained in the Agreement. The obligations of the Parties set forth in this Agreement shall survive and supersede any subsequent discharge in bankruptcy. The filing Party shall indemnify and hold harmless the non-filing Party from any and all losses suffered as a result of the bankruptcy proceeding, including costs and legal fees."

In my opinion, this clause is illegal in that it violates federal law and is unethical because it misleads the parties and can cause them to litigate frivolous issues in the event of a bankruptcy filing by a party.

Bankruptcy law is established by federal law. While it may incorporate state law and even look to state law for various elements of the overall bankruptcy scheme, on the issue of a party's ability to file bankruptcy and the effect of filing a bankruptcy petition, these are within the exclusive jurisdiction of federal law. State court judges in family court have no ability to take away a party's right to file bankruptcy or to restrict the effect of such a filing. The parties also lack the power to contract away bankruptcy rights. If an individual could contract away bankruptcy rights then every contract would contain an anti-bankruptcy clause.

In some regards, bankruptcy law protects obligations created by Family Court in a divorce. Child support and alimony are domestic support obligations which are protected categories of debt. Property division does not receive protection under bankruptcy law. The proposed clause does not effect child support or alimony as these are already protected would not be effected by a contract clause that caused separation agreements to survive bankruptcy. This clause is aimed solely at property division.

In the case of In re Kroen, the court addressed a similar clause. The court found that the clause violated bankruptcy law and could not be enforced. The court found that this clause violated public policy. There are are long line of federal cases that hold that an agreement to make contracts non-dischargeable in bankruptcy are void as they all offend the public policy of promoting a fresh start for individual debtors.

Since the proposed clause is illegal and void under bankruptcy law, it can never be given any enforcement in either state or federal court. As such, the only possible purpose of the proposed clause is to make the parties think that property division in a divorce is non-dischargeable under bankruptcy law. In other words, the purpose is to mislead the parties into an incorrect understanding of the law. This is a violation of the ethical rules that lawyers follow.

The Rules of Professional Conduct for Lawyers prohibit lawyers from engaging in conduct involving dishonesty, fraud, deceit or misrepresentation or conduct that is prejudicial to the administration of justice. The proposed clause would mislead parties into thinking that they can file litigation in bankruptcy court and prevent the discharge in bankruptcy of property division obligations. Such a misleading action is conduct that involves misrepresentation. Since it encourages frivolous litigation it is also prejudicial to the administration of justice.

Drafting a separation agreement is a complicated process. People getting divorced should consult an lawyer experienced in family law before signing a separation agreement.









Friday, December 23, 2016

Prenuptial Agreements Should Address All Terminating Events For A Marriage

 Every marriage will come to an end.   Some terminate by divorce and others terminate by death.   Eventually every marriage will end.  

Most people who want Prenuptial Agreements  (also called premarital agreements or prenups) want the agreement for protection in the event of a divorce.   However, a recent case in Massachusetts explained that a well drafted agreement should also address termination by death.  

In the case of Stacy v Stacy the husband and wife had a Prenuptial agreement that had the following language:  "a final and complete settlement of all matters relating to the interest and obligations of each [party] with respect to all future property matters, including but not limited to alimony, support, maintenance, property assignment, and the rights of the parties under G. L. c. 208, § 34, as amended, in the event of a divorce."  Apparently the agreement was silent on what was to happen if a spouse died.   

The husband died and the personal representative of his estate sued his widow over ownership of personal property.  The Appeals Court held that the language of the agreement did not exclude applicability to other events such as death.  This meant that the personal representative and the widow had to try a case to figure out how to interpret the agreement.  Most people who draft prenuptial agreements do so to avoid litigation.  This agreement failed to do so.

A properly drafted prenuptial agreement should specifically address termination of the marriage by both marriage and death.  If the parties don't want to include events other than divorce then the agreement should state so in clear language.   In the Stacy case they could have included a sentence to the effect of "in the event this marriage terminates by death this agreement shall have no effect and shall not decrease the rights of the surviving spouse."

If you are considering a prenuptial agreement you should consult an experienced family law attorney to draft an agreement that includes provisions for termination by death and by divorce.

Sunday, November 27, 2016

Massachusetts new alimony law – Durational limits and prior divorce judgments

In 2012 Massachusetts divorce law changed by implementation of an Alimony Reform Act. A recent case, George v. George, interpreted and explained a portion of the law known as durational limits.

Under prior law, alimony was awarded for life or until a material change of circumstances occurred. It made no difference if the parties were married for one year or thirty. An award of alimony did not have a termination date. The new law imposed durational limits for divorces less than twenty years in length. The longer the marriage, the longer the period of alimony. The George case addressed the issue of applying the durational limits to alimony awards that occurred prior to 2012.

Earlier cases had held that modification should be denied if the recipient spouse testified that property rights were given up in exchange for alimony. This argument is mostly rejected for marriages less than 20 years in length. The Court said that every person who receives alimony will make this argument. The legislature, by implementing durational limits, indicated a clear intent to impose time limits for prior alimony judgments. If prove of a deal exchanging property for alimony can be made by language in the agreement or other contemporaneous documents then the court can consider extending alimony beyond the durational limits. However, in the absence of such written evidence from the time of the alimony judgment, durational limits will require termination of alimony for previously granted alimony judgments.

While the legislature created the durational limits, it also created an exception: “in the interests of justice.” The Court in the George case established guidelines for application of the interests of justice standard.

First the Court was clear that there can not be a deviation from the durational limits unless the trial judge makes written findings of fact, based on the evidence, which explain that deviation beyond the limits is “required in the interests of justice.” The recipient spouse bears the burden of proving by a preponderance of the evidence that deviation beyond the presumptive termination date is warranted.

Second the circumstances must be evaluated in the here and now. In other words, the circumstances as they exist at the time deviation is sought. While the court can look at prior circumstances, they can't be considered by the court unless the circumstances still exist. As an example, a previously disabled spouse can't get alimony beyond the durational limits unless the disability continues to exist.

Third, the Judge must consider all relevant statutorily specified factors. The court then identified which statutory factors are to be considered: (advanced age, chronic illness, unusual health circumstances; (2) tax considerations; (3) payment of health insurance; (4) required life insurance, (5) sources; (5) amounts of unearned income; (6) significant premarital cohabitation; (7) inability to provide for a party's own support due to abuse by the payor; (8) a party's inability to provide for their own support due to other reasons; and (9) any other factor the Court deems relevant and material.

This decision shows a distinct preference to terminate prior alimony judgments based on the durational limits while allowing a continuation of alimony in limited circumstances. This is a complicated area of law that requires a comprehensive evaluation of all current circumstances of both the payor and receipient of alimony. Individuals should consult an experienced family law attorney before making any decisions about how they could be effected by the change in law.



Thursday, September 1, 2016

PLAY DATES, GUNS, AND OTHER SAFETY QUESTIONS

This morning on the news there was a story about an 11 year old who was shot in the face. The shooting was accidental and the gun was legally registered and owned. One child was at another child's home and they found the gun and played with it. The expected result occurred. One child pointed the gun at the other and pulled the trigger.

Asking questions about child safety before sending your child to a neighbor's to play with your child is extremely awkward and potentially offensive. However, the safety of your child should be paramount. Asking safety questions before entrusting your child to the care of another adult should be routine. If you screen potential babysitters before hiring them then you should screen other adults as well.

Gun Safety. Experts indicate that onein three families with children have guns in the house. Not all of these households take appropriate measures to keep children safe from guns. It should be routine practice for parents to ask: “Do you have guns in the house?” If the other parent does have guns, there should be follow up questions. “Do you have a gun safe?” “How do you keep the guns safe?” “Is the gun loaded?” Is the ammunition stored separtely? It is not enough to discuss the topic with other parents. You need to discuss this with your child. You need to impress the child with an understanding that toy guns are different from real guns. Children can't tell the difference so it is better to tell them that they can't play with guns in someone else's home unless an adult gives them the toy guns. Children should be told to assume that a gun is always loaded. They should NEVER point a gun at a person. They should not even pretend to point a gun. Children may not understand death but they do understand getting hurt and having pain. Children should be taught that if someone points a gun at them they could die, be injured, or suffer pain.

Dogs and pets. Most people consider their pet dogs to be friendly and safe to children. However, even friendly dogs can attack strange children who don't know how to interact with dogs. Dogs can be protective of household children. A playful interaction could be misconstrued by a dog as an attack on the child they protect. Sudden moves by a child can cause a skittish dog to bite. Some people believe that particular dog breeds are prone to dangerous behavior. Some dogs may need a supervised introduction to a child before the child is accepted by the dog. Teach your children how to interact with dogs to avoid injury. Dogs do not like hugs and kisses. Dogs should not be approached without permission of the dog's owner. Even if the dog is on a leash, the dog should not be approached. Never take food or toys away from a dog. Don't wake a sleeping dog. There are additional methods that can be taught to children to avoid injuries from dogs.

Other issues: Parents may want to ask about other concerns. Swimming pools can pose a danger to children. Some parents are concerned about children being exposed to cigarette or cigar smoke. You may want to ask if a babysitter will be watching the children. How old is the babysitter? Does the babysitter carry a gun? Does the babysitter smoke?


Taking the time to ask appropriate question to protect your child is not a social issue it is a matter of child safety. Child safety should take priority over concerns of offending other parents. Taking steps to avoid injury is better than a child suffering an injury and then needing the services of an attorney.

Sunday, March 20, 2016

The court didn't give me custody of my children. Am I a bad parent?

In most custody cases, both parents are good parents who can take care of the children. A judge has to decide custody between two good choices. In most Massachusetts custody battles, custody is not decided on the basis that one parent is bad. The standard applied by judges is known as the best interests of the child standard. In other words, the judge has to decide which custody arrangement is better for the children.

Judges will frequently look at the following questions when considering custody:
  • When the parties were together who was the primary custodial parent?
  • Which parent has bonded better with the children?
  • Which parent works more hours?
  • Which parent prepares food, cleans the house, bathes the children, puts them to bed?
  • Which parent takes time off from work for a sick child or doctor's appointments?
  • Once the parties have separated, do both parents have adequate housing for the children and sufficient plans to care for the children?
There are other facts that a judge may consider.

After a judge considers these factors and others, the judge will then make a decision about custody. Frequently the judge has to choose between two good parents. Not receiving custody does not reflect anything negative about your parenting skills. Custody battles can be very complicated. An experienced divorce lawyer should be consulted before you engage in a custody dispute.


Tuesday, January 19, 2016

A search of a computer for “communications” includes photographs.

In a recent case in Massachusetts a court ruled that a search warrant issued for a computer (in this case an iPhone) properly included a search for photographs. The search in this case arose out of a shooting on a city street between two men. The police obtained information that the defendant, believed to be one of the two men involved in the shooting, had received threatening telephone calls and texts on his cell phone. As a result, they obtained a search warrant for the cell phone which included “saved and deleted photographs” on the iPhone. The police found incriminating photographs on the cell phone.

The court found that photographs can constitute communications. The defendant admitted this point so the court did not discuss the point. A famous quote says that “apicture is worth a thousand words.” This point is proven every minute as people attach photographs and video to texts and emails. They post pictures and video in social media. Video cameras constantly provide information over the internet. I can't imagine a good faith argument to dispute the fact that photographs are communicative. Once the argument is made that a photograph can constitute communications then it seems inevitable that a search warrant for communications should include photographs.

Many people think that a search of a cell phone occurs by a police officer manually searching the phone to look for texts, emails, photographs, etc. While this can occur, that is not how the police searched in this case. The police used a Universal Forensic Extraction Device (UFED) to access the device and to extract the information. A UFED bypasses the password lockout feature of the cellphone and allows a targeted search of the device. It can search all areas of the physical phone as well as all cloud based accounts accessed by the telephone. As the search is targeted the police didn't receive a copy of all information on the phone and its services but only such data as the UFED found responsive to the targeted search. A properly targeted search prevents the police from browsing the entire phone and obtaining information outside the scope of the search warrant. A UFED search based on permissions granted by a search warrant should be permitted.

Police routinely search cellphones in arrests on serious crimes. There are many restrictions on the ability of police to search phones. If you have been arrested and the police seized your cellphone or computer you should consult a lawyer to analyze the method, scope, and reasons for the search. Failure to act promptly can result in improperly seized evidence used to obtain a conviction.



Sunday, November 15, 2015

How to sue someone in the digital age when you don't know where they live.

In every lawsuit the Plaintiff has the obligation to notify all defendants that they are being sued. When a lawsuit is filed the court issues a summons which must be served (usually with a complaint) on every defendant. Massachusetts and probably all other states prefer that the person be served in hand or at least by leaving documents at their home. What happens if you don't know where they live or work? How do you serve them?

Every state has laws that allow a substitute form of service of documents on a person who can't be located. In Massachusetts, a motion must be filed to serve by an alternate form of service. If nothing else works, the court can order service by publishing in a newspaper. Of course, most people don't read the legal notices in newspapers so service by publication usually results in no notice at all but would be satisfactory to a court. In Massachusetts, the courts prefer that a different form of notification be used. Massachusetts courts now require detailed affidavits explaining how the Plaintiff searched for a Defendant including details of searches on the internet. As one clerk told me internet searches are required unless the Defendant's name is Smith.

A search for a missing Defendant should start with a search for a telephone number. A telephone information request with the telephone company is generally a first step. If this doesn't work, a similar search on the internet using multiple search engines (Google, Bing, etc.) should be made. If the person has a driver's license or professional license then the state data banks may show a current address for the person. All of these search methods may show a residence for a missing Defendant. A lawyer can request confirmation of addresses or forwarding address information from the post office. A non-lawyer probably would need a court order authorizing the post office to provide this information from the post office.

If, after using all of the methods just described, the person still can't be located, then social media should be searched. There are too many social media sites to search them all. At a minimum, Facebook, Linkedin, Instagram, and GooglePlus should be searched. If a social media page is located for the individual then print the contents of the page. A judge may need information that the person currently uses the social media site.

If after all of these methods, the person still can't be found, try to locate a close relative: parent, child, ex-spouse, or sibling. These people may be in contact with the person and may be used for service.

After all methods to research have been used and if you still don't have a work or residential address, then file a motion with the court for alternate service. In Massachusetts, and probably other states, the judge will want to use the best method of service that is calculated to actually reach the Defendant. Service can be made by email, text messaging, messaging through social media, or by relatives. The motion should be accompanied by a detailed affidavit showing all of the internet research and any relevant web pages.

If after all of these steps, the person can't be located, service by publication may be approved by a judge. Service by publication is expensive and usually ineffectual. However, it may be the only method available. Alternate service can be complicated for individuals. A local attorney can guide you through the process and help you locate your defendant.   

Sunday, October 18, 2015

October is National Domestic Violence Awareness Month

By presidential proclamation, October was declared to be National Violence Awareness Month. Nobody should be subject to domestic violence. If you or someone you know is in an abusive relationship you need to get help. You can get information about domestic abuse from the Frequently Asked Questions about abuse at my web site. You can talk to an attorney or even call the police. Understanding your options may help you take steps to protect yourself. The courts can issue restraining orders to protect against violence and, in certain circumstances, can make orders of child custody and support. If you are in an abusive situation there are people and services who can help you.

Saturday, October 10, 2015

You can commit criminal acts by owning or using surveillance and security systems.

The cost of home security and surveillance systems has decreased so that now everybody can afford a system. Internet providers offer home security systems. Some people use hidden cameras like nanny cams to keep an eye on babysitters. The news contains stories of people who use home security systems to catch burglers in the act. While such security systesm have many benefits they can also cause people to commit criminal acts.

Most states have laws that prohibit recording of voice communications without permission or a court order. These are generally called wiretapping laws. While we usually think of wiretapping as meaning telephone calls the laws are usually written broadly to cover all voice communications. Some states allow recording of such conversations if one person to the conversation gives permission. Other states, including Massachusetts, require all parties to the conversation to grant permission before the conversation can be recorded. Recording a conversation without permission is a crime in most states. In Massachusetts, making an unathorized voice recording is a felony. This means that making a recording of a person's voice without their permission can result in person being sentenced to imprisonment in the state prison. The Massachusetts wiretapping law goes even further and makes it a crime to possess hidden equipment that is capable of making voice recordings. Mass.Gen.L. c. 272, § 99.

Hidden cameras as part of a home or office security system do not violate any laws. However, microphones are probably not lawful as they can record voices. Merely having microphones as part of a home security system can result in a criminal conviction. Of course, you can have microphones as part of the security system as long as you obtain permission from the person you are recording. You may be able to have the equivalent of permission by using signs that disclose the recordings. Such disclosures would probably defeat the purpose of having the microphones in the first place but would be adequate to prevent commission of a crime.

If you own or want to purchase a security system you should consult an attorney to find out what is permitted for recordings in your state.







Monday, September 7, 2015

Prepare for a divorce—create a household inventory

In most cases, people anticipate a divorce before it happens. While some actions taken before a divorce can receive an adverse reaction from a spouse, creating an inventory should not. Creating an inventory can be helpful in case you suffer an insurance loss such as fire, theft, or flood. An inventory can also be helpful in a divorce.

In a divorce the two spouses will have to divide the household belongings. Sometimes this occurs leisurely and sometimes in a rush. An inventory will make a split easier. If a court issues an order removing one party from the house having an inventory will make it easier for that person to receive a fair distribution of the household assets. If you are dividing items from memory you are likely to forget items that you care about.

Another benefit of having a household inventory is to reduce the potential for items to disappear. After a person who is out of the house takes their initial list of items it is much more difficult to obtain items from the house. That book that you received from your grandmother is likely to be thrown out if you don't retrieve it in the initial group of items. With digital photography you can incorporate photographs into your inventory.  By having a list you can designate items to retrieve later and avoid having them thrown out or sold.


The earlier you start the inventory the better off you are. It is also helpful to consult an experienceddivorce lawyer as early as possible. Both an inventory and a divorce lawyer can help you work through the difficult times created by a divorce.

Sunday, August 9, 2015

Natick Judge enjoins Macy's for shoplifting fines

Judge Douglas Stoddard, a District Court Judge in Natick, Mass. has enjoined Macy's from demanding that shoplifters pay a $500.00 civil fine to Macy's when they are caught by the store.  Massachusetts General Laws Chapter 231, Section 85R-1/2 states that shoplifters ". . . shall be liable in tort to the merchant for damages for not less than fifty nor more than five hundred dollars. . ."  Many stores claim that this law means that a shoplifter owes the store $500.00 if they are caught by the store.  The stores are wrong.  The law means that if the store sues shoplifters in court a judge may award civil damages of up to $500.00.  Macy's has no right to collect $500.00 until after a Judge awarded them damages.

Macy's had a practice of detaining shoplifters and telling them that "if they paid the $500 fine, they would not be civilly sued in court and some said they were told they would not be arrested."  In some cases, people paid the $500.00 and were then turned over to the police who arrested them.  When the cases came before Natick District Court, Judge Stoddard learned of the practices of the store and issued an injunction against the store.The Judge stated “I’m not sure if I have the legal authority to do what I’m doing, but I believe I do have the power to right what’s wrong.  I don’t think I’m asking for much.”

What Macy's was doing was not only wrong, it was criminal.  Massachusetts is a common law state.  This means that crimes exist that were created by English judges before the American Revolution.  Some of these crimes are still in existence.  Macy's actions constituted the common law crimes of compounding a crime and misprision of a crime.  In addition, their actions also constituted the statutory crime of extortion.  

Compounding a crime occurs when a person enters into  an agreement for one person to pay money in exchange for an agreement to not prosecute the crime.  In Massachusetts only the District Attorney or the Attorney General can agree that a crime won't be prosecuted.  Any other person who agrees that a crime won't be prosecuted is committing a criminal act.  If Macy's accepts money and agrees that a shoplifter won't be prosecuted then Macy's has committed the crime of compounding.

If Macy's, having agreed that a crime shall not be reported to the police fails to report the crime then they have committed the crime of misprision of a crime.  Every citizen has the duty to report crimes to the government.  In our society we don't prosecute people who merely fail to report crimes.  However, if a person has received money and then fails to report the crime then they may be prosecuted for misprision.  Compounding is the crime of making the agreement not to prosecute.  Misprision is the act of failing to report the crime.

When Macy's asked for money in exchange for not prosecuting the shoplifter, they committed the crime of extortion.  The elements of extortion are (1) a malicious threat (2) made to a named person (3) to accuse someone of a crime or to injure someone's person or property (4) with intent to extort money. Mass.G.L. c. 265, § 25.  This means that Macy's committed three separate and distinct criminal acts.  When they asked form money the committed extortion.  When they agree to not prosecute they committed compounding of a crime.  If they took the money and then failed to report the shoplifter they committed the crime of misprision.  

When settling a civil case that has the potential for criminal charges, parties want to eliminate the ability to be criminally prosecuted.  This can't be done without violating criminal laws.  When I have encountered this problem in my practice I have agreed to a "gag order" as part of the settlement.  A gag order typically states that neither party can talk about the facts of the case or the settlement without creating civil penalties.  However, I always include language that states that the gag order shall not apply if there is a duty to disclose the information including, but not limited to, disclosure to law enforcement officials.  This exception means that the gag order does not violate any criminal laws.  An attorney who understands the common law crimes should always include language of this nature.  

Macy's practice of demanding a civil penalty without a judgment from a court should cease immediately.  Since the cost of going to court is more than the potential $500.00 recovery this means that it is unlikely that any shoplifters will ever pay the civil penalty.  However, it also means that Macy's will stop violating criminal laws.